Why Are House Prices Not Crashing? 

So.. are we just not going to discuss the prime product placement?

I feared a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k, but I'm not sure on how to mitigate risk.

You cover complex, boring but essential topics and do so in an informative and effective way. You’re a very gifted communicator, Damo, power to you.

A lot of people still on low fixed rate mortgages, more and more will come off them and that's when it will hurt. Mine is expected to go up by over £300 next spring.

Centre bank digital currency is far more worrying for all of us.

Before I ever became a first time buyer, many years before I bought my own home, when I lived at the family home with my parents, I worked full time and though it was a low paid job, I paid my parents a small rent and after that saved every penny I could to put towards a good deposit on my first home. I saved a hundred pounds here and there for over ten years. Then finally at the age of 34 I decided to buy my first home. It was at this point that the wisdom of what I had done became apparent. I managed to buy my three bed semi detached house with such a high amount of deposit that the outstanding mortgage amount is so low it runs out at a current repayment of £250 pcm. Plus I have a single person mortgage despite only being on a wage of £28k per year. My advice to anyone young out there is to think of your future early and start saving deposit money asap towards your own home if that is your goal. It is no good taking on a 95% or 90% mortgage on a £300k+ house.

The reason prices aren't falling is the same reason that house prices have gone up for decades, demand outstrips supply. I know demand has reduced but there is still a huge lack of supply.

Not many people understand but the price to build a house has doubled in the last two years. There isn’t going to be any affordable homes unless the government pays for them. Every single developer is renegotiating their 106 because the costs don’t stack up. The new building regs are extreme and will add another 15% to build costs. Utilities have trebled in the last year. Funding costs have doubled over night. None of these higher costs are going to return back. House prices will double in the next five years.

I wouldn't worry about going too far with editing of your videos Damien. I watch you because you are real and talk sense !!

Having listed twice this year, buyers are offering 15 to 20% below asking prices even if reduced to reflect downward trend. My home is outright owned. You are right I can wait several years so I am not motivated. The knock on effect is that there are not many homes available to purchase. It makes sense for some people to wait.

Buddy I am not going to watch the full video but I am going to say this. The true reason house prices are not and will not fall fast is because all us sellers are in the same boat we can not go lower until other houses drop in price to buy after this one BUT that is the same for the other people selling so everyone is in a stalemate no one can afford to take less for their house if they can not buy a follow on property pretty simple really.

I for one like the fact your videos are not edited to death with flashing unrelated glossy distractions every 3 seconds. Just keep it real man. Great job!

Respect the lag. Markets as liquid as housing have huge inertia. They will collapse, just a matter of time. Inertia also carries price further past the meme so expect a better discount. Unemployment will be the driver

I for one am shocked that importing over a million people a year causes house prices to increase. No one could ever have predicted this.

2 years ago, experts said prices were going to CRASH. I said they were going to be wrong back then. People said we were stupid for buying a larger house at the “peak”. Guess what…except for rubbish homes that were selling for a huge premium 2 years ago simply because nothing was on the market, good homes have stayed stable or seen growth. Never bet against the housing market. If 2008 didn’t kill it, then nothing will.

Houses can't reduce in price when the value of your currency is decreasing

One of the main reason housing hasn’t collapsed, as you mention, is that unemployment hasn’t risen alongside interest rates. Even the modest unemployment raise is usually with the younger generation who aren’t home owners to begin with, and likely weren’t potential buyers anyway. Because older homeowners aren’t losing their jobs - that reduces supply.

You are by far the most informative youtube channel on topics like this. You explain things so clearly and without bias. I know I can always trust your perspective. Keep up the great work and thank you very much.

I've been watching this for 30 years. No crash coming. Just a slow down and slight decline before another massive price jump. I mean, which governments are looking to produce an oversupply of housing? None. Any increase in supply is temporary at best. Governments are motivated to ensure housing remains a good investment. This is what voters who matter want, such as those who own their home outright. Politicians pay the poor and those without homes lip service while making decisions which ensure that housing prices will remain unreasonably high globally. And as long as we have humans in charge this is the way things will continue to be. The only real way out of this is through a painfully slow process of increasing density. If you think we can force things to be different, then you should be aware that we've already tried in modern times. China is the example of what not to do. You can't force this issue while humans are in charge. As long as humans are in control, we're not seeing any housing crash any time soon. Not except for wars, disasters, and small pockets which experience temporary change. But also, people will keep predicting a crash. Month after month. Year after year. "No really guys, the crash is coming this time! So get ready to buy that home you gave up on!"

When you realise you should bought property after the 2008 crash instead being 9 years old

I live in a small village in national park. Houses here usually sell within 2 weeks of going up for sale. There are two good quality 3 bed houses, both renovated, both with views across open countryside, that have been on the market for 7 months. One is grossly overpriced, but the other is an absolute steal at £300K. No interest. People now can't afford £250K+ mortgages at 7% rates, and sellers are so used to sky high prices, they're unwilling to sell considerably lower. No doubt some of them won't be able to afford as they'd find themselves selling for less than their current outstanding mortgage.

If you factor for inflation then house prices have already come down a fair bit. But we don't want the actual headline prices to fall much otherwise a lot of people will be mortgage prisoners and that will mean the whole housing and construction industry will basically grind to a halt along with jobs.

If a property is selling at the same price it was 2 years ago, then it has dropped in value by significant amount, because of inflation. If everything has gone up by 20% over the last 2 years, but properties have remained the same price then they are 20% cheaper than 2 years ago.

I know it's a contentious topic, but it would be good to have a video that considers the effect of net immigration on house prices.

143k subs and growing, and now looking for an editor! "Look at my boy, he's grown up so fast!" - I remember being here right near the beginning, when you had less than 5k subs! Well done chap. Keep it up.

The whole idea of motivated sellers and the comparison with overpriced coconut water is so relatable. It's crazy how the average prices can be deceiving.

Anecdotally I’ve seen more and more reductions showing up on Rightmove in the area I’m looking to buy in. My thoughts are sellers are holding out as long as possible to eke out the last of the market highs I have relatives that were pressured to sell this year when getting their place valued to sell next year so I think estate agents know what’s coming as well. Hard to tell buyers their 3 bed is not worth half a million though

I want to buy a BMV property and looked at 3 auction houses in Oct and Nov. I saw ZERO BMV deals and a lot when way above. Until the liquidity is drained there will be no crash

Just bought my first house this month. I expect to lose some value in the next year or so but I think it'll work in the long run. People living longer, people living apart longer, 500k immigration into the UK last year, gov under delivering on new homes. I also think cheaper first homes are going to be less susceptible too price volatility. A necessary good rather than a luxury. That being said, during the viewing process I saw so many people overpricing their houses because they bought it brand new at a premium in 2019 and didn't want to realise a loss

Your forgetting the government kicked the can down the road by having at least a 12 month delay before repossessions process can start. This is the sole reason why house prices haven't fallen off a cliff but as the time moves on and the economy doesn't improve there is going to be a tidal wave of repossessions coming. By 2025 I expect to be in the middle of the crash think it's way too soon to say why haven't house prices fallen because everything takes time.

Sign of a successful RU-vid channel enough money to invest in an editor 👌 nice going, can't wait to see how it evolves

Please don't show anything outside your window, years ago a youtuber did that and a stalker appeared outside his door with her luggage, and he lived in apartment, she could still figure out which one and which floor base on the trees.

in the long term providing you have impartial professional advice buying is always cheaper than renting and once rates have decreased fix for 10 years so your cost is fixed, unlike renting where the rent goes up annually and your landlord can evict you by pretending to sell

I think the higher prices during covid play a massive part in why current prices arent falling. People who bought over priced houses 2/3 years ago that are now having to sell, will not accept making a loss and therefore holding out, to at least break-even to get their deposit back and pay off the mortgage. I went to view a house listed for £135k which has been up for 5 months, they would not accept any offer below this and after looking at sale history they had purchased the house for £132k in 2020

Sounds like you live near me. I am 300m from the beach, commuting distance from Liverpool and Manchester too. Bought in 2019. Has doubled in value, but more importantly, my return on investment is around 50% a year. As you say " know your local market" is good advice. The rest of the country doesn't matter. Can help with the video editing, will fill in your form :) Keep up the great work. You are way better than any fully loaded TV production on the economy.

Great work. I very much appreciate your balanced analysis. Especially the last part when you say that the only market which matters is the one where you live or want to buy.

Biggest thing you're missing, is the devaluation of currency. If your house price hasn't increased by the rate of inflation, it has devalued.

too much hassles dealing with houses for renting. I just care for the one I live into, and since I need a roof, I am not particularly stressed about market fluctuations.

This is all interest rate related, nothing more. Renters are desperate to own, and they would if the affordability was right. Owners can delay selling by renting if needed. I see the return of 95/100% mortgages being offered once wages catch up with inflation in the next 5 years. But fundamentally, I see no crash, at all. Homes are so expensive to build, and new ones are in short supply.

This is the problem with the folk that say ‘that’s why it’s an average’. Normal houses (2 to 3 bed) outwith the south east are not dropping from what I see. I bought a new build in 2016 for 250k. Same house type is being sold on an estate other side of a small town in Scotland just went from 300k to 330k due to build costs. Ex council or smaller houses are selling within weeks and for above asking.

Actually if you take inflation into account the £ is losing 8% or so a year in buying power, so even if prices don`t change over a year house values will have fallen in line with inflation.

I wish we could see an average house price excluding London. Including it skews the numbers massively.

The reason prices haven't come down yet is because the delay in data. We had our offer accepted in July but we're only going to exchange 30th November, so our house price wont be in the data until the end of the year. I think we're the last wave of people paying full price, the house prices will officially start falling over the next 3-6 months when sales agreed from September onwards start to complete.

When the price of something doesn’t go in the direction that it ‘should’, it is providing you a very valuable piece of information. Probably best to step back and listen. U.K. house prices are about to go off to the races.

You need to have a look at the listings you show for prime, that was a 12 pack so only slightly overpriced compare to supermarkets which is fair for an amazon seller really

Part of it for me is the dramatic language used by the media; Prices "crash" "plummet" "soar" etc, none of which reflectthe way prices really change.

This has to be one of the best, if not the best, objective, balanced and unbiased overview of the current state of affairs within the property market currently available online. It is clearly on a gradual slide and is likely to continue given the BOE narrative and recent economic activity across the nation. But that doesn't mean it is all total doom and gloom as the crash wannabees report and neither does it mean there will only be a 5% nominal drop from top to bottom as reported by those with a biased agenda due to their participation and reliance on a solid property market. It is always best to become an expert in your area and use a variety of sources to help inform you of important decisions. I don't know what will happen but my best guess is that 2024 will, overall, be worse than 2023 for most people as the coming year is when I believe we will see more company failures, less availability of jobs, more people losing jobs, rate rises really biting and the butt of overall financial failure before recovery begins its slow path from 2025 onwards. The snowball has not stopped rolling. It might even just be starting to accelerate before a thaw sets in properly. It is good to see balance. Well done.

Good analysis. Nice one Damien. We've currently seen a nominal fall of approx. 5% and a real terms fall of about 15%. The central case is now a peak to trough nominal fall of 10-12% and a real fall of 25-30%. It would take a major recession to see a 30% nominal fall.

You should talk to Charlie Lamdin. He has a deeper insight into what's going on. Current prices are probably lower than you think.

My observation, folks in one state sell their million dollar acre and move where acres are cheaper. Real estate agents in new states fleece "out of stater" by raising property prices double which seems fair to million dollar acre guy but sucks for locals looking to buy who knows prices are inflated. Oklahoma real estate agents are bad about this!!

What are you on about. House prices have dropped 5% in the last year, things aren’t selling. It is set to go down by at least another 5% next year. In London so many prices are being dropped below this level (all the properties I’ve looked at recently are people who have already moved back in with parents and are desperate to sell. I’ve got friends who are renting where their landlord has defaulted on the mortgage due to rates and the flat is being repoed. It is really bad out there.

House prices don’t crash when sellers decide to hang on and not sell until the high interest rates start to drop resulting in less on the market which keeps value afloat. And even more simply people can’t afford to move house right now again resulting in less for sale.

I've been looking for a house in the north west and we noticed that there are loads of houses for sale in all the seaside towns. Our theory is that a number of people have looked at sea level rise projections, and they've decided to sell up while they still. My parents live in the river valley in Preston, and they've already had house insurance companies being funny about insurance - potentially those on the coast have experienced something similar.

Just wanted to thank you Damien, I just opened my first Vanguard account.

01:50 in the sellers defence, they are selling it at £2.33 a bottle (£27.99 for a 12 pack) so yes he’s marked it up, especially if you include postage, but not quite the ridiculous amount you’re making it out to be.

I look in my area of interest and almost all properties look like they were owned or are owned by elderly people. Very few new build and renovated properties.

In a situation where the cost of food, energy, transport, and everything else is increasing, the fact that house prices are stagnant means they're falling, the fact that nobody's acknowledging this means theres a lot of people with their head in the sand

Very good video as always. One counterintuitive factor that may be preventing a house price crash is the inflation in labour costs and materials for building. We are fast approaching a point where a £60k house will need to be insured for substantially more as it could not be rebuilt for anything like it’s current value. Professional property investors also know this and I think that is another factor stopping a price crash. As you rightly noted - the jobs market will be the key issue to watch. I’d also recommend using new car sales as an early warning system for the housing market.

I would suggest you look into the 18.6 year real estate cycles Damien

I got a mortgage on our first home in 1978 , rate was 6.5% and quickly got to 15.4% . A few people I knew got rid of their homes, but most stuck with them. I have seen house prices go up since then , with little blips with different problems with the economy , but the housing market soon returns to the same levels. It makes me laugh that every one that talks about housing as an investment yet to most it is where you live and raise your family. I know a few people that want to move for different reasons but they have all said the same thing they will wait until the market starts to settle. House near me are still going on the market but are not really dropping in price, just taking longer to sell. The only ones that aren’t selling seem to be the high end ones ( £900,000 ) and up.

The main reason is the government has pressured lenders to not repossess houses (previously a lot would be in the courts by now)

Unless they build more homes, house prices will continue to be unaffordable.

As the property hub have covered, learn the 18.6 year land price cycle dynamics and you'll understand why the last big bull run up in prices is still ahead. Next peak expected around 2026.

Very sensible, statistic based and honest perspective!

In my block of 18 flats in south east London only five of us are working. The rest are retired. Several have homes in Europe or the US and spend very little time here. The last four flats to sell were bought for cash, no mortgage. With their index linked pensions these people have not been affected by inflation, and their savings are benefitting from higher rates. Time to tax wealth, not work.

Interesting, Repossessions reaches 90,000 in 1991, in those days if you missed 2 payments with the Alliance and leicester you got a court date for repossession a week before the third missed pmt was due end of. and the house I bought in 1989 and paid £30k for had dropped to £22k if you were lucky enough to find a buyer. But this was before 10 million people were forced on the great british people, so Who knows what will happen.

Why do we only seem to report change in property prices in absolute terms? If house prices have broadly flatlined for the past 12 months but inflation run at 10% odd then in essence we have seen a 10% reduction in the real value of houses? From another investment site I saw this shown when comparing investing in US stocks vs UK housing and whilst there was a boom through the Blair years, outside of that window property was pretty flat in real terms and still lagged stocks by a significant amount.

If you are in real estate. You can uncover false reporting by the ONS on their monthly HPI Bulletins in 10 minutes. They claim a lag in reporting but that is not the case The HMRC have the sale price, the tax to be paid and the full address on the day of sale. It would take the ONS (which only has the job of reporting house gains or house loses and not recording the sale) a single click of a key to input the data into their own data base also on the day of sale. You tell me why they choose not do it?

I've seen house prices decrease in London lul. From outrageous prices that nobody can afford to slightly less outrageous prices that nobody can afford...

Massive oversuppy of houses in the 300-450K bracket here in North Devon, hardly anything like that is selling, 100-250K moving, far far too many new larger houses on the market, nobody is buying them but buyers are stubbornly sticking on price making the situation worse

Net immigration of around 500,000 people per year is a huge factor in property prices, whatever else they bring with them they do not bring a house.

South Wales selling had to drop over 15 grand to sell.

Unrealistic prices and seller greed has been the norm for decades, the only change is volume and that has been seasonal for the same period of time, anomalies to this were large interest hikes & current levels are not to be compared.

Recently bought my first home and the area and condition of the property relative to list price was totally reliant on a motivated seller, they're moving into independent living accommodation and that's also made it a much quicker process than I'm sure a lot could expect. I was extremely lucky to get it, price was around 25k cheaper than next doors price from a few years ago.

I work for a private bank. Something is spooking the banks and government out. In the past 8 months the entire tone and focus has changed plus we keep being told micro economics are concerning investors as debt is increasing and savings are disappearing. They also are now seeing a surge in defaults and missed payments. But we're told we have enough to weather the storm for a short to mid term but no one is telling us what is short and mid term!

Very well balanced video. The analogy with Prime was brilliant and the way you've explained how the number of transactions can affect the average is better than anyone I've seen so far. Keep up the good work!

House prices didn't go up across the board, in some places they dropped. One of the things that keeps houses valuable is wether or not your house is in a good safe area, and or industry near by. In the absence of both of these things the property market is now on a precipce. Goodbye property investors, hello negative equity.

In my area, properties around 250-300k were selling literally in days, although since late September, prices haven't dropped, but the rate of sale has dramatically slowed.

Good video. My area, very stubborn sellers not accepting falling prices altho listed 8 months ago and not reducing prices altho’ making profit of 35k when he bought 8 years ago. When will this change never know

Interesting, Repossessions reaches 90,000 in 1991, in those days if you missed 2 payments with the Alliance and leicester you got a court date for repossession a week before the third missed pmt was due end of. and the house I bought in 1989 and paid £30k for had dropped to £22k if you were lucky enough to find a buyer.

Rent seems to have gone up by around £300 over the past 8 months (at least in the South East looking on Right Move). Im eager to buy or rent a niceer place but the prices keep going up.

I can`t see any price drop or a large number of properties in the market in MCR, ok i am looking for a 150-200k price range, but it`s very very hard to get a good one and houses selling within a week. The market is still very resilient.

Damien you raise such a valid point about the lag in pricing. I've been looking into buy to let properties as a first time landlord and one of the things that the mortgage advisor said is really challenging at the moment is the time to register a house on the housing registry. Many landlords rely on doing a house up and then remortgaging it in order to release the additional equity from the Investment. However the mortgage brokers advised that it can now take up to two years for the land registry to process house sales. Meaning that you can't remortgage the property. Without a property listed on the land registry you can't raise a mortgage charge, which may well mean the house prices being reflected or only those of properties that have been mortgaged because they need a charge raise against them.

How about because the population of the uk is increasing by about 500,000 a year and we only build 100,000 or so new homes a year? There may be lots of availble jobs and not many people to fill them , but is the average wage keeping up with inflation?

Supply and demand Its as simple as that 🎉

Many boomers in big houses (mortgage free but big utility bills) are downsizing. These represent many of the cash buyers of smaller houses, and their buyers contribute to the increase in average transaction value, very different from average house price. This also holds up the price of smaller houses as the boomers compete with first-time buyers for them.

Isn’t it too early to say? Another factor at play is that a lot of people can probably afford to just sit on the house rather than selling, so they’ll just wait with selling it until the market turns around

Whilst we live in an inflation based monetary system that relies on debt, house prices will always go up. Houses are the vehicles to sell the debt. Salaries go up, prices go up, its all just a touch slower than inflation. Boiling the frog slowly so it doesn’t notice. Inflation is energy theft and bad for the world, why should all the hard work my father put in over his lifetime be worth much less today. It was valid energy at the time and he should still be wealthy today, inflation stole it from him.

The 2008 crash was never remedied. None of the sub prime banking crooks were even investigated. The same problem persists with banks trying to keep the music going.

Demand is still high, simple as that. And the bank of mum and dad, or grandad and grandma, is still very much open for business. And yes, sellers are unwilling to accept lower prices.

Well I’ve just got £50k (8%) less than I’d hoped, so it’s not all good news out there.

NO HOUSE PRICE CRASH stagnation and inflation will drop prices. The prices have no where to go down

When the baby boomers start to die off & release lots of properties back into the market house prices will remain higher. A lot of property developers have realised they can make more money renting out thier new builds than they can selling them retail...which also helps keep house prices higher.

Really great statement at the end about your own area and pseudo experts. This is why I trust you; you’re very aware of bias and how much of a game this all this.

An important factor that you didn’t mention is that stamp tax acts as a significant barrier to the housing market. When someone wants to move and will suffer significant taxes and transaction costs, people are disincentivised to move, so activity is stifled and price movements are not realised as significantly. Elderly people don’t want to downsize because of the waste in taxes and transaction costs, so you have many big 4/5 bedroom homes occupied by only 1/2 people. Abolish stamp taxes and we will have a much more efficient market.

Personally I think house prices aren’t crashing because interest rates aren’t high enough yet. They’ve risen enough for repossessions or previously unplanned sales to start but not enough to push people out of the market.

While demand is slowing; supply is also slowing. Builders will tend to sit on their plot and wait rather than build and sell cheap and sellers will also hang on if they can. Much of the demand is from current owners moving up the property ladder. They will not be doing this. We have high interest rates because we have high inflation. Where will we be in 6 or 12 months? Most of the factors fueling inflation are one-off things and will drop out the figures within 12 months. Inflation is already falling and interest rates will come down soon. Also there is an election on the way and the government will want to present an optimistic picture to voters. That will be falling inflation, falling interest rates, a growing economy and people felling less pressed. Anyone with a house to sell would be mad to sell it now instead of waiting 6-12 months and getting top price. So while it looks like a slump it is actually just a pause while everyone waits for things to get back on track.

There is so much wrong with this video that I don’t want to explain, but good to hear other views (and I respect them)

It's a spiral. People spend more on the house payment and a car payment. Then they have less money to spend it in normal things like food and having fun. Then the producers of every product that isn't house or car, cut down their production because nobody is buying it. So they lay off the workers, who now have even less money. Etc...

Within the UK labour market, unemployment might be not the problem, but many people not earning a living wage.