Something Huge is Happening in the Housing Market

[@AndyQuinton]

The buy to let mortgage is a big culprit in all of this I think. It essentially means that older, wealthier people are pricing your traditional first time buyer out of traditional first time buyer properties.

[@AssassinHunterGamingChannel]

You have a point. Property investors use buy to let mortgages as leverage. That’s why most of the private rented sector is propped up by debt. The problem is if the government and lenders make property investing less attractive, it will push rent prices up as there will be a decreased supply.

[@ThatFinanceShow]

Hey mate. Yeah no doubt buy to let investors have an impact on it all. Problem is, we need a healthy private rented sector for the whole thing to function. The problem is once people are in rented, it’s so bloody hard to get the money together to buy.

[@sonicwingnut]

@@AssassinHunterGamingChannel I hear this argument a lot - that without all these BTL landlords there'd be nowhere to rent - but surely if a BTL sells up it's only going to two places, right? To another investor who is going to rent it out again, or to a first-time buyer in which case that buyer has reduced rental demand by the same proportion by taking themselves off the rental market?

[@sonicwingnut]

@Mark Rangers just out of interest, how many of those houses sold to first-time buyers, and how many to cash investors? From what I heard cash buyers have been scooping up a lot pf property. Also I think you're right about rents exploding, but have to admit my thought is that a lot of landlords are going to end up in trouble when tenants can no longer afford to pay - rents are already far too expensive and hyperinflated, so raising those rents while tenants are facing an unprecedented cost of living crisis seems like a bad idea and will just end up in tons of evictions.

[@noushinkhalehoghli6833]

@Mark Rangers Hi Mark, may I ask where do you have your investments now 👍

[@jonathanbenson1634]

An excellent video. I believe that there was one single major event which has caused a vast majority of the issues regarding both housing and society. When the financial institutions abolished their lending policy of lending between 3-3.5 times salary, this opened the floodgates! This allowed property prices to rise purely on the principle of supply and demand, those who could afford it got it. The 3 times salary kept house prices low and affordable. With the disparity between wages and house prices, this required the previous stay at home mother to go out to work to assist with the finances of the home. Both parties now working full time, coming home tired and not wanting to cook started the reliability of pre-prepared foods to feed their family. The additional preservatives, sugar and salt within them leading to obesity crisis we now have. With parents being out at work all day trying to earn money, parental supervision, guidance and teaching has become greatly reduced resulting in the behavioural issues with some of the youth today. I believe that this single change in policy has affected so many areas within both society and the family, especially regarding what was once the norm in owning ones own property.

[@ThatFinanceShow]

Thanks for the comment Jonathan - loads to think about there.

[@lindathefish7736]

Whilst it’s great that women are now being offered better opportunities at work, what was sold as better opportunities for women has become an expectation that both mum and dad will work to afford a house in order to complete with everyone else. Put children into a child minder until they can get away from work, eat sleep and repeat.

[@SusannaSaunders]

I agree with most of this! Removing the multiplier was a catastrophic move and should have been fixed by law... But we don't have the smartest politicians do we! We have rich fa(r)t cats running the show regardless of whether it's actually good for society as a whole - it very definitely usually isn't! Capitalism and greed will always follow the money regardless of the suffering it causes to others. Frankly, we need a law banning the purchase of second homes. The buy to let scam is totally out of control! The rich are getting ever richer out of it and the poor ever poorer. Stop rich people buying second third etc house to rent out at above the cost of the mortgage!

[@DavidNotSolomon]

Yes, it is in large part banks lending too much - they know they are 'too big to fail' - so they lend too much. And they get to collect on the higher interest payments, get bonuses etc, allowing the gov (i.e taxpayer) to take all the risk if the economy collapses. Even if the bank does go down, those at the top will be multi-millionaires, so what do they care?

[@garrywynne1218]

@@lindathefish7736 - this is the flip side and knock on effect if women entering the workforce . Don’t get me wrong I am not against it . But the single breadwinner determined the economics of home ownership prices etc with the expectation that it is 2 x incomes now. ….plus plus . My father was the primary bread winner in a family if 4 boys . Only after we were all in school did my mother venture out part time. They built 4 houses over the period and he was blue collar . There is no way you could do that now 🤷🏻

[@kualabear]

My great grandfather (I’m in my 60’s) worked above ground in the office for a coal mine in South Wales. He bought his own house and one each for all four of his children. My grandmother didn’t need hers so gave it to a relative. This puts into perspective for me the current state of the housing market.

[@alistairdarby]

We bought with a 5% deposit using the help to buy scheme when we were 32 (8 years back). A smallish 3 bed in Bucks. We had to move out of our “mates rates” rented house in Surrey because we couldn’t buy there since the “affordable housing” being built there was £450k. Our house was around £225k, but the interest rate on Help to Buy was 5.49% for 5 years. We got our rate down after 5 years to 1.89%, locked in for 3 years. Just remortgaged again at 3.25%ish for two years. But here’s the difference. We now earn a lot more, have two kids, lots of childcare costs, and two cars we’re paying off. We need to move asap to a bigger house, ideally in a nearby village where our eldest goes to school. But house prices there are £550K+ for the size of house we are looking at (3-4 bed semi-detached/detached). We simply cannot afford it right now. With energy prices going up, saving will become difficult, and more importantly, if I get asked to commute back to the office again (since I wfh), it will be completely unaffordable and might leave me without a job for a month or so. Despite the fact we might lose money on our house, I’m praying for a crash/reset as house prices come down as a percentage meaning we might be able to afford somewhere. Our kids are now 6 and 2 and in a couple of years, the youngest will need more space than a tiny box room. It feels almost like anyone born in the 80s is shafted financially. Jobs don’t pay decent pensions now unless in education or healthcare, no houses, shit mortgages, rising energy costs. And my parents tell me, “we’ve been through hard times too” like we should be putting up with it because it’s just the way it is. One day, I hope to look back and laugh at the cluster fuck that is the 2020s. But I doubt I will.

[@phoenixxavier9615]

My partner & I moved from the South East two years ago to the North East. We bought a six bedroom semi & I'm slowly fixing it up. We couldn't buy a bedsit down South for the money we spent buying this house. There are still many places in the UK where properties are affordable, but you may have to do a little research & move to a completely different area, just as we did. The money we would have spent on rent every month is now being ploughed into this house. My advice is look beyond where you currently live & consider moving to a different area. New house, new job, new life, new start. I hope someone benefits from our experience.

[@slayerrocks2]

The elephant in the room is investment companies. Financial giants at home and abroad, have been increasing their portfolios massively. The most obscene thing I heard was, that Chinese investors had slowed buying UK properties when the stamp duty holiday ended. Why the hell were foreign investors allowed to benefit from that, at a cost to the taxpayer?!

[@KINGZ44four]

That’s a good point, not sure why he didn’t dive into that point on the video. I’m a first time buyer and almost 90% of the houses I went to view , I was forced into a bidding war with investors and foreign companies. Anyone who’s on the market currently specially here in the north will tell you how crazy the market is.

[@bencarter2334]

I thought that for years. Corruption at government level?

[@Josh-iw3md]

A local estate agent near me has just gone bust, apparently as they couldn't get enough sellers to list their homes in the past 2 months. So even if demand falls due to a harder deposit saving environment and higher interest rates, supply is crashing too as people are choosing to stay put during this crisis. So overall I think supply and demand market will shrink and prices will still grow, although much slower.

[@richardfowler9901]

Good

[@joliemarietrahar8027]

I am currently going through conveyancing process for my first house. We are moving to a much cheaper region (im a remote worker). I used to pray for a house price crash, but now as a (nearly) homeowner I am really worried about it :') . No one wins apart from the banks.

[@ThatFinanceShow]

Difficult isn't it Jolie - just know that whenever you look at data over long term it gets friendlier. If you're buying somewhere you're going to enjoy living for 15 years + then it's less of a worry what prices do in the short term.

[@jjefferyworboys8138]

Good luck, it's a huge step, I remember it will. It's not easy but when you get to that point in life that you have paid off your mortgage it's a great feeling.

[@slayerrocks2]

If your main aim is to live in your own home and not pay rent, you'll be fine. Don't consider it an investment. That is the only time there should be concern. Once done, your house will usually be x% of a more expensive one you aspire to, or 100%+ x of one you wish to downsize to. If you can afford it, you won't be paying rent, you will be building capital. Hope that puts your mind at rest.

[@joliemarietrahar8027]

@@slayerrocks2 Thanks alot everyone for your replies. This is going to be our home for many years to come. We just needed to get out of the rental market as we could find literally nowhere to live that would allow us to keep our 2 dogs. Luckily we were in the position to put down a modest deposit for a home. I am hoping it all goes well for us !

[@michaeljohnson1006]

@@joliemarietrahar8027 If the prices drop 30% Then they will be back up in 10 years. The thing that is unfair is if you need to borrow more money to move again when you just paid 30% over what the price should be. It would be a good time to bye if prices have dropped but just getting more money to borrow.

[@TheThebrocks]

For the first time in years I'm now seeing more and more "reduced" properties on Rightmove for my area. A sign of things to come. Another thing that drives me insane is this whole "guide price" that estate agents use...example "guide price 350 to 400k" just put a bloody price on it !

[@ThatFinanceShow]

It's because they don't really know what they are worth. Finger in the air stuff. I used to work at an estate agents and the trust me, valuing isn't as scientific as you might hope.

[@ScoreGuru123]

@@ThatFinanceShow a house is only worth what someone is willing to pay for it, simple 🤣

[@michaelkelly339]

The guide price is just a teaser.

[@mustwinmel4244]

Where I live, houses that would be on the market for less than a week are still up for sale three months later, lot's are being reduced as a result which is discouraging people from selling as they want to sell for unrealistic prices. There is a new build, not far from me, and in 2017/18 would have been sold out in days, 50% is unsold. This is the beginning of the complete collapse of the housing market.

[@TheThebrocks]

@@mustwinmel4244 ​ @Must Win Mel I think part of the issue of new builds is this leasehold scam on houses. A rip off. Who the hell buys a House with a lease attached to it!

[@AndyZ22SE]

I have to say your content is very well put together. Informative, balanced, well supported and easy to watch with the light-hearted jokes and style of delivery. Keep up the good work!

[@mustwinmel4244]

I just had a look at Right Move and 15 houses out of 35 have been reduced. Last year there were maybe 4 at most. There were also around 60 to 70 homes for sale in our area of interest/price range. The housing market where we are is stalling, prices are dropping and fewer homes are coming onto the market. No one wants to buy and no one wants to sell.

[@anthonyduncalf-uk]

House prices rising out of line with wages have destroyed this country. No Politician will allow them fall so hopefully market forces will instead. The last time house prices were inline with wages was the late 90s.

[@ThatFinanceShow]

Yeah it’s political suicide to damage the housing market that’s for sure

[@jjefferyworboys8138]

Price is determined by supply and demand. For the rate of growth or indeed for a fall in prices to occur demand needs to reduce. There are variety of factors that cause this, the most obvious being rising interest rates which translates into greater borrowing costs. For first time buyers and those needing large mortgages, affordability is more important than the actual price of the property. There is little point in delaying buying a property in the hope that the price will fall if the cost of borrowing will be greater than previously. There are no easy answers, but we all need to live somewhere.

[@BB-mv9wl]

No.. the most obvious is uncontrolled mass immigration. Its like the QE artificial stimulus for property prices.

[@holdfast453]

There were plenty of properties out for sale during the credit crunch twelve years ago. Once the home prices begin to fall you’ll see all the speculative owners flooding the market in panic again like twelve years ago.

[@TheSpanishGuitarHub]

Solution: rent control. If the landlords will not be able to raise rents and get the returns they will find other places to put their money so the homes will be available for first time buyers. I would love to buy my home, but it is just so unaffordable at the moment. I am also on the waiting list on the council to build my own home for 5 years now. I believe they did not give out any plots. Whats the point of the waiting list than?

[@pookachu64]

Especially when anyone who turns up on a boat goes in front of you

[@olliedenton4003]

Major problem I have where I live (Norfolk coast) has become really desirable for holiday home investment and 2nd homes! Local people have been pushed out including myself! I’m an electrician, I earn reasonable money and have a large deposit saved but still can’t afford anywhere….really sucks, I’m hoping for a massive plummet

[@RK01]

Crash seems unavoidable to reset everything, houses are over priced right now.

[@philipburgin3109]

People's outgoings, the biggest sign

[@ThatFinanceShow]

It’s that age old thing isn’t it - only worth what people will pay for it. Value is all about perception. Is a 1 bed flat in London worth £400k? Some would say yes, others would think it’s utterly mad.

[@TheSnkrPimp]

A lot of the 409000 first time buyers are also assisted by parents who have either paid off their significantly lower mortgages already or have benefited from rises in property values over the years

[@richardgreenhough]

Hi Tom. You give a really lucid and informative presentation. I think a real hard reset is only possible when people start to lose their homes in significant numbers. If people can simply hold onto their homes they are loathed to sell them and move down the ladder. A fire-sale situation is not impossible if those with homes are struggling against inflation and fall in real income. Interest rates are rising and we have the aftermath of mass furllow and the huge energy supply shock. I do of know how the present recession will affect demand for labour over the coming months.

[@KMartha22]

This isn't something talked about really, but I also think that the building saftey crisis is adding to pressure to house prices. More than 1 million people are affected by it, meaning that at least 500k thousand of flats are currently unsellable (assuming 2 people per flat). In the end those that can, end up buying a second property and renting the flat they can't sell. Overall this means there is less stock, the kind that's more in the first time buyer budget.

[@stuwhite2337]

With thousands of new households arriving by dinghy every week and a government willing to borrow money to house them house prices will only continue to rise

[@Zel0978]

Brilliant video! Loved it, enjoyed comparing my scenario to your stats was of particular interest! For reference to your stats I'm now 43 (I was late to the "I want my own home" party!), and my wife and I bought our first home in Sept 2020 (Lincs) for £195,000. It's a 4 bed detached but needed some TLC hence the lower price. Combined we make above average household income but not obscene amounts of money (sadly!) so we grinded away for 3 years to save a £50k deposit upfront. We got accepted by Halifax for a 5yr fixed term mortgage almost instantly (mid-pandemic) since we had more than a 25% deposit, at a rate of 1.84%. This gave me peace of mind that we would be able to absorb any financial stress should interest rates start climbing. We dodged the stamp duty (thanks Rishi), and have been steadily upgrading and modernising the house ever since. We have 1 car between us because reading between the lines told me it was a money sink and I can WFH so it worked out nicely. I would say I'm in a good place right now but the energy crisis is certainly cause for concern before I even contemplate other financial standpoints - I locked us into a 2 yr deal last Oct at £167pcm as I could see what was on the horizon, and I've watched it systematically borderline cripple friends and family now it's tripled (and more). We are fortunate in that we have no intention to upgrade to another house - so a crash wouldn't necessarily hurt us as we've got no intention of moving anyway, but getting by week to week, month to month is certainly something we're watching on the horizon. I feel bad for those who are stuck unable to save due to high rent, yet unable to afford to buy - we just about managed it on our own but it took 3 years of grafting and living at home (embarrassingly) to make it happen. The other side of the coin you didn't touch on, is that with the ever increasing age of first time buyers, they'll only be able to mortgage up to their retirement (typically) - so at 41 (when I purchased) I was only just able to fall into the 25 year mortgage category. First time buyers older than 43-44 will start to be hit by a shorter mortgage duration which again, increases monthly outgoing cost because they have to pay back the mortgage in a shorter timeframe. This country is in a horrendous downward spiral and like you, I genuinely cannot see a way out. All I could do (and have done) is insulate my family as much as I can from the impending financial hits by saving as much as I can up front, not borrowing money for things I didn't need and a generous helping of luck coupled with good timing. Sadly, good financial saviness can't help with timing or luck. Keep up the great work and thanks for reading! Keep well all.

[@Vicky19463]

32k is the average salary in the UK? So many employers offer 21k + and consider it competitive salary... 😩

[@sean9446]

I put an offer on a house recently which was accepted but now i’m thinking of pulling out and waiting to see what happens with the market. The house i offered on was a stepping stone, the original plan would be to live there for 2-3 years but the fear is ending up in negative equality and getting stuck. I’m still looking at houses however with the intention to maybe spend abit more and staying there longer term, where ending up in negative equity is irrelevant as the market is cyclical and prices will eventually go up again. But i’ll only do that for the right house, otherwise i’ll continue to rent until this blows over. Any opinions on this plan?

[@Timto900]

You failed to mention the air b&b situation that is engulfing much of the country. Houses are now seen by many as investments because of the profit involved. Houses are for living not investing. As soon as the uk realises this it will improve. Also estate agents and banks are distorting figures / being dishonest to inflate the prices to increase profits. Basically it comes down to greed.

[@shaz7132]

It started with Thatcher selling social housing and making building new social housing illegal by the council. So, we should start there and then the knock on effect would be that there would be less private renters, so there would be less people making a business out of a house.... and then house prices would come down.

[@jwpeachey]

What is a first time buyer ? We lost our house after the 2008/9 crash and have rented ever since. If I try to buy now would I be considered a first time buyer and does it mater

[@piercoucy]

You ignore a process that's been going on for the last few decades: concentration of the house property in fewer hands. This is similar to what's happening in US, with the difference that in UK is mostly in the hands of private citizens, whereas in US funds and corporations. In the end is what was envisaged in Davos this year: you will own nothing and you will rent everything. This is the plan, you believe it or not.

[@michaelkelly339]

A big factor in the market is short term letting developments being built that hike up rents in a location to levels that make the location attractive to other (usually large) landlords and leave the ordinary punters out in the cold. Involvement of financial heavyweights like hedge funds, as purchasers, make the situation worse because of the depth of their pockets. They sometimes buy off plan or before completion and don't always get captured in national statistics so the problem is underestimated. They also have a habit of leaving developments unlet because the asset appreciation looks good on their balance sheet and it's not worth their while staffing up, putting maintenance in place, paying insurance, tidying up between tenancies and dealing with the great unwashed.

[@keithhobbs1]

Anecdotally we're seeing houses marketed for £250k going for £260, £270k as people are willing to pay over the odds. The problem is two fold, one the government has supported house prices at any cost through help to buy etc when a correction could have happened in the financial crash for example. and second there are just not enough houses being built. what we need is what we used to have a mix of private and public housing stock with affordable rents. I was shocked when a 2 bed terrace came up for rent in my road for £1100 per month which was 3x what my mortgage was (I bought a long time ago)

[@RichardFoggin]

Really solid findings. Thank you. I think we are seeing a spike at the moment primarily because interest rates are rising rapidly - we’ve known they will for a while. It created a rush to get a move completed at a ‘lower’ interest rate (this is also compounded after people have reassessed their needs post pandemic). House prices have reflected the increase in demand - many selling the day they listed. Ultimately the rate of increase can’t continue. House prices will likely steadily come down as interest rates go up and affordability drops. I have been looking to move for the past 6 months, recently found a place and am midway through the mortgage process - my repayments are scary. But I feel for first time buyers desperate to get on the ladder, those on lower incomes or at younger ages (as you mentioned) are being priced out.

[@ThatFinanceShow]

Hi Richard, firstly good luck with the purchase - hope it all goes through OK. You’re right, stuff has been selling so quickly and many resulting in bidding wars pushing prices up and up. People just get over excited. I think the market will calm down - but I’m not so sure it will ‘crash’.

[@RichardFoggin]

@@ThatFinanceShow Agree. And thanks for replying 🙂. Good luck to you too with you holiday let, would love to do the same. I stumbled across your yt channel looking at your extension price up. Since then I’ve found your content to be really well thought out and very clear and easy to follow - brilliant 👏🏻👏🏻👏🏻keep it up!

[@traintomorrow]

But in three years time when the fixed rate is gone people will lose out and have to rent ofcourse nothing to rent as only few die hard Lanlords left so institutions will build high rises its already started , look around they'll house you but rents will be astro.

[@waelelamin1881]

Realistically with the severe supply demand imbalance I cannot fathom the idea that house prices will drop regardless of any other factors because this is the most important factor unless the a significant percentage of the population choose to leave the country and live elsewhere! Does this makes sense?

[@jameshardy4666]

I can’t back this up but I’d guess there was a surge of first time buyers last year due to lockdown, and not being able to go out and spend money. Now that this surge is (at a guess) calming down, the number of first time buyers will vastly decrease, which will in turn stall the market. If I didn’t have a young family to support, I’d be selling my house right now, and moving back in with my parents, or a cheap rental, because I can’t see anything other than a crash. Might not be as severe as 08/09, but I believe it’s about to stall/subside. IMO.

[@sirrodneyffing1]

House prices don't rise. Priced in gold, the average price of house in the UK is not far of what it was in the 60s. Gold puts on 8.5% year; you're looking a fiat currency inflation and a shortage of supply due to 60 years of increased in planning regulations and Govt. pandering to the NIMBY lobby. The problem is all man made.

[@musicloverUK]

Nice one. At 22 I bought a 2 bed terrace house with a family member in 1987 when Dad said buy a house quick the prices are starting to go up. It was £26,000 and as we earned £10,500 between us and were female (can't be trusted?!) so B. soc would only lend us £23,000. We eventually found a lender for the remaining £3K at 12% interest (which Dad paid off for us shortly after we got the house). How lucky we were with numerous injections of cash from family through the years. Looks like my kids who have only just started work will still be living with us when we retire. Bring back the cap on 2.5x max borrowing like we had and house prices will come down to suit. But we also need new council homes preferably eco houses which are cheap to run. I moved up the ladder once, with hubby. I was a stay at home mum for some years as my mum was, and only did a few hours a week after that.

[@keithwhelan3021]

I can see a price drop on the way. Affordability with increased interest rates, mortgage like utility bills and increased food and fuel costs mean that even those with a healthy deposit just won’t qualify through the stress tests. Also, looking at the prices of homes compared to what you are actually getting for the money, in the areas that they are selling them.. it doesn’t match. Value has gone out of the market. So a lack of affordability, a strain in confidence in terms of the affordability of cost of living and the lack of value for money, means I can’t see anything but a stall and most likely a drop in house prices in the next 12 months

[@ThatFinanceShow]

Yep a lot of truth in all of this. The stress tests the lenders do though only look at credit commitments really so I’m not sure this will be quite the direct effect you might think. But I agree, it will surely calm down these rises at least.

[@keithwhelan3021]

@@ThatFinanceShow thanks, good to know. Great video as always!

[@slayerrocks2]

I'd agree with all that, but the threat of a 'burst' has been touted for as long as I've been around.

[@Jcshh]

I reckon another big factor in terms of younger people still buying houses is Help To Buy, effectively just buying a share of a house (a lot of the time a small percentage too) and mortgaging that, almost stat padding if you will.

[@jona826]

At a time when house prices are rocketing people are experiencing a cost of living crisis. Isn't this going to pull the rug out from beneath the property market?

[@krcalder]

An old person remembers what happened, which is very handy as no one seems to be able to work it out. My first property was a small, typical, first time buyer property and I was surrounded by other first time buyers. BTL came on line in the early 1990s. The next boom did not need first time buyers; BTL landlords were buying up what were first time buyer properties. The bottom rung of the housing ladder could now rise in price above what first time buyers could afford.

[@shaunsprogress]

Inflation, it's not houses are worth more, it's your paper currently is quickly becoming toilet roll! If the CPI was correct houses in real terms are dropping! But interest rates are negative in real terms also. The problem is the cost of living crisis is going to hit employment and overleveraged homeowners, when they lose their jobs. Additionally, couples usually buy a house now, and both work now, in the 80s one mainly did. That's why house prices need to be measures as the average of the buyer(S) income not the average salary.

[@paulbrown5839]

Very good point that regarding multiples. Since people rarely buy alone now, double the average income x 3 is doable.

[@grumpySafa]

It's not just one thing that is causing this causing this issue in the housing market and won't say I understand but what I can say is what I have experienced. I am renting and have been trying to get onto the property ladder. My salary wasn't that great and took a long time to save for a deposit of 7.5% +. As we saved the prices would rise and we were always chasing the deposit. Then Covid happened and in the rental market it went absolutely bonkers. Rental prices have ballooned to dizzying heights and my rent was no exception and we were told to accept the increase or move out. For the last 6 months, we have been forced to pay the increase which is now eating into our savings deposit. We have also been looking for another property to move into and that's its own problem as it's a landlord's market. We have had to fill out so many applications and prove that we can afford the rent and if you are accepted you are then invited to view the property. We have now secured a property (but not the type we need) but at least it gets me and my family away from this toxic environment we find ourselves in. While spending the better part of this year trying to move and read up I did find out that AirBnB is also a major cause for the lack of properties.

[@TheSnkrPimp]

Every single person who works full time should be able to buy their own property, even if it’s just a small flat. Imagine a country where everyone owned their own home, I am convinced that society would benefit and welfare and crime would decrease

[@judyparsons1333]

Yea I think we need to go to France to see some landscape or we won't remember what it looks like

[@bonehead2412]

there going to be one massive CRASH with in the next 4 months (i hope im Wrong) but im seeing it building very quickly as a company Owner in flooring and house's and new builds ive seen a very big drop in the lower class buying flooring they are making do with what they have the Middle class have made cut backs instead of the full house of flooring the just doing a few rooms and its not affected the Upper Middle class yet but it will plus my electric bill has gone from £190 a month in Jan to £1130 in Aug this is for electric used and its just lights and fridge and microwave and kettle i dread to think once ive got to heat the shop what the bills going to be then and at the end of all this ive got to put my prices up as i dont pay to work plus ive trying to keep 6 people employed witch is very tough at the moment but im doing it

[@jfk9996]

I spoke with my local agent at Your Move. The manager advised me to be more 'realistic' about asking prices and as such I've reduced by a whopping 10%. That in turn means I'll be seeking out bargains and making lower offers. Once this gets going it'll lead to a crash/correction/plateau, insert your own experience.

[@ThatFinanceShow]

Blimey this is interesting. Market is still red hot by me - there is no bloody discounts!

[@crispyduck1706]

This is because mortgage companies are not valuing house as much for loan purposes

[@pentacosttb2565]

There's also the thorny issue of mass immigration. At the low end of the economic scale, the constantly imported excess labour force is stagnating wages as workforce supply outweighs job demand, and means ever more people want homes, driving prices ever higher in turn. On the high end of the economic scale we have foreign investors and elites (also part of that first time buyer group, artificially making that number seem healthier), who either want a holiday home, monetary investment or can simply afford to buy luxury homes in Great Britain when moving here for work. This also makes the prices in desirable locations like cities higher as they can afford to out bid locals, with the knock on effect of those native elites moving to other areas, being able to outbid those poorer locals, and drive up prices in places like the Cotswolds, which are where the native elite want to move to from cities, further driving up prices. It's all fundamentally just supply and demand. There's simply an excess supply of people, and that has a major effect on the housing market and wages.

[@garybradley2171]

Surely this is more than offset by the fact that the number of working age adults in the UK is falling by c400k each year due to demographics?

[@mattgs1671]

Immigration didn't cause stagnating real wages, it was austerity that did that. Real wages rose by 33% a decade from 1970 until the 2007-08 financial crisis and haven't risen at all since.

[@garybradley2171]

Totally agree that immigration has been used as one of many excuses for failure of the economic system to adequately reward workers for their time and efforts… plenty of value is being created, but how it is shared out has let billions of people down

[@geoded]

Accusations of racism are used by the wealthy to suppress any critique.

[@garrywynne1218]

@@mattgs1671 - it did at the bottom end for low skill labour . The ONS and Parliamentary Committee’s confirmed this with knock on effects on housing and rental costs. In essence low skill labour that was reliant on taxpayer subsidies such as HB and tax credits

[@samihusseini1138]

Hi dear I hope you have a lovely day.could you please let me know that how much would be the price of property in 2023 or 2024 thanks

[@ThatFinanceShow]

No idea sorry! Can't predict the future.

[@duchieupham7689]

If they put higher tax on buy to let, no more property investor and force them to sell. That is it

[@ThatFinanceShow]

They are pretty heavily taxed already to be honest!

[@joefrasier4742]

What people forget is that this debt based monetary system we are in began in 1980 when interest rates were 15%. Interest went to close Zero over the last fifty years. There is no ammunition left to cut rates and stimulate demand and more importantly to raise house prices. Help to buy, 50 year Mortgages, and other schemes just try and paper over the cracks as you mentioned. The cut in stamp duty was just another short term ' kick the can down the road' measure. This is end of a 50 year cycle within which we had within it 8/10 year cycles. House prices will stagnate or there maybe a correction. I fear Japanification. Prices in Japan are still below the levels in 1995 when their bubble burst. Interest rates went as far down as 0.5%. We must consider a house as a place to live and not an investment. We are looking at a major shift in the housing economy.

[@ThatFinanceShow]

Yep Joe, it can't carry on like this indefinitely can it. Homes fundamentally are for people to live in, to raise families in and it would be a crying shame if we end up in a position where it's out of reach for most people.

[@jsgwatches]

The government are now also scrapping the 3% stress test on mortgage applications, which again is just kicking the can down the road and not solving the root cause of the problem, but rather fuelling the demand for housing and further amplifying the problem. Absolute madness

[@JanZamani]

-Limit buy to let -Stricter limitations for landlord (rent caps, epc requirements, stronger tenant rights) -Much higher taxes on 2nd and more homes. -More rights for building homes and mixed use urban planning. -Build a lot more homes. None of this will likely happen because most MPs are landlords...

[@superspecky4eyes]

I've just sold my house and it has been "down-valued" by £15k by the buyers bank. Could this be a sign that the banks are expecting the prices to crash?

[@hilaryporter7841]

Perhaps the fact that the market has kept going is not down to first time buyers at all but down to buy to let companies that have ridden roughshod over ordinary working people due to lack of regulation in this area, hoovering up all the low price properties and then renting them out to people at extortionate prices meaning people can never get on the housing ladder due to lack of disposable income for saving a deposit. We have had a Tory government for over 12 years and frankly for the largest majority of 100 years. They look after their own. They have inspired more 'buy to let' companies than a healthy economy can sustain and are unlikely to do anything to slow their profit stream. As they are so powerful, the property market will probably grind to a halt as this onesided system gradually over-reaches itself as the people move closer to serfdom and cannot meet the stratospheric rents.

[@ThatFinanceShow]

Hi Hilary, thanks for your thoughts. Would be interesting to see some statistics of what % of purchase were for buy to let in the last 12 months.

[@michaelkelly339]

@@ThatFinanceShow The stats are masked by the way thr BTL companies buy. Stats are gathered largely by looking at stamp duty transactions but if you but the SPV company typically formed to manage a medium to large development before the development is finished then there's no stamp duty, just VAT and the transaction often doesn't make it into national stats.

[@robwalker7575]

Hi buddy, great video. What are your feelings on right to buy for Housing Association tenants, would it just be another Thatcherite sticky plaster or would it help to open the market?

[@AndoverFistQuizzes]

Fantastic video. Private landlords are a big issue. Landlord gravy train needs to be stopped. One house per person/couple for ownership, rest state owned/council owned. No foreign ownership unless you live there 6 months plus a year.

[@IMAN7THRYLOS]

Here is Ireland, we have the same problem. Many former colleagues of mine have left Dublin or Ireland, due to the housing situation. I have left Dublin as well and relocated to a smaller city with far more affordable housing. I hope that I will manage to get a cheap but descent house next year.

[@sagargadre]

I think the government shall crackdown on houses being bought as investment and business. Homes shall be for living. Any business income from houses should be taxed heavily. Also the non residents shall not be able to buy the houses with the same ease the residents are. Note I'm talking about the non residents not foreign citizens.

[@ThatFinanceShow]

Thanks for the comment Sagar. I don’t know, house buying is big business so the government will be wary to squash it. To be honest, 2nd homes are pretty heavily taxed already. Stamp duty, capital gains tax, tax on income received etc.

[@SDW3-6-9]

London property is skewed allegedly from the function it serves as a sink for funny money from Pakistani rulers and by Russian and Chinese Oligarch buyers, who replaced Middle Eastern Sheiks after the 1970's.

[@energybrown]

Interesting video. Definitely agree with the point about the government not fixing the problem. Offering free stamp duty during Covid was insane; these funds could have been put to far better use. Think it's time for a much needed reset!

[@enochpowell27]

I agree with much of this but the elephant in the room remains the rapid growth in population. Back in 2004 Lord Andrew Green predicted we need to build 3 cities the size of Birmingham (population 1 million) just to house migrants. How many new towns have been built since 2004? Zero. Of course we need to build more genuinely affordable housing but without effective border control it is futile. Former leader of the Labour party, Jeremy Corbyn promised to build a "million new homes" over a 4 year parliament but the only problem with that was net migration was running at nearly 300,000 pa. Do the math. Why are all the so called "experts" ignoring the big elephant?

[@MrRocksW]

It's outside the Overton window

[@jackowens7636]

There is a simple solution to the lack of supply, above every abandoned high street retailer is property that could become flats. Could instantly fix the lack of council houses/adorable housing

[@ThatFinanceShow]

What would be left of high streets then though Jack? Already a dying breed, this would kill them off - would be a shame.

[@jackowens7636]

@@ThatFinanceShow I meant atop of shops, not the shops themselves

[@sksessions1284]

Such an informative video! You have put all my thoughts into one structured video (with graphs) Thanks!

[@tsscnorthants]

Look into where the money you borrow comes from when you borrow it form the”bank” it explains the continuous inflation in the housing market.

[@vickanden7816]

What’s the reason for first time buyers being so resilient to the trend of increasing gap between average income and average home prices ? Is it because first time buyers are skewing more and more towards high earner? Or are a lot of first time buyers foreign investors ?

[@EbluestarE]

Finished high school right in the 08 crash. Went to college a few years later and finished up in 2019... now I want to buy a house. It’s like everything is fucking against me

[@rory6046]

This is a brilliant video 👏 part of a wider picture of working/middle class people getting paid increasingly less in real terms while the rich get richer, hence why the government work so hard to protect property prices. I think part of the resilience in first time buyers comes from more and more people living at home thanks to the cost of living crisis, but this is eroding the rental market so I think the first cracks may appear there

[@ThatFinanceShow]

I think the rental market is still so competitive, people are fighting over limited stock and paying through the nose as a result. Overall, I still think people should aspire to own their own home.

[@rosemarytaylor3933]

Homeowner. I sold my property last year but had to pull out because I could not find another property to move into. Now it is more expensive to move and I feel totally trapped. Can't afford rental so staying put seems my only option. :( I'm filled with dread regarding staying put and risking a crash and moving risking huge losses.

[@mikeakachorlton]

The potential huge losses will only really be a problem if you would be looking to move within a few years of your move. Over time the ups and downs of the housing market are really just blips along an upward trend line, so as long as you can afford your mortgage and are happy to stay in whatever home you're in it shouldn't affect you. I had friends who bought their first home in the early 90s just before the crash when we first heard the phrase 'negative equity'. They were appalled that they were paying a mortgage on a property that dropped 20% of its value after 6months, but five years later the house prices had recovered enough for them to sell and move up the ladder.

[@tonda1]

Great video mayte - good banter. I've subbed. I think you are spot on with house prices outstripping pay, I was able to get on the ladder, however, a big factor was the Help to Buy as without it the affordability for the full amount was not possible. I also had to take a break from renting for a year and moved back home in order to save enough deposit. Wishing everyone that is hoping to get onto the ladder all the best.

[@spencerosei2616]

House prices are just hyper inflated, and there needs to be intervention soon. If a typical home is 13x the average wage, that just is'nt right 🤬

[@ThatFinanceShow]

Never been more unaffordable than right now, I feel for first time buyers.

[@Nicks-qc6ty]

Very good video and hits the nail on the head...but I'm not so sure about the 'they are not building enough houses' argument.There simply is no fluidity in the market with regards to going up the ladder.The cost with stamp duty and the massive steps are too large and hence many improve their homes and stay which leaves the 2 bed starter home unavailable to first time buyers( Its now a three bed)and the 4 bed detached 250k more than the 3 bed semi (in my area) so at 45 with a little bit of promotion pay say 10k per annum uplift makes it still bloody impossible. Let's add my utility bills going up by 150% Council tax ,10% ,food,15%, petrol 40% and god forbid if I had a 2 year fixed rate that ends in two months .With the impeding interest rate rises my outgoings would be £500 more a month.Now im just about above the average Joe with two average wages in an average house , two average cars and I certainly am finding it a challenge .Inflation needs taming the pound is weak and rates will rise and cheap money is dead. I am 100% sure there will be a house price correction and it wont be pretty!

[@ThatFinanceShow]

Thanks Nick and some good points here. Stamp duty really is one hell of a tax

[@richardlyd7450]

I think you missed a factor in your video about the first time buyers rise...the first time buyers currently are NOT British citizens!...that's why it doesn't make sense about low wages and first time buyers....all the housing stock is being brought by foreigners for renting out!..but great video... thanks!

[@michaelkelly339]

Hang on, isn't that what Brexit was meant to stop? Not being sarcastic btw.

[@richardlyd7450]

@@michaelkelly339 comes under a different law....yes it should've...but the current government are happy to have international money's... flowing inwards....I got a mate who is renting a house and his landlord lives in South Africa!...wtf!...

[@michaelkelly339]

@@richardlyd7450 I had exactly that when I lived in London 🙄 I lived in a house on Durban Road near Brixton and my landlord had an address in Durban near the Indian Ocean. You couldn't make it up. Mind you, SA is commonwealth, not EU so Brexit wouldn't make any difference.

[@nivekg100]

If you look at the Nationwide data for “First Time Buyers Mortgage Payments as a Percentage of Take Home Pay”, the percentage is still lower than it was before the 2008 crash (UK Q4 2007 46% vs Q2 2022 31.9%). OK interest rates are rising, but first time buyers can still hedge against further rate rises with a fixed rate mortgage.

[@ThatFinanceShow]

Interesting data Kevin thanks. A slightly different way of looking at it. You can do some really long fixed rates now too

[@craigroberts3732]

Stamp duty: buy a house for £600k and the price has to go up by £20k straight away when that owner wants to sell and get their money back … this is likely a big driver as well

[@christyfur1162]

First time viewer here. Really enjoyed the video. Thankfully both my kids are on the housing ladder but I feel really sorry for those guys who just can't bridge the gap between deposit and house price!

[@suegurney4666]

There are plots for sale which could be used to build houses but they are prevented from doing so. Whilst I agree you don’t want the uk to become a rabbit warren , some of these plots don’t contribute to farming at all or greenery . Those green plots with forest land could have stipulations which allow only green houses on them and numbers of homes capped.

[@cgmat7804]

The fact that you used to be able to buy a house at x2 or 2.5 times your earnings and now is x8 or x9 is your problem. This is a result of two things, either salaries are not keeping pace with inflation or the housing supply is restricted.......maybe both happening atm, stop blaming old people

[@ThatFinanceShow]

Who’s blaming old people?

[@cgmat7804]

@@ThatFinanceShow They have been accused of not "downsizing"

[@johnhumphries6751]

Bring in rent control and security of tenure in private rented sector, use the benefit savings to help fund social rented new build, scrap absentee holiday rentals, remove banks from mortgage market and return to building societies only, change treasury rules to fund building via a public works loans board again ...

[@ThatFinanceShow]

Hi John, yep totally understand some of these points. The difficult thing is leaving a market to naturally set prices through supply and demand when in reality, there are so many factors that push it one way or another. We definitely need more homes to be built whatever the solution.

[@konukonu6368]

Govt.intervention economics has brought us to this point. The G7 has effectively created a low negligible global interest rate. Thatcherism or multinational transferism. Resulted in deregulation of the financial sector 1980 and profit hungry banks could give out Mortgages as opposed to just non profit ( essentially) Bldg societies. Before RTB right to buy. There was a vast alternative in public housing that was considerably cheaper and actually affordable. 1988 HA stopped capital investment in housing. Fast forward. When there was not enough demand we changed the 2/3 times your gross income qualifications for mortgage to , "whatever you can afford". That created exponential demand for home ownership. But it became the only option as there is no longer public housing readily available. Waiting lists of 10 years actually exist. Private rented sector now exceeds the public sector housings. We have adopted spin and spuriously call even public housings affordable when it's not. We have a plethora of housing options , shared ownership, rent to buy, etc all designed to evade the question of affordability, it's deception. Housing investment is asset delivery and therefore capital creation. COVID shows us the finance is there but not the will. A massive public be sector investment in true public housing creating an alternative is the only OPTION. But government is hand in hand with big financial institutions and therefore they will not enter into conflict with thier covert funders.

[@rockerjim8045]

buy to let no. buy a plot of land with planning and build your own . 30% mark up and you can reclaim the VAT

[@susanlane8803]

Nothing has been said about foreign investor’s purchasing 1/3 of all the UK housing stock, thus keeping the house prices high.

[@dylanfisher6042]

What I know for certain is people will only sell their houses for a cost lower than what they brought it out for either of the following: - Mortgage defaulting - Moving up the chain Based ONS (Office National Statistics) only 28% of households in the UK are mortgaged, with 83% on fixed contracts as of 2022 (financial times). So even with increasing interest rate hikes this is still a very low amount of households that could default on their payments which could cause a housing market crash. As with moving up the chain, this usually occurs when families are made or expanded upon, and are desperately willing to sacrifice wealth for a better standard of living. And people will, naturally, want to have families over time but will only likely drop prices for first time homes.

[@fraybentos666]

Nice comment.

[@michaelross8273]

A brilliant video. I'm going to share. You've hit the nail on the head, it's supply. The private sector tends to build 200,000 units per year, and until right to buy came along, local authorities built 200,000 per annum. Housing associations haven't picked up the slack since local authorities were told to sell their stock to tenants and offload the the rest to housing associations. The population has grown and the rate of house building has halved since the 1980s. Central Government is already targeting local authorities to allocate more land for developers to build residential property. This needs to be increased further, but it will take time. The other thing is, we could move further away from London.

[@KseniaCook]

Thank you! We are selling and looking to buy at the moment. Considering micro and macro economic context of the near future in the UK, I can’t see how house prices can NOT fall significantly. Economic fundamentals just don’t support affordability for the majority of the population here. But what will happen to market £1.5 mln+ I wonder? Surely this one will take some hit too?

[@blue_tree_meadow]

Just bought our second home after a period in rented and yes, definitely expecting a hard crash, but we're staying put and have no plans to move on ever, so hoping to ride it out (touch wood).

[@stevep9221]

Look. Father recently passed and he took a lifetime tracker minus 1/2 percent in 2005 - I had to act as executor for his estate. Back then (in 2005) he was paying £207. the lowest the mortgage went to was £67 a month but is going up rapid. Soon interest rates will be 5% again and my mother will be paying over 3 times as much for her mortgage. Why? Look at the historical interest rates from 2005. They plummeted because the government swapped from raising interest rate to quantitative easing. It was a disgrace and soon those with £500 mortgages will be paying £1500. Get used to it as this will happen. Anyone advising someone to buy now must be committing fraud. The only way out is if the government switch to quantitative easing again. If they do that there will be civil unrest. This is a disgrace how the rich made themselves richer and the poor poorer. The Halifax HPI is a conman's sales tool. Look at the small print and tell me how that has an ounce of credibility. Read the Terms and Conditions in the small print before comment. Greedy disgusting posh criminals. They will cost hard working british home owners trillions and get MBEs.

[@FinanceDee]

Fantastic video as always Tom! I know a lot of people are hoping/expecting a crash but I really struggle to see it. I do think we won’t see much growth over the next couple of years and things will plateau, but I really don’t see house prices plummeting. But of course just my opinion 😊

[@ThatFinanceShow]

Yep agree with you I think Dee. I just don’t see demand dying off enough to make them crash.

[@stephenjenkins1323]

Average house price is not first house price - you get to average house price in flipping first

[@afridisyed3086]

I'm working as a real state agend working for a company in Birmingham and I hope it doesn't crash broo

[@rhtremovalsandstoragenorfolk]

As a small business in the removal industry we have seen our customers change since 2008 we used to move nurses police now these people cant afford our services they are moving them shelves the average home is 350k where I am and the average wage is 22k Our work level has dropped dramatically this year in Norfolk and I have contacts up and down the country reporting to me same thing which to me says that we are already in a recession and the housing market is in affordable and unsustainable and will crash soon due to the interest rate hike the fac to that the bank of England has just scrapped the affordability checker show how desperate to he government are to prop up the market

[@ThatFinanceShow]

Thanks for this, really interesting insight from someone who actually lives and breathes this industry. I was surprised to see the affordability checks get relaxed for sure

[@kitlai768]

Your video was very informative for those who’ve not been trying to get on to the property ladder for the last decade or so or, for those who already own properties and not kept up with the status quo, so well done. However, I find your title a bit disingenuous because I thought you was going tell us your predictions of where the market is heading and what potential buyers should consider given the macro economics etc.

[@OriginalBaoser]

Let the laws of supply and demand sort out the house prices. it wasn't just the low interest rates that caused this. It was also all the 'Help to Buy' and shared ownership schemes that gives people the impression they can afford a house. They then over stretch, pushing prices up and now have no money for necessities and causing a cost of living crisis. If there were not enough buyers to begin with because the prices were so high then the price would have had to come down naturally.

[@ThatFinanceShow]

Yeah problem with letting supply and demand sort it out naturally is it’s never a fair fight. Whilst the rule makers can manipulate the variables like stamp duty, interest rates you just never get a ‘natural’ balance.

[@ianscottuk]

So odd to hear this, i am in Aberdeen and the prices have only just started going up

[@stevo728822]

FTB'ers were rushing in to get a fixed rate mortgage before the BoE pushed up the base rate.

[@nickday192]

Great video again, Tom. Currently waiting and hoping for those house prices to drop, albeit with tempered optimism.

[@ThatFinanceShow]

Thanks Nick. I don’t see them crashing, just growing at a slower rate. Could be wrong though…

[@nickday192]

@@ThatFinanceShow No, I think you're probably right. Any wobble that we have could be accelerated by the inevitable energy price cap increases that we've got coming up. It adds another piece to the chessboard of affordability at least.

[@peterkavanagh64]

In your rent or home. Adjust the issue note thes and see if you are renaing in the rierty

[@hummit]

I find it strange initially when you mentioned that a tenant is paying rent that is higher than mortgage payments but the banks won't lend. But I guess banks do have to cover their bases by scrutinising personal annual incomes before lending. My take is that prices of land, materials and labour are all increasing so developers will have to price their offerings higher if they want to make any profit. Doubt that any of them are charity organisations.

[@dan44zzt231]

Good point about land and labour. When it comes to new development there's lots of other issues that are pushing prices up. Lack of road capacity, lack of sewerage capacity, lack of quantifiable sustainable transport options as bus services get cut, lack of power capacity meaning new sub stations and bigger cables to be laid, rivers already at bursting point, higher sustainability aspirations meaning less plots can be built on a certain site. All of these costs gets passed back to the developer, who pass them onto the consumer. They still seem to sell quickly enough mind. But I always laugh when people say 'just build more houses' as if developers deliberately stunt demand to keep prices high, not the case at all.

[@jonbetts21]

If all land allocated on LDP ( local development plan) were taxed as if there was a building on it (after say a 2 year grace period) then developers holding vast land banks would be incentives edge to sell plots for building or build themselves. This would drastically increase the supply of land and hence the number of houses built. It would also make land and property speculation significantly more risky, which would again promote the building of houses as homes. However at the same time we need to reevaluate the way we build in the UK to incorporate modern standards of factory built super efficient houses with can be erected in a few days . This could speed up the planning and construction phases by using pre approved designers with incorporate the latest efficiencies. ( SEE Neath Port Talbot- homes as powerstations)

[@samanthakenyon2634]

Great video Tom. I am lucky enough to own a home, if I was a first time buyer now I wouldn't have been able to do it. I really feel for everyone in that situation. Interestingly we are stuck in our terrace house. We would love to move up the housing ladder but with the cost of a 3 bed semi being over 200k more than this home it feels even harder! Our only option is to overpay as much as possible and hope one day we will have enough. Good luck to everyone.

[@adamcoppock5018]

As far as I can think, to free up supply pehaps people should be limited to owning one home and pehaps landlords should be limited to rent up to 2 homes. This will introduce other problems. You could also tax the heck out of each additional home that people own...

[@allotmentuk1303]

Interesting, well thought out but one point r garding the not in our back yard complainers. The reason why my area in East Sussex people are objecting to recent planning applications is the infrastructure is inadequate and the service at the top of the list is drainage with sewage being deposted in rivers and into the sea. Not to mention we are in a hose pipe ban due to so called drought, of schools, big queues at the doctors and the local chemists. Transports not so good.petrol is not cheap I could go on but simply the country is in a mess it is falling apart.

[@superspecky4eyes]

I've heard house builders are more interested in buying up land than they are actually building houses. It's more profitable for them to sit on empty land, watch it's value increase, stop other companies building on it while drip feeding houses on to the market. Rather than keeping up with market demand.

[@SteveDuts]

Another fantastic, informative, topical video Tom. It’s a rough time out there that’s for sure.. and loved seeing the shot of the cash from the Instagram “issues”.

[@ThatFinanceShow]

Thanks Steve, glad someone spotted the shot. Nearly broke my neck climbing up to get that 4 seconds of footage 😂