I Can’t Believe What Just Happened! (UK House Price Crash 2024)

UK House Prices have been FALLING for over a year and are widely forecast to DROP further in 2024, however, are these house price predictions about to be proven WRONG?

A UK housing market crash has looked very likely ever since inflation led to a huge surge in interest rates and mortgage payments, however, house prices have proven to be more resilient than many of us expected.

After a year of turmoil in the UK housing market, the latest House Price Indexes from the ONS, Halifax, Nationwide and Rightmove indicate that a full blown UK house price crash has been avoided.

Unfortunately, these reports are causing confusion among potential buyers and sellers who are finding that the indexes don’t appear to match what is actually happening in the real world. In a recent Twitter poll, over 80% of followers stated that the house price indexes do not reflect what is happening in their local area.

The UK property market is in a very precarious position yet over the past couple of weeks a mortgage war has broken out with lenders seemingly desperate to lend money.

Last week I applied for a mortgage agreement in principle and was shocked to be offered a salary multiplier of x 4.75! This was higher than I was offered during the peak of the market and is a worrying sign that potential buyers may be tempted and facilitated to overpay in this risky market.

What will happen to house prices in 2024? How much will house prices fall in 2024? Let us know your house price predictions in the comments below!

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• Follow me on Twitter for my latest thoughts: https://twitter.com/darrenthedegen

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In this week’s video I want to talk to you about a recent event that could potentially have a huge impact on the housing market and how house prices perform over the next year or two now I’m not referring to the wonderful government scheme to offer 99% mortgages

My very succinct feelings on that scheme is that it is unlikely to ever see the light of day the Tories are offering this as a vote winner and it seems extremely unlikely that they are going to win the next election so it’s very unlikely that policy is ever going to

Come to fruition now I’m not saying that maybe labor or another party won’t come up with an alternative scheme that could have an impact on the housing market and if that ever does happen rest assured I will be making videos to explain the the potential impact of those schemes as and

When they are announced but what I want to talk about today is something that has happened to me in the past week and it has seriously opened my eyes to something that I thought was very different over the past year but let me explain as we go through the video and

There’s also something coming in April that combined with this combined what’s happened to me over the past week potentially does change my outlook for the housing market or at least part of the housing market over the next year or two so just firstly I just want to very

Quickly recap my position so that anyone that’s new to the channel can understand the process I’m going through at the moment and why I may have done what I’ve done over the past week so I sold or we sold our family house what turned out to be the peak around about August

September 2022 and at that time we were supposed to be buying another property but within the last week or two of the transaction it became clear that that property just wasn’t going to be viable um and I’ve got a video on the channel that coveres out in a lot more detail

But to the the long story short is that we decided not to buy that property and instead of trying to find another property the state of the housing market at that time was one of the factors that we took into consideration when we decided we’re going to proceed with our

Sale and move into a rental property so that’s what we did we sold at the peak and we’ve been in the rental ever since and we’re sitting on the sidelines potentially waiting to buy either for ourselves or as we quite like where we are we may stay where we are and buy

Investment properties instead we haven’t decided yet we’re just continuing to watch the market and assessing it as we go so that’s my position now last year we viewed one property in the entire year because I felt that pretty much all of the properties that were being listed

Did not reflect what was happening in the housing market but as we got towards the end of 2023 we did start to see a kind of a smattering of listings that did offer value you know the sort of property that if you could get at the

Price it was at it felt like it was decent value but also offered you some downside protection so that if the housing market continued down it wouldn’t be a major issue so that’s where we were now as it’s January the housing market activity has supposedly picked up but really when you look on

Right move other than an influx of listing on boxing day it’s still very very slow and listings are still well down from where they were a few months ago but over the past week or two we have viewed two different properties one was a slightly cheaper property and then

One was a much more expensive property so we viewed the cheaper property first we thought it was very interesting potentially had long-term potential to develop it into what we wanted it to be it wasn’t what we wanted to start with so I thought you know what let’s reach

Out to the bank let’s just see what they will lend me and this is kind of the the main takeaway from this video this is the thing that shocked me the most now my position I am self-employed I’ve got my own limited company and it’s the same

For my wife as well she’s got a limited company now historically ever since the global financial crisis in 2008 and 2009 Banks they haven’t liked lending to us that are self-employed and they make us jump through a lot more Hoops for example if we want to get lending from a

Bank we normally have to provide two years worth of accounts whereas someone that just wants to uh someone that’s employed maybe can get away three to six months of pay slip so I’ve had these weird situations in the past where when I’ve started a new business I can’t get

A mortgage from a bank because I don’t have two years of accounts but some of the people that I employed at the time that I gave three months pay slips to they could go and get a mortgage so it’s a very very strange situation but the

Key thing you need to know is that Banks don’t really like lending to people that are self-employed but I wanted to know how much they’d lend me regardless to see how much buffer we’d have to develop that property as we’d like to do so they

Asked me how much I’d want and I said right I want x amount thought that should be well within the uh reasonable request and sure enough they come back and said yeah we can give you that absolutely fine and then I said to I’m just out of Interest what’s the maximum

You’ll lend me and the guy said well technically we don’t really tend to you the maximum you have to ask for an amount and then we either approve it or disapprove it um and then I spoke to him for a little bit longer and then he just

Told me straight out he told me how much I could borrow and I was shocked because I’ve made videos on this over the past year how affordability should impact the amount of money that people can borrow but they offered me more last week than what they

Offered me at the peak two years ago and actually at the peak two years ago I I was actually earning a bit more than I am now cuz I I was doing a bit more work whereas now I don’t really push as hard so I’m not actually earning as much so I

Said to him how come you’re offering me that much and he said well our standard multiplier is 4.75% joint income which in this market I was shocked cuz even a year or two ago getting four or four and a half was kind of the norm and when you consider the

Inflation that we’ve seen and you consider the interest rates have gone up so much the fact they’re now offering 4.75 affordability and this is for people that are self-employed and this is from a big provider as well this was from First Direct and the reason I called them they were Market leading

Last week at 3.99% I think they were there were some that was slightly cheaper but they had like ,000 or500 upfront fee whereas First Direct was only £499 so that’s for me why they were the market leading provider so that has now made me rethink a little bit about

Where the housing market could go because I’ve always assumed that affordability for most people is going to be crushed but it still seems that the banks are very very keen to lend a very large amount of money and this I actually went through an affordability

Check for this as well so I spent a good well I spent 90 minutes on the phone which is absolutely ridiculous but the actual affordability side of things took about 30 minutes so they took in all of my accounts for the past two years my wife’s accounts for the past two years

All of our outgoings and all of that they’ve already looked at the affordability side of things and they basically said look as long as your accounts back up what we’re telling you and the survey passes and you’ll get the mortgage so this was a full affordability checked agreement in

Principle just a quick on that can we just pick a simple name for this we have different mortgage providers it’s either an agreement in principle a decision in principle a mortgage in principle it’s an iip it’s a dip it’s an MIP I mean just pick one surely just call it an AIP

Or just any one of them but all three of them just confuses it for people especially people that are new to the market so they’ve given me this huge iip now which means I can go and buy a house at a much greater value than I thought I

Could and that’s kind of why I then viewed a second more expensive expensive property last week which is more towards the higher end of the budget as as typically you do when you’re buying a house as it is usually the most important purchase in your life you

Stretch your budget and even for me someone that is fully aware of the state of the housing market at the moment and that is in such a precarious position and that things could easily head south very quickly from here even I am tempted to buy at the moment so if I’m in this

Position with my knowledge and I’m thinking this what is your average person that isn’t following the housing market as closely as us and the people watching this video and people that fully trust the house price indices which don’t actually paint too bad a picture of what’s happening in the UK at

The moment what sort of decisions do we think they’re going to take are they really going to sit there being offered a big mortgage and go you know what actually I’m going to sit tight and wait for a crash as I think that’s going to happen when all of the HPI are showing

That a crash isn’t happening and I know obviously we talked about in previous videos that we don’t fully trust the HPI I’m going to come come back to that in a moment but I just wanted to share that initial event with you and how this can now combine with something else that’s

Coming in April to potentially have a big impact on especially the lower end of the housing market so keep in mind banks are super eager to lend at the moment that’s why they’re slashing rates that’s why they’re offering crazy multipliers still despite the risk that is clearly there to both the economy and

The UK housing market so that’s the background you need to keep in mind and then going forward as of April we get the new minimum wage and the new minimum wage is £144 per hour now this isn’t a criticism of the minimum wage or people on the

Minimum wage what this is is a recognition of the potential impact this could have on the housing market when you combine it with basically these relaxed lending policies that we’re seeing at the moment so if you take two people because pretty much no one’s buying a house on their own at the

Moment are they if you’re going to buy a house it’s going to have to be with your partner so two people that are on £144 per hour if they work fulltime say they’re on a 40 hour week that’s about TW I think it’s 22 or is it 24 I’m going

To have to double check them out let’s just say 24,000 per year if they’re doing a 40h hour week on minimum wage so between them that’s 48,000 now if you pop that into a calculator let me just bring one up I don’t know if you guys can actually see

This no it’s not going to show you at the moment I’m just going to run the calculations here so it’s uh so 48,000 Times by 4.75 228,000 now the average deposit for first-time buyers it varies depending on who you believe but it’s anywhere it’s can be around about 25% which is often coming

From the bank of mom and dad which would take you pretty much to the average house price in the UK which is around 280,000 so when you take those two things into account that the Min minimum wage is going up in April and the banks or the mortgage providers are still

Lending freely is the downside of the lower end of the market limited because that that lower end of the market you’ve got the firsttime buyers wanting to buy you’ve got the buy to let landlords that are investing the ones that are cash buyers and not relying on credit and

Then you’ve also got the downsizers as well the people that are selling the big property so there’s a lot of pressure and a lot of demand at the lower end of the market and we’ve spoken over the past couple of months about how the house price indices don’t seem to be

Reflecting what we’re seeing happening in the housing market and I think this potentially could explain it and we’re not going to know this for certain unless one of the HPI actually shows us their full breakdown of calculations and how they weight different property prices but I think potentially what is

Happening is that historically there’s always been more transactions at the lower end of the market it makes sense houses that go for 200 300 400,000 they’re going to sell a lot more frequently than places that sell for a million pound and if the indices have been developed in that environment over

The past decade or two that there’s been more transactions at the lower end of the market then their indices should be weighted towards the lower end because that is where the majority of transactions are if they just did a fixed number from each tier of the market it wouldn’t truly reflect what’s

Happening with house prices so these indices are potentially weighted towards the lower end of the market and if what we’re seeing over the past year or two is that those lower value properties are still continuing to transact but because of buy to let demand because of firsttime buyer demand because of

Downsizes in demand that part of the market hasn’t really Fallen that much but the top end of the market which is more reliant on expensive mortgages has come down substantially it’s not being truly reflected as the indexes are still weighted towards the lower transactions which are actually holding their value

So that is one Theory it’s not fact it’s just something I’m thinking about at the moment based on this new information so I just wanted to share it with you with you guys so you can make your own decisions as ultimately we’re all making our best guess in this market as to

Which way things are going to go you guys clearly know where I think house prices are heading but certainly what’s happened over the past week or so has made me reconsider maybe how we are going to get there and which properties are going to be impacted the most now if

You want to see why I think inflation is about to make a shock return I’m going to pop up a video now and I’ll see you guys over There