In January 2023 everyone was talking about the property market crashing, but it’s January 2024 and nothing’s happened…or has it?
In this video, we’re going to look at why a crash was forecast for 2023, the signs that it might now have started… and how you can use this to your advantage.
So let’s have a look at what happened in 2023, why the crash may have already started and how this could potentially be great news for investors…
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We’d love to hear what you think in the comments below. You might even have a topic you’d like us to cover in the future – if so, comment it below.
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Flashback to January 2023 and everyone was talking about the property Market crashing but it’s January 2024 now and nothing’s happened or has it in this video we’re going to look at why a crash was forecast for 2023 the signs that it might now have started and how you can
Use this to your advantage but in order to do that I first need to take you back to 2021 and tell you the story of Dave imagine Dave went shopping for a house in 2021 with a monthly budget of 1,000 for his mortgage leaving him enough left over for bills and living
Costs with enough of a deposit and a clean credit history Dave’s conversation with his mortgage broker would have been very positive he could have potentially borrowed with an interest rate as low as 2% so he could have borrowed 250,000 and still hit his monthly budget assuming that he was repaying over a
25-year term but Dave just couldn’t quite find the perfect house so he decided to wait until 2023 so what happened well by then mortgage rates had gone up a lot that 2% borrowing was long gone Banks were now asking for 5% so with the same ,000 budget he couldn’t
Borrow 250,000 anymore he could only borrow 175,000 but of course that wasn’t just true for Dave it was the case for everyone who wanted to buy a home with a mortgage and it was also true for investors because if they bought a property for the same price but with a
Much more expensive mortgage they’d make a lower rental profit or even a loss so logically what would you expect to happen well you’d expect house prices to fall because the prices that houses were changing hands for in 2021 was supported by the amount that buyers could afford
To borrow so if buyers could no longer borrow that much their buying power would decrease meaning that any seller who didn’t want their property to just sit on the market would be forced to cut the price and of course lots of homeowners might be forced to sell because their own mortgage rates had
Gone up and this is why all the experts thought a crash was inevitable in 2023 with some predicting house prices would go down by 10% or more but did it happen no not even close in fact up to November 20123 property prices were only down by around 2% according to Nationwide and 1%
According to Halifax so the next logical thought would be that crash would just be delayed into 2024 right well no weirdly those exact same experts who are predicting a 5 to 10% crash in 2023 and now saying that the market will go down by no more than 3% in 2024 which seems
Crazy because there are three big reasons to suspect that 2024 could be the year that the property Market finally stops Defying Gravity let’s imagine Dave did in fact buy a house in 2021 with his, mortgage budget if he borrowed on a 3-year fixed rate deal he’d be having some sleepless
Nights right now because he’d be due to refinance this year when he does he’ll probably see his payments jump from 2% up to maybe 5% which means he’ll need to pay an extra £42 per month that’s almost a 40% increase on his previous budget if he can’t afford that well he’d need to
Sell the house in a hurry and he wouldn’t be alone between now and the end of 2024 about 1.9 million homeowners will come to the end of their cheap mortgage deal 2023 was supposed to be the year that the UK fell into recession but even though the economy didn’t exactly power
Ahead it didn’t collapse in the way that the bank of England had originally expected and as a result people seem to have been lulled into a full sense of security however the bank of England is still anticipating a 50/50 chance of recession in 2024 and what happens during recessions people lose their jobs
And when people lose their jobs they’re unable to pay off their mortgages and might need to put their house up for sale before the bank takes it off them so if more people are losing their jobs and fewer people can afford their mortgages a lot of people are going to
Need to sell their homes and these people are not going to be selling their homes in a comfortable position they’ll be Panic selling trying to get the house sold quickly so they can bring down their living costs so it’s no coincidence the average discount negotiated of house asking prices has
Reached its highest since 2018 because not only is there more Supply and less demand but sellers are willing to agree to discounts in order to get deals done faster so when you consider Rising interest rates a chance of recession and record discounts on asking prices it really does sound like the perfect storm
For prices to plummet so why is no one predicting a crash for 2024 do they think the market has adjusted better than expected Ed or have they failed to spot the storm on the horizon well here’s my take on it the crash is already well underway here’s an example
To explain what I mean imagine in January last year I’d offered you a job for £50,000 a year we started working together and things went well so in January this year you come to me to negotiate your pay but I’m only willing to offer you £50,000 again now I haven’t
Reduced your salary but technically you are earning less money because the price of everything around you has become more expensive food electricity bills transport bought everything so your £50,000 is worth less it might not seem like it but I’m asking you to take a pay cup and this is what’s happening now
With house prices everything’s been getting more expensive but house prices have stayed pretty much the same so if you adjust the numbers for inflation house prices aren’t down by 2% like some sources claim they’re actually down by 15% and in the coming year if prices do
Fall just a little bit like the experts predict and everything else continues to get more expensive then we could be looking at a 25% drop and we can definitely agree that that is a crash only it’s a silent crash because you don’t see it so is it time to panic well
No because from an Investor’s point of view this is the best possible outcome and 2024 could actually be one of the best times to buy in recent history but why is that well firstly although the national average tells you that prices have dipped by 2% or so in truth that’s
Pretty meaningless because it’s impossible to buy the average UK house in fact in 202 3 when the average price fell prices actually increased in 22% of the country including parts of the Northwest and the Midlands so whatever happens in 2024 on average that doesn’t mean it applies to you you can buy in
One of the areas that’s primed for further growth and avoid the areas that are most vulnerable to the risks we’ve described secondly if you were taking out a mortgage 3 years ago at an interest rate of 2% you knew it was going to go up at some point it was just
A matter of time how much time you couldn’t know whereas if you buy at today’s rates of around 5 to 6% it’s unlikely to increase that much more so you know that if the figures in your investment work today they’re likely to still work 5 10 15 years from
Now thirdly while the market is uncertain and property prices are heading downwards rents have been rising fast and while they might not keep growing as rapidly as they have been over the last year there’s little sign of them slowing down so you can take advantage of uncertainty in the market
To do a deal that works well based on today’s rents with your mortgage pretty static and rents Rising you can expect your income to grow and grow over time fourthly if you borrow £300,000 from the bank for your mortgage that debt stays the same forever £300,000
Granted you need to pay interest on that mortgage but that should always be covered by the rent you’re receiving it’s not an extra cost that you need to budget for however based on centuries of data we can safely predict that property prices will go up over time they go up
In 2024 who knows maybe they’ll defy the experts and they will go up or maybe the impact of higher rates and a potential recession will send them down further than expected but over a Time measured in decades well they will go up even if the price increase is only in line with
Inflation so 20 years later once you’ve paid the mortgage off and the house is yours it’ll be worth way more than the original 300,000 that you borrowed from the bank so if you play the long game and map out your investment for the next 10 into 20 years as long as you’re not
Forced to sell at a bad time it’s really hard to lose so is 2024 the worst year to buy a house well not everywhere in some parts of the country it could be a great year to scoop up deals because the supply of houses on the market has
Increased some sellers will be under pressure to sell quickly and there’s still plenty of uncertainty that will keep buyers out of the market throughout the year giving you less competition however in other regions of the country 2024 could be a nightmare year to invest so to find out which regions they are
And avoid a bad investment check out this video here
46 Comments
No. It’s like trying to time the stock market. Buying at any time is fine, as long as you plan on keeping long term.
Could you please elaborate on how it is the best time to buy when mortgage monthly payment (@4.9%) it is higher then monthly rent ?
Mortage monthly payment should be 80-85% of your monthly rental payment so you can cover fees and left with a 5% profit
Biggest thing you forgot for 2024…. election and the incoming Labour government will surely rock the market for investors who will more than likely sit tight for a short period to see what happens
No, the recent price dip mean its a good time to buy if you're willing to invest long term. Even if the incoming government inceat heavily in building social housing, it will take a while before it has a significant impact on the rental market.
I agree that some regions are still OK to invest in. However, that's getting very limited. I'm here in the South East, and I think it's a lunacy to bury your money in any property. The ceiling of additional equity growth has been reached. This was enormously accelerated by the +25% increase that happened in just 2 years during Covid. That should have been spread over a number of years, but here we're…Regarding potential "hotspots" in the North, that's probably OK for the rental yield. But not sure about capital growth…That would imply they'll reach the levels that we currently have in the South East? Will salaries in the North match the salaries in London? Hmmm….
UK average house price in Aug 2021 was £260,575. in Jun 2022 it was £286,436 and in Jul 2022 they were £292,118. The ONS in the July 2022 Bulletin reported a yearly house price rise of 15.5% and a monthly rise of 7.4%. Do the maths and the real rise was 11.4% for the year and 1.9% for the month. That is a 400 billion mis-reporting in 1 month when things were good. The ONS now say due to a 22% reduction in house sales they are only able to process 50% of usual volumes. If the ONS was a large company they would be charged with fraud. This is a Ponzi con and it must be outed. Look at any postcode by going to Land registry sold house prices and you will see any smart person is getting a 30% reduction and the rest are being fooled by estate agents. Get 30% off (the real low estimate and not the asking price) or walk away.
More selling pressure in 2024 than 2023 due to refinancing demands. We had a big downturn in consumer spending too on the recent consumer print.. this is a sign that all isn't right in the economy and then a new variable might kick off which is rising unemployment.
Canada is running a few months ahead of the UK. We're in a technical recession, inflation has peaked and we expect interest rates to drop in the summer. Experts said our over-inflated housing market would crash, it didn't, it crept up. House prices dropped in real terms, as they grew less than inflation, but rental prices shot up and are only now coming back down. The impact from the re-financing of low-rate mortgages didn't hit, people just found the extra money or went off the high street. We all know the rates are temporary so people are just hanging in. Nobody is expecting a rapid return to the very low rates of 2021, but everybody is waiting. It's like a game of musical chairs, the music is playing but few people are moving around. Give us an interest rate drop or two, or even shave 1% off the top and we'll probably re-ignite the market and house prices will start rising again in real terms.
You need to distinguish between average house price and average transaction value.
Fewer properties have been selling at the lower end of the market so the data is skewed.
I have never lost a penny on the 3 houses I’ve bought and sold since I bought my first in 2007. There’s never a wrong time to buy.
Thay have fallen a lot in real terms
This is a comedy material. The lower segment of the market is not moving anywhere, even after 15% reductions (have been keeping an eye on Rughtmove last 9 month). The upper segment (i.e. wealthy) dont carentoo much whatbis happening if they want an house for themselves. Figures – aka 2% based on scewed data, issued by the body, which is least willing to send a message out that might affect the buyers' confidence adversely is absolute make up based on "average" between top and bottom segments. Follow moving home with Charlie for a more objective information.
UK average house price in Aug 2021 was £260,575. in Jun 2022 it was £286,436 and in Jul 2022 they were £292,118. The ONS in the July 2022 Bulletin reported a yearly house price rise of 15.5% and a monthly rise of 7.4%. Do the maths and the real rise was 11.4% for the year and 1.9% for the month. That is a 400 billion mis-reporting in 1 month when things were good. The ONS now say due to a 22% reduction in house sales they are only able to process 50% of usual volumes. If the ONS was a large company they would be charged with fraud. This is a Ponzi con and it must be outed. Look at any postcode by going to Land registry sold house prices and you will see any smart person is getting a 30% reduction and the rest are being fooled by estate agents. Get 30% off (the real low estimate and not the asking price) or walk away.
Hello, did anyone notice, the presenter or anchor of this video is not a real person but it appear to be a computer generated animated character, developed by the Artificial Intelligence! Well, if you observe the figure closely it would be evident, if I understand correctly! If you have already noticed it, well and good. But if not, please watch it and do describe your comment on what your reaction is. Thank you!!
Decades of data*
Good point at the end about playing the long-game. Btw, no mention of the election. Historically, many people postpone major decisions in election year until they know the outcome. The housing market will be affected by the forthcoming UK election.
Always buy when you can.
You either pay back the bank… or you pay a landlord who owes a bank.
It's that simple.
3 PROPERTIES – rinse 🚿 the equity and invest else, yields ain’t that much better elsewhere
The house prices are being "engineered" to be out of the reach of the working class, so that when the WEF organize the building of " community" housing,most people will jump at the chance of owning nothing and paying rent to the 1% with their newly introduced credit score!!!
It's coming folks, because you're all fast asleep😴😴😴
Nope. Not if you buy a home and not an "investment" and F you if you're buying houses as "investments".
Do the people not see the correlation between importing useless people and housing demand?
as greedy banks/mortgage lenders/govs rig the market ……………….it all comes down
Everyone seems to assume rates will come down from here. If they don't it feels like a lot of people's plans will go out the window. There's certainly a macro case to make that rates could have a lot higher to go.
As a country we need to stop encouraging buy to let, that combined with selling off the housing stock has broken the housing market. Sure I've profited personally but that doesn't mean the system is right.
We still have a housing crisis or more accurately a LAND crisis unfortunately. Without land you cant build more houses and unfortunately land is very tightly held in the hands of the few. What is more we have a structural problem on land. For example, once developers and very wealthy land investors own land in the UK there is no taxes due or a council tax band for this type of property ownership. Yet in most developed countries around the world there is a tax levied on this type unused land bracket. Sadly, as long as Tories hold the reins there wont even be a discussion
The government pumped £450 billion in quantitative easing. Until this money is taken from the market and sunk into something else, like government investments in social housing, renewable projects, or even HS2, etc. this money will keep propping up inflation for the foreseeable future.
Its time for wealth redistribution. Tax the rich to save them from themselves.
The difference between assets and currency. One increases over time and the other decreases, that's why they invented currency. A big con to keep people on the financial treadmill and creating more billionaires, landlords and rentiers that paper over the cracks for those at the 'lower end' getting squeezed out of the running all together. Even trainee UK doctors are feeling the pinch.
2022 was 2006,2023 was 2007 a year of optimism
2024 is 2008 agreed
should I buy now then as an investor or wait?
Only 30% of UK homes are mortgaged. And only a fraction of those are people who want to move. So there is no drastic event causing a crisis in thr housing market.
The idea lots of people need to sell is rubbish. Most will change their spending habits to maintain payments on mortgage. Only people who have borrowed beyond their means with huge mortgages will have to sell. Stop the fear mongering!
Я гадаю, що падіння або ріст ціни правельно рахувати до національної валюти, а якщо заробітна плата не росте а все подорожчало, то у людей лишається менше вільних грошей, і вони будуть купувати і орендувати дешевші варіанти – а це спричинить зниження ціни або просто зупинить ріст цін.
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In Oz inflation is supposed to be over, thanks to the interest rate hikes.
"In the Country of the Blind, the One-Eyed Man is King" – Erasmus
Respectfully, it is irresponsible to suggest interest rates are unlikely to increase. A study of economics, associated policy, and history dispels such hypothesis. Viewers should be wary of recency bias and make a careful study the period predating the 1990's along with the medium average interest rate since the BOE's inception in 1694. This is reality – not speculation.
Housing market is gonna crash cash buyers let's go
In the past an average annual income will be substantially able to cover the costs of living expenses for a family provided by a single earner. However recently it takes both couples to make ends meet by increasingly working multiple jobs to support their families
Population growth is insane though
Jagx stock
Are you a property expert or just someone reading the newspapers and commenting? If you are an expert how dare you come up with such garbage, Are you deliberately trying to make people overpay. 30% off the real price and not asking price is correct for today if you do your own due diligence. Why are you doing this? It can not be because you believe it to be true!
Unless we get net migration or a surge in unemployment it’s hard for houses to fall while we aren’t building sufficient. Developers are jittery and neither side of the govt want to build in their backyards or their electorate’s backyard. That’s about as popular as IHT. So it won’t be a crash. In the supposedly overpriced south east I just sold in north Surrey in one week for the asking price. 24 mins from Waterloo, detached house, conservation area. You need to unpack the word ‘growth’. There are very few places we can grow stock politically. Perfect storm of exogenous economic shocks, then maybe.
What the hell is Garcia on about. I lost all my £7500 deposit plus another £2500. That was a £10,000 cash loss and that was 25%. Do you work for the ONS or Halifax. They would love to employ you if you do not!!!
Everyone is talking about
UK AVERAGE house price not falling much, but this is only because of common downsizing now, pushing up average price. Does UK get UK house prices by sector, 1 br, 2br…flat and 1,2 …5 br house?
They'll never be a crash as long as the gov keeps allowing millions of illegal immigrants in.
Never a good time to get into the housing market, just get on when you can afford it and ideally buy as big as you can go – if you get through the next 10yrs you'll think to yourself that you wouldn't be able to afford it now (heard that from home owners when I first bought and now I think that myself).
It's not that I think houses are worth their prices but guaranteed over time money gets devalued & thus inflate assets, sadly it doesn't pay to be too prudent, it pays to take on debt (assuming you can get a decent rate) and have inflation (in relative terms) shrink it away over the years.
House price crash will come however this is never immediate – if you look at Ireland after the 2008/9 downturn, the real slump in house prices came 3 to 4 years down the line, long after the banks, developers and estate agency firms had run aground – reason being is that it takes a lot of time for people to eventually run aground and really need to sell.
The longer interest rates remain high, the more likely a house price crash is, this is simple economics – house prices remain well out of reach of ordinary people while thus only the select few can buy – this comes to an end when borrowing costs rise by 50% and mortgage availability runs dry.