Is the property price fall as bad as the 2008 crash? | Property News Of The Month

Is the Property Price Fall As Bad As The 2008 Crash? | Property News Of The Month


This month, a lot of the focus has been on the fall in property prices, and people are concerned that we could see a repeat of the 2008 crash. Our Sales Director, Jack, has taken a look at some of the headlines surrounding the market this month.

How far are property prices going to fall?

Jack: “Some reports are suggesting there will be anywhere from a 2% dip, all the way down to a 12% dip. This is quite a drastic difference. So, the truth is nobody really knows what the price will potentially fall by. During COVID, many expected the property market to plummet, when in actual fact, we saw one of the biggest booms in history. It is important to remember that predictions do not always reflect reality.”

Is now the right time to buy?

Jack: “Personally I don’t think, and I think most people will tend to agree, that we going to see the types of 18% drops we saw in 2008. We are in very different circumstances in comparison, when there was no liquidity. Mortgage lenders didn’t want to lend to people because there wasn’t enough money. Now we’re seeing a very different scenario where mortgage lenders still want to lend. Since the mini-budget, as mortgage rates have come back down to around 4%, it has created a price war in terms of mortgages. Lenders want to lend, unemployment is at an all-time low and people still have money in their pockets.”

What is the worst-case scenario?

Jack: “There are reports saying that there could be around a 10% fall. If we were to stay on the same trajectory as we are now, it would take around 8 or 9 months to fall to that level. Personally, I think that we will still see some sort of fall, but the fall will definitely begin to level out. I don’t think we’re going to see the prices fall as much as 10%.”

“The data above is being compared with only 2 lenders, Nationwide and Halifax on their mortgages, and this does not take into account the full picture of all properties. This month, Zoopla reported that the value of all UK homes is over £10.5 trillion. However, only £1.6 trillion is of mortgage value and almost £8 trillion is in house equity.”

“So whilst this can be taken into account, we should take a look at the completion rate rather than mortgage rates.”

Why should we look at completion figures?

Jack: “Data from the Office of National Statistics show that completion statistics are only down 0.3%. We are not seeing the big dip that many others have anticipated. This is why I don’t think we are going to see those massive dips of 10-12% across the board. Some areas of the UK will experience different sizes of dips but this won’t be consistent.”

“As you can see, the dotted line was their prediction made back in 2022 and so far they have not got it quite right. We are now seeing a dip of 0.3% but this is at a much higher price than was expected. I do think that this will continue to drop, however, I don’t think it will be as dramatic as the 10-12% that the headlines are stating.”

What about asking prices?

Jack: “Asking prices are down around 2.3%, but this is the seller sentiment, which is not necessarily a reflection of what properties end up selling for. So comparing to 2008 like some are isn’t taking into account the full picture as to what we may actually see.”

When is the right time to buy?

Jack: “According to the Telegraph, those that are purchasing in cash and are already in a good financial position have a great opportunity. It’s currently an investor’s market and it is quickly becoming one of the best periods for investment in nearly a decade. So as an investor, it makes great sense to be looking at a buy-to-let property at the moment, there are definitely deals to be had. The rental market has increased dramatically, I have seen that first-hand on our lettings side but also across the board with others.”

How to combat further dips?

Jack: “If the market falls another 5% in the next 5-6 months, then you will need to make up 5% when purchasing a property, for example buying now for 5% under the market value. This is great because if the market only falls 2-3%, for example, then you have got a great deal, but if it does drop 5% then you have at the very least evened out. The data is currently not suggesting it will fall further than 10% and this is due to factors such as a record-low unemployment rate, and banks actively wanting to lend.“

“I believe that if it does dip by 5% then it will take longer than 5-6 months, more towards 11-12 months. To combat this finding a property that generates at least 5% income will mean you will still be up on your investment in a year’s time regardless of potential falls. We are currently seeing rates of 6-10% income so this can be easily met.”

If you leave money in the bank, are you likely to lose money?

Jack: ““The short answer is yes. Savers still face losing hundreds or thousands a year due to inflation, despite prices falling and interest rates for savings improving. For example, on a deposit of £50k, you are currently losing £3,800 per year by leaving it in savings. Whereas, investing this into a buy-to-let property allows you to make between 6-10% return on your investment.”

The bottom line…

Jack: “It’s important that we dive deeper than what we see in the headlines because they can be deceiving. We like to dig deeper into the data itself to help investors understand how the market is behaving.“

“At the moment we are not seeing the massive fast dip that was anticipated. I do think that this potential dip is going to be over a longer period, but you can combat this by either buying below market value or finding a buy-to-let property that will return at 5% or more.”


For more information about buy-to-let, short or long-term lettings, or to speak to one of our property specialists, please get in touch. We are more than happy to offer no-obligation advice and assistance at a time convenient to you.

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