Survey reveals housing ‘crash’ fears

Over half of respondents believe a housing market crash is coming within five years, rising to two thirds fearing a crash within the decade.

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New research reveals wavering public confidence in the housing market with fears of a crash coming within the next five years – if not sooner.

An online survey of over 2,000 British adults found that while just over one in four respondents (28% when excluding “don’t know”) had faith in the stability of the market, saying there would not be another crash in future, with a substantial proportion less convinced on the ability of the market to avoid another boom and bust cycle.

In total, two thirds of respondents (66% excluding “don’t know”) predicted a crash within the next decade, but many feared a  potential crash was even more imminent, with one in four (24% excluding “don’t know”) saying there will be a crash within just two years – and 6% saying it could happen in the next 12 months.

With sales slowing across much of the UK and prices failing to maintain their upward momentum, property marketplace TheHouseShop.com thought the time was right to assess the future of the UK housing market.

Overall housing market activity is now well below pre-crash peaks, with sales volumes in England and Wales down by more than a third from 2006 to 2016.

In the year from 2015 to 2016, sales transactions declined by 7%, in some part due to increased stamp duty charges pushing up moving costs.

Another potential cause of the decline in transactions is that the long Buy To Let boom has meant that many homes bought as pension investments may not appear on the market again for decades – causing a drop in the churn of new homes coming on and off the market

New YouGov research commissioned by TheHouseShop.com has found that public confidence in the future of the housing market is wavering – with more than half of Brits (53% when excluding “don’t know’s”) believing there will be a crash within the next five years.

Three quarters (74% excluding “don’t know”) of the millennials surveyed (aged 18-34) believe there will be a housing crash within the next decade, with almost six in 10 (58%) saying it could happen within five years.

Younger millennials in the 18-24 year old age bracket were most convinced of the likelihood of a crash, with just 14% saying there would not be a crash in future, compared to well over double that amount (37% excluding “don’t know”) in the over 55’s age bracket.

In general, the results show that as age increases, the perceived likelihood of a crash decreases, with older generations more confident in the ability of the housing market to avoid another boom and bust cycle.

Nick Marr, co-founder of TheHouseShop.com, said it wasinteresting” to see such a high proportion of the younger generation believing that a crash within the next decade is inevitable.

“Young people, especially the millennial generation, have been the ones least benefitted by the strong growth in the housing market over the past few decades – with many finding themselves priced out of homeownership altogether as they are forced into expensive rental properties with little potential to save for a deposit.

“I imagine that many young people are in fact hoping for a crash, so that they can snap up cheap properties during the low point of the resulting crisis and then enjoy the same appreciation of value that saw their parents accrue substantial personal wealth from property ownership.

“While price growth is of course desirable in the housing market, we have now reached a point where a sizable number of properties in the UK are simply unaffordable for first time buyers – even for those on relatively high incomes.

“The public are clearly struggling to see how the market can continue on its current trajectory and still remain accessible to aspiring homeowners.

“It seems highly likely that we are due for some form of market correction in the coming years to prevent prices spiralling further out of control – whether that comes in the form of a steady and controlled adjustment or an all-out crash is yet to be seen.”

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