The UK's Inflation Crisis: Will it Bring Down the Housing Market?

With inflation still stubbornly high, the Bank of England is set to hike interest rates further and possibly send the UK into recession. So in this video, we break down the economic and political impact of this, and why it's bad news for Brits and Sunak.

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00:00 Introduction
00:48 The Latest Data
02:43 The Economic Impacts
05:05 The Political Impacts

[veronica.baker]

Because so many people overpaid for homes even while loan rates were low, I believe there will be a housing catastrophe because these people are in debt. If housing costs continue to drop and, for whatever reason, they can no longer afford the property and it goes into foreclosure, they have no equity since, even if they try to sell, they will not make any money. I believe that many individuals will experience this, especially given the impending mass layoffs and rapidly rising living expenses.

[nicolasbenson]

fear a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k, but I'm not sure on how to mitigate risk.

[Raymondjohn]

Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.

[mrmattrg]

Love how the US and UK are breaking all economic assumptions in completely opposite ways

[mcginnnavraj]

Every crash/collapse brings with it an equivalent market chance if you are very well informed and equipped. I've seen folks amass up to $800K amid crisis, and even pull it off easily in an unfavourable economy. Unequivocally, the bubble/collapse is getting somebody somewhere rich.

[RedfishUK]

Sunak has another problem with "halving Inflation"
Polls suggest 60% of voters think "halving Inflation" would mean prices were the same or less than last year, only 23% understand they would still be going up

So say he squeaks in on this, and claims to have achieved it, voters will be disappointed

[KjV]

*The comments:*
50% people
50% investment scam bots

[jackw]

I wonder if there is a correlation between wages increasing and inflation coming down.
The bottom 80% need more, the top 1% need to cut back

[leel]

I am a homeowner, but I would happily see the housing market go down and people who hoard properties be penalized if it means young people can get on the ladder. Nobody should be allowed to profiteer on housing.

[lorenzo]

Maybe.. just maybe cutting off your primary trading partner wasn't the greatest decisions ever made

[JaymisHawk]

Missed one major issue here.

The BoE increasing Interest Rates would only cause Inflation to decrease if it was Demand Based Inflation.
The UK is currently experiencing Supply Based Inflation.
This can only be managed and resolved by Government intervention.

So yes, the Govt and Sunak are directly responsible for our current predicament due to complete inaction.

[scepticskeptic]

heres what will happen .. average joe who works hard wont get a mortgage and all the rich people will hoover up the houses leaving us as a nation of renters other than those who already have one

[gbt]

It’s really gross how financially tough life has become for regular people. I’m earning a lot more than I was a few years ago but I don’t feel like I’ve become any more well off. It’s almost impossible to save money and even if you do the value of your savings is being destroyed by inflation. It has always been hard to become financially free, but now it seems impossible.

[ianworley]

People have gotten so used to low interest rates and low inflation for decades. They'd come to believe it was somehow intrinsic and we lived in a benign capitalist system. I lived through the 80s in the UK. Four million unemployed, with double digit inflation and interest rates, that lasted over a decade. At that time when we were part of the EU, politicians were far more capable and intelligent than the intellectual dregs and criminals now in power. They had much more control of the economic levers of power and were far, far less corrupt than today. We're royally fucked for the foreseeable future. Batten down the hatches people, we're in for hard times and it's going to get a lot worse.

[talideon]

This is Brexit coming home to roost. I can remember telling people back when the referendum was kicking off that the UK is heavily dependent on food imports and the inevitable outcome would be massive inflation in food prices. Well, as the UK is finally disengaging from the single market, that's exactly what happened. And I wasn't even thinking about migrant labour at the time and how heavily dependent British farmers are on it for vegetable and fruit harvesting.

[sad_bean]

Inflation has nearly crippled me and my uni mates. Our student loans are being stretched thin in order to afford rent, one of my friends and I are having to work around 6 days a week (to ensure we can afford the higher rents for next year). It's causing us a bit of an issue. Even though we aren't home owners, inflation is affecting us harshly and we all have started making plans to move back in with our parents after uni simply cause we aren't likely gonna be able to afford any rents. Fingers crossed that it somewhat gets better over the next year.

[EdgyNumber]

*Problem is, inflation in the UK* is being caused by supply side shocks, not demand side. Hence the Brexit mention.
Interest rate hikes will barely make a difference.

[MultiKommandant]

I feel like it's a bit misleading to still be calling it the Housing Market, first thing most people think when they hear it is House prices themselves as opposed to merely the associated renting or mortgage payments. My heart goes out to those affected, I can't help but feel like this is just the tip of the iceberg in terms of our average quality of life collapsing.

[erint]

What about housing cost help for renters? It's us who are hardest hit, and in the UK as usual, the discussion is about protecting boomer home owners, not everyone else...

[getnohappy]

Months ago, it was practice (even on the BBC!) to quote private-sector wage rises with AND without the banking sector, when they did that non-banking wage rises were something like 1-1.5% less than the overall figure. Wonder why we stopped doing that...