I was told yesterday that there's a bizarre mini-boom on at the moment because quite a lot of people got mortgages agreed and are desperately looking for a house to put them on before they expire.

They might that rather difficult due to the hosuing chain likely being broken due to the other circumstances referred to above, plus many previously reasonable mortgage deals being suddenly withdrawn and now are being replaced with ones that are 2%+ more and likely with more strngent Ts & Cs.

Unfortunately the increase in monthly mortgage payments and deposits required aren't balanced out (yet) by big reductions in house prices. Unfortunately when that comes, so will the big recession, which means a lot more people won't be able to afford to buy anyway.

The same goes with second hand cars, though perhaps not for new ones as much, because of the ongoing logistical problems, energy worries and parts shortages. I'd bet on new car prices dropping 10-15% eventually, unless and until the other issues resolve themselves.

I agree that second hand car prices will more quickly fall back to their historical norms and stay there.

I found out today JLR Halewood plant suspended production from the start of September and won’t resume until the end of October due to part shortages. That factory alone is over 23,000 units behind target this year. It seems some manufacturers are far more affected than others, The local Renault dealer was quoting 1-3 month wait for any model not in stock except electric cars this week, If you want a electric Zoe it was ‘get on the list’. Dacia wait was 3-4 months for all models.

I was watching a video review on YT of the Suzuki Ignis (from last month). One of the comments was someone saying they'd had one on order for 7 months now and still no sign of it.

I have also noticed that on the Motability website for the last two quarters, there is no sign of either Ignis or Swift on the car search page.

Crudely - for a second-hand car to become available for sale, a new car needs to be sold.

Exceptions - folk giving up driving (age, health or affordability) being broadly offset by folk starting (young or increasingly prosperous).

Prices of both s/h and new cars will remain high until deliveries of new cars match demand - still in short supply post pandemic with some supply chain issues still unresolved.

Inflation and increased interest rates may dampen demand with folk less inclined to spend money upgrading, and some dropping off the car ownership ladder completely.

IMHO it will be 6-12 months before there is an appreciable fall in prices. It will be gradual, not precipitate.

Bear in mind that (again very crudely) changing prices impacts on the difference between the sale and purchase - cost to change.

Assume today - replacement car costs £20k, trade in value is £10k, cost to change is £10k. Prices fall (say) 20%.

The deal then becomes replacement car £16k, trade in £8k, cost to change £8k. Impact on cost to upgrade is £2k - whether this is important or not is a personal finance issue.

After casually browsing Auto Trader, I must say I did not find any proof that car prices coming down - yet.

Of course, things may change very soon. We had 4 chancellors in 4 months and possibly another PM very soon. So anything is possible.

80% of cars are bought on PCP and fewer people are now signing up for it.

www.telegraph.co.uk/money/consumer-affairs/car-fin.../

In case you can't go past paywall, here is the text.

Motorists have shied away from leasing contracts for new cars amid concerns about high inflation and soaring interest rates.

A report by the Finance and Leasing Association, a trade body, found the number of cars purchased on finance dropped by 5pc in September compared with the previous year.

Second hand car purchases were 1pc higher, she said, but the number of new cars bought on finance dropped to 82,831 – 13pc lower than a year ago. It was the lowest September activity figure for new cars since 2010, the report said.

Geraldine Kilkelly, of the FLA, said the fall in drivers buying new cars on finance was because of disruption to the supply of new cars and drivers’ “weakened confidence” over the outlook of their finances because of inflation and interest costs.

Car finance payments, also known as personal contract purchases, are used by 80pc of drivers, according to The Car Expert, an adviser.

PCPs function similarly to mortgages – drivers take out a loan a car’s value, making monthly payments with interest over a two- to four-year term.

At the end of the term, a driver has the opportunity to make a “balloon payment”, paying off the remaining value of the car, in order to own it outright, or return the car to the dealership, after which they typically take out another loan for a different car.

However Stuart Masson, of The Car Expert, said increased cost of living pressures would force thousands of drivers to default on their payments as “household budgets simply don’t add up any longer”.

He said: “For most households, your car is either your largest or second-largest monthly expense alongside your mortgage or rent.

“Sales are down, the number of deals is down, but the amount of money people are borrowing is going up – but if you get into trouble halfway through your term, you've got a mountain of debt.

PCPs are more expensive, on average, than leasing a car without the option to buy it outright at the end of the term.

John Wilmot of LeaseLoco, a leasing platform, said: “For some, the appeal of PCP finance has been the option of buying the car at the end of the deal term.

“But in the current economic climate, where households are feeling financially squeezed, many don't have the money or want to make the final payment at the end of the contract, and are more likely to just give the car back, especially with used car prices starting to soften again.”

"...especially with used car prices starting to soften again.

If demand for PCP deals declines then those people will buy a secondhand car - assuming they still want a car at all. So I think the consequence of this might be secondhand prices firm up even more?

And if less people are buying new cars then there will be less second hand cars coming onto the market.

Harder economic times means that people who would have bought new cars cannot so they look for secondhand cars. However it means that people who would have bought secondhand also have less spare money so they will move down market too. Basically the whole market is going to shift and the people at the bottom who were stretching to even afford a banger will get squeezed out altogether. Another thing is that some people who bought on finance will not be able to make the payments and will have the vehicles repossessed. These are unlikely to be well maintained cars.

Housing market currently stalled. Besides supply & demand, availability of cheap credit is what fuelled housing market growth. After interest rate rises the affordability is far less. In every house chain, there is a first time buyer (or someone not selling) which props up the upward chain. If bottom falls over, the whole chain collapses. This has exactly happened to housing market.

Same for cars. The dealers may reduce PCP payments by increasing future value amounts but that means sometime in the future they will be flooded with cars returned by drivers at end of PCP deals. Often people P/X their cars for something better. That P/X car is bought by someone down in the chain with less budget. If people don't get good P/X value, they may continue to keep their cars (until broken down). This will reduce demand on higher end cars.

Unlike houses, cars are depreciating assets. Currently a decent SUV costs £40k+ which is too high IMHO.

Unlike houses, cars are depreciating assets.

Depends where the house is. Some houses in, ahem, undesirable areas of some northern towns became almost worthless during the lifespan of one of my mortgages.

Depends on the car. I wish I'd bought and cared for a second hand Ferrari Dino instead of a nearly new Triumph TR7 in 1981.

nowhere near £40k.

There are always exeptions but generally cars lose value and houses increase.