Is waiting to buy the right idea?

I'm not sure about my thinking on this one, so would appreciate some views from others. I also appreciate I make some big assumptions.

At present:

• House prices are too high.
• Borrowing is difficult and costly, unless you have a substantial deposit.
• Those with adverse credit histories are deemed more of a risk.

Let's say house prices will fall.

Developers will continue to develop new build properties.

Shared ownership and key worker schemes will continue to exist.

Banks will eventually free up the ability to lend at decent rates again, to low risk customers.

First time buyers will be keen to continue saving whilst renting, despite a possible falling interest rate on their savings (but they will still be making some extra money on their savings).

Sellers will want to avoid negative equity where possible, and so will be reluctant to sell at a loss (i.e. those who have purchased a house in the last few years will not want to sell unless absolutely necessary, because the chances are they will lose money in a falling market.). These sellers are likely to include first time sellers, who bought a property as a FTB, only to see its value drop. They are finding it hard enough as it is to make ends meet, so they will not want to sell at a loss.

Sellers who purchased their property many years ago still stand to make a profit - albeit relative, given the prices of all properties. They may be willing to sacrifice a smaller profit for the next step up the property ladder.

First time buyers find it difficult to get onto the property ladder, as sellers are relucant to sell at a loss. The only properties FTB's could purchase would be through new builds, which are typically overpriced, reposessions and shared ownership schemes. Suddenly demand outstrips supply, because the whole market is not available to the buyer, and with that comes a gradual rise in house prices again, as sellers realise they can price a bit higher and accept offers nearer to their asking prices. Then we're back to where we were with inflated house prices (perhaps not as high as today, but along a similar vein).

Yes, some sellers may still sell and accept the loss for a move up the property ladder, but the way things are going, all I can see is the property market stagnating, unless all sellers resign themselves to the fate that prices have dropped i.e. it effects the whole chain, and therefore whilst a seller may not get as much money as they wanted for their property, that money can then go further when buying the next property up.

As I said, I appreciate I make some big assumptions, some of which may not be true or cannot be predicted. I think there is a wider picture to also consider, such as the financial markets, which have caused our current situation of falling interest rates but higher mortgage rates.

Feel free to pick apart my thoughts - I'm just interested to see what people think.

Thanks.