Solution for FTB's MAYBE.

rizla01

Yes. It is the best interest of the UK economy that real property prices drop about 30-40% from peak

I must be missing something here, then.

Prices of property falls and my property on which I put down 100k, mortgaged 150k, which was worth 250k is now worth 180k and I am somehow better off?

O.k. the prop that I buy to replace it is, pro rata, cheaper but till my Mortgage is paid off, I still have to pay the agreed figure no matter how they reduce the interest on payments.

BS isn't going to reduce the capital owed because prices fall, are they?

So how are the majority of house owners going to be better off?

kristianwilliams wrote: »

....so its best for house prices to stay high for the economy......... why? Surely

lower house prices = lower mortgage repayments = more disposable income = more sales / shopping = more jobs = a better economy.

High house prices = high mortgage repayments = less disposable income = less sales/shopping = less jobs = a false/falling economy based on debt = now.

Not sure about those facts KW.

Lower prices would cause lower mortgages and lower payments I agree, but people have already got the mortgage for the amount that was needed then and are paying high amounts already. Falling prices will mean that they are paying more for less value and in some cases end up with negative equity.

Traditionaly property has always risen so over a period of time property prices will catch up to what they were even if they did fall enough to make a difference now, which I doubt.



For the record, I also think that property prices will stabilise by end of this year and perhaps start to rise again during '09, I believe.

The only thing that'll change that is a full blown recession (Which I doubt will happen, personally)

I've got a zany idea. Why dont we just let house prices continue to come down to an affordable level so that people can buy them without crippling themselves, lenders can lend on them without going broke, a lesson is finally learned and there isnt another ruinous boom and bust, and the British public never again have to see sarah Beeny or Kirstie Allsopp on tv?

Nice one.

And you can start by leaving the lovely Kirsty & Phil AND my Sarah out of this.:)

dannyboycey

rizla01 wrote: »

Traditionaly property has always risen so over a period of time property prices will catch up to what they were even if they did fall enough to make a difference now, which I doubt.



For the record, I also think that property prices will stabilise by end of this year and perhaps start to rise again during '09, I believe.

The only thing that'll change that is a full blown recession (Which I doubt will happen, personally)

Yes, but the value of money is not static. It's very well having a hundred quid in your pocket, but if it only buys you a bag of crisps, that's not too clever. It's called inflation.


Based on what? Genuinely interested as this goes against nearly all the evidence that I've seen. Are you sure it's not what you're 'hoping for'?

Again, I'm interested to know why you think this. You only need to take a quick look at the FTSE to see things look far from rosey for UK business in general.

kristianwilliams

rizla01 wrote: »

Not sure about those facts KW.

Lower prices would cause lower mortgages and lower payments I agree, but people have already got the mortgage for the amount that was needed then and are paying high amounts already. Falling prices will mean that they are paying more for less value and in some cases end up with negative equity.

Traditionaly property has always risen so over a period of time property prices will catch up to what they were even if they did fall enough to make a difference now, which I doubt.

True, traditionally property has always risen, and over a period of time will catch up to what they were last year... this rise will probably be with inflation/wages which will result in it taking years, maybe even decades, as apposed to the increases we have seen over the last few years.

Lets take your first point now. People bought houses at a high cost, they should have factored in house prices going up AND down. Anyone who did not, with the vain hope they always increase all the time, are the same people who buy shares in a large business because "they always go up".

The fact they are paying more than the house is worth is argumentative. They thought the house was worth what they agreed to pay for it. "this house i am willing to pay £250,000 for" well, in a few years its seen by other people as only being worth to them as "£200,000". Who is correct? The original buyers or the new ones?

I buy a car, its worth £10,000. I pay a monthly fee to the car company for it. I have read in books and seen on TV how some cars where bought for a few hundred quid 30 years ago, and are now worth THOUSANDS!! WOW!! Over a period of 20 years, the value of that car has gone up, and thus must always go up!! I can make money on this. I take it to be valued a year down the line, and its no longer worth £10,000. Im now paying the same monthly fee on this car as I was originally, do I go back to the car company and complain that its now worth less so I should pay less?

MrMonkey

The only people who will struggle are those who can not afford their mortgage payments. Changes in house prices are argely irrelevant to them.

If prices are falling, it is because they are too high to maintain a sustainable housing market. In such a situation a drop to levels where people can enter the market (as FTBs) is necessary. The question about whether house prices are too high is secondary to the question of cash flow. If no money is moving in the market, prices will fall until houses are purchased and the cash flow problem will resolve itself. Then prices will stabilise, and probably rise again.

rizla01

dannyboycey wrote: »

Yes, but the value of money is not static. It's very well having a hundred quid in your pocket, but if it only buys you a bag of crisps, that's not too clever. It's called inflation.


Based on what? Genuinely interested as this goes against nearly all the evidence that I've seen. Are you sure it's not what you're 'hoping for'?

Again, I'm interested to know why you think this. You only need to take a quick look at the FTSE to see things look far from rosey for UK business in general.

But if that hundred quid that is used to purchase said crisps came from an initial investment of 10 quid then it doesn't matter as your investment is keeping up with or staying ahead of, that inflation, Isn't it?

Re the other opinions of mine they are not based on any fact in particular and may well be incorrect.

I just feel that there is a lot of panicking going on at present, perhaps spurred on by Tories passion for slagging off this inept government, on top of credit problems that are around the world and especially with the state of America.

But, somehow, there is a slightly different air about things compared to last recession. You may wish to call it 'Gut feeling' and I wouldn't disagree but I'm not so sure that the prop market is dying at anywhere near the pace that some claim and that the majority of us are suffering SO badly with the rising prices.

I also think that a lot of lessons have been learned and are being used to stave off the problems easily caused through 'Lack of forethought' which is why BS's are trying their damnest to help people in difficulty to maintain payments on their homes rather than repossess them as quickly as they did last time, which flooded the market with cheap property which in turn, help stoke the out-of-control debt problems of before.

Just my personal views.:)

steadysaver

rizla01 wrote: »

Explain, perhaps, what is wrong with my so called 'Prepared to pay' assertion? Are you somehow saying that people are NOT prepared to pay the price asked?

Clearly in the current climate people are not perpared to pay the asking price otherwise you wouldnt have to come up with these crazy ideas.

The simplest and best idea is to simply drop the price of the house to an affordable level.

rizla01

kristianwilliams wrote: »

True, traditionally property has always risen, and over a period of time will catch up to what they were last year... this rise will probably be with inflation/wages which will result in it taking years, maybe even decades, as apposed to the increases we have seen over the last few years.

Lets take your first point now. People bought houses at a high cost, they should have factored in house prices going up AND down. Anyone who did not, with the vain hope they always increase all the time, are the same people who buy shares in a large business because "they always go up".

The fact they are paying more than the house is worth is argumentative. They thought the house was worth what they agreed to pay for it. "this house i am willing to pay £250,000 for" well, in a few years its seen by other people as only being worth to them as "£200,000". Who is correct? The original buyers or the new ones?

I buy a car, its worth £10,000. I pay a monthly fee to the car company for it. I have read in books and seen on TV how some cars where bought for a few hundred quid 30 years ago, and are now worth THOUSANDS!! WOW!! Over a period of 20 years, the value of that car has gone up, and thus must always go up!! I can make money on this. I take it to be valued a year down the line, and its no longer worth £10,000. Im now paying the same monthly fee on this car as I was originally, do I go back to the car company and complain that its now worth less so I should pay less?

But the argument that you have reproduced was against your claim that the country will be better off as a consequence of falling prices, not whether that person was wise to hope that his investment would continue to rise, or not.

Not a politician are you KW.:)

To reitterate my previous point.

So do you seriously believe that it is in the country's best interest if property prices fall to say, 2/3rd (or less) of what they are today?

steadysaver

rizla01 wrote: »

But, somehow, there is a slightly different air about things compared to last recession. You may wish to call it 'Gut feeling' and I wouldn't disagree but I'm not so sure that the prop market is dying at anywhere near the pace that some claim and that the majority of us are suffering SO badly with the rising prices.

No its worse than most people claim

lonestar1

Hmm If i was a seller of a high value house would I go with the EA whose a member of NAEA OR would I go with an EA who wasnt and as such could lower his fee because he didnt need to contribute to this subsidy for FTB's ? I expect most would go with the later meaning the EA whose in the NAEA would get all the FTBs but none of the High Value buyers/sellers ergo wouldnt work as they wouldnt have the cash coming in to lay out

vickyb242

Please don't shout at me, as i don't fully understand the economy situation but please can someone explain why it's good that house prices fall, when this seems to be causing a lot of redundancies, which surley will only make things worse and lenders are tighten their belts and lending critera.

I'm was trying to buy a house up until a couple of months ago. Had everything agreed with one of the big lenders at a good rate, sale fell through, now don't qualify for a good rate or a mortgage with some lenders.

I have a good size deposit and an excellent credit score.

Yes, i might have saved 15k on the house i liked, but now i can't get a mortgage.

Wouldn't it be best if the market started to stabalise?