If house prices fall another 37% ...

Entertainer

Jim_B wrote: »

Surely it doesn't actually create a problem for the banks unless more people default on their mortgages, and if that's going to happen, it'll happen whether or not the price jumps about as the price change doesn't affect people's repayment (barring the need to remortgage).

How do lower prices undermining the banks ability to lend? Surely it will improve their ability to lend; more people needing smaller mortgages, with lower chance of defaulting.

Because people might realise it's better to "hand the keys back" and walk away from their liabilities, particularly when the government has helpfully made it so much easier to be declared bankrupt. But shhhh don't tell them. Zombie borrowers need to be in denial about being the undead for all our sakes.

bluey890

mewbie wrote: »

Let's try and agree on this very simple statement.

have a beer mewbie :beer:.

i accept the olive branch. its been fun debating with you. the wookieboy coward ran away.

whilst u persist on answering proper questions - youre unlikely to get your thanks ratio up.

any offense caused to anyone by me to anyone, may be accidental.

themanbearpig

Kenny4315 wrote: »

If you wipe off 57% of the housing value then that's masses of personal wealth gone, the asset devalues and the liability remains. In short a 57% fall won't happen because it would be catastophic, and Mr Clown knows it.

You sound like a child that has been told something you dont like. Fingers in ears, "lala im not listening..."

Take a look at what happened in Japan. Gordo hasn't got any control over what's happening or going to happen to asset values. 57% is not even that extreme if you consider the extent of the crisis. If you believe things will only get as bad as you consider to be acceptable in that head of yours, you could be in for a shock.

themanbearpig

Entertainer wrote: »

Because people might realise it's better to "hand the keys back" and walk away from their liabilities, particularly when the government has helpfully made it so much easier to be declared bankrupt. But shhhh don't tell them. Zombie borrowers need to be in denial about being the undead for all our sakes.

When the debt crisis moves into the next gear when interest rates start climbing, all those zombie borrowers will be squaling like pigs, asking the government to bail them out. They will still be in debt without a house after the repossesion for the rest of their lives. Not a good position to be in, but they have their chance now to get out of it. If they are so stupid to not see the signs at this stage, they deserve to debt slaves.

jojo90_2

Price to wage ratio does not mean much as a given mortgage is still 'affordable' at the higher multiples. A shift in working patterns has also happened to compensate for example mothers returning to work earlier. Women also earn more in comparison to their male counterparts (although of course still not even).

Interesting analysis but not comprehensive and the author does not consider even the most basic of cultural changes over the past 20+ years.

Kenny4315

themanbearpig wrote: »

If you believe things will only get as bad as you consider to be acceptable in that head of yours, you could be in for a shock.

Nope, it's the 20 somethings, currently renting and moaning about having to pay the LL, praying for a 57% correction that are in for a shock. Because in will just never ever ever ever ever happen.

Doesn't the reality of the suggestion of a 57% drop just sound a little bit unrealistic. If you wish to wait for a drop of such magnitude then hope you like renting because you'll be doing it forever.

Kenny4315

ad9898 wrote: »

I think you maybe eating your words, or maybe if you keep your word, you maybe eating something else.:D

I am fairly confident that I won't be getting my gums around Gordon's plums. :money:

57% correction you guys .... :rotfl: :rotfl:

prowla

penguine wrote: »

... from current prices, then they will reach the house price to earnings ratio of 3.12 seen in 1995, at the end of the last housing crash.

(That's the lowest ratio they've reached in the past 25 years.)

There is not much in this article that we didn't already know, but that's an interesting figure.

DOes that take into account that average earnings are falling too?

Kenny4315

Graham_Devon wrote: »

You looking forward to it!? ;)

It would take a alot more than 57% drop for peak but pleased to hear that your concerned about it.

An 80% drop from peak would just about do it. :money:

Actually closer to an 84% drop.

motch

Graham_Devon wrote: »

I remember a year or so back, even 9 months back, people stating house prices could only fall roughly 10% by roughly this time, as it would not be allowed to fall further because of the election and people would be snapping up houses as they would be at a bargain price. Hasn't happened.

In fact, house prices have fallen over 20% from peak in a very very short period of time.

People are still saying Brown won't allow it. Well how can he really stop it? If people are not willing to buy, he would have to come up with some pretty serious plans to force people to buy or some draconian legislation stating it is now mandatory that house prices stay above a certain level.

It's certainly possible that they will fall another 37% from now. Whats clear is that no one is saying they will, BUT they are saying if it follows the last recession step by step, thats where we would end up.

It's a possibility I think anyone would be foolish to rule out.

Good post - I can remember a couple of years ago people saying brown will "never let it happen" and it's down by about 20% from peak already.
I think the olympics was also used in the argument as well !

Is it really a bad thing if housing falls back to an affordable level?