Price Crash??? Why would it happen

Sand_Man_2

If the Housing market crashes, all these FTB would flood the market.

But would'nt this just drive up the price again

So why would there be a crash in the first place as it comes down to suppy and demand

NervousYetFeisty

Dozens of reasons.
Here's one:
If interest rates take a hike, many would become forced sellers as they wouldn't be able to afford their monthly mortgage payments. Seeing as so many people are currently overstretched, because they bought vastly over priced homes or they've remortgaged to finance their 4x4s or whatever, a rise in interest rates would really hurt a lot of people - selling might be their only option (other than reposession...).

OldNelly

Sand_Man wrote:

If the Housing market crashes, all these FTB would flood the market.

FTB would be reluctant to buy in a falling market.

Once prices start taking a fall all house buyers would seriously consider waiting until they had stabilised again.

Why would anyone buy a house when they know it would be worth less in a year or more time?

PoorDave

OldNelly wrote:

FTB would be reluctant to buy in a falling market.

Once prices start taking a fall all house buyers would seriously consider waiting until they had stabilised again.

Why would anyone buy a house when they know it would be worth less in a year or more time?

You wouldn't know it would be worth less in a year or more's time though, would you? Prices might go up again!

I think there would be enough people who would buy straight away at any slight fall that it would stabilise prices again, hence our more stable market at the moment.

PoorDave

NervousYetFeisty wrote:

Dozens of reasons.
Here's one:
If interest rates take a hike, many would become forced sellers as they wouldn't be able to afford their monthly mortgage payments. Seeing as so many people are currently overstretched, because they bought vastly over priced homes or they've remortgaged to finance their 4x4s or whatever, a rise in interest rates would really hurt a lot of people - selling might be their only option (other than reposession...).

Why would interest rates take a hike though?

That's a bigger question.

What are your other "dozens of reasons"?

Wickedkitten

The FTB's may well be reluctant, but you can bet your !!!!!! that the STR's would be right in there

NervousYetFeisty

OldNelly wrote:

Why would anyone buy a house when they know it would be worth less in a year or more time?

And why would anyone wait to try and sell? Vendors would flood the market, which coupled with the lack of buyers brings the old supply/demand equation into play even more...

PoorDave

NervousYetFeisty wrote:

And why would anyone wait to try and sell? Vendors would flood the market, which coupled with the lack of buyers brings the old supply/demand equation into play even more...

Would people suddenly start selling their primary residences if prices are giong down? I personally have no intention of selling for such reasons.

Maybe investment properties might be sold, but then maybe not, maybe nerves will hold.

This is turning into the "people who own houses trying to say prices won't crash vs. people who don't saying they will" thread again.

And yet still i keep posting...

mr_fishbulb

Sand_Man wrote:

If the Housing market crashes, all these FTB would flood the market.

But would'nt this just drive up the price again

So why would there be a crash in the first place as it comes down to suppy and demand

The prices of houses have been rising a lot in recent years partly becuase of buy-to-let people. They are buying the houses that first time buyers can afford, so there are more buyers = higher prices, often squeezing out FTBs becuase mortgages are linked to salary.

I've heard that the buy-to-let market isn't what it used to be. So if there is a crash, it will mean a lot more FTBs can afford homes, but will not push the prices up as fast as they are currently going because FTBs can only afford what the mortgage lenders will lend them.

As a potential FTB in 12-18 months time, I would love a price crash now, but don't see it happening. Maybe a drop off in price increases, or maybe even a little average price reduction, but not a crash.

mr_fishbulb

PoorDave wrote:

Would people suddenly start selling their primary residences if prices are giong down? I personally have no intention of selling for such reasons.

Exactly. Where would people live?

People might sell off their buy-to-lets though.

NervousYetFeisty

PoorDave wrote:

Would people suddenly start selling their primary residences if prices are giong down?

If they have to (interest rates, unemployment, debt), and they think waiting another year is going to cost them then yes.

This is turning into the "people who own houses trying to say prices won't crash vs. people who don't saying they will" thread again.

I'm about to buy and think it's a terrible time to do so - but needs must.