Why house prices are certain to fall

new_home_owner_3

Snooze wrote: »

Sorry but that is BS. There are plenty of houses available. The problem is that they are all in places where people don't want to live. Go down your local $hithole area of your town and you'll find thousands of them all tinned up and empty.

Everyone wants to live in a 'nice area' but nice areas = ££££££££ = can't afford = blame it on there not being enough houses.

R

There probably are loads of !!!!!! houses and the good ones are at a premium, if people are looking for a cheap house then maybe they should buy one of the houses you are on about, everyone would love a real nice house in a real nice area at a bargain price, simple fact of the matter is you have to pay for it, by me theres a shortage of decent houses, and all the good ones go quite quick...

I dont blame people for not wanting to live in those places, i can see why people get upset that houses that are in decent areas and are in a good condition are not really falling and the ones like you are on about are dropping loads, the problem is no one wants to live in them, thats why they are still on here hoping and wishing decent houses fall loads.

just a shame i cant see it happening.

Generali

new_home_owner wrote: »

i understand inflation related house prices may not go up, but im not on about that im on about houses prices, my dad bought his house 40 years ago and he paid 3500 pound, he was only on 1.50 a week.

if someone buys a house now in 10 years time i would think it would be valued higher than what it is now in pounds.

If i knew 10 years ago what has happened i would have broke my balls to have bought more properties 10 years ago.

But anyway back onto the subject why are house prices certain to fall?

The last time it was due to high interest rates which forced sales, when are the high interest rates coming back and when?

Well it depends if you're talking about long or short term.

Long term, house prices are highly likely to fall IMO due to the huge liabilities that successive UK Governments have landed on the tapayers of the countries with no means to pay them. Pension promises will have to be defaulted on (a process which has already started under Grodon Brown with the taxing of assets held in pension funds and raising the retirement age).

Short term it's harder to say. Falling prices cut supply (as any 16 year old A' level economics student could predict). Now what will happen to supply and demand in the next couple of years depends on conflicting forces.

At some point, supply should have to increase at any price as more and more people are living in unsuitable places (eg had kids so want more space or moved jobs and want a nicer journey to work) or are forced sellers (rising unemployment should lead to rising repossessions). Increasing supply doesn't necessarily mean falling prices however as it depends on demand.

Demand is likely to hinge on 2 factors: sentiment and finance.

Sentiment is likely to be positive as British people have a default belief on house prices which is that they rise.

Finance is more problematic if you think prices will rise. Over the past few months, bank reserves have risen massively, as can be seen from the M0 money supply figures showing a 200% rise in the past 4 months. However, bank lending has fallen slightly as can be seen from bank lending figures and M4 money supply figures issued by the Bank of England.

If housing supply increases there simply isn't the money to support higher or even static prices.

It's hard to see what can support higher prices although I'd be interested to know what forces can allow demand to increase, demand of course being the number of people willing and able to buy at any given price, not just the number of people that want something.

Snooze

Generali wrote: »

Well it depends if you're talking about long or short term.

Long term, house prices are highly likely to fall IMO due to the huge liabilities that successive UK Governments have landed on the tapayers of the countries with no means to pay them. Pension promises will have to be defaulted on (a process which has already started under Grodon Brown with the taxing of assets held in pension funds and raising the retirement age).

Short term it's harder to say. Falling prices cut supply (as any 16 year old A' level economics student could predict). Now what will happen to supply and demand in the next couple of years depends on conflicting forces.

At some point, supply should have to increase at any price as more and more people are living in unsuitable places (eg had kids so want more space or moved jobs and want a nicer journey to work) or are forced sellers (rising unemployment should lead to rising repossessions). Increasing supply doesn't necessarily mean falling prices however as it depends on demand.

Demand is likely to hinge on 2 factors: sentiment and finance.

Sentiment is likely to be positive as British people have a default belief on house prices which is that they rise.

Finance is more problematic if you think prices will rise. Over the past few months, bank reserves have risen massively, as can be seen from the M0 money supply figures showing a 200% rise in the past 4 months. However, bank lending has fallen slightly as can be seen from bank lending figures and M4 money supply figures issued by the Bank of England.

If housing supply increases there simply isn't the money to support higher or even static prices.

It's hard to see what can support higher prices although I'd be interested to know what forces can allow demand to increase, demand of course being the number of people willing and able to buy at any given price, not just the number of people that want something.

And that is the problem. These days many people seem to think it's the norm to have a 40yr mortgage round their necks and have to be a slave to the system working 60hr+ weeks to pay for it all, with non-existant social lives because they're spending the remainder of their time in bed sleeping from exhaustion. What a complete waste of a life. You should work to live not the other way round... :rolleyes:

R

the_ash_and_the_oak

Don't really believe the myth that there aren't enough houses imo.

Though there might not be 'enough' for sale

pretty sure these are 2 diff things tbh

Generali

the_ash_and_the_oak wrote: »

Don't really believe the myth that there aren't enough houses imo.

Though there might not be 'enough' for sale

pretty sure these are 2 diff things tbh

Supply isn't 'the total number of houses' any more than demand is 'the number of people that want to own a house'.

Harry_Powell

Snooze wrote: »

And that is the problem. These days many people seem to think it's the norm to have a 40yr mortgage round their necks and have to be a slave to the system working 60hr+ weeks to pay for it all, with non-existant social lives because they're spending the remainder of their time in bed sleeping from exhaustion. What a complete waste of a life. You should work to live not the other way round... :rolleyes:

R

We must have a different circle of friends, because I've never met a single person who thinks it's the norm to have a 40 yr mortgage, in fact I never even knew you could get a 40 year mortgage! I also don't know anyone working 60+ hours to pay for their mortgage and spending the rest of their time in bed with exhaustion.

What a strange world you frequent.

Cleaver

new_home_owner wrote: »

we will have to wait and see, if only you or me knew the answers, all you can go on is whats happened in the past, some things do change.

Are you saying we might not see house prices double in the next 20 years?

Double in the next twenty years? I don't think so, but there's a possibility I guess. But your original comment was that 'most graphs prove house double every 10 years'.

Well, the average house price was £185k in 2007. So with your theory on graphs the average house price would be around £375,000 in 2017 and around £3/4 million in 2027.

Possible of course, but I think both scenarios are highly unlikey, especially the figure in 2017.

Cleaver

Snooze wrote: »

Sorry but that is BS. There are plenty of houses available. The problem is that they are all in places where people don't want to live. Go down your local $hithole area of your town and you'll find thousands of them all tinned up and empty.

Very true. So in another way, you could say that what you've described is a lack of housing stock and that there aren't plenty of houses available.

chucky

Cleaver wrote: »

Double the next twenty years? I don't think so, but there's a possibility I guess. But your original comment was that 'most graphs prove house double every 10 years'.

Well, the average house price was £185k in 2007. So with your theory on graphs the average house price would be around £375,000 in 2017 and around £3/4 million in 2027.

Possible of course, but I think both scenarios are highly unlikey, especially the figure in 2017.

2017 is doubtful but the original statement of 20 years is easily possible, i would say they will double within the next 15 years though.

Snooze

Cleaver wrote: »

Very true. So in another way, you could say that what you've described is a lack of housing stock and that there aren't plenty of houses available.

Well if you were stupid you could say that, yes.

R