House Prices Heading up not down

Graham_Devon

Linton wrote: »

Less credit wont do the average FTBer much good because he/she wont be able to get the credit, so any drop in prices would be irrelevent.

Price drops do the average FTB loads of good.

- A 25% deposit becomes easier to save
- The multiple on their wages buys a better house because the price has fallen.
- They pay less interest on a lower mortgage amount over the term.
- Mortgage payments will not be as high each month allowing them to enjoy other things in life.

chucky

Linton wrote: »

'fraid not. Far more likely stagnation or a relatively small temporary drop. Less credit will decrease the building of new houses. A drop in prices will reduce the number of houses coming onto the market.

Less credit wont do the average FTBer much good because he/she wont be able to get the credit, so any drop in prices would be irrelevent.

you'll have to explain that the usual lot that they need credit to buy the house in the first place.

it doesn't matter if house prices are lower - the lenders won't be lending any money for mortgages.

soooo... as has always happened when house prices are falling or at their lowest the less people will be able to buy...

Linton

I think I am wasting my time but.....

Graham_Devon wrote: »

Price drops do the average FTB loads of good.

- A 25% deposit becomes easier to save
- The multiple on their wages buys a better house because the price has fallen.
- They pay less interest on a lower mortgage amount over the term.
The scenario is that less credit leads to a price drop which is possibly true to some extent BUT if the FTBer cant get a mortgage when credit is restricted he cant take advantage of the cheaper prices.
- Mortgage payments will not be as high each month allowing them to enjoy other things in life.

Blacklight

Linton wrote: »

I think I am wasting my time but.....

You are. It doesn't matter how many times you tell people that whilst interest rate hikes, banking crises, credit restriction, spending cuts and higher unemployment may bring house prices down... it won't matter because you won't be able to buy one.

Or perhaps you will, but it'll cost you a lot more if you've lost your cushy well paid job and are paying 10% interest on your mortgage out of your McDonald's wages.

Emy1501

IveSeenTheLight wrote: »

Is your friends house in the same street as next doors?
Just property size is not a simple calculation of value.
Location is extremely relevant.

It's also not wise to get too hung up on individual properties, you need to compare on a wider basis.

Individual properties can be subjected to a wide varying factors which determine how much the seller is willing to sell for.

It could be that next door's was a bargain

The property I looked at was next door to the one that sold. In the current market anyone trying to buy anything other than a bargin is a bit mad in my opinion.

I suspect like the other overpriced properties I have viewed on the road the property will be still be sale in 2 months with a reduction in asking price of 10%

HAMISH_MCTAVISH

Blacklight wrote: »

You are. It doesn't matter how many times you tell people that whilst interest rate hikes, banking crises, credit restriction, spending cuts and higher unemployment may bring house prices down... it won't matter because you won't be able to buy one.

Or perhaps you will, but it'll cost you a lot more if you've lost your cushy well paid job and are paying 10% interest on your mortgage out of your McDonald's wages.

Lower prices mean less people can buy. Because the only way prices will fall is because less people can buy.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Lower prices mean less people can buy. Because the only way prices will fall is because less people can buy.

Actually means less people can get themselves into the kind of debt that created all the problems in the first place.

You have put a nice spin on it. But lower prices does not mean less can afford. It just means less will have access to dangerous multiples of credit.

Those people couldnt afford it in the first place. Policies created to extend the debt they could take on made it "affordable".

That's what all this is about. One side spinning it to convince the other side. Will never work, as both sides of this argument have two different thoughtpaths.

Let's be clear here. The bulls are defining affordability by how much credit is available to people. The more credit available, the more affordability.

I, and others, are defining affordability, by what is affordable....i.e., you can afford it based on responsible credit lending and sensible deposits.

HAMISH_MCTAVISH

Graham_Devon wrote: »

The bulls are defining affordability by how much credit is available to people. The more credit available, the more affordability.
.

False.

We define afforability by the total costs involved in buying a house.

The ticket price is only half that cost.

It is obvious to even an idiot that a 200K mortgage at 5% interest is more affordable than a 100K mortgage at 15% interest.

Yet the multiples which bears claim are "sensible", were set during the three decades of the highest interest rates in history.

The multiples the bulls advocate are based on the long term average interest rate.

Graham_Devon

HAMISH_MCTAVISH wrote: »

It is obvious to even an idiot that a 200K mortgage at 5% interest is more affordable than a 100K mortgage at 15% interest.

Thats fantastic. Not that anyone is paying 15% interest.

And a word of warning....

Fixe's only last so long. If the FTB is paying 15% interest, it's only a matter of time for the person with the 200k mortgage.

Seems were into yet another "debt is wealth" and "the more expensive the house the cheaper it is" crock of !!!!!! argument.

HAMISH_MCTAVISH

Nah, just a reminder that the ticket price is only half the cost of buying.

And with interest rates likely to be at record lows from late 2007 until 2014 or 2015, then 2005-2008 may well end up being a once in a lifetime opportunity to buy.