Friday Debate: Will House Prices ever be allowed to fall?

chucky

Graham_Devon wrote: »

There was a highly political aspect running up to labours exit.

forget your dislike of anything left of centre and and anything anti-Labour for a moment and focus on the reality...

there is always a political aspect when the housing market is concerned - just look at Right to Buy and the Tories.

all political parties do it and will do it - it's a nice and eay vote winner

Really2

Graham_Devon wrote: »

I'm not sure that a 30%, 35, 40, even 50% reduction in house prices would equal economic collapse, the pound no longer existing and everyone losing every penny they ever had.

a 50% nominal fall (the thread is about price crashes so cant really do it over a decade +)

Would take prices back to 1999, the majority who purchased in the last 10 years would be in NE or close to NE.

Banks bad debt write downs would cause them all to fall over or close to fall over and lending would seize.

I would be fairly confident that would be toast for the economy.

chucky

Graham_Devon wrote: »

I'm not sure that a 30%, 35, 40, even 50% reduction in house prices would equal economic collapse, the pound no longer existing and everyone losing every penny they ever had.

Each to their own I guess.

The impact of any reduction depends a lot of how long a period the reductions happen over, or, to put it another way, how severe the reductions are over a period.

i don't think you understand how banks and their mortgage portfolios work...

Graham_Devon

chucky wrote: »

forget your dislike of anything left of centre and and anything anti-Labour for a moment and focus on the reality...

there is always a political aspect when the housing market is concerned - just look at Right to Buy and the Tories.

all political parties do it and will do it - it's a nice and eay vote winner

Of course.

Rennovation said "more connected" however.

That's what I was talking in reference to, and agree with him. His point is that things are more politically connected now. Not that things are politically connected now and never have been in the past. I'm merely discussing in context to the thread and OP's point.

chucky

Graham_Devon wrote: »

Of course.

Rennovation said "more connected" however.

That's what I was talking in reference to, and agree with him. His point is that things are more politically connected now. Not that things are politically connected now and never have been in the past. I'm merely discussing in context to the thread and OP's point.

i think they've always been connected in the same way - people are maybe more sensitive to it now because of the economic crisis.

Graham_Devon

Really2 wrote: »

a 50% nominal fall (the thread is about price crashes so cant really do it over a decade +)

Would take prices back to 1999, the majority who purchased in the last 10 years would be in NE or close to NE.

Banks bad debt write downs would cause them all to fall over or close to fall over and lending would seize.

I would be fairly confident that would be toast for the economy.

I referenced in my post that the timeframe and severity of price falls would have a big impact onto how bad things are, which you decided to delete when you quoted me?

But this isn't about price crashes as far as I am aware. No one had mentioned price crashes until you just did. It's been "price falls" all the way through the thread so far, and I am talking in context of the thread, which is price falls.

A price crash is somewhat different IMO, and leans towards a far more severe downturn in prices over a short period. That would have a far more negative impact on the economy than simple falls.

Blacklight

Really2 wrote: »

a 50% nominal fall (the thread is about price crashes so cant really do it over a decade +)

Would take prices back to 1999, the majority who purchased in the last 10 years would be in NE or close to NE.

Banks bad debt write downs would cause them all to fall over or close to fall over and lending would seize.

I would be fairly confident that would be toast for the economy.

That pretty much sums up my sentiment a lot better and in fewer words.

What are the options for the government to get banks lending at more attractive rates/ratios?

Could they nationalise a bank properly and set up their own loans? How would this affect the commercial market for mortgages? Would increased competition assist or would people accuse the government of reckless lending.

Really2

Graham_Devon wrote: »

I referenced in my post that the timeframe and severity of price falls would have a big impact onto how bad things are, which you decided to delete when you quoted me?

But this isn't about price crashes as far as I am aware. No one had mentioned price crashes until you just did. It's been "price falls" all the way through the thread so far, and I am talking in context of the thread, which is price falls.

A price crash is somewhat different IMO, and leans towards a far more severe downturn in prices over a short period. That would have a far more negative impact on the economy than simple falls.

Jesus, I still acknowledged it!

OK, when house prices have had sustained falls in the past, has that been a couple of percent a year or crashes of 10-25% in less than 18 months?

Just asking just in case you do not live in the UK?

House prices generally crash and the affect is generally server to banks and lending.

When have we had "just simple falls" and what are you classing as fall, nominal or real as they hare entirely different.

Graham_Devon

Were going completely off tangent again, discussing a point no one even bought up, but merely "corrected" a quote with and talking of crashes which isn't what the thread is about as far as I'm aware.

For what it's worth, I agree with Rennovation man in that houses are politically more connected now in a variety of ways, not sure on how the coalition will fair on this point though, as were all waiting for the spending review. It is however, for the reasons rennovation bought up, the reason I'm leaning more and more towards more stimulus, or policies being bought in should prices start to fall again. Maybe soemthing like Hamish saw mentioned. I don't agree with the stimulus etc, but do feel it will be used if needbe.

Generali

Blacklight wrote: »

That pretty much sums up my sentiment a lot better and in fewer words.

What are the options for the government to get banks lending at more attractive rates/ratios?

Could they nationalise a bank properly and set up their own loans? How would this affect the commercial market for mortgages? Would increased competition assist or would people accuse the government of reckless lending.

Under EU law it would be illegal AIUI for a Govenment to subsidise a particular bank to allow it to lend cheaply. It would be possible for a Government to subsidise all banks operating in its market. The Bank of England effectively did that with QE when the offered to buy Gilts (UK Government debt) from any bank, not just British ones.