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

Emy1501

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.

Don't the government lend already through NR and aren't they involved with the post office etc. The lending criteria is more generous than most for these lenders.

From what I'm seeing anyone with a decent credit history can get a mortgage with minimum of 10% deposit.

I can't see the government offering 95-100% loans in the near future or sub prime mortgages. There is an argument for making rates more competitive and not turning down people who are refused because of a couple of late payments but banks need to make money and all consider the risk they are taking on and many will say their rates are reasonable.

The government will not be worried about falls of a few % a year over the next few years in my opinion as long as the economy is recovering. Unlikely we will see falls of 15-20% a year like 2008.

The reality is people cannot get mortgages like they did a few years especially the size of the loan and therefore either wages will have to increase a fair bit over the next few years or there will be pressure on prices.

People will be willing to sit out a depressed market for a couple of years or so but just like people who STR'd people need to get on with their lives and at sometime there will be those who need to cut their losses.

julieq

Thrugelmir wrote: »

The Labour Government provided a support structure sufficent to enable people to remain in their homes despite having debt problems. This has maintained repossessions at relatively low levels.
If this hadn't of been the case then prices could have dipped sharply and suddenly, as forced sellers attempted to sell. FTBs and STRs would have sat on the sidelines watching the freefall.

Not everywhere I should add. But in areas where employment levels and employment incomes are under ever increasing pressure.

Repossessions were already at low levels. There weren't waves of unemployment, and most people were able to cope with repayments that weren't increasing from levels they believed affordable at the time they took their mortgage deals (if they were lucky the paymets decreased massively). It's one of the great bear myths that the government spent billions throwing cash at the overstretched. It will have helped a small proportion of homeowners, but the effect was marginal only.

des_cartes

julieq wrote: »

Repossessions were already at low levels. There weren't waves of unemployment, and most people were able to cope with repayments that weren't increasing from levels they believed affordable at the time they took their mortgage deals (if they were lucky the paymets decreased massively). It's one of the great bear myths that the government spent billions throwing cash at the overstretched. It will have helped a small proportion of homeowners, but the effect was marginal only.

Have you asked yourself why house prices are falling now but were not before May?

Generali

des_cartes wrote: »

Have you asked yourself why house prices are falling now but were not before May?

You mean apart from in 2007 and 2008 presumably.

Why do you think house prices have fallen since May 2010?

des_cartes

Generali wrote: »

You mean apart from in 2007 and 2008 presumably.

Why do you think house prices have fallen since May 2010?

Several reasons but there are a few key factors:

1.Government propaganda via the media that house prices are unaffordable and are going to fall over the next 2 years.

2.More houseowners trying to sell now before prices fall further.

3.Cuts to public spending that are re-enforcing beliefs that your house will never be worth as much again.

It's a bit like having several tens of thousands invested in perishable goods with a sell by date of October 20th, only to find that everyone in the street has the same investment.

Generali

des_cartes wrote: »

Several reasons but there are a few key factors:

1.Government propaganda via the media that house prices are unaffordable and are going to fall over the next 2 years.

2.More houseowners trying to sell now before prices fall further.

3.Cuts to public spending that are re-enforcing beliefs that your house will never be worth as much again.

It's a bit like having several tens of thousands invested in perishable goods with a sell by date of October 20th, only to find that everyone in the street has the same investment.

Maybe. The UK housing market has shown a remarkable capacity to defy gravity. It's pretty amazing that real house prices have only fallen by something like 10-15% over the past 2.5 years given that the UK has experienced her worst recession since 2007 and first bout of austerity since the 1970s.

olly300

Generali wrote: »

Maybe. The UK housing market has shown a remarkable capacity to defy gravity. It's pretty amazing that real house prices have only fallen by something like 10-15% over the past 2.5 years given that the UK has experienced her worst recession since 2007 and first bout of austerity since the 1970s.

Accidental landlords.

I spoke to some estate agents over the past week for one of the jobs I do and they state there is a real shortage of rental property. They have more would be tenants on their books then properties they can rent out.

I also know people since the recession began who wanted to sell their house/flat and simply can't. So they have taken their properties of the market and rented them out. They have had no problems finding tenants quickly much to their surprise.

The houses that are selling in my area are family houses with 3 to 4 decently sized bedrooms. Anything else bigger or smaller is not shifting or taking over 8 months to sell.

vivatifosi

olly300 wrote: »

The houses that are selling in my area are family houses with 3 to 4 decently sized bedrooms. Anything else bigger or smaller is not shifting or taking over 8 months to sell.

The houses that are selling quickly near where I grew up are 4 bedroom council built townhouses that are ripe for conversion into HMOs. They are all being HMO converted from family houses and are selling within a couple of weeks of coming onto the market. Convert the garage to a lounge (plenty of prescedents) and you get four bedrooms with space for en-suites for all, or six bedrooms with two bathrooms.

I've never seen anything like it. Houses go on the market and stick. Flats even worse, one of these comes on and they get snapped up. The right product at the right time?

olly300

vivatifosi wrote: »

The houses that are selling quickly near where I grew up are 4 bedroom council built townhouses that are ripe for conversion into HMOs. They are all being HMO converted from family houses and are selling within a couple of weeks of coming onto the market. Convert the garage to a lounge (plenty of prescedents) and you get four bedrooms with space for en-suites for all, or six bedrooms with two bathrooms.

The houses around me are not being converted into HMO. They aren't allowed to be.

The reason they are being brought is due to the good primary schools in the area. Shame people don't realise that there is a shortage of state secondary schools.

There is no shortage of flats in the area anyway and more are currently being built.

vivatifosi wrote: »

I've never seen anything like it. Houses go on the market and stick. Flats even worse, one of these comes on and they get snapped up. The right product at the right time?

Yep that's what I was told by the EAs I talked to. They said they had wonderful houses and flats for sale but nothing apart from 3/4 beds are selling. People just want to rent.

vivatifosi

olly300 wrote: »

The reason they are being brought is due to the good primary schools in the area. Shame people don't realise that there is a shortage of state secondary schools.

Interesting one that. Where the HMOs are going the schools are ok, not great, but its selling point is that its in walking distance to the main jobs area. I hope it doesn't drive families out though, large families with the means to buy a house still need to be able to do so.