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

IveSeenTheLight

olly300 wrote: »

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.

I've rented out for a few years now and never had a problem finding tenants.
Certainly in my VI area the rental market is strong.

It would seem in the UK with a growing population and propoerty not being developed at the same rate, the competion for rental properties is going to increase, unless investors step in to the market which they appear to be doing so

Thrugelmir

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.

Support doesn't have to be in monetary terms. The Government by pressurising the lenders into being flexible on arrears and offering various support schemes. Enabled the market to retain confidence that property prices wouldn't freefall.

However none of the underlying residual issues have been solved. As there is still an enormous amount of debt to be repaid by many. Being on an interest only mortgage in a stagnant market has no upside.

IveSeenTheLight

Thrugelmir wrote: »

The Government by pressurising the lenders into being flexible on arrears

You could say they have done the right thing.
Arrears and reposessions are falling, largely due to falling mortgage rates.
This has meant that people and families have not lost their home and have the opportunity to ride out the storm with some stability.

Are you promoting that people should be kicked out of their homes into the storm because of a global credit crunch?
Would you have the same view if you were one of those affected?

dopester

RenovationMan wrote: »

Given that so much of the UK's economy is rooted in property, probably more than at any other time in history and given that so many voters are now home owners, will any government ever allow prices to fall in a significant way?

The market is rigged to hell. Something has to break with such naked self-interest and policy intervention for one section of the market; who have already seen a massive boom in values. The side Hamish talks, with property owners getting ever wealthier - the new force - as house prices won't be allowed to fall even against tighter credit and people in their 20s not being able or unable to afford to trade up.

It's like playing cards against crooked cardshark cowboys in some Wild West Saloon. You've got "Rainman" style intelligent card counting skills and have been so patient waiting to bet your hand... and when the time comes, Merv and his baby boomer gang simply put their losing cards back into the deck and openly pick out themselves out new cards infront of you, to give themselves a Royal Flush to equal your hand. I've got a Royal Flush too !

It should be; bang bang bang bang bang. Reap the whirlwind Merv. Bang.

Instead it's like FTB and very patient who thought the market was actually fair, and that their reluctance to overpay and overborrow during the boom was the right course of action and that they'd see house prices correct in the market and be rewarded for their intelligence..... just take the cheating QE, the ultra low interest rates, the generous 13 week change to rolling SMI, and all the other policies to keep house prices falling without complaint.

GDB2222

Generali wrote: »

How could a Government prevent house prices falling?

I think you are asking the wrong question. House prices are inextricably linked to the availability of mortgages. It's quite clear that *most* buyers don't make a value judgment of whether house prices are cheap or expensive. They simply look at what they can borrow and whether they can afford the repayments. Within that constraint, they buy the best house they can for the money. So, house prices can be easily regulated, up or down, by changing interest rates and making lenders be more or less careful in their lending criteria. It's also clear that it suits government at the moment for house prices to be relatively stable. They don't want the run-away prices of the past, but they dread major falls - the economy would stall even more and they definitely wouldn't be re-elected if that happens. In the longer term, it suits governments for lending criteria to be tightened, so banks are more stable.

ILW

IveSeenTheLight wrote: »

You could say they have done the right thing.
Arrears and reposessions are falling, largely due to falling mortgage rates.
This has meant that people and families have not lost their home and have the opportunity to ride out the storm with some stability.

Are you promoting that people should be kicked out of their homes into the storm because of a global credit crunch?
Would you have the same view if you were one of those affected?

If people are living in houses they cannot afford, yes they should be kicked out. The true market should be allowed to function in both directions.

ILW

MadnessOfHPC wrote: »

It's absolutely abhorrent that people want the misery of homelessness and unemployment reaped on others just so a select few can pick up a house on the cheap.

Nothing to do with wanting to buy cheap houses, just cannot see why anyone should have ownership of any asset which they have not and cannot afford to pay for.

ILW

MadnessOfHPC wrote: »

Yes it is so stop being so disingenuous. Well they could clearly afford it when they bought it so now that they have fallen on hard times you want them on the streets. The caring considerate humane attitude is to help them through their hard times with support and finance until they are back on their feet. Not kick them when they're down.

True, but for a limited period, not for years and years.
Why take out a mortgage without income insurance and expect the taxpayer to pay your interest?

IveSeenTheLight

ILW wrote: »

If people are living in houses they cannot afford, yes they should be kicked out. The true market should be allowed to function in both directions.

In normal circumstances then yes.
When people lose their jobs as a result of a global credit crunch, I think that it's good that people be given a little extra time while they and the economy get through it.

ILW

What do you mean by a little extra time, weeks, months or years?
And do you not consider it the buyers responsibility to insure against loss of income?