Why as a homeowner trading up are property rises good for me

Le_Chuck

HAMISH_MCTAVISH wrote: »

Yes, I know reading comprehension isn't your strong point Piggy, but I already stated for someone trading up to a house double or so the first one it's not a factor.

Most FTB-s in most areas simply don't though.

The more common move by far would be from a 100K flat to a 140K terrace, for example. Very few people move from a 100K flat to a 300K detached.

And as I noted, the price of entry level properties fell on average far more than the price of second tier properties. Plus of course the difference in mortgage rates for anyone with less than 40% equity. Between the two, it's very much the case that few people at that level of housing benefited from the crash.

Where I live, I'd say the most common was from 70k terrace to 150k semi. Flats do generally fall more than house, but in my area the few flats that exist, nearly all of them are rented.

Generali

the_flying_pig wrote: »

i know maths 'aint your strong point H but let's be clear:

1. for someone who's considering trading up to a second time pwoperdee that's initially double the price of his first time one, for pwoperdee inflation to be in his advantage it must be the case that the inflation on his first pwoperdee is at least double that on the second.


2. for someone who's considering trading up to a second time pwoperdee that's initially 1.5* the price of his first time one, for pwoperdee inflation to be in his advantage it must be the case that the inflation on his first pwoperdee is at least half as much again over that on the second.

3. for someone who's considering trading up to a second time pwoperdee that's initially double the price of his first time one, for pwoperdee deflation not to be in his advantage it must be the case that the deflation on his first pwoperdee is at least double that on the second.

[etc]

As a matter of absolute fact there is no magic identity which dictates that conditions 1-3 will [as you perhaps imply] be satisfied more often than not.

Indeed, one of the favourite mantras of the pwoperdee rampers on here and elsewhere is that detached/otherwise desirable pwoperdee tends to inflate quicker than others [i.e. that 1-2 will rarely be true].

You're talking about prices rising, the OP was about prices falling. The impacts are different.

Can someone please try and explain to me why as a homeowner who is now looking to trade up why property prices falling would not be a good thing for me.....

Falling prices mean slowly increasing numbers have negative equity. Negative equity is bad for the borrower and bad for the lender.

chucky

it's much safer and much less risky to be on a moving train than trying to jump onto it whilst at speed.

cue the train crash comments that happen every 100,000,000,000 train journeys

julieq

It's not a question of whether it's good or bad. It's what happens regardless. The world isn't set up for the convenience of individuals.

Conrad

julieq wrote: »

It's not a question of whether it's good or bad. It's what happens regardless. The world isn't set up for the convenience of individuals.

But that isn't fair, booooo hooooooo - pepe's want a big semi like wot Daddy got in 1970 when he was just a ballon blowerupper and Mum baked cakes at home. Pepes HAVE to live in thier specified part of West London (see my FSA regulation thread)

chewmylegoff

property prices that rise out of line with increases in earnings aren't much good to anyone. sure, some people will benefit - some will lose out. but as julie q points out, prices aren't determined by what would suit most people. if the world worked like that you would just get given a form to fill in titled "your ideal home", and the next day your home would appear and you would be allowed to live in it for free, and you could sunbathe all day and then play a bit of call of duty followed by a massive feast of findus crispy pancakes.

mine would be an enormous roman villa. i'm not sure what my slave girl's ideal home would be like. who cares.

Thrugelmir

Generali wrote: »

Falling prices mean slowly increasing numbers have negative equity. Negative equity is bad for the borrower and bad for the lender.

A borrower on a 25 year repayment mortgage could absorb falling houses prices of 2% without any impact in the initial years of the mortgage. Mid term house prices could drop 25% in a 5 year period without impact.

So in terms of house ownership (pre boom average move was every 7 years) the effects of negative equity are overstated.

Only exception to this is Northern Rocks 100% mortgages plus unsecured loan. Where it will require management of the debt to normalise the situation.

the_flying_pig

HAMISH_MCTAVISH wrote: »

Yes, I know reading comprehension isn't your strong point Piggy, but I already stated for someone trading up to a house double or so the first one it's not a factor.

Most FTB-s in most areas simply don't though.

The more common move by far would be from a 100K flat to a 140K terrace, for example. Very few people move from a 100K flat to a 300K detached....

er, yes, that's why i gave more than one examples, e.g. one £100k to £200k, another £100k to £150k, to show how the maths works... in your £100k to £140k example a trader-upper needs a 14% increase to his starter pwoperdee to compensate him for a 10% increase in the price of the more expensive one...

HAMISH_MCTAVISH wrote: »

....as I noted, the price of entry level properties fell on average far more than the price of second tier properties...

but [:facepalm:] this is a nonsense, isn't it? your "...far more..." statistic is made up AFAIK but that's not the real point, the real point is that there is, of course, no reason at all to suspect that, going forwards, starter pwoperdees will inflate more than middling ones. if this continued for any significant amount of time [apologies, I'm about to make another point that requires basic cognitive ability] then in a very short space of time the 'FTB properties' would stop being cheaper, and become the more expensive ones...

and i'm sure that low inflation prospects for flats and/or houses in cheap areas relative to upmarkets ones is one of the cornerstones of your crackpot stack of pwoperdee theories... right?

why do you have to argue such rubbish? why not stick to plausible 'bull' arguments [of which there are certainly some], instead of chucking the proverbial kitchen sink at it?

whatawaste_2

julieq wrote: »

It's not a question of whether it's good or bad. It's what happens regardless. The world isn't set up for the convenience of individuals.

GOSH!!!

That was a little heavy, sorry i asked the question on a property board that exists if i am led to believe on trying to predict on movements in the housing market.
And a quick look at your last dozen posts shows me that you firmly believe in there being little chance of a property crash and rents levels remaining strong, the word hypocrite springs to mind me thinks.

Sorry if i do not meet your "friendship" critiria of someone that owns property and does not particulary get off on house price inflation, something i think is quite vulgar actually.:)

I am quite blessed with a lovely partner and good health along with a good income, all that i care about in my life is having kids, and then trying to find a home, not a "property", to nurture my famly in and be happy in. And from where i am sitting things are not easy for young familys on average or above average wages. I am able to do this even though my choice is limited, i just hope and pray that more young working familys will be able to afford sizable homes in the near future so i can have them as next door neighbours.
Not some vulgar little childless "property developer"

Yes a property crash would suit me even if i went into negative equity, i also have a strong suspicion that one will take place in the next year or two, so i am sorry if my enquiring questions annoy you in the mean time.

HAMISH_MCTAVISH

the_flying_pig wrote: »

but [:facepalm:] this is a nonsense, isn't it?

How is it that someone who posts on two different house price boards can be so very clueless?

FTB's were disproportionately affected by the crash. The price of the entry level properties fell faster when prices were crashing, meaning the gap between rungs widened.

FTB properties also recovered faster when bank lending increased after the trough, so when prices did start rising again, the gap narrowed.

the real point is that there is, of course, no reason at all to suspect that, going forwards, starter pwoperdees will inflate more than middling ones.

No, I rather suspect not, and I've never argued that will be the case.

But of course that is not particularly relevant to the point that the crash did not narrow the gap between rungs for most FTB's looking to move up. And that the recovery did narrow the gap for most.

Another unintended consequence that the pro-crash crowd spectacularly failed to anticipate.

and i'm sure that low inflation prospects for flats and/or houses in cheap areas relative to upmarkets ones is one of the cornerstones of your crackpot stack of pwoperdee theories... right?

I'm sure it would be easier to decipher your drivel if you just linked to a relevant post.

why not stick to plausible 'bull' arguments [of which there are certainly some], instead of chucking the proverbial kitchen sink at it?

I'm merely noting the facts. You can argue about it all you like.