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

Graham_Devon

HAMISH_MCTAVISH wrote: »

I know you're a bit of a condescending pr1ck at the best of times, but y'know, it might be more productive for you to try arguing with what I actually say

Well I just did that, backed with real evidence and figures, but didn't get a response

chucky

Graham_Devon wrote: »

but didn't get a response

neither did i

chucky wrote: »

how about people who's flats have risen in value more than the 3 bed semi they plan to trade up - is rising house prices good for them if they trade up?

HAMISH_MCTAVISH

Graham_Devon wrote: »

Your whole theory is made up and unsubstatiated.

No Graham, it's a fact.

1. When the crash happened, average prices for entry level properties fell more than average prices for for 2nd tier properties. Indisputable fact.

2. There is a significant difference between mortgage rates for different LTV brackets. Also an indisputable fact.

When you combine the two factors, that entry level properties fall more than 2nd tier properties in a crash, and that lower LTV = greater mortgage interest rates, then it should be pretty easy for even a village idiot such as yourself to grasp the implications....

Now of course you can make up all the random examples in the world for people with 60% equity, or for people trying to buy a house double in value. I've said quite clearly that for those buyers it won't be the case.

But for the majority of FTB's, with little equity, and looking to move up only a modest step on the ladder, it is absolutely the case that a crash doesn't help them, and is in fact more likely to hinder them.

the_flying_pig

chucky wrote: »

...how about people who's flats have risen in value more than the 3 bed semi they plan to trade up - is rising house prices good for them if they trade up?...

as per the earlier posts - if the 3 bed is initially x% more expensive than the flat then rising prices will be a good thing for the trader-upper iff the inflation on the flat is x/10 percentage points higher than on the house.

chucky

the_flying_pig wrote: »

as per the earlier posts - if the 3 bed is initially x% more expensive than the flat then rising prices will be a good thing for the trader-upper iff the inflation on the flat is x/10 percentage points higher than on the house.

that's exactly the point, it's 6 of one and half a dozen of the other. sometimes it suits people and sometimes it doesn't.

all the trading up or moving to a better street is all dependant what and how much the prices have moved by, talking averages isn't too accurate though.

the_flying_pig

chucky wrote: »

that's exactly the point, it's 6 of one and half a dozen of the other. sometimes it suits people and sometimes it doesn't.

all the trading up or moving to a better street is all dependant what and how much the prices have moved by, talking averages isn't too accurate though.

well, not really.

falling prices are fundamentally better for trader-uppers.

to see this consider the case of someone who'd been thinking about trading up from a 2-bed to a 4-bed in 1997, but who'd dawdled for a decade and only got around to it in 2007. now that person would have been made vastly worse off by the HPI [all houses went up in price hugely over that period] and by nothing other than the HPI.

underlying HPI is bad for trader-uppers. this is a fact. the losses brought about by HPI might, mostly in the very short run, in certain special circumstances, be offset by other factors [such as unusually high inflation in the area that they are moving from, or the type of house that they are selling], but the underlying HPI is always, in the long run, a killer.

HAMISH_MCTAVISH

chucky wrote: »

that's exactly the point, it's 6 of one and half a dozen of the other. sometimes it suits people and sometimes it doesn't.

Exactly right Chucky, which is why the endless repetition of the bears favourite meme, ie, "that crashing prices are good for upsizers", is nonsense.

A crash is just as likely to be bad for upsizers as good for them.

chucky

the_flying_pig wrote: »

well, not really.

falling prices are fundamentally better for trader-uppers.

to see this consider the case of someone who'd been thinking about trading up from a 2-bed to a 4-bed in 1997, but who'd dawdled for a decade and only got around to it in 2007. now that person would have been made vastly worse off by the HPI [all houses went up in price hugely over that period] and by nothing other than the HPI.

underlying HPI is bad for trader-uppers. this is a fact. the losses brought about by HPI might, mostly in the very short run, in certain special circumstances, be offset by other factors [such as unusually high inflation in the area that they are moving from, or the type of house that they are selling], but the underlying HPI is always, in the long run, a killer.

taking any period up to 2007 isn't great because of the rate of annual HPI which wasn't 'normal'. i think time is a massive variable in all of this because of the movement in mortgage rates and also the availability of different types of mortgage products (old style cheap trackers) that skew the real price paid to buy a property compared to the ticket price.

i looked at this once before and there are areas that flats went up in value disproportionately more than any other types of property and others were terraced property shot up much more than flats. if you bought and sold one of these groups you were lucky, one was good for up-scalers and the other wasn't.

with all of this it's luck the key factor not planning.

whatawaste_2

I have just read the posts from yesterday until this morning and the point i was trying to make in the opening post about people trying to explain why rising prices would be a good thing is now happening here.
And i don't have a clue what 95% of them are talking about...

It's quite simple, i want a bigger better property, and no matter how i sit down and do my sums and even with making a loss on my present property i will be quids in should there be a property fall of 20% or 30%. It's not borderline calculations, the saving for me will be massive.

I seriously think some people are really confusing themselves on whats good and bad. The only argument that is coming out that is making some sense is the argument of a deposit for the next property being built. But when you look at that argument that is not a good thing, it's perverse in that you need bigger debts in order to get yourself a SECURITY deposit...lol

Somewhere along the line the penny will drop on how crazy we have become in this country

the_flying_pig

HAMISH_MCTAVISH wrote: »

...A crash is just as likely to be bad for upsizers as good for them.

No. For goodness' sake, be precise in what you're staying. Stop conflating and muddying the waters.

Rising prices are good for upsizers in special circumstances only - one of the four cases I outline below, and therefore an unusual case. It's possible to construct a hypothetical example where it's good but no more than that. It's therefore by far most sensible to describe them as generally bad:

(1) If FTB and other pwoperdees rise in price by about the same amt
proportionally [something that I'd expect to be true most of the time], rising prices are a bad thing for trader-uppers.

(2) If FTB pwoperdees rise in price at a slower rate than other pwoperdee [something that I'd perhaps expect to be the next most common case given that small pwoperdees, especially flats, seem to be the thing we build most of these days], rising prices are a very bad thing for trader-uppers.

(3) If FTB pwoperdees rise in price at a faster rate than other pwoperdee [something that you say happened in 2009 but which even you don't attempt to claim is something that's likely to be a norm of some kind going forwards - I certainly can't think of any reason why it would], and, where the new place is initially x% more expensive than the flat & inflation on the old place is less than x/10 percentage points higher than on the house, rising prices are a bad thing for trader-uppers.

(4) If FTB pwoperdees rise in price at a faster rate than other pwoperdee [something that you say happened in 2009 but which even you don't attempt to claim is something that's likely to be a norm of some kind going forwards - I certainly can't think of any reason why it would], and, where the new place is initially x% more expensive than the flat & inflation on the old place is more than x/10 percentage points higher than on the house, rising prices are a good thing for trader-uppers.