House price falls would be excellent for the economy

Jimmy_31

HAMISH_MCTAVISH wrote: »

The FACTS are indisputable. There is no opinion here.

Crashing house prices are horrifically bad news for any economy.

It's like trying to explain to a 2 year old that the sky is blue, and then they ask "but what if it were green".... "it might be green one day"....

Absolutely pointless.

And on that basis, I'm off.

There wouldnt be a crash if there had never been a boom, so therefore i think housing booms resulting in over priced homes are bad for the economy

LisbonLaura

I see HM is being selective as usual. A healthy housing market doesn't include the after burn of a credit-fest, but HM insists it does.
I did post his psycho-analysis report on here once, but he whinged to the mods it was a personal attack, so it was removed.
I might post it again one day; meanwhile it is best to always agree with him.

Hamish, you are right in everything you say; particularly about my silver position. As for gold, that was really silly of me as it actually still shows UK property as having some value left.....at the moment.
You were right again, I should have invested in garlic, as you said.

Jimmy_31

HAMISH_MCTAVISH wrote: »

Of course not.

The answer to Ireland's current problem is to bulldoze the surplus housing.

Only then will house prices stop falling, the banks stop needing ongoing bailouts, and the economy be able to recover.

If they bulldoze the surplus houses that would mean more people are trying to buy the houses that are left which would put prices up.

So you actually want it to become harder in ireland for a single working person to put a roof over their head, maybe we should knock a few thousand houses down in britain so that even more people can be skint week in week out.

I think most sane people in britain would like to pay 20k for a 2 bed terrace and not 200k, just think of all the nice shiny things we could all buy with our wads of money saved from mortgage payments, go on tell me each and every home owner in britain spending 500, 600, 700 quid extra a month in the shops is a terrible thing for the economy, hey maybe it is but at least people havent got a massive 25, 30, 35 year debt to worry about.

Cleaver

Jimmy_31 wrote: »

If they bulldoze the surplus houses that would mean more people are trying to buy the houses that are left which would put prices up.

Jimmy, you need to have a think about two things. Firstly, the location of where houses are built and the overall demand for houses in those areas.

Building more houses does not automatically cause houses to reduce in price and knocking down houses does not automatically mean an increase in prices. Let's say you build a massive housing estate containing thousands of affordable houses just to the west of the Northumberland National Park, bascially in the middle of nowhere. I would imagine that this would have no effect whatsoever on house prices, as not many people live in that area, nor want to live in that area. You'd probably struggle to even sell the houses for even a small price. On the other hand, if you were suddenly allowed to build on all the greenbelt land around London, and you did, then you would probably see massive house price falls in London. This is because there is currently a very high demand to live there, which keeps house prices high. So drastically increasing supply in a area of high demand will reduce prices.

Bulldozing these houses in Ireland will make no difference to house prices there as there is clearly a very low demand to live in them. Ireland seems to have more houses than it needs and a lot of these houses are in areas where people don't seem to want to live. That's just simple market economics.

You say that 'more people are trying to buy the houses that are left', but this isn't true. The same amount of people are competing to buy the other set of houses as they don't want to live in the houses that are being bulldozed. This is the same reason why the building of a massive housing estate near Carlisle, or even the knocking down of a massive housing estate near Carlisle, won't have any effect on London house prices, for example.

HAMISH_MCTAVISH

Jimmy_31 wrote: »

If they bulldoze the surplus houses that would mean more people are trying to buy the houses that are left which would put prices up.
.

There are currently 120 houses for every 100 households in Ireland.

Population is falling.

Remind me again, what's the purpose of having a third of a million houses sit empty for a decade or two.... perhaps even forever?

So you actually want it to become harder in ireland for a single working person to put a roof over their head,

No, the exact opposite.

Right now ordinary working people in Ireland have NO CHANCE of buying a house, because the economy has tanked. Thanks to your beloved housing crash.

For that matter, they've got almost NO CHANCE of even getting a job. Thanks to your beloved housing crash taking down the economy. Hence why they're emigrating in numbers not seen since the potato famine.

Oh, and to cap it all off, they're not even getting to spend less over their lifetime if they do buy a house.

All that debt merely transferred from the housing sector to the national debt. The "ordinary working people" still have to pay for it, through higher taxes, lower wages for teachers, nurses, firemen, etc... And of course even those that don't buy will still pay. Even renters are effectively buying someone else's housing debt.... Twice.

I think most sane people in britain would like to pay 20k for a 2 bed terrace and not 200k, just think of all the nice shiny things we could all buy with our wads of money saved from mortgage payments, go on tell me each and every home owner in britain spending 500, 600, 700 quid extra a month in the shops is a terrible thing for the economy, hey maybe it is but at least people havent got a massive 25, 30, 35 year debt to worry about.

Wow.

Just........ wow.

You've learned nothing from posting here at all.

Absolutely remarkable.

IveSeenTheLight

Jimmy_31 wrote: »

I think most sane people in britain would like to pay 20k for a 2 bed terrace and not 200k, just think of all the nice shiny things we could all buy with our wads of money saved from mortgage payments, go on tell me each and every home owner in britain spending 500, 600, 700 quid extra a month in the shops is a terrible thing for the economy, hey maybe it is but at least people havent got a massive 25, 30, 35 year debt to worry about.

The lyrics were not written for this purpose, but certainly I think there are a section who should have this song as their mantra

http://www.youtube.com/watch?v=gfLD-7bCtME

Who would have thought Queen would have been so insightful if not their original meaning.

"Here's to the future, hear the cry of youth,
I want it all, I want it all, I want it all, and I want it now,
I want it all, I want it all, I want it all, and I want it now, "

Jimmy_31

Cleaver wrote: »

Jimmy, you need to have a think about two things. Firstly, the location of where houses are built and the overall demand for houses in those areas.

Building more houses does not automatically cause houses to reduce in price and knocking down houses does not automatically mean an increase in prices. Let's say you build a massive housing estate containing thousands of affordable houses just to the west of the Northumberland National Park, bascially in the middle of nowhere. I would imagine that this would have no effect whatsoever on house prices, as not many people live in that area, nor want to live in that area. You'd probably struggle to even sell the houses for even a small price. On the other hand, if you were suddenly allowed to build on all the greenbelt land around London, and you did, then you would probably see massive house price falls in London. This is because there is currently a very high demand to live there, which keeps house prices high. So drastically increasing supply in a area of high demand will reduce prices.

Bulldozing these houses in Ireland will make no difference to house prices there as there is clearly a very low demand to live in them. Ireland seems to have more houses than it needs and a lot of these houses are in areas where people don't seem to want to live. That's just simple market economics.

You say that 'more people are trying to buy the houses that are left', but this isn't true. The same amount of people are competing to buy the other set of houses as they don't want to live in the houses that are being bulldozed. This is the same reason why the building of a massive housing estate near Carlisle, or even the knocking down of a massive housing estate near Carlisle, won't have any effect on London house prices, for example.

Fair enough i can relate to that, but that does cast doubt on the supply and demand issue in britain, i see no reason at all why house prices in my area got to ridiculous levels during the boom because we already had plenty of empty houses and flats even before the house builders started throwing up new estates everywhere i turned, we now have a lot of new build empty propertys to add to the surplus as well.

So why is the market slowly falling in my area and not massively tanking in a short space of time like in ireland. This isnt me trying to be funny i just cannot understand why a 2 bed new build terrace that was built 12 to 18 months ago in my area and has never even been lived in can still warrant a 150k plus price tag or an older style property with a 120k price tag. We have plenty of supply but zero demand.

Jimmy_31

Like i said hamish there has to be a boom to have a crash.

I wont be made to feel guilty for the state of my country or any other due to people basically being mugs and getting conned by the banks.

If banks throw money at people and people take it then they both have to live with the consequences of their actions, you do realise when me and others talk of wanting a housing crash we dont expect to get a house for 1k but we do expect to pay a fair price for a home, if i end up buying a house from somebody who cannot afford it anymore because they paid a price which was a very large multiple of their salary then so be it, i wont feel sorry for them and i wont feel like i have done anything wrong.

Why should i or others like me suffer because idiots fell for the being outpriced forever garbage.

My beloved housing crash comes straight after the dearly beloved housing boom.

Cleaver

Jimmy_31 wrote: »

Fair enough i can relate to that, but that does cast doubt on the supply and demand issue in britain, i see no reason at all why house prices in my area got to ridiculous levels during the boom because we already had plenty of empty houses and flats even before the house builders started throwing up new estates everywhere i turned, we now have a lot of new build empty propertys to add to the surplus as well.

It doesn't cast doubt on supply and demand in Britain. The forces of supply and demand work exactly the same in Ireland as they do here, but you just have different supply and demand factors at play.

You need to understand that, even in a massively rising market, you will always have homes that are very difficult to sell, or even homes that will remain empty. Imagine for one moment that suddenly apples become really, really popular because of some unknown reason and everyone flocks to the supermarket to buy them. Not only that the supply rate is not going up to match. The price will go up and it will probably be very hard to find quality apples, as people will bid against each other for high-quality apples. That said, some places will still sell bruised or low-quality apples that people just don't want to buy. Apply this simple scenario to your empty flat conundrum.

Jimmy_31 wrote: »

So why is the market slowly falling in my area and not massively tanking in a short space of time like in ireland.

A variety of reasons I guess. The main one would be the things Hamish has been saying on this thread: the fact that Ireland has a much, much higher housing vacancy rate compared to the UK, the fact that they have much higher unemployment, the fact that their economy is in a much worse state, the fact that they have too many homes already for their population, etc. etc.

The simple answer is that in your area there must be enough demand, and people with the money to buy houses, to keep the prices in your area at whatever price they currently find themselves at. If demand goes down, or the economy tanks in your area, or interest rates massively go up, or some other factor happens then presumably prices will 'tank'.

Jimmy_31 wrote: »

This isnt me trying to be funny i just cannot understand why a 2 bed new build terrace that was built 12 to 18 months ago in my area and has never even been lived in can still warrant a 150k plus price tag or an older style property with a 120k price tag. We have plenty of supply but zero demand.

Jimmy, Jimmy, Jimmy. It's just simple economics really. The house near you is on the market for £150k because the seller obviously feels they can sell it for that. Whether they do or not remains to be seen. But the market will sort itself out - if it doesn't sell for that then it will lower in price. Or, the owner can just afford to hold it at that price and the market stagnates. Quality housing is still really, really difficult to find. Ask anyone who is looking to buy a house. We probably looked at around 30 a couple of years ago when we were looking and it was exhausting. Even in a very deflated market, really good houses were selling very quickly.

The house in your example might not be worth £150k, it may only sell for £110k in the end. Or maybe it'll go tomorrow for the asking price to someone who falls in love with it? It doesn't really matter though and don't worry about it, because the market will find it what it's 'worth', and that will be the final selling price agreed between buyer and seller.

Cleaver

Jimmy_31 wrote: »

I wont be made to feel guilty for the state of my country or any other due to people basically being mugs and getting conned by the banks.

You have your opinion Jimmy and that's fine - I hope you get a house some day for a price you feel happy with. I'd certainly like to see houses come down in price a bit so that FTBers can buy, but whether I think that will happen is a different story.

I have some issues with all this 'mugs who bought at peak' and 'getting conned by the banks' stuff you spout.

Most (not all, but most) homeowners buy a house using long term thinking. I've posted this on here before, but if I were a FTBer I'd use the following when thinking about whether I should buy a house:

• Do I have at least a 20% deposit for the house I want?
• Am I buying a house which seems good value? By that I mean, not my own definition of 'good value' ("pah, that house on for £200k is blatantly only worth £100k...". I mean a house that is similar to 2005/6 prices, or isn't priced at top whack, street record price.
• Can I get a mortgage for 4% / 5% fixed for five years or so?
• Is my mortgage repayment 35% or less than my monthly pay?
• Am I ready to see my house go up and down in value over the next decade? Am I ready to face interest rates at 8%?
• Am I ready to see further falls of maybe 10% or more and just be happy that I've bought a house I love, at a rate I can afford that I'm in for the long term? Will I be comfortable seeing my house fall in value?
• Do I really feel that I want to buy a place rather than renting one? Do I know why I want to buy rather than rent?

If you can do all these things you'll be fine. Doesn't matter whether you buy in 2003, 2005, 2007, 2009, 2011, 2013, 2015 or any other year. Sure, if you feel you can wait a year and get another £5k or £10k off a house then that's great, as your mortgage repayment will be less. But not really that much less. Wait 10 years and save half the deposit if you like. You gotta do what you feel is right for you.

But please stop all this 'bought at peak, conned by the banks' rubbish. The vast majority of people can afford their homes and have a long term view which will see them through just fine. Remember, most people who buy now have probably another two, three, four or even more property booms and busts to go through during the course of their ownership.