House price falls would be excellent for the economy

chucky

DervProf wrote: »

Eh ?

Are you just trying to prove The_Fox wrong ? If you are, then I think you are missing the point here. For a start, it is worth debating the pro's and con's of cheaper property prices over the short and long term (yes, I know there is a difference between falling and fallen house prices). I also have to disagree with your conclusion that falling house prices would cripple the economy. If house prices fall 2% per annum for the next 10 years, I doubt that the economy would be "crippled".

not at all trying to prove the Fox wrong.

falling prices would be a big economic issue - in the short term or even long term. there is too much dependency on a personal and a financial sector level for house prices to fall. it would be a massive problem for the UK economy to resolve, which i don't think it can. banks balance sheets are a very important fundamental to maintain otherwise we have the wealth destruction that occurred in 2008.

lower house prices are achievable by 'real house price drops' through inflation, so nominal prices increasing by less than inflation which in the end would mean lower house prices.

house price falls aren't good at all but inflation adjusted prices are good. the obvious down side is having high inflation. the best worst case scenario is the inflation one unfortunately.

DervProf

So, having a continuing shortgage of property available for purchase (or even rent) is good for the economy ?

chucky

DervProf wrote: »

So, having a continuing shortgage of property available for purchase (or even rent) is good for the economy ?

as you know that's a different subject completely.

increasing the supply of property restrains excess demand by increasing supply, it's unlikely to happen with the current government or at least not enough property will be built.

all i'm saying is that falling house prices hurt the financial sector which this economy is very dependent on.

the only realistic way to achieve lower house prices and not damaging the economy is through inflation (with economic growth) or by increasing supply of rented or property to buy. the first option is the most realistic unfortunately.

chucknorris

chucky wrote: »

as you know that's a different subject completely.

increasing the supply of property restrains excess demand by increasing supply, it's unlikely to happen with the current government or at least not enough property will be built.

all i'm saying is that falling house prices hurt the financial sector which this economy is very dependent on.

the only realistic way to achieve lower house prices and not damaging the economy is through inflation (with economic growth) or by increasing supply of rented or property to buy. the first option is the most realistic unfortunately.

But surely you are talking about in the real world chucky! You seem to have forgotten that in the magical place of 'round my way' rents and property values can fall while the rest of the economy is free to prosper.

chucky

chucknorris wrote: »

But surely you are talking about in the real world chucky! You seem to have forgotten that in the magical place of 'round my way' rents and property values can fall while the rest of the economy is free to prosper.

they seem to forget if we have house prices falling we probably have a deflationary environment - expecting wages to rise in a deflationary environment isn't going to happen

lower wages mean lower multiples to buy property, why have lower property values if your salary is dropping too and it doesn't help you buy.

chucknorris

chucky wrote: »

they seem to forget if we have house prices falling we probably have a deflationary environment - expecting wages to rise in a deflationary environment isn't going to happen

lower wages mean lower multiples to buy property, why have lower property values if your salary is dropping too and it doesn't help you buy.

I think you credit 'they' with too much nous, it probably hasn't even occurred to them, rather than forgotten.

Jimmy_31

wotsthat wrote: »

Foxy, YOU want house prices to fall so YOU can buy and then YOU'D be quite happy to see them rise after that.

Talk about transparent.

I want house prices to fall to a price im happy to pay but the last thing i want when i get my house is for another house price boom to kick in and my house to double or triple in value.

That wouldnt do me any favours when i want to move into my next home would it.

DervProf

chucky wrote: »

they seem to forget if we have house prices falling we probably have a deflationary environment - expecting wages to rise in a deflationary environment isn't going to happen

lower wages mean lower multiples to buy property, why have lower property values if your salary is dropping too and it doesn't help you buy.

Some of us can see a UK economy beyond the one where everything hinges on property prices. Yes, it's not going to happen overnight, and maybe not in my lifetime, but if we sit back and accept that the economy relies on the property market to a large degree, then it is very likely that the property market will forever have it's tight grip on the UK economy. I'm sure that earlier in my lifetime, house prices didn't have such an importance attached to them with respect to the health of the wider economy. Do we want a property prices to determine the health of the economy, or would it be better to encourage an economy where a strong performance leads to higher property prices ?

Jimmy_31

RenovationMan wrote: »

I havent had the house valued since we bought it, so all I have to plan against is the original purchase price. When I remortgage at the end of my current deal I will have the house revalued for the mortgage and will update the signature and see how my overpayments stack up against the new valuation.

The Nationwide figure is an average of asking prices across the whole country and so would not represent any sort of accurate figure on the actual value of my house. Even a valuation for a mortgage is a bit hit and miss, the only real way to know what my house is actually worth is to sell it, but would be a bit of an extreme way to calculate my home ownership percentages.

I said a similar thing in the halifax hpi thread, i said i didnt really care what the average price of a house was because my thoughts are along similar lines to yours on the matter ie the average price given out by the banks would not represent any sort of accurate figure on the actual value of a house i was going to buy.

I was promptly labelled thick as sh*t.

Im planning on offering a price im happy to pay for each house i try to buy, what im supposed to do with this average figure given to me by the banks i dont really know because i have yet to see a house that is described as average in the EAs description.

shortchanged_2

chucknorris wrote: »

But surely you are talking about in the real world chucky! You seem to have forgotten that in the magical place of 'round my way' rents and property values can fall while the rest of the economy is free to prosper.

Well I think 'round my way' probably covers every part of the UK apart from the South East and of course Aberdeen.