MSE News: Guest Comment - Glimmer of hope for first time buyers

milliebear00001

Unless homeowners who wish to sell are FORCED to sell, they will refuse to do so at a significant loss. They will simply hang on to their houses for dear life, rather than 'lose' what they perceive to be the equity they've 'built up' in them. It's got nothing to do with the economics and everything to do with the psychology of the average British homeowner.

They will continue to do what they have been doing for the last couple of years, which is to largely sit tight and not budge too much on price. They probably won't sell - but they aren't that bothered.

For example - somebody who wants to 'upsize' by selling the property they bought ten years ago and that they perceive to be worth 'x' amount. The next property being achievable depends on them getting close to their asking price. They can only sell for significantly less than they want (or perhaps even at a loss) - what would you do? Unless I had to, I'd just sit tight and wait it out. Most people don't HAVE to move - they are not in financial trouble etc, so why would they sell? It just doesn't make sense.

I don't buy the 'panic sell cos prices are falling' argument for one minute. Most people are not routinely thinking about selling their houses. In a falling market, I'd do whatever I could to avoid selling and wait it out.

If you want cheaper houses, you need to build more of them.

Jimmy_31

amontlake this scheme is supposed to help FTBs , if this scheme was really there to help FTBs then the government would just be allocating plots of land to FTBs and then we could all build a home for ourselves and not be paying a major house building company to do it for us.

I would rather be paying cost price for the house than a made up number the house building company decides its worth, minus ten percent of course.

How much is ten percent of a made up number actually worth to a FTB.

franklee

Is it really a good idea for the Firstbuy scheme to take what few FTBs there are out of "circulation" by encouraging them to buy a new build? If they were buying "second hand" they'd enable a chain of people to move, with a new build that doesn't happen. Besides which it may be galling for someone who was a FTB of a new build a year or so ago who now wants to move on. They are already competing against any nearby new builds for a sale and now the scheme may poach their potential customers. If the scheme runs long enough that may even happen to those who purchased under Firstbuy. Not to mention new builds generally devalue when they become second hand so aren't necessarily the best investments for FTBs to make in a shaky market.

brit1234

amontlake wrote: »

FTB's do not want lower house prices, they want lower price houses - the difference is key. If house prices fall 25% or 30% then the housing market will completely stagnate as noone will sell. It is even happening now as vendors refuse to accept lower, more realistically priced offers despite recomendations from the better estate agents.

Hi
Sorry to rain on your parade but I'm a first time buyer and I want lower house prices.

You may whine that the market will stagnate and prices won't fall but that is incorrect in a free market. At present we have highly overvalued properties which causes are now gone. A simple return to normal interest rates will purge the system and get the housing market going again (to the benefit of FTBs maybe not the property rampers as you seem to be).

Sorry if I don't accept your housing theories, I'm more open to proper experts such as economists rather than vested interest parties. My trust of mortgage brokers is very low also as huge numbers inflating FTBs salaries to get mortgages which was a major part of our housing bubble. Didn't we have nearly 40% self cert mortgages at the peak.

No the housing bubble is unsustainable, we should allow the market to be free to correct it self and scrap shared ownership/equity scam deals.

HAMISH_MCTAVISH

brit1234 wrote: »

Hi
Sorry to rain on your parade but I'm a first time buyer and I want lower house prices.

And I'd love the price of Ferrari's to fall to a fiver each.

It's not going to happen though.;)

You may whine that the market will stagnate and prices won't fall but that is incorrect in a free market. At present we have highly overvalued properties which causes are now gone. A simple return to normal interest rates will purge the system and get the housing market going again (to the benefit of FTBs maybe not the property rampers as you seem to be).

And you've been whining for several years that prices would fall 50% by X-mas 2009, (remember that signature Brit?) or that prices will crash 50% with.....

the recession
rising unemployment
the end of liar loans
increasing repossessions
new FSA regulations

And now the new excuse is rising base rates.

Despite the fact most economists don't believe they'll rise very far or fast, and are likely to remain below 3% for the next 5 years....

Do you never tire of being do very wrong?

the housing bubble is unsustainable,

We withdrew 70% of mortgage funding from the market, had the deepest recession in a generation, had unemployment rise dramatically, had government spending cuts, and a media full of doom and gloom about housing for the last few years.

Yet prices are stable at around 10% below peak....

Time for you to accept it wasn't a bubble at all, just an imbalance between supply and demand.

scarletjim

amontlake wrote: »

Simply wishing for a house price crash is not the answer and will damage everyone further.

No. It will damage the relatively few people who have bought property at a ludicrously high unsustainable price, but will benefit everyone else.

HAMISH_MCTAVISH

scarletjim wrote: »

unsustainable price,.

And yet prices are being sustained at a level just 10% or so below peak..... Despite the withdrawal of 70% of mortgage funding, a recession, high unemployment, etc.

And in fact are now rising again....

Clearly then, not so "unsustainable" after all.

scarletjim

Totally miissing the point. I agree that generally house prices won't falll much, but who benefits if they keep rising?

J_i_m

There seems to be a lot of probable long time home owners here assuming they know what FTB's want, a lot of waffle about crashes, stagnation, supply & demand etc.

Well, in 2 or 3 years when I may be able to secure a mortgage (touch wood) I'll be a first time buyer, and I can tell you that I don't give a fig about waffle about supply & demand, nor arguments about if houses are overpriced or not... I simply want to be able to afford to buy a satisfactory property in a nice enough area, (i.e not having drug addicts on my doorstep) and for the monthly payments to be within my means and to not be ripped off, it's really not too much to ask is it?

I'm looking to buy a home, not a investment, not a first asset for a would be property tycoon but simply my home. Simples!

milliebear00001

J_i_m wrote: »

There seems to be a lot of probable long time home owners here assuming they know what FTB's want, a lot of waffle about crashes, stagnation, supply & demand etc.

Well, in 2 or 3 years when I may be able to secure a mortgage (touch wood) I'll be a first time buyer, and I can tell you that I don't give a fig about waffle about supply & demand, nor arguments about if houses are overpriced or not... I simply want to be able to afford to buy a satisfactory property in a nice enough area, (i.e not having drug addicts on my doorstep) and for the monthly payments to be within my means and to not be ripped off, it's really not too much to ask is it?

I'm looking to buy a home, not a investment, not a first asset for a would be property tycoon but simply my home. Simples!

I would absolutely agree with that, but looking to sellers to drop their prices so you can buy one is not a winner! They aren't going to drop their prices unless forced to. What I am saying, is that there is little on the horizon, so far as I can see, that is going to force them.

I am looking for practical reasons for the fact that house prices are so high - from there we might be able to find a way to reduce them to a level at which ordinary people all over the country (and that last bit is key) can afford to buy a house on approximately three times income - i.e. without struggling to pay the bills as soon as one of them gets sick/has a baby/goes part-time etc.

In my book, this means building more houses to impact on the current imbalance of supply and demand. It's not waffle - it's common sense.