Why prices must not fall, but have to fall

crash123

Nobody has mentioned "turning Japanese".
If we do not have the falls in house prices this is where we are going.

Kohoutek

macaque wrote: »

Agreed but in a bear market, the banks who dispose of their poor risks quickest will be the ones who survive

Our mortgage market is too concentrated in the hands of a few key institutions for that argument to be relevant.

macaque wrote: »

They can only step in if they have the funds to do so.

Nope...The central bank can create funds from nothing, so the concept of "not enough funds" is not a valid one.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6646923/Bank-of-England-tells-of-secret-62bn-loan-to-save-RBS-and-HBOS.html

http://www.smh.com.au/business/world-business/feds-secret-loans-to-banking-giants-revealed-20110526-1f5zb.html

macaque wrote: »

There must be a theoretical limit. Governments need to borrow and borrowing against a sinking currency means higher interest rates.

There's no theoretical limit, the only limit is the credibility of the currency in question. Contrary to what some people would have you believe, we're a long way whole populations abandoning paper currencies to hoard their wealth in real assets.

macaque wrote: »

I agree its painful but I believe that the sooner we face the music, the sooner our house will be put in order. The economy cannot survive as a collection of BTLs, shops and life style consultants.

Don't you think that structural changes to the UK's economy are best done gradually, not dramatically?

Vagildi

Cleaver wrote: »

It's really weird to see a simple, small discussion forum that has a few dozen actual posters sniping at each other over a 0.3% fall in house prices be described like some grandiose and epic battle between good and evil.

Too high house prices where ordinary people are priced out of the market is EVIL.

undetterred

Vagildi wrote: »

Too high house prices where ordinary people are priced out of the market is EVIL.

Define ordinary?

Sibley

Too high house prices where ordinary people are priced out of the market is EVIL.

You are not priced out. It's the fact you want a 4 bed house as a first time buy instead of a flat that is the problem.

Buy now or stay renting forever. Simple chioce really.

asturdy2

been watching from afar, just like to add to the debate, in burnley house prices are falling, even the 4 bed exec homes you speak of in the most sought after areas. Here are a few examples -

http://www.zoopla.co.uk/for-sale/details/13867030?search_identifier=58d82be1a9870ebafc8385c147a83c49

http://www.zoopla.co.uk/for-sale/details/787288?search_identifier=d81eadaec76c22109bb669ddd2871ed7

or how about a grade II listed 4 bed farm house in the ribble valley reduced by 30% ?

http://www.zoopla.co.uk/for-sale/details/14020774?search_identifier=a38b16f803bcb7598e58874d5be74d02

just to add i suppose iam a bear, lookng to move up te ladder so falling prices is a good thing id say, i have about 50% equity so plenty to play with. I was always obsessed with rising prices thinking it was a good thing but its not, only for people looking to downsize imo of course.

macaque_2

Sibley wrote: »

You are not priced out. It's the fact you want a 4 bed house as a first time buy instead of a flat that is the problem. Buy now or stay renting forever. Simple chioce really.

The average age of the first time buyer is now in the range of 35 to 40 years. By that stage, many of these people will be married with one or two children. A 1 bedroom flat in a tower block is not a suitable home for a family.

Poshbird

Thrugelmir wrote: »

So how does the Government run down NRAM?

Full of borrowers who are unable to remortgage elsewhere. Due to high LTV, negative equity or poor credit rating.

There is hardly any neg equity about now, wait till rates are back up to 5%+ and values are falling, the we will see record numbers of neg equity.

debtistheft

macaque wrote: »

The average age of the first time buyer is now in the range of 35 to 40 years. By that stage, many of these people will be married with one or two children. A 1 bedroom flat in a tower block is not a suitable home for a family.

If the average FTB is looking to buy a family home at age 35 to 40 then why didn't she or he buy a 1 bed home when they were childless at age 30 to 35?

If the logic holds that it is pointless buying a 1 bed home when they would be looking to start a family within 5 or so years, surely the logic also holds that its pointless buying a basic FTB 2 or 3 bed home at age 35 to 40 to then probably buy a better 3 or 4 bed family home at age 40 to 45. It then follows that it's pointless buying that better family home at 40 to 45 because within a decade or so, the kids will be moving out and they would be looking to downsize back to a 1 or 2 bed home.

Why not save all that cost and raise the kids in rented accomodation and buy a house in retirement?

HAMISH_MCTAVISH

macaque wrote: »

The average age of the first time buyer is now in the range of 35 to 40 years. By that stage, many of these people will be married with one or two children. A 1 bedroom flat in a tower block is not a suitable home for a family.

The average age of a first time buyer is 32. Exactly the same age it was two decades ago.

The average age of an unassisted first time buyer is 37.

The average age of an assisted first time buyer is late 20's.

But getting back to that whole 37 year old FTB thing.....

A 37 year old looking to be an FTB now has gone through the late 90's, when houses were at their cheapest relative to income in history, they've gone through the early 2000's when prices were still cheap and interest rates were low, and they've gone through the mid 2000's when 100% mortgages on unbelievably cheap lifetime rates were given to anyone with a heartbeat and a job.

Yet somehow they managed to miss not one, not two, but three of the best opportunities in a generation to buy a house.

!!!!!! were these people thinking???