FTBers sleepwalking into negative equity which threatens to leave manny trapped

FTBFun

joe_blotts wrote: »

Whose Foxy and Mr Ree? Do Newbies always get accused of being 'someone else'?

They do when their first post is on a "closed" forum, in that it is only visible to those who have logged in.

moneyinmypocket

House prices won't drop it's a supply and demand issue

joe_blotts

moneyinmypocket wrote: »

House prices won't drop it's a supply and demand issue

But arn't house prices down about 20% since their 2007 highs? has the population dropped? fewer people wanting to buy? House prices are not soley decided by supply/demand. Affordability, credit availability, confidence etc all play a part.

FTBFun

joe_blotts wrote: »

But arn't house prices down about 20% since their 2007 highs? has the population dropped? fewer people wanting to buy? House prices are not soley decided by supply/demand. Affordability, credit availability, confidence etc all play a part.

Yes they are - the factors you mention are just aspects of either supply or demand.

Credit availability, for instance, would increase effective demand because more people are able to obtain mortgages to purchase property.

the_flying_pig

joe_blotts wrote: »

But arn't house prices down about 20% since their 2007 highs? has the population dropped? fewer people wanting to buy? House prices are not soley decided by supply/demand. Affordability, credit availability, confidence etc all play a part.

well, no, the prices of pretty much everything that has ever been bought/sole very much was solely set by supply & demand. only, of course, the 'demand' for anything is emphatically not the same as the total population. if it was, then the demand for pretty much everything would creep up by about 0.4% per year or so, in line with population growth.

one in five of all first-home buyers are putting down 10 per cent or less as a deposit.

curse these ultra-strict, historically abnormal, over-onerous, lending standards/rationing.

Graham_Devon

FTBFun wrote: »

I think any article which uses the phrase "plunging", and has its first quote as someone from PricedOut, can be taken with a pinch of salt.

Depends really. While the national indexes don't show a drop per se, they do when you view them in some regions. So in these cases, the article will be completely factual.

It's easy to write it off though, I'd agree. But that ignores the wider message, and as they say, ignore at your peril.

Your advice would appear to be for FTB's to simply ignore this. I wonder if you would do this yourself?

The article states around 40,000 FTB's a year are affected. There are of course, more than 40,000 FTB's a year. So it's certainly not suggesting all FTB's.

Generali

joe_blotts wrote: »

Whose Foxy and Mr Ree? Do Newbies always get accused of being 'someone else'?

Pretty much always. Foxy is an old poster here. Mr Ree is a particularly enthusiastic if slightly one-eyed current poster.

FTBFun

Graham_Devon wrote: »

Depends really. While the national indexes don't show a drop per se, they do when you view them in some regions. So in these cases, the article will be completely factual.

They may show a drop, Graham, but "prices plunging in most areas of the country" seems to indicate a substantial drop in most parts of the country - I'd wager a couple % here and there is not "plunging".

Also a fair few of their numbers have wrong - they say a 3% fall in East Anglia but the Q2 2012 Nationwide report (where this has come from) says a rise of 1.3%; they say a 3% fall in the South East (actually 0.4%, so negligible), and a 3% fall in the South West (actually flat); and a 5% fall in the East Midlands (actually 0.2%, again negligible), and a few others are off too.

http://www.nationwide.co.uk/hpi/historical/Q2_2012.pdf

It's easy to write it off though, I'd agree. But that ignores the wider message, and as they say, ignore at your peril.

The wider message being what exactly? (Other than "the Daily Mail is a load of old toss").

Your advice would appear to be for FTB's to simply ignore this. I wonder if you would do this yourself?

Yes, I'd tell first time buyers to avoid scaremongering articles in the Daily Mail.

The article states around 40,000 FTB's a year are affected. There are of course, more than 40,000 FTB's a year. So it's certainly not suggesting all FTB's.

Except the article header "first-time buyers sleepwalking into negative equity" - accurately this would be "20% of first-time buyers could have a chance of being in negative equity" but that wouldn't make such a good headline.

Graham_Devon

FTBFun wrote: »

Except the article header "first-time buyers sleepwalking into negative equity" - accurately this would be "20% of first-time buyers could have a chance of being in negative equity" but that wouldn't make such a good headline.

When it gets to this level of pedantry, I give up. Don't see you moaning about the express headlines.

Carl31

ess0two wrote: »

Odd really,the majority will happily pay 20k for a car,for it to be worth less than 10k 3 years later.

And dont even bat an eyelid.

quite, it really does go to show that many people that buy houses really do so with a severe lack of understanding of how house pricing works

if they have negative equity, all they know is its 'bad', not considering that the reality is most assets when purchased lose value

those same people are those that think they have 'made a profit' on their house everytime theres a 1% value increase