FTBers sleepwalking into negative equity which threatens to leave manny trapped

FTBFun

Graham_Devon wrote: »

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

Nice comeback.

Graham_Devon

wotsthat wrote: »

Journalists are writing articles to shift newspapers and keep web traffic high. They aren't generally known for interpreting data in a way that would allow someone to make an informed judgement.

You really should be a journalist.

IveSeenTheLight

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.

Demand = Desire and Ability.

Desire may still be as high or higher than in 2007 given the population numbers, however their ability has been diminished due to deposit requirements and access to credit.

So the option in the meantime is to live else where i.e. rent , live with parents etc, whilst they work on meeting the criteria to get a mortgage.

Nett result is Demand is far lower.

Now as a result, Supply sees that there is less demand and may not be willing to compete with other supply to drive prices down, hence you see Supply also reducing until the Supply and Demand are balanced again.

Hence why we saw prices drop and now are rleatively stable.

Which direction will they go?
A lot depends on what happens of course. Population is still increasing so there will be increasing desire, however the financial markets are not very stable at the moment so could we see a further contraction of credit availability.

One thing is for certain that prices will increase in the long term.
There may be a change in lifestyle and available choices, but people need to live somewhere and will need to pay to become an owner or to rent.

IveSeenTheLight

Graham_Devon wrote: »

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

Oh the irony!!!

joe_blotts

FTBFun wrote: »

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.

You imply therefore that house prices are set by latent demand and supply. Seeing as you admit that demand is set by availablitiy of credit and affordability then it is not just simple suppy/ demand is it? Certain factors affect the supply demand equation which is what I was saying and what you've just admitted!

pinkteapot

Who's Manny?

The article is primarily talking about new-builds and the risk of negative equity in the short-term. This has always been the case. New-builds should come with a warning that their value is more likely to fall in the short-term and buying them should be considered a long-term decision. The problem is the number of new-build flats in recent years. For people keen to move out of home, a flat seems great. It's suddenly less appealing three years down the line when they're married and want kids. New-builds need to be bought with a horizon of at least 10 years and for many, this isn't the case when they buy a flat.

quantic

Similar thing going on in our estate, fortunately for us, we bought well below the original price as it was a repossession. The larger houses in our estate cost 250k new and are now selling for around 180k, ours originally sold for 180k and they sell for 120-130k at the moment...

They are selling, but only when the sellers reduce their asking to a more realistic number.

Makes me feel sorry for the guys who bought at the height, but some of them only paid 40-50k for their previous houses and sold them for 180k so its swings and roundabouts

Oh and it might help if the FTBers bought cheaper houses and actually paid back some equity rather than over stretching themselves, because they *deserve it*, our friends have either interest only or 35/40 year mortgages, whereas we bought a cheaper beginner house and have a 15 year mortgage.

FTBFun

joe_blotts wrote: »

You imply therefore that house prices are set by latent demand and supply. Seeing as you admit that demand is set by availablitiy of credit and affordability then it is not just simple suppy/ demand is it? Certain factors affect the supply demand equation which is what I was saying and what you've just admitted!

No i'm not. Are we agreeing to the same thing but with different wording?

Credit availability does affect demand - the easier it is for credit, the upward pressure on demand, and vice versa.

Mr._Pricklepants

Mr._Pricklepants wrote: »

Anyone else thinking this joe blotts guy is another reincarnation of our beloved Foxy?

I have to apologise for suggesting joe blotts is one of Foxy's sockies, as he's obviously not.

joe_blotts

FTBFun wrote: »

No i'm not. Are we agreeing to the same thing but with different wording?

Credit availability does affect demand - the easier it is for credit, the upward pressure on demand, and vice versa.

Possibly. I just thought 'supply demand alone sets price' is a bit too simplistic but I get your point.