Who'd vote for lower house prices? Not many...

wotsthat

Gracchus_Babeuf wrote: »

Why are falling prices bad for the economy? Maybe bad for the construction industry and estate agents, but why anyone else? It's higher house prices that benefit the rich, not lower prices. The rich have a lot fo their wealth tied up in property and land - just look at the Duke of Westminster. And what do you mean by 'absence of lending'? Mortgages are out there, but you do need a decent deposit, which is no bad thing.

Falling prices reduce homeowners net worth. They'll have reduced access to better mortgage deals. There will be more people in negative equity who will be less able to move house for job moves. House price falls are associated with reduced consumer spending and confidence.

Absence of lending means exactly what it says. Less loans are being approved by lenders. Arguably it's because people don't want to borrow but it's looking more likely, to me at least, that banks are restricting lending because they don't want to lend because of pressure to improve balance sheets and over-caution.

I'm better off than the average person and bought a second home that would have been suitable for a FTB. I had a 25% deposit sat in cash in the bank, a fast-tracked mortgage, and my cheeky no chain offer was taken seriously by the vendor. Prices have fallen too since I've been looking. Brilliant for me - how's it helped the poor?

Not quite in the Duke of Westminster league. I don't know anything about him but would imagine he's delighted to be mopping up properties competing on his ability to fund purchases rather than price.

Can see the argument why price rises might not be desirable but not why prices should fall. Slowly stagnating/ reducing real prices seems like the cautious compromise.

Gracchus_Babeuf

wotsthat wrote: »

Falling prices reduce homeowners net worth. They'll have reduced access to better mortgage deals. There will be more people in negative equity who will be less able to move house for job moves. House price falls are associated with reduced consumer spending and confidence.

All psychological. 'Net worth' is an intangible concept because it's not necessarily related to cash in the bank. Many pensioners on £150 a week are worth £400k but that doesn't make then rich. Negative equity is due to lenders lending too easily to people without decent deposits.

wotsthat wrote: »

Absence of lending means exactly what it says. Less loans are being approved by lenders. Arguably it's because people don't want to borrow but it's looking more likely, to me at least, that banks are restricting lending because they don't want to lend because of pressure to improve balance sheets and over-caution.

Nothing wrong with that. If you can't afford to buy, rent.

wotsthat wrote: »

I'm better off than the average person and bought a second home that would have been suitable for a FTB. I had a 25% deposit sat in cash in the bank, a fast-tracked mortgage, and my cheeky no chain offer was taken seriously by the vendor. Prices have fallen too since I've been looking. Brilliant for me - how's it helped the poor?

My wife and I bought with a big 44% deposit in 2005, but we were 38 and 35 years old at the time. We are very far from being rich, but we are responsible borrowers who waited until we could properly afford to buy. Unlike you we are also not into property speculation. I would favour a law to stop speculators like you from buying multiple properties without much larger deposits.

wotsthat wrote: »

Not quite in the Duke of Westminster league. I don't know anything about him but would imagine he's delighted to be mopping up properties competing on his ability to fund purchases rather than price.

Can see the argument why price rises might not be desirable but not why prices should fall. Slowly stagnating/ reducing real prices seems like the cautious compromise.

Well, stagnation is what we've had for the last few years, but prices are beginning to creep up in the wealthy south-east.

chewmylegoff

personally i wouldn't vote for any party which had a policy to attempt to control house prices in any particular manner, because anyone publishing such a policy would be confirming to the entire world that they are as mad as a balloon.

to clarify, if a party said "we will spend £20 billion building houses cos we obviously need more houses" i would think "that sounds sensible, i might vote for that". if they said "we wil spend £20 billion building houses in order to saturate the market with new property to force the price of houses down" i would think "you are as mad as a balloon".

chewmylegoff

net worth is not an intangible concept as you can sell all of your assets, pay off all your debts, then withdraw the remaining cash from the bank and put it on a table.

Gracchus_Babeuf

chewmylegoff wrote: »

net worth is not an intangible concept as you can sell all of your assets, pay off all your debts, then withdraw the remaining cash from the bank and put it on a table.

Technically yes, but realistically this is not feasible unless you are planning to emigrate.

wotsthat

Gracchus_Babeuf wrote: »

All psychological. 'Net worth' is an intangible concept because it's not necessarily related to cash in the bank. Many pensioners on £150 a week are worth £400k but that doesn't make then rich.

I don't much disagree with anything you've said except for this.

Someone with a net worth of £400k is richer than someone with a net worth of £250k. Liquidity is another matter.

It's maths. The psychology comes in because as net worth increases so does confidence and the likelehood to increase spending. Irrational? Maybe but it's standard human behaviour.

wotsthat

Gracchus_Babeuf wrote: »

Technically yes, but realistically this is not feasible unless you are planning to emigrate.

Or downsize? According to Lloyds downsizers are driving the current sales volumes - not entirely convinced but according to them the average downsizer buys a new house and releases £100k.

Not sure they'd be voting for lower house prices (well not until they'd got the £100k stashed away).

Eellogofusciouhipoppokunu

DervProf wrote: »

It's a function of supply and demand, demand being governed by all sorts of things. Credit availabilty, promotion of property ownership etc.

We are told that HPI is simply down to a shortgage of property. I happen to believe that there's much more to it than that. Look at what happened to property prices in America, Spain etc. Yes, they may have had more supply than us, but they still managed to get HPI. The "excuse" for HPI here is that we have a shortgage of property. I still believe that with proper regulation of lending a decade ago, the property market would be in a better state at the moment, and prices might not be quite so high. We had our feast, and not it's famine.

If I could thank this twice I would do. It should be nominated for 'post of the month'. Totally hit the nail on the head.

moneyinmypocket

High house prices are fantastic for the country

Gracchus_Babeuf

wotsthat wrote: »

I don't much disagree with anything you've said except for this.

Someone with a net worth of £400k is richer than someone with a net worth of £250k. Liquidity is another matter.

It's maths. The psychology comes in because as net worth increases so does confidence and the likelehood to increase spending. Irrational? Maybe but it's standard human behaviour.

This goes back to the meaning of 'net worth'. If you are living inside a million it doesn't mean it's there for spending.