'We've reached a tipping point' Signs of house price weakness

aardvaak

The cracks are showing but won't completely fall apart until after the election

Thrugelmir

aardvaak wrote: »

The cracks are showing but won't completely fall apart until after the election

Plenty of cracks appearing in sectors outside of residential property already.

wotsthat

aardvaak wrote: »

The cracks are showing but won't completely fall apart until after the election

Never understood this train of thought. If the government are able to fine tune house prices on a month by month basis why are there any economic problems left given this level of skill?

aardvaak

wotsthat wrote: »

Never understood this train of thought. If the government are able to fine tune house prices on a month by month basis why are there any economic problems left given this level of skill?

Obviously they are "fine tuning" to try and win the next election.

padington

aardvaak wrote: »

Obviously they are "fine tuning" to try and win the next election.

But don't most people want cheaper housing ?

gallygirl

padington wrote: »

But don't most people want cheaper housing ?

That would be an interesting calculation.

Let's say prices dropped by 25%.

Owners would be split:
- Current low LTVers would be hit, many would be unable to move. Any already in difficulties could lose home. Unlikely to be coupled with an interest rate hike though so affordability wouldn't be affected for most.
- Those with equity wanting to move would presumably be pleased - their 300k house would now sell for 225k, but the house they want at 450k would now be 337.5k, a jump up of 112.5k instead of 150k.
- Those wanting to downsize and release equity would either lose out or sit and wait for a rise. Those having to sell would be hit significantly - especially if downsizing and releasing equity formed the backbone of their pension plans.
- The majority I suspect would shrug their shoulders and go 'oh well' as they had no intentions of moving anyway.

Landlords:
- Those heavily leveraged would be in difficulty if they had to remortgage etc (probably a lot of you will say 'good' - but not good for the tenants who get chucked out).
- Those with plenty equity or separate money may well see it as a buying opportunity. Lower prices means higher yields.
- Again, I suspect the majority would shrug their shoulders and go 'oh well'

Tenants:
- Those renting while they saved for a deposit would need less £ in theory - in practice though they may actually need more as lenders may up the criteria and deposit required.
- Those with cash waiting for an opportunity to buy would definitely benefit - if they had the confidence to call the bottom.
- What would the impact be for 'permanent tenants' - e.g. those on benefits who could never get a mortgage, or those who simply don't want to buy? Would a 25% drop in house prices lead to a drop in rents? That would depend on how many renters were suddenly buying. If the crash was linked to a recession then there would be fewer people buying and more forced to rent - would that offset the additional purchasers and still keep rental demand roughly the same therefore shoring up rental prices? Or if a depression would rents have to fall?

HPC'ers:
- I assume they'd do nothing except gloat and wait for a further 25% drop before they'd consider buying?

People may want cheaper housing - but it doesn't seem to follow that a 25% drop will lead to any significant change for most people. The 'cheapest' option, IMO, is still to buy a 'nice enough' house, pay off the mortgage and stay in it for 50 years. If you pay off the mortgage in say 20 years the maintenance and upkeep over 30 years is going to be cheaper than renting for 30 years.

James_B.

Crashy_Time wrote: »

Indeed. The nastiest comments on here come from those who have "bought" IMO, because many of them are obviously bricking it :T

Most are clearly not. Like many, I bought in London because I preferred to own. I've a flat on the Thames, which of course cost an arm and a leg, but I get to do what I want in it.

I'd prefer to own a house on the river in Limehouse, and to get that, probably need property round here to drop a bit.

Being an owner is not necessarily the same as wanting prices to increase, it's as often as not more about wanting to have security.

hpifever

You overpaid for the lovely rabbit hutch "flat" on the Thames.

Crashy_Time

James_B. wrote: »

Most are clearly not. Like many, I bought in London because I preferred to own. I've a flat on the Thames, which of course cost an arm and a leg, but I get to do what I want in it.

I'd prefer to own a house on the river in Limehouse, and to get that, probably need property round here to drop a bit.

Being an owner is not necessarily the same as wanting prices to increase, it's as often as not more about wanting to have security.[/QUOTE]


There is insecurity if you have a large mortgage in this deflationary environment though? The debt is just sitting there while the borrower is less able to service it? The insecurity of renting is overdone on forums IMO, I have been in one rental property for seven years in the past, and got two years notice of property and land being sold to a developer in one other case.

KR200

Crashy_Time wrote: »

James_B. wrote: »

Most are clearly not. Like many, I bought in London because I preferred to own. I've a flat on the Thames, which of course cost an arm and a leg, but I get to do what I want in it.

I'd prefer to own a house on the river in Limehouse, and to get that, probably need property round here to drop a bit.

Being an owner is not necessarily the same as wanting prices to increase, it's as often as not more about wanting to have security.[/QUOTE]


There is insecurity if you have a large mortgage in this deflationary environment though? The debt is just sitting there while the borrower is less able to service it? The insecurity of renting is overdone on forums IMO, I have been in one rental property for seven years in the past, and got two years notice of property and land being sold to a developer in one other case.

The thing is Mr Crashy is that price go up and down but in the long term they ultimately go up.

I couldn't care less about +5% here and -10% there. We're not talking crash figures here.

Renting is indee dead money. Who cares if you "over pay"? big deal.

In 25 years time where will you live if you haven't bought?

My angle is security. Unlike the HPC nutters your common garden human simply wants a gaf.

An up or down market has no bearing on quality of life.