So, House Prices can't fall uh?

Doozergirl

dolce_vita wrote: »

Some people look at someone driving a new BMW and think the driver is well off. I just see debt and MEW.

When you see me in my car, please note that it is fully bought and paid for. You'll know it by the number plate

Generali

PasturesNew wrote: »

You mean the posh/expensive bits where there's an over-abundance of wealth and opportunity.

Just out of interest, how can you have too much wealth and opportunity? Seems a bit odd to me.

kingkano

phlash wrote: »

Your argument just supports the argument for further house price falls! If people can't obtain it with the available credit around at the time, then the house prices have to fall further such that they can!!

Did you mean to argue that?

I guess it does if you look at it that way. As you probably aready know anyways, I was saying that even after the drops people won't be in any better a position to buy (as they keep presuming they will be).

Which is proven about 5 posts down from mine where somebody has said they'd need 100k in savings just to buy AFTER A CRASH, when lending has tightened.

SO we're going to need what, a 70% crash? Assuming banks will even give mortgages after that, people might be able to afford.

OR we could have a slight dip in house prices, say 2% a year, with banks NOT dropping their lending criteria (but also not extending it) so people can afford?

turnbull2000 wrote:

Have you actually done an ounce of research about the 70's? A super-inflationary environment followed the 70's property boom, causing 30% falls against the value of money.

This escape act is no longer possible to due global economic pressures.

Some people really don't have a clue...

Thanks for pointing out my bad research. I had checked on inflation but I think somewhere along the way I had the wrong figures or something.

As for the rude comment at the end, no real need is there.....

PasturesNew

Generali wrote: »

Just out of interest, how can you have too much wealth and opportunity? Seems a bit odd to me.

Good point. I've never had any so I didn't think that far ahead.
That must be why I've not got any - as there's no such thing as too much wealth/opportunity .... it's not being shared out!

Lazy_Runner

I don't claim to understand how the following will play out, but here are some thoughts:

When prices are dropping, people are less likely to sell (except in certain circumstances, see below). Everybody has a value for their house, and most will hang tight rather than sell. Therefore supply goes down. Does this mean the sell to renters get the bargains they have been waiting for? Not sure. With less houses on the market, but still possibly the same number of buyers?

When prices are falling, people will only sell if they have to. That means because of job moves, redundancy, repossession etc.
Well if it is job moves, at least means the economy is still in good shape so that people may pay the asking price or a little bit less.

If the economy is tanking, and the selling is due to redundancy, it is a buyers market.

If the sale is because of a repossession, the price might be lower, but the previous owners may have not had the finances to do any repairs etc i.e. keep the house in good condition. So yes the house will be cheap but may need a load of money spending on it.

So my essential point is that when prices are falling, people aren't going to sell and the bargains that people are expecting just won't show up.

nelly_2

^ you missed out divorce and seperation, which also go up when money gets tight.

Cissi

So my essential point is that when prices are falling, people aren't going to sell and the bargains that people are expecting just won't show up.

That's why there is always a slowing down of the market before and at the beginning of a crash. But eventually some people will have to sell, for the reasons that you listed and others (repossession, relocation, owner's death...). Once a few vendors start accepting substantially lower prices, the snowball starts to roll. It's a slow but inevitable process.

Everyone (including estate agents) seems to agree that the market has already slowed down considerably this year. To my mind that's the strongest indication yet that the crash is close.

Rick62

What you say, Lazy Runner, is the reason that property price falls tend to happen over 2 to 3 years rather than days for shares. Because of sentiment people have the idea that their house is worth £X00,000 and won't sell for less, but eventually over years their sentiment changes, they see other property selling for less (the forced sells) and get to the point where their attitude changes to 'OK, our house was worth £X00,000 but is now worth £Y00,000 (less) but we need to move on with our life and whatever house we buy will also be correspondingly cheaper'.

Property is driven massively by sentiment. Also not everyone needs to be selling, prices are set at the margin, i.e. by the houses that are sold, not by the ones that are not sold. So once a few people sell, redundancy, high debts, forced move, split/divorce, trading up, overextended BTLs etc, then the price will adjust based on those sales.

globalds

I have been reading and enjoying this thread ...I just think that there is a bit of the puzzle being missed .
Property owners who own 2 homes either in the UK or overseas sit at the wealthier end of society .Yet any loss of value would hit them twice as hard .the efect on sentiment because of this could be enough to start the snowball rolling
I am thinking specifically here of people investing in Dubai or USA .both places have amassed a huge oversupply of developments and as we can see with the USA need cheap money to keep supply ongoing .
So What i'm saying is "I think a drop in prices in a few more places globally would be enough to start a knee jerk that would worry enough people in UK to stop people wanting to buy"
the unkown is whether there is still enough demand in UK to mop up this effect ....I think it is too close to call .
People with a steady income are in a much better position to talk to a bank than some poor s%d who has been made redundent.
Banks with a pile of bad debt from overseas investments are going to be more inclined to negotiate .
I would have to say if forced ..NO crash ..Just no more Rises ....Just stuck for 7-10 years .....Not very exciting I know ....I think maybe thats what the sytem wants.

A_Fool_&_His_Borrowed_Mon

scope wrote: »

Keep in mind that when media talk about prices going down they often talk about down 2% on last year - what they mean is often "last year they went up by 8%, this year they went up by 6%", so 2% less, but far from a price reduction.

And inflation is currently running at......?

(Your Pound is being devalued, so all the extra noughts on the prices being added over the years are being counteracted by a drop in value of the pound.)

Fill one bucket by emptying another into it?

Comprende?
:money: