50% house price falls

Badger_Lady

The very fact that so many people (on this forum anyway) are speculting a house price crash in the hope that they will "buy, buy, buy" is the very reason that any "crash" would be severely limited.

As long as there is a market for the housing, it will retain market value. The minute people start clambering to buy "cheap" houses, sellers will be able to put their prices higher and higher (although from a lower starting point).

If there is a true crash, you won't be able to afford any of the "cheap" houses. As long as you can afford them, it won't happen.

Doc_N

Badger_Lady wrote: »

The very fact that so many people (on this forum anyway) are speculting a house price crash in the hope that they will "buy, buy, buy" is the very reason that any "crash" would be severely limited.

As long as there is a market for the housing, it will retain market value. The minute people start clambering to buy "cheap" houses, sellers will be able to put their prices higher and higher (although from a lower starting point).

If there is a true crash, you won't be able to afford any of the "cheap" houses. As long as you can afford them, it won't happen.

In any market there will always be buyers and sellers. Once the sellers outweigh the buyers, though, prices fall to reflect that. Yes, there are plenty of people wanting to buy cheaper houses, but once the BTL people are forced out of the market (as is already happening) there will be far more sellers than buyers.

That's why so many people are now predicting a crash. There simply won't be enough buyers to soak up all the distress sales. And the more people talk about a crash, the more confidence is knocked, and the more likely it is to happen.

manhattan

As soon as falls start happening, people will not buy. It would be the opposite effect of the "houses go up" lemmings.

Feelings would change and they will not want to buy a falling knife!
:rotfl:

tr3mor

Badger_Lady wrote: »

The very fact that so many people (on this forum anyway) are speculting a house price crash in the hope that they will "buy, buy, buy" is the very reason that any "crash" would be severely limited.

Not many people will buy a house if they know they can get it cheaper in two weeks time.

Why would anyone try to catch a falling knife?

Badger_Lady

When are we going to get bored of the falling knife analogy? I'm there already!

I appreciate your comments but, with so many would-be first-time-buyers currently unable to buy (and prices remaining strong despite this), I can't see the shortage of buyers.

The average age of an FTB now is 34, but if a 22-yr-old suddenly sees that a flat in their area is suddenly an achievable price, they're gonna go for it.

Maybe everyone will be a shrewd investor and wait for the bottom of the troph, but where will they live if there are no landlords? Are we suggesting that the majority of 18-33 year olds are going to retreat to their family home in order to protect their investments?

The rush to get back into their own homes would make the "troph" short-lived indeed!

tr3mor

Badger_Lady wrote: »

When are we going to get bored of the falling knife analogy? I'm there already!

Okay, I'll restate it. No lender in their right mind would give people decent terms secured against a falling knife.

And surely it's a "Trough" not a "Troph".

Doc_N

Badger_Lady wrote: »

When are we going to get bored of the falling knife analogy? I'm there already!

I appreciate your comments but, with so many would-be first-time-buyers currently unable to buy (and prices remaining strong despite this), I can't see the shortage of buyers.

The average age of an FTB now is 34, but if a 22-yr-old suddenly sees that a flat in their area is suddenly an achievable price, they're gonna go for it.

Maybe everyone will be a shrewd investor and wait for the bottom of the troph, but where will they live if there are no landlords? Are we suggesting that the majority of 18-33 year olds are going to retreat to their family home in order to protect their investments?

The rush to get back into their own homes would make the "troph" short-lived indeed!

The flaw in this argument, though, is that most of these potential buyers cannot afford anything like the current asking prices. They can only get back into the market if there's a steep drop in prices. That steep drop might also be termed a crash - it depends on your viewpoint perhaps.

Don't expect them to push prices back to where they were a few weeks ago in the short/medium term - they just don't have the buying power to make that happen.

Badger_Lady

Tr3mor wrote:

And surely it's a "Trough" not a "Troph"

:rotfl:
Ok, Ok, it's a Monday morning and I've got no kitchen, Mr Pedantic! (should have seen me when I arrived at work - had a V-neck top on back-to-front!)

Generali

Badger_Lady wrote: »

When are we going to get bored of the falling knife analogy? I'm there already!

I appreciate your comments but, with so many would-be first-time-buyers currently unable to buy (and prices remaining strong despite this), I can't see the shortage of buyers.

The average age of an FTB now is 34, but if a 22-yr-old suddenly sees that a flat in their area is suddenly an achievable price, they're gonna go for it.

Maybe everyone will be a shrewd investor and wait for the bottom of the troph, but where will they live if there are no landlords? Are we suggesting that the majority of 18-33 year olds are going to retreat to their family home in order to protect their investments?

The rush to get back into their own homes would make the "troph" short-lived indeed!

That wasn't the case in the early 90s. As prices fell, people became more and more reluctant to buy.

Whereas in the late 80s, the human interest stories on the news were 'Broom Cupboard in Kensington Sells for £68,000(?)" or "Buy Now While you can Still Afford It!", in the early 90s news items about property had become either "Woman Hands in Keys in to Building Society - I didn't Know What Else to Do Sighs Woman" or "Couple With Negative Equity Trying to Raise Triplets and Twins in a Studio Flat - We've Negative Equity and no Space Bemoan Couple".

If prices are falling, why buy today if you can buy for less tomorrow?

carolt

Have to disagree, Badger_Lady - I'm a potential FTB and we've been looking for a suitable house in our village for years, dispirited as houses kept racing up. But when let down over a house in February, we decided enough was enough, prices were ridiculous and - whilst I'd been predicting a crash for years - this time we were going to put our money where our mouth was and give up the search until prices had fallen sufficiently. I greatly enjoyed telling estate agents (oh so politely) which way the market was headed and that, regretfully, I was no longer interested. We rent a house (from long-term landlords - not likely to sell up as have little if any mortgage to cover) but I am sure that many younger people WILL choose to stay at home/share with friends or partners etc rather than buy. And some of the economic migrants that have arrived in recent years may choose to return home if the economy takes a downturn, thus further reducing the need for rental properties, when, as predicted, buy-to-let landlords sell up in droves.

Remember - noone ever HAS to buy. But people do HAVE to sell. And in a downturn, that becomes much harder. Potential buyers can always sit it out and wait till prices are right - sellers such as those facing repossession etc, can't. And if you thought prices would be say, 10% cheaper in 6 months, would you buy? Really?