Can you imagine the destruction in the UK if the property market crashed

kabayiri

James_Green_1982 wrote: »

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I own my own home. I'd be delighted if all the houses in the UK dropped in value by 50% tomorrow. It would mean my savings were worth more, in terms of house purchasing. So I could buy a bigger house.
...

I know quite a few BTL types who have no emotional investment in their rentals.

They might be more inclined to just get rid of a property if the market turned. It depends where they are in their career path etc.

James_Green_1982

kabayiri wrote: »

I know quite a few BTL types who have no emotional investment in their rentals.

They might be more inclined to just get rid of a property if the market turned. It depends where they are in their career path etc.

Wouldn't that mean ''selling low''?
Surely if prices fall, that's the time to buy - not sell.

kabayiri

James_Green_1982 wrote: »

Wouldn't that mean ''selling low''?
Surely if prices fall, that's the time to buy - not sell.

I've only done comparitive analysis between fleet sales and sellers of private vehicles.

It typically takes longer to shift a private vehicle, because there is a resistance to adjust the price by the seller.

I can understand why someone would be reluctant to reduce the price of their home in a declining property market. I have been in that exact same situation, both in the UK and Canada.

At rental is just an economic unit. No emotional attachment.

James_Green_1982

kabayiri wrote: »

I've only done comparitive analysis between fleet sales and sellers of private vehicles.

It typically takes longer to shift a private vehicle, because there is a resistance to adjust the price by the seller.

I can understand why someone would be reluctant to reduce the price of their home in a declining property market. I have been in that exact same situation, both in the UK and Canada.

At rental is just an economic unit. No emotional attachment.

That may be true.
But my point was, why sell any asset (shares, property or land etc) in a falling market?
Why not wait until you have made a gain?
Long-term assets should not need to be sold at short notice. You should plan so you have the ability to hold them for 10-20 years plus.
I would argue that due to high transaction costs and high costs of improvements etc - property should be treated as a very long-term asset. More so than shares or funds etc.

GreatApe

James_Green_1982 wrote: »

Interesting that a ''double income'' is now assumed to be ''normal'' by so many of the public.
One of the factors that has actually increased mortgage lending and house prices.
Very insidious, yet successful, propaganda - drip fed over the years.

Back in the 1950, 60s, 70s, many men on reasonable wages could raise a family on one income.

This is largely self indulgent propaganda

Some men could raise a family on one income just like some men can raise a family on one income today. It was never the norm for just one parent to work. My mother worked, my grandmothers worked, my great grandmothers worked ....

House prices are actually not all that high in most of the UK

More importantly my point is a house price crash is not going to massively improve anyone lives they might save a few pounds a month and the time spent on this could be better used in increasing earning power rather than hoping for a hpc that probably isn't going to happen

GreatApe

James_Green_1982 wrote: »

That may be true.
But my point was, why sell any asset (shares, property or land etc) in a falling market?
Why not wait until you have made a gain?
Long-term assets should not need to be sold at short notice. You should plan so you have the ability to hold them for 10-20 years plus.
I would argue that due to high transaction costs and high costs of improvements etc - property should be treated as a very long-term asset. More so than shares or funds etc.

average property transacts ~ once every 23 years so it is seen as a long term investment by most

Also no one knows what the price of an asset will be in x months/years time or that would be its price today minus the discount rate

AG47

James_Green_1982 wrote: »

Wouldn't that mean ''selling low''?
Surely if prices fall, that's the time to buy - not sell.

Not if it has much further down to go over several years

James_Green_1982

GreatApe wrote: »

This is largely self indulgent propaganda

Some men could raise a family on one income just like some men can raise a family on one income today. It was never the norm for just one parent to work. My mother worked, my grandmothers worked, my great grandmothers worked ....

I'm not saying married women didn't work in the past, but if you add another wage to a mortgage affordability calculation - it can only increase the amount that is able to be borrowed.

Herzlos

James_Green_1982 wrote: »

Wouldn't that mean ''selling low''?
Surely if prices fall, that's the time to buy - not sell.

Sure, but bear in mind that if you bought early enough, you could sell at a 50% drop and still make a profit over purchase price (before factoring in rent yields and such). It may be easier to just get rid if you're worried about it selling for less later, or it sitting empty and needing maintenance.


More likely, at a 50% crash, is that landlords will just stop doing maintenance on existing properties (why spend more money on them than you need to if the value halved), whilst scooping up a few more cheap properties.



You're average buyer/upsizer, unless holding a 50%+ deposit, is going to have a harder time getting a mortgage and likely still won't be able to compete with cash buyers who have no chain.


The bigger concern would be for those who are about to cash out a pension - a 50% drop in property prices is really going to hurt any pension fund which has property as part of the folio (that's almost all of them in some ratio). Can you imagine working hard all your life to find 25% knocked off your pension fund a year before you retire?

AG47

MobileSaver wrote: »

More conspiracy theorist fake news from AG47.

"Normal" interest rates are around 4% and so, for years now, mortgage affordability tests have been using up to 8.75% as a worst case scenario.

Consequently repossessions will NOT sky rocket if interest rates go back to normal.

You keep looking through rose tinted specs:rotfl: