50% house price crash does not = more affordable homes

GreatApe

Here is a explanation that most will not understand but...what the hell

If House prices fall 50% are the people of the UK any better housed?

Maybe on an individual level a person can answer, yes sure if house prices fall 50% I can buy a bigger better home. That makes sense it is easy to understand...

But nationally are we better housed if house prices fall 50% or even 90%? .... No
This should be obvious because the same number of people and the same number of homes exist pre and post 50% (or 90%) house price crash

The same is true the other way around, if house prices double are we any better or worse in terms of housing as a nation? No its the same

What this tells us is, affordability of homes for uk citizens does not change much with prices...up or down!

This is such a key concept yet almost no one seems to understand it

SpiderLegs

Maybe no-one understands it because it’s a load of rubbish?

Just a thought...

MovingForwards

If there is a property crash mortgage lenders are very strict about who they will lend to:

95% mortgages are gone.
Criteria is changed so people need to be in their job longer etc.

Sub-prime lenders don't take on new clients, that rules out people with historic money problems who have resolved it.

Construction jobs go, meaning less properties are being built.

Crashy_Time

SpiderLegs wrote: »

Maybe no-one understands it because it’s a load of rubbish?

Just a thought...

It is just there to provoke a reaction, certain posters need the "Crash Trolls" like Madonna needs publicity (I quite like Madonna though TBH)

[Deleted User]

Might make life easier for first time buyers if prices crashed 50%, for those already on the property ladder it makes no difference

ProDave

If prices crash 50% almost all building will stop. Building material is unlikely to fall 50% nor are wages, so it will not be profitable to build houses.

So if house building stops, regardless of the cost of houses, there won't be any more houses built to house a growing population.

GreatApe

SpiderLegs wrote: »

Maybe no-one understands it because it’s a load of rubbish?

Just a thought...

I only met two people that instantly got it
Both Cambridge grads
Everyone else, even those who have done math heavy degrees dont get it on first thought
So feel at ease for being wrong you have a lot of company

silverwhistle

Can I just say thank you everybody for not quoting the OP.
As a result of his posts on another section of this site I have him blocked, and it would appear from here that that is a reasonable decision..

GreatApe

silverwhistle wrote: »

Can I just say thank you everybody for not quoting the OP.
As a result of his posts on another section of this site I have him blocked, and it would appear from here that that is a reasonable decision..

Stop stalking me

peachyprice

Ok, I'll bite.

You seem to be forgetting the 200k+ empty properties across the UK, many of which are new build apartments that are too expensive for people to buy.

Now, I'm not a Cambridge grad, but a housing price crash that would potentially add 200k homes to the housing stock would make the people of the UK better housed.

vacheron

The reality is that if prices of ALL property types magically dropped universally by 50% overnight, the laws of supply and demand would re-correct everything in a matter of days.

For example. My friend bought a 2 bedroom downstairs flat in 1998 for £30K. At the time 3 bedroom terraced houses were £60K.

In the 10 boom years between 1998 and 2008 his flat tripled in value from 30K to 90K, because of disproportionate demand from first time buyers, however because most of these buyers didn't want, or just couldn't afford, the the 3 bed terrace, the terraces "only" doubled in value during this time from 60K to 120K.

This meant that even after 10 years and a tripling of his properties value, he still had the same 30K stepping stone to his next property which by then represented a 33% price difference rather than the original 100% difference.

The same thing will happen in a crash, the affordable or in demand property types will increase as soon as they become desirable and affordable to a large number of buyers. and other less desirable (in that current economic scenario may stagnate or fall.

Simple supply and demand, same as it has been for millennia.