50% house price crash does not = more affordable homes

SpiderLegs

AG47 wrote: »

50% crash would be a huge equalisation the rich get poorer and the poor get richer.

There will be less huge house with only a few people living in them, they will need to have more people living in all these huge rich homes that only have a few people in them at the moment

For the sake of your non-existent kids, please could you lay off the pot.

spadoosh

SpiderLegs wrote: »

For the sake of your non-existent kids, please could you lay off the pot.

I dont think its pot. I smoke a lot of pot and whilst there was an incident with a UFO and a lot of fascination with things that probably arent fascinating, its never effected my economic views.

Thrugelmir

ProDave wrote: »

so it will not be profitable to build houses.

Just less profitable, not not.

Builders can simply change the mix.

Herzlos

A 50% house price crash will not be an equalizer- the rich will gobble them up and drive prices back up, whilst the poor won't be able to meet the new affordability criteria.

A crash of that size will only benefit cash buyers.

phillw

Why has nobody said that house prices can't drop 50% all the time people can afford to buy them at the current rate.

Whatever happens to remove those people from the planet, is pretty bad news.

westernpromise

Herzlos wrote: »

A 50% house price crash will not be an equalizer- the rich will gobble them up and drive prices back up, whilst the poor won't be able to meet the new affordability criteria.

A crash of that size will only benefit cash buyers.

More accurately, if you want to know who'll own property after a crash, look at who owned it before.

malkie76

I guess it could help someone sitting on £500k currently renting, or just received a windfall.

However if their £500k is in investments they see a drop in its value prior to property dropping. If it’s genuinely in cash they might struggle to access it if there is a banking crisis, with only a small piece protected by the government.

System

venison wrote: »

Might make life easier for first time buyers if prices crashed 50%,

How? It's not going to increase the supply of new houses, and all the 2nd, 3rd, etc buyers up the chain are all ultimately dependent on someone having a new house to move to.


The proposition seems obviously true to me. Even if we had a revolution and house prices crashed to nil it's still not going to build any new ones. We'd all live in poverty in crumbling houses it was no-one's responsibility to maintain, until the state had a massive programme of building shoddy workers' housing blocks.


The proposition seems obviously true to me.

Malthusian

malkie76 wrote: »

I guess it could help someone sitting on £500k currently renting, or just received a windfall.

Anyone who received a £500k windfall and wants a house has already bought one.

Someone who inherits £500k at the exact moment of a house price crash could technically benefit by being able to afford a bigger house as a cash buyer, although that's such an extreme minority that it will have no discernible economic effect.

And for most people it would make far more sense to buy a house for £250k (if they can find someone desperate enough to sell at the bottom of the market) and put the other half of the windfall towards retirement. Who wants to live in a (formerly) £1 million house if you don't have the lifestyle to match?

Buy a (formerly) £1 million home which I only get to enjoy for 6 hours a day because I'm still working a 9 to 5. So I've got an extra bedroom. Whoop de do. Or invest £250,000 in the stockmarket, which has almost certainly crashed as much as the housing market, then when everything recovers, I'll be living in a £500,000 house and have £500,000 in investments, which could conservatively provide an income of £15,000 to live on and go a long way to allowing me to go part time or bring forward full retirement. Or pay for my children to go to a posh school. Or whatever. Plenty of better uses for the money than living in a fancy home I don't value.

And as you said, it doesn't actually benefit you whatsoever if you'd've inherited £1 million if your parents' assets hadn't fallen in value in the crash.

malkie76

Totally agree with you on all of that