Is a Housing Price Drop a Disaster for All?

Getting_greyer

Crash, not sure of your story but I see you get a bit if stick on here reference HPC. But I'm interested if you think homeowners post 2008 are better able to withstand another hypothetical GFC in the future.

If so do you think a house price drop would be less severe?

lisyloo

Crashy_Time wrote: »

Voters were told Brexit would knock 30% off house prices, they still voted for it?

I don’t think the first part is accurate.
Voters were told the absolute worst case scenario was 30% drop and you have conveniently lost the context.
I agree that people still voted for it.
Unlike this part of the forum most of the population are not obsessed with house prices and I’d suggest it is generally lower priority than brexit, crime, nhs, local services and climate change.

movilogo

Price crashes are great for cash buyers to grab a bargain.

They are terrible for anyone who needs a mortgage.

Since when borrowing less amount of money is bad thing?

House price reduction is good news for everyone - including Estate Agents. Because there will be more transactions and they will get higher commission overall. Currently plenty of houses in EAs' books are just not selling.

A small number of recent buyers could see negative equity for few years, but if they can hold tight, it will no longer be problem after few years.

Crash is a relative term. Although I think a 10% price drop will be considered a big crash because it will send price to a downward spiral.

If people pay less for house, they will have more money to spend on other things which will improve economy.

Malthusian

movilogo wrote: »

Since when borrowing less amount of money is bad thing?

When you can't do it to buy an appreciating asset that will provide more in growth than you pay in interest. If house prices crash then mortgage lenders will be reluctant to lend on assets that are falling in value.

House price reduction is good news for everyone - including Estate Agents. Because there will be more transactions and they will get higher commission overall. Currently plenty of houses in EAs' books are just not selling.

Lots of people put houses on the market because they want to move at some point but only for the right offer, otherwise they're happy where they are. There is nothing unusual about housing remaining on the market for ages. Estate agents don't deliberately avoid making sales because they don't like money.

Crash is a relative term. Although I think a 10% price drop will be considered a big crash because it will send price to a downward spiral.

A downward spiral to how much of a price drop?

If people pay less for house, they will have more money to spend on other things which will improve economy.

If people pay more for a house do you think the sellers just put the extra money in a barrel in the garden and set it on fire?

phillw

triathlon wrote: »

the one thing this government will have to increase spending on, and will, is unemployment welfare and most importantly for the likes of me and many housing investors, housing benefit .. It is so hard to crash the housing market in these times

We are stuck with the conservatives for five years, they seem opposed to increased welfare spending.

movilogo

If house prices crash then mortgage lenders will be reluctant to lend on assets that are falling in value.

Not necessarily. Lenders will be more realisic while valuating the houses. They will downvalue it assuming it might fall in value. This will stabilize the market.

Lenders have to lend, because that's how they earn money - from the interest.

Estate agents don't deliberately avoid making sales because they don't like money.

EAs intentionally over value properties because they think (often rightly so) that buyers will chose the EA who offered highest valuation. They know houses won't sell at the inflated price. After few months buyer will get frustrated and will accept EAs offer of reducing price, then the house will eventually sell at lower price.

EAs are more interested in getting the house in their books in the first place. They worry about selling it later.

House price correction is long overdue. Something needs to happen, even if that means only 5% reduction.

If people pay more for a house do you think the sellers just put the extra money in a barrel in the garden and set it on fire?

This works only if seller is downsizing. Otherwise everyone in the chain is feeding money on houses only and the top of the chain seller may be putting it to his retirement fund.

If house price falls, every person in the chain can then circulate the money in the economy.

Crashy_Time

Getting_greyer wrote: »

Crash, not sure of your story but I see you get a bit if stick on here reference HPC. But I'm interested if you think homeowners post 2008 are better able to withstand another hypothetical GFC in the future.

If so do you think a house price drop would be less severe?

https://www.telegraph.co.uk/property/house-prices/property-predictions-2019-should-buy-now-wait-brexit-will-house/

Most people have many more debts now than just their mortgage, how they cope in any downturn is likely to correlate with how much they have to pay out each month, but the mortgage payment has been made easier by super low rates, however I think the pressure on the housing market now will come form the BTL boom turning sour as less people fancy just popping over here for a year or two to work without any real checks or red tape and young people realising that they will end up much wealthier if they save/invest and stay under the parents roof or house share longer, prices are past the point where people think they will "sacrifice" to get a house, many are just saying Sod It at theses prices.

Crashy_Time

lisyloo wrote: »

I don’t think the first part is accurate.
Voters were told the absolute worst case scenario was 30% drop and you have conveniently lost the context.
I agree that people still voted for it.
Unlike this part of the forum most of the population are not obsessed with house prices and I’d suggest it is generally lower priority than brexit, crime, nhs, local services and climate change.

"No Deal" was the scenario supposed to knock off 35%, according to the BOE Governor, not some bod on HPC remember...

https://www.thetimes.co.uk/article/house-prices-would-plummet-in-no-deal-brexit-says-carney-csgr9j0hj

Also remember that "No Deal" is back at the table sipping soup and waiting for the main course......

lisyloo

Crashy_Time wrote: »

"No Deal" was the scenario supposed to knock off 35%, according to the BOE Governor, not some bod on HPC remember...

https://www.thetimes.co.uk/article/house-prices-would-plummet-in-no-deal-brexit-says-carney-csgr9j0hj

Also remember that "No Deal" is back at the table sipping soup and waiting for the main course......

I’m not disagreeing with you that is was and is a possibility.
I’m disagreeing with you removing the context completely.
You and I have different views on likelihood.
You seem to grab onto any worst case scenario as a chance to get on the ladder whereas I see worst case scenarios as unlikely as there’s a lot of momentum and effort going in by various parties to actively avoid the worst case scenarios.

triathlon

lisyloo wrote: »

I’m not disagreeing with you that is was and is a possibility.
I’m disagreeing with you removing the context completely.
You and I have different views on likelihood.
You seem to grab onto any worst case scenario as a chance to get on the ladder whereas I see worst case scenarios as unlikely as there’s a lot of momentum and effort going in by various parties to actively avoid the worst case scenarios.

It is very possible that the planet Earth could be wiped out this very night, if not this night any night in the next year or even the next decade. But I am willing to bet that some of us will be discussing property issues tomorrow and even next year, and a very few of us will be talking about property in the next decade, guess who