Looking on the positive side: Why falling house prices are a good thing

Generali

Emy1501 wrote: »

There are old people around living in a house with maybe 100K+ equity who can't afford their heating bill because the wealth only gets realised when they die

In France a lot of older people enter into a deal often with the local Notaire where the Notaire gets the house when they die in return for an income today. It's a great idea IMO to be able to realise a substantial part of your wealth while you're still alive to enjoy it!

When_is_the_reset?

Sibley wrote: »

The only people who dont want property to rise dont own.

I think it's seeing your asset has risen. Your future is much better.

Just plain wrong.

julieq

Emy1501 wrote: »

Are you sure about that? my parents own 5-6 properties but they want prices to fall because they have seen how hard it is for the young to buy at a reasonable price.

Well they could start by selling off 4-5 (if they ever remember how many houses they have, you ALWAYS forget one or two, don't you?) well below market price, couldn't they? That would instantly make it easier for some young people to buy at a reasonable price.

Talk is cheap.

julieq

Generali wrote: »

In France a lot of older people enter into a deal often with the local Notaire where the Notaire gets the house when they die in return for an income today. It's a great idea IMO to be able to realise a substantial part of your wealth while you're still alive to enjoy it!

Erm, so that would be called Equity Release then?

System

Emy1501 wrote: »

Are you sure about that? my parents own 5-6 properties but they want prices to fall because they have seen how hard it is for the young to buy at a reasonable price.

That actually made me laugh out loud.

Really2

Emy1501 wrote: »

Are you sure about that? my parents own 5-6 properties but they want prices to fall because they have seen how hard it is for the young to buy at a reasonable price.

If they were not taking advantage of HPI why would they own 5-6 anyway?

They could give them to a HA to help the young. Give us their county and I will find their local HA for them.

I always knew people hold 5-6 properties because they think the young cant afford them and prices should drop.
What a great service they are doing to the young holding them.

But this is not a go at your parents, if you turned round and said your parents have 5-6 properties and are prepared to rent them out or sell them at market value I would have respected what you had said more.

It is clear they can't care about the prices for the young that much as they still own 5-6 houses.

System

It seems people want house prices to fall, but not THEIR OWN house, no sirreee, that would be ridiculous.

I'll buy their spare houses for 50% off the valuation, then everyone is happy!

Pennywise

I'd be happy for my house to fall in value by 50% or more if all other houses fell in proportion.

My house has supposedly risen in value by 300% over its purchase price 13 years ago and I'm mortgage free by working hard to pay off the mortgage, not by a windfall! The rise in house price has done nothing for me. On paper, I may be a couple of hundred thousand better off, but that doesn't translate to my living standards etc., so it doesn't really matter.

If I want to move to a bigger house, they, too, have risen by 300% so I have to find more money to bridge the gap. 13 years ago, I could have afforded a 4 bed house but thought a 3 bed would be fine. Now, I can't afford a 4 bed house, because the difference in price which was about £25k 12 years ago, is now about £75k.

The only time the rising house price would benefit me would be if I sold it. But where does that leave me? Homeless! So I'd have to buy another or rent - neither of which make me better off!

I'd be content for house prices to fall by 2/3rds back to the price I paid for mine - if all houses fell by the same, it's all proportional, I've not lost anything, so what's the problem.

None of my family & friends have bought recently because they've been priced out of the market for 5 years or more, so I know no-one who's bought at the peak and would badly suffer. In fact, I find it hard to fathom how people have managed to buy at the peak levels when you compare earnings against house prices - certainly "normal" people with "normal" jobs and without windfalls have been priced out of the market for a few years.

So, for me and my close family/friends, a house price crash wouldn't hurt at all - I wouldn't be out celebrating because I know a lot of people who bought at the height of the property bubble would be hurting. But I've never celebtrated my illusionary wealth from house price inflation either.

Really2

Pennywise wrote: »

If I want to move to a bigger house, they, too, have risen by 300% so I have to find more money to bridge the gap. 13 years ago, I could have afforded a 4 bed house but thought a 3 bed would be fine. Now, I can't afford a 4 bed house, because the difference in price which was about £25k 12 years ago, is now about £75k.

But would you be so happy with a 50% fall if you wanted a smaller house?

Emy1501

Really2 wrote: »

If they were not taking advantage of HPI why would they own 5-6 anyway?

They could give them to a HA to help the young. Give us their county and I will find their local HA for them.

I always knew people hold 5-6 properties because they think the young cant afford them and prices should drop.
What a great service they are doing to the young holding them.

But this is not a go at your parents, if you turned round and said your parents have 5-6 properties and are prepared to rent them out or sell them at market value I would have respected what you had said more.

It is clear they can't care about the prices for the young that much as they still own 5-6 houses.

they saw what was going to happen back in the 90's and they took advantage. Do you think if they had not have bought the houses prices would be lower now? If they had not someone else would have. They bought the properties for the yields and therefor HPI makes no difference the properties will be left when they die so they have no interest whether prices rise or fall. They never expected prices to rise as much as they have and if the banks and the governments were not so interested us getting into debt then enough houses would have been built to allow property prices to remain reasonable.