Yeah but.....if there were to be a 10% drop in the value of houses, those at the bottom of the ladder will be most affected. A loss of value of (say) 10% to first time buyers, will push them into staying put. How will that help others that are trying to get onto the house purchase ladder, being able to take advantage of the lower cost? Wouldn't there naturally be less "first time buyer" properties on the market ?
No one benefits whilst property is falling dramatically as banks just won't lend for mortgages unless you have perhaps a 50% deposit. If owners lose 40% of the value of their property it might take 10-15 years before they are ever able to move house. House prices have been over valued for years and it's been used by successsive governments to hide the fact that productivity and wealth creation is piss poor in the U.K.
No not necessarily. As I've said and using the example of first time buyers, should they already own a property recently then yes they may find themselves within negative equity, but given they've only recently purchased I would assume a large percentage of those people wouldn't be looking at moving for a good number of years, unless they played the property flipping game and that's a risk they entered knowingly. However everyone else looking at moving house who hasn't recently purchased will not only find their property lower in value, but also the property they're looking at moving to, therefore all becomes equal. If someone is sitting there in a house and they've been told it's worth £30k more than they paid in the current climate, then if they want to move they would need to utilise that £30k to buy the next property as that will also be over valued to a similar degree. The only people who would lose out from an older existing property would be those downsizing (yet the new downsized house would be cheaper) or those selling up and moving overseas, or similar. New buyers do not just buy off new buyers, in fact I'd say that's a very very small percentage. You simply need to buy a house, you find said house, try and get the biggest deposit you can, you make offer. Age or length of time in the property of the previous owners rarely comes in to it. You give them the money it's valued for, they then carry on the chain and use that money on the next property. It's not a matter of whether this will happen, it's a matter of when and frankly that tipping point won't be far off as people simply aren't earning increased amounts of money to be able to afford it all.
Ok, so is 40% a crash? If so then yes you're right, that wouldn't be good and to be fair it's also extremely unlikely. However a more sensible view of 10-15% isn't beyond the realms of possibilities and wouldn't adversely effect things to the degree you're alluding to.
And yet the government has never had access to my bank account, my choices on vehicles, my choice whether to use credit of any kind or even how many advacado's I eat a week But listen to some and every bad decision a person makes, they are not responsible for their own choices ,as it is all the governments fault.
It seems silly doesn't it, he bemoans there is almost no one there but yet on a regular basis, approves new buildings with the space egg at £300 million, being the most recent, soon they will have a building for every mep. Mind you when Junkers went off on one, he was slapped down and told, the Parliament runs the commission and not the other way around. Darling calling others clueless is like the blind leading the blind given he was the chancellor before, during and after the crash for Labour. I believe he joined Morgan Stanley in 2015 after stepping down from politics. and just a lil sweetie for fin as he seems not his usual self https://athousandflowers.net/
It's impossible to move house if you have negative equity unless you have the cash to make up the shortfall.
So why move? the obsession like the iphone that I must have an update is nonsense. You need more room because you do, then extend, Having kids? part buy part rent schemes are a plenty or delay the kids for a while till you have saved up a bit more. Want a bigger place with benefits, move to a cheaper area. It's like any gamble, when the prices go up, you love the housing market when selling, when the prices go down, you hate the housing market and it's all the governments fault. The world is full of people who see their own financial restrictions as everyone else's fault. Person wants a new car, they want it and want it now so get finance/pcp/loan.They are then spending the next 48-60 months paying it off as well as the interest. If you say to them, why not save the amount and then look and buy outright, and once you have it then start saving again for the next one, the most common feedback is, I want it now and I can't save as I have too much debt, derr This may seem hard and there are always exceptions but it comes down to this, we get the government we deserve and if the majority take little personal responsibility then this is the gene pool our politician's come from and it is reflected in how the government behaves. We also need to stop thinking, why aren't the government sorting this out on every single thing and recent events have shown not so much incompetence but more there is a limit what a government can and cannot do.
I really don't disagree with most of your point of view Noob, but you forget that there's a lot of young new house owners (FTBs) that are progressing careers too. All of my early moves were to be within sensible distance of a new job/position/promotion. How could I move to a better job somewhere else, if I was locked into negative equity? It can be crushing. I know, having seen my second daughter get caught in a negative equity shit storm.
You don't have to agree chap, everyone will have different experiences, My main drive was, in older days negative equity, wanting a better house than your budget allows, being in debt through personal bad choices etc, used to be part of growing up and life more so now, too many want to delve into the sweety bag of life and complain when they get the bitter sweets despite knowing the bitter sweets are in the bag. It seems, to me anyway, that "it's my human right " and "it's not fair" has replaced "sometimes real life throws you lows as well as highs" As to the housing market, we all know like most things in life, it goes round in circles just like fashion, music, governments etc so it's not as though we don't know this happens, so if we know the game rules, complain about the game rules but never change them then we must be okay with that? If the best people can come out with because they have become lazy or complacent is "it's all the governments fault" then simply replacing the government, which happens regularly, would have solved it by now.
I'm not saying that house prices coming down will be perfect fit for everyone, nothing is. Therefore some people will be effected yes, whilst a whole heap of people who purchased their houses earlier than the last few years won't be, and the net beneficiaries will be those struggling to even get a deposit together large enough to step on the ladder to start with. I'm not being cruel or wishing bad on people, but I genuinely think there needs to be a reality check here. Housing markets rise and fall, they do not just rise, the end. At the moment the houses have gotten to a point in which they're out of reach for too many people. Therefore demand will reduce and/or halt, sales obviously slow up, people then cut asking prices to force sales, market values decrease due to competition to sell = house devaluation Basic basic stuff and yet everyone seems surprised by this. No, if you're in negative equity you can't move as easily, not without finding the shortfall (£20k on a 10% devalued £200k house) and yet if you're not looking to move then it won't effect you. The mortgage agreed originally is still in place, you work, you pay, the same as you would have done. The unfortunate situation is that houses cannot just keep going up, it's wishful thinking at best
I'm sure that's a bad place to be and I'm sorry you had to go through that, luckily neither of mine are old enough yet to buy a scooter, let alone a house but I'm sure that'll come around. But with my neutral hat on, just put the shoe on the other foot for a minute and think about how bad you felt about your daughter being caught in negative equity, and think how bad it must be for literally hundreds of thousands of parents who's kids are young couples, or single people finding it impossible to get on the housing ladder to start with. All of those parents will be equally worried about their kids and the struggle they're facing. If they can't even get enough deposit together to buy a house then it's all going too far. Now is simply not a good time to buy and in my opinion it hasn't been for the last year or so, possibly because I'm expecting a decrease in house prices but you don't have to listen to me, listen to the experts They've been saying this since 2015 sort of era, plenty online about it all.
When an asset price bubble has come into being, there is no denying that it is a problem. A big problem. For the bubble to burst is a terrible shock, especially to the people who loose their shirts at the time. But for the bubble to keep on growing is not sustainable, and the longer it goes on the worse will be problems when it eventually bursts. House prices in the UK are in a bubble situation; the asset prices, driven by speculation, have inflated to a level which is disproportionate to purchasers' incomes. Demand is insufficient to sustain this level. These facts are partly obscured by a confusion between "demand" and "need". The need for housing is great, and ever-growing. But "demand" in the economic sense is not just need, it means money being offered to purchase assets. People who "need" a home (or food, or anything else) but who lack the money to pay for it do not constitute "demand". If (or when) the house price bubble bursts, to debate whether this is a good thing or a bad thing is not very constructive. It is a bad thing for a bubble to inflate in the first place. The bursting of the bubble is good news for buyers and new entrants, but bad news for sellers and existing owners. In the wider scheme of things, it is better for the bubble to burst soon than for an even more damaging collapse to happen at a later date.
House prices generally only go up when there is more cash floating around or the banks are more lenient with their lending criteria. The last couple of years has been caused by the Government allowing people to draw from their pensions fund at 55 years old and invest (or waste) it elsewhere. Many have bought a home to let, making the misery worse for young buyers.
It reminds me of the person who claimed to have abolished boom and bust, however economic corrections are a necessity and to try and fend them off just results in a bigger and harder to manage bust.
