House prices

[Booldawg]

Why do people get worried when house prices drop? If you sell your house then no doubt you'll be buying one that has also dropped at the same level.

OK there are a few instances whereby it could be a bad thing; like if yours has dropped and you move to an area that hasnt dropped as much. But in general most people wont end up out of pocket?

[stoofur]

What about people who have a mortgage for 140,000 pounds and they paid 145,000 pounds for the house. Then the price drops to less like 135,000 pounds. If they are forced to sell then they will still owe the bank money.

This has happened to a lot of people I know during the last crash. I know one person who ended up �20,000 negative equity.

[redcrx]

negative equity is only a problem if you have to sell up and move, which may happen to many in the current climate. If you can still afford mortgage payments stay where you are and make do. Fix your mortgage for as long as you can.

House prices will bounce back or people will reduce their balance on mortgage if they dont.

[daytrip]

I lost �27,000 on my first flat due to the price crash back in early 90's.

I couldn't stay put as I was getting married - this meant I had to take on another 100% mortgage and pay for an indemnity policy for another 3 years - in todays climate it is increasingly difficult to get 100%.

The upside was that I could afford a house that I would never have got near if the prices hadn't dropped

[Twenty20]

That's a simplistic view Booldawg. People borrow against the equity in their property for a number of reasons. Even if they arent moving house they may wish to remortgage to improve their house, start a business, support a business during hard times, to take a well earned holiday or maybe to pass on to their children. If house prices drop too far then it affects a whole range of people.

In the longer term though, house prices will always rise but that doesnt help those who need the equity from their property now.

[gucciman]

because people are greedy thats why, they've all been sitting back gloating as their houses rocket in price to a level where the prices are absolutely ridiculous, and the wages have never risen to match the house prices either, i for one am glad to see th prices fall as i can't afford a house at the moment.