Spectator N0 2680 : "Two Of A...
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House prices falling how can this be bad?
23 Answers
News items report as it's going to get worse. But surely house price falling means it's getting better.
Shouldn't houses be afordable to those who work? Therefore I see it getting better and not worse. I also think anyone who's purchased a propery at the ridiculous inflated prices of the last few years have been in cookoo land. Brick and morter were never worth that much. The value of my propery went up to 5 times the purchase price in just 5 yrs, had someone paid that price for my house I would have thought them rather silly.
Now the greedy people who bought the buy to let are in negative equity and moaning. Well dear me, how many houses does a person need? These pushed up prices and only have themselve to blame.
Surely it's better not worse when the average person can buy a home on an average income?
Shouldn't houses be afordable to those who work? Therefore I see it getting better and not worse. I also think anyone who's purchased a propery at the ridiculous inflated prices of the last few years have been in cookoo land. Brick and morter were never worth that much. The value of my propery went up to 5 times the purchase price in just 5 yrs, had someone paid that price for my house I would have thought them rather silly.
Now the greedy people who bought the buy to let are in negative equity and moaning. Well dear me, how many houses does a person need? These pushed up prices and only have themselve to blame.
Surely it's better not worse when the average person can buy a home on an average income?
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In principle, yes, but take a person who bought a house for �180,000, which's now worth perhaps 20K less. If they sold it, they'd be losing money, and have less to put down on a new place. More than likely they'd have to downsize or move to another area. This drop'd perhaps help first time buyers, but not those wishing to make a bit of profit and better themselves - or for couples who want a larger place in which to bring up a family.
Unfortunately, the world's becoming more materialistic, but it has it's consequences.
Unfortunately, the world's becoming more materialistic, but it has it's consequences.
The problem is that falling house prices make it harder for those average people on average incomes to get mortgages.
Let's say that someone wants to buy a house for �100,000. The mortgage company need to know that, if the buyer defaults on the payments, the repossession value of the house will match the debt. If house prices are rising, the mortgage company will know (or at least guess) that the house might be worth �120,000 in a few years time. So they'll consider offering close to a 100% mortgage (perhaps 95%) because they know that their money is safe.
However, if prices are falling, the house might only be worth �80,000 in a few years time. Lenders won't loan more than the value of the property upon which the loan is secured, so they might only offer a mortgage of around 75%. That leaves the buyer needing to save a �25,000 deposit before he can get a mortgage.
Chris
Let's say that someone wants to buy a house for �100,000. The mortgage company need to know that, if the buyer defaults on the payments, the repossession value of the house will match the debt. If house prices are rising, the mortgage company will know (or at least guess) that the house might be worth �120,000 in a few years time. So they'll consider offering close to a 100% mortgage (perhaps 95%) because they know that their money is safe.
However, if prices are falling, the house might only be worth �80,000 in a few years time. Lenders won't loan more than the value of the property upon which the loan is secured, so they might only offer a mortgage of around 75%. That leaves the buyer needing to save a �25,000 deposit before he can get a mortgage.
Chris
my parents sold their beloved house in 2004 and their business cos they know they will make money... the value of their house over trebled to what they had bought in 1997. so they made abit of money... to pay off all the mortgage owned to the house and had enough to pay off a new home. so mortgage free. but since this credit crunch thing ... they had to remortgage half of the property to pay off bills... etc....
if the house prices keeps falling at this rate.. it would benefit me... it would mean i can afford to put down 10% deposit and get a mortgage... ..
if the house prices keeps falling at this rate.. it would benefit me... it would mean i can afford to put down 10% deposit and get a mortgage... ..
Basically due to thatcher encouraging the working classes to get themselves into debt on a scale never seen before , they have now overstretched themselves.
Its now a case of folk boasting almost .I own my house .Ehm actually you own a debt on a house which if you misss 6 or maybe 9 payments on , they will pull from undre your arse and will sell off to a property speculator and youll stilloiwe money.
People dont realise they are saddling themselves with a great debt.
if you get negative equity then all the payments have been for nothing and you stillowe cash.
the amount of negative equity is on the rise coming to a house near you.Maybe even yours.
britain is unusual in europe the amount o ffolk who have mortgages compared to germany france and other countries.aftre the mortgage the other lonas and credit gets added and then one day you wake up to hear theres a credit crunch.
whod have guessed eh ?
Its now a case of folk boasting almost .I own my house .Ehm actually you own a debt on a house which if you misss 6 or maybe 9 payments on , they will pull from undre your arse and will sell off to a property speculator and youll stilloiwe money.
People dont realise they are saddling themselves with a great debt.
if you get negative equity then all the payments have been for nothing and you stillowe cash.
the amount of negative equity is on the rise coming to a house near you.Maybe even yours.
britain is unusual in europe the amount o ffolk who have mortgages compared to germany france and other countries.aftre the mortgage the other lonas and credit gets added and then one day you wake up to hear theres a credit crunch.
whod have guessed eh ?
well my opinion is once you are up the ladder from years ago you are not a loser as if your house goes down 20% so does the house next door and the next street up so they cant really become upset its really the people who brought there hous for the 1st time buyers that have negavtive equity that are the losers or those who panic to sell homes pulling out the market tooo early they lose toi know people who did that 5yrs ago expectins this outcome they sold too early and lost out and if you remember about every 7yrs it swings in round abouts the rich stay rich as saving is a better option and to sell the property they have to sell will be the same as most %droped ok all of us had the right timing we could make money.but now people r hurr ing up to scarper out the market will find rentals are extreemly high and they throw there money away and if and when the prices rise again no ones that sure what time is right and in the mean time what they got out the house say u 1ok is gone in rent ok no risks and and not omly that they have to have rules regulation and i just feel sorry for the youth today the country is not anything anymore refugees get given �10k our school children leave scholl into minimu wages and a foriegner has thate dge to start up own business but average people struggle to even save10% i they are not debitited up to eye balls with credit on that i could argue allday long but wont the govermount are just things to pay tax 1million times on top of whay we earn to every 1p we spend they spend money and if we save for our children they get atxed again on top of the money saved that has already beenn taxed it really is almost imposible for any one to sucseed unless they havwmoney in the family any way think againyou could sell your house tomoro and at the least its gonna cost u �7000 to move thats alot of rent and lots of your privacy gone you are now beholdent oto there rules its a sad bad life nite
It's complicated some win most lose.
as prices drop the differential drops so it becomes cheaper to upgrade to a better house - despite the fact that yours is worth less the one you want to buy is worth *much less*
However when prices are falling people are less willing to take the lesser value that their house is now worth - if they're in negative equity (house wiorth less than the outstanding mortgage) maybe they can't.
That means that maybe you can't actually buy that better house at all.
And because mortgages are hard to come by there are less people buying at the bottom of the chain too and the whole market stagnates
It's great if you're a cash buyer though isn't it? In that case do you buy when prices are falling? not wise - especially when political changes may do things like drop stamp duty further.
And then there's the wider economy which was getting a lot of money pumped into it from rising house prices. People extending their mortgages to pay for all sorts of things from weddings to extensions to pay off credit cards. So less money ->less business -> fewer jobs
as prices drop the differential drops so it becomes cheaper to upgrade to a better house - despite the fact that yours is worth less the one you want to buy is worth *much less*
However when prices are falling people are less willing to take the lesser value that their house is now worth - if they're in negative equity (house wiorth less than the outstanding mortgage) maybe they can't.
That means that maybe you can't actually buy that better house at all.
And because mortgages are hard to come by there are less people buying at the bottom of the chain too and the whole market stagnates
It's great if you're a cash buyer though isn't it? In that case do you buy when prices are falling? not wise - especially when political changes may do things like drop stamp duty further.
And then there's the wider economy which was getting a lot of money pumped into it from rising house prices. People extending their mortgages to pay for all sorts of things from weddings to extensions to pay off credit cards. So less money ->less business -> fewer jobs
depends who you are - as usual, falling prices are good for buyers, bad for sellers.
There are more people who own homes than are looking to buy them, so more people are likely to think that it's a bad thing; but jno jnr, who's looking to buy his first place (and leave mine), thinks it's wonderful.
And the great mass of homeowners, who use their houses to live in rather than as an investment, probably aren't too much bothered either way. I bought at the last peak in the early 80s, and the value of my place fell slowly for about five years, but I wasn't bothered in the least as I wasn't planning to move. It's worth now about five times what I paid for it - but I still don't care and I'm still not planning to move.
Still, I sympathise with those who bought over the last few years. Most of them didn't do it because they were stupid or greedy; like most people they just wanted a home of their own and had to pay what was then the going rate.
There are more people who own homes than are looking to buy them, so more people are likely to think that it's a bad thing; but jno jnr, who's looking to buy his first place (and leave mine), thinks it's wonderful.
And the great mass of homeowners, who use their houses to live in rather than as an investment, probably aren't too much bothered either way. I bought at the last peak in the early 80s, and the value of my place fell slowly for about five years, but I wasn't bothered in the least as I wasn't planning to move. It's worth now about five times what I paid for it - but I still don't care and I'm still not planning to move.
Still, I sympathise with those who bought over the last few years. Most of them didn't do it because they were stupid or greedy; like most people they just wanted a home of their own and had to pay what was then the going rate.
well it didn't take long for the anti MrsT brigade to pile in did it. Get real you plonkers she went in 1990 it's fcuking nearly 20 years down the line and you are still blaming the Iron lady. MrsT made it possible for millions to buy their homes, many owing property now would still be paying rent to lefty councils to spend on diversity courses if she hadn't. Get real you whinning faint hearts.
When reading through these responses I wondered how long it would be before somebody blamed Mrs T.
She has been out of office now for 17 years, and it is unlikely that anybody who bought a house as a result of her �encouragement� (probably 20 or more years ago) is adversely affected by today�s situation. On the contrary, if they stayed put they are living in a property probably worth twenty times the price they paid for it and are by now free or almost free of mortgage debt. For legend_mark3 to suggest that the current working class �...have now overstretched themselves� as a result of her policies is preposterous. It�s about time the Thatcher-haters grew up and moved on.
For many years property in the UK has been seen as a lucrative investment as well as (but sometimes instead of) a place to live. Successive governments of all persuasions have encouraged this and their policies have fuelled house price inflation. Borrowers have been encouraged to borrow 100% or more of the value and have been able to finance their loans with relatively cheap money.
All this has enabled the buying and selling of houses to be carried out with relative impunity (and a new Jeep to be purchased with the balance of each 120% mortgage) and this has facilitated price rises to ludicrous levels.
All that�s happening now is that some realism has been injected into the market. Lenders are insisting that buyers put a reasonable deposit down (as they used to 20 + years ago). Interest rates are still quite low so nobody�s mortgage payments have shot up, apart from those who bragged about their wonderful fixed rate deals, which have recently come to an end.
All it means is that people will not be able to �trade up� quite so easily for a while, and they cannot use their property to finance profligate spending (which manifests itself as the nation's "growth"). But it�s not the end of the world.
She has been out of office now for 17 years, and it is unlikely that anybody who bought a house as a result of her �encouragement� (probably 20 or more years ago) is adversely affected by today�s situation. On the contrary, if they stayed put they are living in a property probably worth twenty times the price they paid for it and are by now free or almost free of mortgage debt. For legend_mark3 to suggest that the current working class �...have now overstretched themselves� as a result of her policies is preposterous. It�s about time the Thatcher-haters grew up and moved on.
For many years property in the UK has been seen as a lucrative investment as well as (but sometimes instead of) a place to live. Successive governments of all persuasions have encouraged this and their policies have fuelled house price inflation. Borrowers have been encouraged to borrow 100% or more of the value and have been able to finance their loans with relatively cheap money.
All this has enabled the buying and selling of houses to be carried out with relative impunity (and a new Jeep to be purchased with the balance of each 120% mortgage) and this has facilitated price rises to ludicrous levels.
All that�s happening now is that some realism has been injected into the market. Lenders are insisting that buyers put a reasonable deposit down (as they used to 20 + years ago). Interest rates are still quite low so nobody�s mortgage payments have shot up, apart from those who bragged about their wonderful fixed rate deals, which have recently come to an end.
All it means is that people will not be able to �trade up� quite so easily for a while, and they cannot use their property to finance profligate spending (which manifests itself as the nation's "growth"). But it�s not the end of the world.
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