People talking about houses dropping 30%

[ayvian]

AIBU to think they should shut up.

Banks are still lending, furlough has saved millions of jobs and no one is going to sell their biggest asset at a 30% loss. It just won't happen all it will create is a mexican standoff that will freeze the market until buyers get a sense of reality. We want to move, but not that desperate to accept a loss of what something was worth a few weeks ago. We'll hold on. It's wishful thinking that anyone can get a bargain right now

Yes. The equity they built up. I'm not saying it's right...

Well, you did say “it sucks”, which implies you think it’s a bad thing that they may lose their “equity”, but OK. It also sucks that prices have been ramped up to such a degree that our economy – certainly a homeowning nation’s morale – seems dependent on them staying stupidly high (my definition of stupidly high: have no rational relation to salaries), which would screw the upcoming generations (MUMSnet, remember folks?) forevermore in the name of protecting those who’ve just bought from the bogeyman of negative equity.

Why do some people get so angry about talking about price reductions? I'm a homeowner & I don't get it.

Well no new houses will be built then . That will save a lot of countryside .

& defensive

@dibble15 - I agree it's actually irreverent really unless you are getting on the ladder or off it. Then it's like pass the parcel and it's who's left holding it when the music stops.
However it's not about the house prices for me, I'm in a strange situation where I can't lose. My bigger concern is the over all economy and you don't get drops in house prices without the rest of it being rather grim. So lets not wish that upon ourselves eh ?

I love how people are predicting arbitrary figures and percentage drops when noone actually knows whats going to happen. None of us really know how this will affect the market. We havent had this situation before! Lets wait and see what happens.

Why do some people get so angry about talking about price reductions? I'm a homeowner & I don't get it.

Are you English? For a lot of English people their self-worth, social standing and ego are all tied up in what their house is worth. They'll spend their weekends putting water features in the back garden, changing their door knobs and stenciling flowers on the kitchen wall in the belief that they are adding value to their house. Any suggestion that their house might go down in value is like telling a man that his driving is shit, or a brexitier that England didn't win the war.

Most houses around here were bought 20-30 years ago by people in 'average' jobs - teachers, police, nurses etc, now you'd need help/inheritance from parents or two large salaries. The argument about wage drops doesn't help when previous house price increases didn't reflect salary increases. While house prices may drop here, I doubt they'll drop enough to help the 'average' worker.

@chrissiekeller61 I had you as one of the defensive ones! I think house prices are too high in many parts of the country & think it's ridiculous for younger generations (Im in my 30s).

it's actually irreverent really unless you are getting on the ladder or off it.

It's not irrelevant to those priced out; nor to those who thought they were doing the right thing by saving, only to have the Bank of England laugh in their face; nor to those concerned with the damage done to the economy by having so much money tied up nonproductively.

My bigger concern is the over all economy and you don't get drops in house prices without the rest of it being rather grim. So lets not wish that upon ourselves eh ?

A drop in prices to sane levels is preferable to the grimness of so many never being able to afford them, and those who can, spending their lives trying to scramble up an increasingly mythical ladder.

I'm sorry but I can't take someone who bought a house for 180k (now worth 600k) moaning about a potential fall in house prices. Seriously!

@GoatyGoatyMingeMinge Ha! I was born & raised in London but my parents are immigrants, maybe that's why. The house I grew up in they bought in the early 80s for 60k (iirc) they sell for insane prices now.

If house prices drop maybe those on lower incomes will finally be able to have a chance to buy! They have got ridiculously high in recent years.

Something I haven't thought too much about is interest rates (so used to low ones), will they go up? Is there a risk of inflation?

It benefits some at the start, but hinders others at the other end of chain. Overall is it bad? No idea, was it bad house prices outstripped salaries in the last however many years?

I’m in the middle so less affected.

I bought my house in the early 80s and it was £26000. Now worth £750000 and all paid off so if it goes down 50 per cent then no big deal because all the other houses will have too. See it doesn't matter

I said it upthread but a reduction would help us move up (if we stay in London) & we could take a big hit.

I have no idea what will happen. I don't think we can predict these things yet.

But what I do think is even if the prices drop a lot of people still wont afford to buy their first home because at the moment banks are not willing to lend as easily. We bought our house with a 10% deposit last year and I had a look out of interest and if we were looking to get a mortgage now with the same deposit and same salaries we would not be getting one from our mortgage lender. Need at least 20% which means even longer saving. Not to mention if interest rates go up it will make the mortgage even more unaffordable to people.

All I hope is that thing will be stable in the future when we re-mortgage. Thankfully we were very cautious and got a very long fixed term on our mortgage.

People still need to move

There will still be a housing shortage

Yes some areas will be affected worse and new builds too but in popular areas prices will not drop anywhere close to 30%

I bought my house in the early 80s and it was £26000. Now worth £750000 and all paid off so if it goes down 50 per cent then no big deal because all the other houses will have too. See it doesn't matter

Except for the collapse of the banking system

The banks have already dropped interest rates rather than increased them

It’s affordability that keeps house prices from dropping

I'm talking about in the next 6m-1yr. I don't think we have seen the true effect of Covid on the economy yet.

@somenerve I honestly don't think you get it, unless you are buying for cash you'll be further away than ever ... the conditions for a crash aren't conducive to the average person buying their first home.

@Rebelwithallthecause

There will still be a housing shortage

I think you may have misunderstood this! Everyone is housed right now, except the homeless, who we can safely ignore for these purposes. There is no real shortage, except that in a wealthy society we expect housing of a certain quality, and a decent floor area per person. We are no longer a wealthy society.

In 1891 our terrace house currently housing three people accommodated 19. I know this from the census. There's only a housing shortage if people want to live in luxury.

@ayvian if the market drops 30% you wouldn't sell at a loss if you bought for 180k and your house has recently valued at 600k. You would need to sell at 30k less than you bought for it to be a loss.

The 600k isnt real money. It only becomes real when you sell.

Your view is exactly what is wrong with such inflated housing markets.