AIBU to want house prices to fall

[Viviennemary]

I thought a house price fall was on the cards but it doesn't seem to be happening. It would have been a good chance for first time buyers to buy their first house and get out of rented accommodation. And a chance for people to move to a bigger house for more space.

Oh, yes please, take me😁 I could buy all the stilton in the world and the subsequent lipo!

If your 800k house loses 20% value you will be left with 340k equity + 300k owed on mortgage. Every time your house loses value it is solely from your equity, not equity and mortgage amount.

where did I state otherwise?

Sorry. I got confused by the "I have to find part"

When you move up the ladder you tend to take out a new mortgage &/or use savings which is where the additional money would traditionally come from.

Yes on average I agree. A market crash will put those upsizing in a good position. Assuming they retain their income of course.

@SlinkyStairs

Yes on average I agree. A market crash will put those upsizing in a good position. Assuming they retain their income of course.

It seems to me that would only be case of high equity so no upsizing for people with lower ones.

That was simply my point. Increasing house prices even when on the ladder don't help you to move up it unless you look at moving to a cheaper area because what you want to buy proportionally becomes more expensive. I linked to a really good FT article that explains it.

@dulciepepp

When you move up the ladder you tend to take out a new mortgage &/or use savings which is where the additional money would traditionally come from.

Yeah. I think both @Babs709 and I were just thrown by the mortgage bits. Usually people count whole mortgage, not just bits, because you have to get the whole amount. I thought you were going for about 27% ltv with taht numbers. I can now see what you meant @dulciepepp.

When you move up the ladder you tend to take out a new mortgage &/or use savings which is where the additional money would traditionally come from. That comes across a little patronising. I understand how buying things works. It was muddying the maths is all.

I think the discrepancy here is that you are saying “lower mortgage if I want to move... yay” whereas we are saying “you have less in assets... boo”.

All depends on your specific circumstances I suppose. I wouldn’t personally want less in assets and a bigger house.

It seems to me that would only be case of high equity so no upsizing for people with lower ones.

But I never claimed it was about everyone, did I? How do the people with little equity move up the ladder with increasing prices?

It seems to me that would only be case of high equity so no upsizing for people with lower ones.

But I never claimed it was about everyone, did I? How do the people with little equity move up the ladder with increasing prices?

@dulciepepp

That was simply my point. Increasing house prices even when on the ladder don't help you to move up it unless you look at moving to a cheaper area because what you want to buy proportionally becomes more expensive. I linked to a really good FT article that explains it.

That's great that it explains it, but as I said before, it's behind paywall

@Babs709 how was that patronising, it's not that complicated but I have had to explain it over & over ok. You were the one questioning where I would "find" the money.

All depends on your specific circumstances I suppose. I wouldn’t personally want less in assets and a bigger house.

Well yes but it doesn't negate my point does it?

In all of this though, my stance is that house prices are not too expensive. Because people are buying them. Houses are only worth what someone is willing to pay. Purchasers of houses pushed prices up, no one else. If there are swathes of FTB who can’t buy, or families unable to afford suitably sized houses then that’s a supply issue and we need to build more.

I think the issue you may have Dulcie is that your 1.1m house dropping to 800k opens up its market to a whole new range of people. There will be more people able to purchase it so you may end up being forced higher up the ladder to an even more expensive house in order to price your competitors out of the market.

@dulciepepp

It seems to me that would only be case of high equity so no upsizing for people with lower ones.

But I never claimed it was about everyone, did I? How do the people with little equity move up the ladder with increasing prices?

But that wasn't even answer to you. I was answering another poster.

Dulcie I think you overcomplicated it by splitting it three ways equity/current mortgage/new mortgage and left out the current mortgage in your figures. You only explained it once anyway! (Here, I know you used the same example up thread.)

I’m not sure it does negate your point... isn’t your point that you can buy a bigger house for cheaper? If that isn’t your point, I’m not sure what is.

My rebuttal is... you have less money to your name.

There is no way to argue that either of those are wrong. As the maths has confirmed. It’s just which one you’d personally prefer.

@SchrodingersImmigrant upthread you asked how it was possible for it to be easier to move up the ladder when prices are falling. All my examples have mentioned lots of equity & I have never claimed it won't be difficult for those just on the ladder.
I assumed you were referring to the examples I gave hence why I replied.

My rebuttal is... you have less money to your name.

But I don't see my equity as anything other than paper money. I'm not going to sell up & move to the Hebrides. Plus I'm happy to have less equity & a bigger home than more debt.

I literally posted that a house drop made it easier for me to move up the ladder as other posters have said.

How does ever increasing house prices help those on the first rung move up?

moving is expensive particularly with stamp duty & not like your savings are going to have great returns.

Not sure you end up with less debt.

You move and then the crash: mortgage goes from 300k (old house) to 600k (new house)

Crash then move: mortgage goes from 300k (new house) to 540k (new house).

You don’t see equity as anything other than paper money because you have never needed to. I have needed it to be real, usable money, therefore I don’t. Which is why I’m saying personal preference.

[quote dulciepepp]@SchrodingersImmigrant upthread you asked how it was possible for it to be easier to move up the ladder when prices are falling. All my examples have mentioned lots of equity & I have never claimed it won't be difficult for those just on the ladder.
I assumed you were referring to the examples I gave hence why I replied. [/quote]
I've even quoted the post I was reacting to because I realised it's getting bit confusing without it. It appears I was right. It's fine.

Because I don't need as big a mortgage to move up as the gap isn't as wide. And my stamp duty is lower so more savings spared.

Again whether I need to liquidate my equity or not my point still stands that it's easier in my circumstances & many others to move up the ladder when prices are reducing vs when they are increasing.

Tbf I would believe taht it's easy to not mind losing equity if it's only the profit, not the actual payments you made. I can see that.

Ah so you mean “a smaller debt increase”. Sure, I can get understand that.

Sorry I completely misunderstood that your point was about ease of move; getting more for your money and whatnot. Assumed it was about how much money you ended up with.