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.

My dad and her husband in their 30s

Thank you, this gave me a laugh.

Seriously though, the OP is U, but mainly because she’s looking at house prices in a vacuum - she’s not wishing ill on people, or being nasty. Nor is she a would-be FTB!

Where she is right is that prices tend to be too high compared with earnings. That’s unlikely to change. Rents also tend to be too high, and I totally agree with the poster early on who said evidence of paying rent should be a factor in getting a mortgage.

However, recessions, even when prices fall, are bad for house buying in general and lenders become very cautious, as they are doing now.

It would be good to see a bit of a correction (not a crash) in London if people move out because more are wfh. It would be good to see a reduction in London rents as well, as I believe is already happening. That might help FTB in the longer run.

Also I think people forget that if your parents can afford to allow you to live rent free in their home whilst saving for a deposit then that is in fact 'help' from your parents as although they may have not given you the money they are stopping you from having to spend your rent/food/council tax/utility bill money. For me that was a saving of around £800 a month if we assume around £450 a month for a cheap rental.

My pet hate is when people proudly say they had no help and saved up themselves while spectacularly failing to recognise that actually they got a lot of bloody help!

I also hate any blog/magazine article with people who bought young and their tips for saving for a deposit and the first ten are things like we stopped buying a latte on our way to work, we cancelled our Netflix subscription, we started meal planning. Then tip 127 - we moved in with my mum so we were able to save on rent. Tip 355 - my Nan died and left us a small sum of money so we put that towards the deposit too. They are the two most important things!! Not having to pay rent, food and bills will save thousands more than forgoing a latte every day for the rest of your life!

That there are even 32% as I post this voting YANBU is a welcome surprise; Mumsnet of yore probably wouldn’t have even hit double digits. I guess reality is starting to bite for more and more people.

Maybe if we stop seeing housing as a property ladder, and buy the accommodation we need for the family we have then we wouldn't be so hung up on values.

Unfortunately, most can’t see how much better for society it would be if this was the case. They’re not thinking ahead. So much that is bad is caused or exacerbated by overinflated house values.

Way too much of our labour goes into servicing the debt. Little or no spare money is left over as a cushion for hard times. It makes homeowners unattractively greedy; they come to expect, as a matter of course, that their house should make a certain amount of money for them regardless even of how much they’ve put into even basic maintenance. Future generations (not to mention anyone priced out now) are screwed by an insistence, a need, for prices to keep rising, as even stagnation would be viewed with horror because of that damned ‘ladder’.

Oh, and ’helping’ FTBs by throwing more money at them for deposits really, really isn’t helping. Ultimately it just fuels more house price inflation.

At some point the madness has to end. But let’s keep pretending that this is the way it has to be, eh?

@dulciepepp

Schrodinger is correct. It wouldn’t allow people to move to a bigger hose. A house is worth a house. If the next biggest size up has a price drop, so does yours - and broadly the difference in price between them remains the same.

Price drops make it easier to move up the ladder!

Can you tell me how, please, because I don't see it. Unless the people moving up have considerable savings

@OverTheRainbow88

Surely lowering the amount needed for a deposit would be the most helpful way to get people get onto the property ladder?

There is no way simple 100% mortgages like before should be done. I really think that 5% deposit is a great thing but 100% without extra security is a no.

I’m quite astonished to see the amount of people who think that if property prices drop everyone will be rushing to sell them. And not holding tight,

Even banks and mortgage providers would try to hold on to repossessed homes in that climate, as would everyone else. Very few people will sell unless they have absolutely no choice and even then it would be a minority.

It does read like folks will be like fuck it, I’ve lost but I’ll sell anyway. Who cares about money,,,🤣

Compared to wages, house prices are far too high
I agree. But there’s no way to fix it without plunging half of the country into negative equity, resulting at best in a stagnated housing market and no more houses being built, or at worst in repossessions and homelessness. It’s 20 years since prices shot up. Prices have been high for too long and there are too many people who have bought at the higher price and stand to lose everything if prices fall.

there are too many people who have bought at the higher price and stand to lose everything if prices fall.

This is overly dramatic. Most people would just be stuck in their own houses.

Better the pain of falling prices than the maintenance/buildup of fantasy prices. You’re choosing winners (homeowners) at the expense of everyone who can’t afford to buy a basic necessity.

You are not JUST stuck though.
You end up stuck and on high interest and fucked.

And no. Buying a house isn't a basic necessity. Having roof over your head? Yes. Owning the roof? No.

Price drops make it easier to move up the ladder!

Not if the person on the first rung of the ladder is in negative equity and can’t afford to sell, and the person at the top is quite prepared to sit tight for a few years until prices recover. That’s what happens in a crash.

We were FTB at the end of 2008, with a decent deposit and secure jobs considering the economic climate. Should have been a bloody dream, right?

Nope. We saw lots of flats where the owners couldn’t afford to sell below the list price because otherwise they’d be in negative equity. So they stayed until the market recovered (often with small kids in 1-bed flats because they’d planned to move after their kids were past the baby stage.)

Otherwise there was fuck all on the market. We got l

Oops! We got lucky but TBH it was a compromise place. The market only freed up once prices stabilised and people could buy with certainty.

In the last crash, if we’d had a smaller deposit, we wouldn’t have been able to buy as banks were worried about further price falls and wanted larger deposits. If we’d had more specific needs, or hadn’t found a flat with no onward chain (owner was moving back to her home country) we would have been buggered.

You are not JUST stuck though. You end up stuck and on high interest and fucked.

Either way, somebody’s fucked. Personally, low interest rates are fucking me and lots of other people who didn’t buy into this pyramid scheme. But as a saver, I’m not a protected species.

And no. Buying a house isn't a basic necessity. Having roof over your head? Yes. Owning the roof? No.

Of course, we all just need shelter. But why should some get to own it thanks to endless government props and market manipulation, at the expense of the greater good of sensibly priced housing?

I mean it's unrealistic particularly after this financial crisis to aim for everyone to be earning high salaries to afford property prices. How will that work?

Rising property prices don't necessarily make it easier to climb the ladder

https://www.google.co.uk/amp/s/amp.ft.com/content/5c49931e-9ddd-3db3-8a67-3fc2bc18f0d2

@ShebaShimmyShake
But how much did the million pound homeowner pay for the house? Will they sell it if it's only going to go for £880k? And what will interest rates be like in that economy? How much will you really end up paying, if you can get your new mortgage at all? And if prices have fallen 20%, that means a poor economy. Is your job safe? Are you financially secure enough to buy this place?

It's very unlikely someone in a 1.1m house will be put into negative equity by a 20% drop, also a 20% drop is not a huge crash & lots of properties sell with at least a 10% discount. You are aware the economy is in trouble & lots of people have lost their jobs?

@SchrodingersImmigrant read my example or the article I linked.

Either way, somebody’s fucked. Personally, low interest rates are fucking me and lots of other people who didn’t buy into this pyramid scheme. But as a saver, I’m not a protected species.

I agree with you on low saver rates! But. If you take out mortgage with 2% interest, then you end up in negative equity due to crash, you can easily be moved to 5%+ as you will end up on variable. That makes massive difference in monthly payments. So that's why I said, you are not just stuck. You are fucked. If you always budgeted to pay 500 and now suddenly it's 600 and you are losing hours because of recession. You are fucked.

There is a reason last credit crunch caused spike in suicides and homelessness...

As pps said, why wish someone to fall instead of someone to rise up...

@dulciepepp I think I quoted you instead of someone else because you agreed with me🤔

Also. I can't read the article. It's beyond paywall, sadly.

@JassyRadlett

Not if the person on the first rung of the ladder is in negative equity and can’t afford to sell, and the person at the top is quite prepared to sit tight for a few years until prices recover. That’s what happens in a crash.

Lots of people won't be in negative equity though & lots of people aren't FTBs. It's true that many FTBs are unlikely to see huge equity gains (regardless of a crash) & will find in difficult to move up the ladder but that's happening already. I never claimed a price reduction made it easter to get on the ladder just that it made it easier to move up.

You have to remember that a property crash would leave many people who face repossession bancrupt.

If your house is repossessed with negative equity you are responsible for the shortfall. Having your home taken from you, becoming homeless and still owing the bank money would not be a great place to be.

Oh wait. No. I got it now.

@SchrodingersImmigrant

As pps said, why wish someone to fall instead of someone to rise up...

Explain how that works though? How does everyone get paid a higher salary?

DH & I earn around 6 figures between us but wouldn't be able to buy what we have now, we just were "lucky" with timing. My inlaws house is worth about 1.8m, cost 50k.

House prices are totally out of whack with earnings, they are surely due a correction? However, as most banks are anticipating a fall in house prices all of the 10% mortgages have been pulled and quite a few of the 15% ones too so it’s really not much help for first time buyers.

@SchrodingersImmigrant Variable rates are a gamble. (Long term fixed is the answer that nobody in this country wants to hear.) People can always lose, as I have so far with my particular gamble. If so, they can go into rented, like the rest of the “fucked”.

As pps said, why wish someone to fall instead of someone to rise up…

Rising up how? You’re seeming to equate high prices with worth as a person.

[quote dulciepepp]@SchrodingersImmigrant

As pps said, why wish someone to fall instead of someone to rise up...

Explain how that works though? How does everyone get paid a higher salary?

DH & I earn around 6 figures between us but wouldn't be able to buy what we have now, we just were "lucky" with timing. My inlaws house is worth about 1.8m, cost 50k. [/quote]
Sorry but 6 figure salary is minim 100k, which means you could get 4.5x that and I fond it hard to believe there and no houses for around 400k in your vicinity.

If you go back on a thread you will see that many of us agreed that price stagnation while wages catch up would be great option as no one gets done that way.

You’re choosing winners (homeowners) at the expense of everyone who can’t afford to buy a basic necessity
Homeowners are the majority. Also there’s a shortage of houses - so for every person who buys a cheap house there’s another person who’s lost that house. Only X number of people can be accommodated because we only have X number of houses. Making houses cheaper doesn’t change that fact, it just changes who the homeowner is.

There's also the issue of older people who may need to downsize, or even sell their homes to pay for care if they need it.