To shout that house prices falling won't help ANYONE

[Marg33t]

Lots are starting to get happy that prices could fall a bit next year.

But really that won't help anyone as sellers will refuse to sell if they fall and buyers will need a bigger deposit. It won't help! They have to keep increasing at at least inflation for a healthy economy.

Falls may help 0.00001% of those that have a huge amount of cash, but that's it. Everyone else will not benefit!

Yanbu but I wish people would stop shouting things on here!

It will help cash buyers and FTBs with large deposits. Also buyers of second homes.

It will probably harm more people than it will help. But no point pretending that there won't be people who will benefit from it.

Stable prices probably will help, but given how few houses are being built, I cannot see price falls other than in some areas.

They have to keep increasing at at least inflation for a healthy economy.
No they don't. We are massively over-reliant on house prices in this country. We need an adjustment to place housing into a commodity not an investment/pension. As the difficulty for young people trying to join this ponzi scheme shows, it's not sustainable.

Oh theyd help us. We have paid off a lot of our mortgage plus prices have gone up, so our mortgage left is less than a third of what we'd get for it now. We bought this house planning it to be a 5-7year move. 11 years on, while our house has gone up in value, the next step up house is too much of a stretch.

We'd need to borrow an extra £300k for the next house, which we cant afford comfortably. If ours fell in value, as long as a) it didn't fall by more than 66% and b) the next size up houses fell in proportion so the gap between what we got for ours and what we'd need to additionally borrow dropped to below £150/200k, we'd move.

I’d be thrilled for house prices to drop. The jump up to next level of bigger house is clearly then smaller. I am in no danger of negative equity due to prudent and careful financial planning. The country urgently needs a housing crash to even if all out again for the poor FTB next generation.

The house I bought in 1987 for £30k is now worth £90k
The house I bought in 1989 for £50k is now worth £250k
The house I bought in 1996 for £60k is now worth £400k
all on the south coast
UK house prices are a Ponzi scheme driven by people on commission

@Marg33t

Why all the shouting and screaming from the rooftops? Are you very angry?

Remember that only 5% of houses sell in any year
and millions of people could not now afford to buy the house they live in due to the inflation
so are stuck
as they could never raise a mortgage or pay the rent on something similar

It would help me. I am still in the stage of my life where I hope to get a better house. If all prices went down say 10% and thus I could have a 10% lower mortgage (ignoring other savings etc) that would be handy.

Of course this is oversimplifying things and maybe a weak housing market would make it harder to fine what I want (more people staying put). But in itself it would be helpful.

Plus people don't sell just because their house price has reduced, they do the opposite thus pushing up demand, thus pushing up prices.

Never heard of the three Ds? Death, Debt and Divorce. There will always be some sellers.

Two houses in our village sold within a week of being on the market. Both got over the asking price and both had a lot of interest. One was our friends house and they were amazed by the amount of interest , people offering far more to guarantee it.

I suppose my starter for ten would always be that changes in house prices help exactly the same number of people as they hinder.

Rising prices bring about [roughly speaking] a transfer of wealth from the young to the old, or equivalently from potential first time buyers and upsizers to multiple homeoners and potential downsizers.

Falling prices do roughly the opposite.

Most houses are bought cash so won't be an issue and people will sell for the best prices they can get for them regardless if that is up or down.

House price falls help buyers, but don't help sellers, and have no real effect on people buying and selling at the same time. Lenders are already requiring higher deposits so any price falls will initially not make much difference. There will always be properties available to buy due to new builds, repossessions and those vacant due to death.

If prices fall significantly then the first real problem might appear - ie. negative equity, where the amount owed on a mortgage is greater than the price of the house. In 2008-2009, house prices fell 20% and this resulted in just 4% of house owners being in negative equity (10% of the 40% of owners with mortgages).

If prices fall even more, then the next important problem becomes builders ceasing to build as they can't make any money. It is only at this stage that house price falls becomes a major economic problem.

It can help if you want to sell to buy a larger place - so long as the drop isn't sharp enough to touch your equity.

Say you want to sell a £200k place to buy a £400k place - you need £200k more. If prices then drop by 20% you'll be in the position of wanting to sell a £160k place to buy a £320k place - you need £160k more. You've saved £40k.

House price drops hurt downsizers, people who only bought their place recently without much equity and need to sell now and investors the most.

Most houses are bought cash
r-i-g-h-t

It’s hard to make short term predictions, but in the long term the oldest boomers are moving into their 70’s now, as they age and sadly due a lot of property is going to return to the housing market and it will be interesting to see what effect that has on prices over the next 10-20 years.

Why will people need bigger deposits?

Not all people would, FTB and upgraders would need smaller deposits wouldn't they?

Anyone who needs a mortgage will be in for a nasty surprise if they think falling prices means they will be able to jump on the so-called property ladder.

In some areas of this very country (England) there are areas with huge price drops, with properties on the market for months if not year. You'd think buyers would jump at the bargain.. funnily enough, they don't.

@bp300

Most houses are bought cash so won't be an issue and people will sell for the best prices they can get for them regardless if that is up or down.

Most houses are most definitely not bought for cash.

an astonishing number of houses [about a quarter to a third] actually are paid for in cash. i suppose lots of second homes/downsizers/etc.

it is true that many buyers cheerfully confuse "cash payment' with "no chain".

House prices are falling in the town DS is buying in and his offer has been accepted. The last time one in the development sold for as little as he is paying was two years ago. As he was 'working from home' during lockdown he was able to give up his rented accommodation in London and move back with us and save. So now he has a huge deposit and adds £2000 to his savings every month. So this whole business and falling prices has helped him, certainly short term.

You are right, there is a limit to how far prices can fall before people are unwilling or unable to sell because they don’t have enough equity in the house. If someone bought a house a few years ago with a 10% deposit then they would not sell for 20% less because they wouldn’t be able to pay off the mortgage with it. They would put it up for rent if they really had to move.