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!

While I have some sympathy for the views expressed by Zilla, the factor not mentioned in that list is the chronic undersupply of property, which is a significant factor in house price dynamics.

It will be interesting - to say the least - to see whether Covid actually results in a longer-term shift in working patterns and therefore housing patterns. That’s a very big unknown so far and probably key to the whole issue. A sizeable correction/crash in London/Home Counties driven by mass relocations would likely be offset by increases in desirable less urban locations with halfway decent transport links (driven by money from the London property market, even if depressed).

Prob not amazing for locals.

Jassy, I can see you've given this some thought. My short answer is that chronic under-supply has been heroically supporting a toppy market and COVID and Brexit may overwhelm even its effects. Happy to be wrong, I am about most things.

Can't get on the property ladder, but I'm still saving. Please explain how house prices rising will help me in my situation? I'm not saying it will be easier, as a hefty deposit will be needed either way, but if prices stopped climbing quicker than I can save it would help.

Not everyone has a huge mortgage and will sell at a loss. My mum paid £30k for her house, which is worth 200k and she can easily downsize if she wanted to as she lives alone. Many starter family homes are occupied by people like my mother.

I bet you are a disgruntled landlord aren't you?

@Facelikearustytractor

Can't get on the property ladder, but I'm still saving. Please explain how house prices rising will help me in my situation? I'm not saying it will be easier, as a hefty deposit will be needed either way, but if prices stopped climbing quicker than I can save it would help.

Not everyone has a huge mortgage and will sell at a loss. My mum paid £30k for her house, which is worth 200k and she can easily downsize if she wanted to as she lives alone. Many starter family homes are occupied by people like my mother.

I bet you are a disgruntled landlord aren't you?

House prices falling may help you, but of course depends on how much they fall. Well done to you for saving, keep it up and you'll get there eventually.

I looked on Rightmove and the houses near me seem to be holding their prices but sales have gone down.

House prices where I am (Sydney) are insane.

Any drop to an actual realistic price would leave so many people with mortgages which are more than their house and land.

We brought our house in 2005 for around $500,000, the house next door on a smaller block, 2 less bedrooms and very 70’s decor just sold for $3.75 million.

The prices are unrealistic and sadly a crash is coming at some stage.

You've also got to remember that if house prices do fall too much, then builders won't build anymore, as they would be building at a loss.
Demand then goes up, so do prices.

As long as interest rates are this low (and might go negative once COVID and BREXIT are truly hitting), house prices will stay high. And once interest rates go up when economy starts to recover, house prices may fall but mortgage costs go up.

@Whammyyammy
The cost too build is a fraction of the cost to buy in many cases. It's the "developer/speculator" that are destroying the market.

Of course people with a vested interest in high property prices don't want a crash
Similarly those with a vested interest in a crash don't want prices to remain high
We all want whatever we think will benefit us....

You've also got to remember that if house prices do fall too much, then builders won't build anymore, as they would be building at a loss.
Demand then goes up, so do prices.

Nonsense. Builders always built before house prices got to where they are today. Or are you saying that builders didn’t build any houses before 2017?

It’s to do with the price of land. Are you saying that if house prices drop, the price of land stays the same?

The financial illiteracy on mumsnet continues to astound me.

tazmac so why did builders stop building after the 2008 crash?

@ivykaty44

Builders didn’t build any houses at all pre 2015 when house prices started going up. Building houses is a new invention.

tazmac so why did builders stop building after the 2008 crash?
They didn't

so the building trade wasn't in tatters then - must have imagined all those companies getting into debt and losing massive amounts of money, with builders out of work

ivyKaty
Many building companies went bust and screwed over their subbies.
That happens very year
And new ones snapped up their land banks and carried on as normal.
The level of Phoenix liquidations in the construction industry is notorious.

The physical cost of building a 4 bed detached house is around £150k
all else is profit
hence why the head of Persimmon got a £75m bonus

Yabu. It would suit me OP. I don’t wish for it and don’t want a recession that would cause hardship for many but yes, falling house prices would suit me. Don’t presume to know others circumstances.

www.theguardian.com/business/2008/jun/13/construction.housingmarket

listeningQ

you really think what happened in 2008 happens every year? you're mistaken, it doesn't

Ivykaty
Those companies may have written down the value of their land but they did not sell it
they just built on it later, for bigger profits.
The job losses are rather illusory because of the nature of subcontracting
I do tax accounts for builders, I know of what I speak

It's the whole land banking thing isn't it.... rising property prices incentivise a 'casino mindset' in building companies

they just built on it later, for bigger profits. so they stopped building for a while

With the huge levels of unemployment expected, people will have to sell, in order to capitalise on their only asset, or because of repossession.

It makes little difference to me as I have a small mortgage and no desire to move, but of course if prices fall there will be people who benefit. Same as there will be people who benefit if prices rise.

We've recently sold and are moving into rented until a suitable property comes on the market. So falling house prices actually would benefit us personally. But in a general sense it would be good for society in general - house prices are just crazy and the rise each year is not sustainable. My dad had kind of a middle management equivalent job in the 80s and my mum was a sahm and then only worked worked part-time when us kids were older and they were able to afford a big semi detached just outside of London. That would not be possible these days as the house price to wage ratio is out of control.

Falling house prices help first time buyers get into the market. And so the chain reaction begins.
I’f you are a seller and looking to upgrade, any fall is relative. And you may feel you do not benefit. But without FTBers being in the market, then no one would ever being to upgrade! (Yes their are exceptions. I know that. But as a rule, you need ftbers. )

Interesting article on predicted houseprice crash

www.business-live.co.uk/economic-development/sell-now-before-house-prices-19031551

It definitely would help first time buyers