So will the prices start going down soon?

[Notmyyearthisyear]

Because right now they seem to increase by at the rate of 10% a month!!! Every time I look, and I look every day, I can afford less than the day before 🤣🤣 Surely this cannot continue…

@Riverlee as I said it's individual circumstances. Young & single is different to older & buying together.

House price crashes don’t happen in a vacuum.

Who claimed they did?

Would you also be happy for them to face unemployment?

That's a risk regardless. Have you not seen the current job stats re youth unemployment.

That’s the risk that comes with what you want.

Who said I want that though?

Well you say governments can’t control central banking but actually they can control the reaction to it i.e. the bail outs of the banks if you think about it property should’ve been absolutely annihilated after Lehman Brothers but it wasn’t because governments intervened due to the fact that they couldn’t have thousands of families in tents outside the White House for example

[quote XVGN]@sst1234

No one has been able to say so far where this magic supply of extra houses is coming from to warrant a crash.

We did. It's easy to remember - the 3 D's - death, debt and divorce.
And yes, it last happened 1989-93. No magic supply was required.[/quote]
Wouldn't divorce increase demand rather than supply: it's a family living in one property requiring two after divorce.

@Bringsexyback

Well you say governments can’t control central banking but actually they can control the reaction to it i.e. the bail outs of the banks if you think about it property should’ve been absolutely annihilated after Lehman Brothers but it wasn’t because governments intervened due to the fact that they couldn’t have thousands of families in tents outside the White House for example

It was nothing to do with the governments, the bankers bailed out the bankers. The government didn’t intervene in anything, they only supported it. Central banks are their own entity, who control monetary policy with representation to the government and parliament. Ever wondered why do all the UK tax havens exist and lead to the City of London, yet it’s not part of the UK?

The bankers bailed out the bankers at our expense (the tax payer) I may add. The governments supported them from the tax payer accordingly.

@bettycarver

Hmm... let's see... anyone in negative equity probably wouldn't be cool with it. Anyone stuck in inadequate housing, or wanting to move for employment prospects who's trapped in a house worth less than they're paying for it... oh and of course anyone who cares enough about the economy to know that we depend on consumer spending and consumer confidence ...

Seriously, how could anyone be 'cool' with a catastrophic housing crash

Stabilising - Yeap, that would be great. Most important, increase in building, increase in affordable housing schemes.

But anyone who thinks house prices dropping by 50% is 'cool' needs, in those immortal MN words, to give their head a wobble

Betty, It's not so bad in the words of the immortal Killers song.

Firstly, we're trying to advise current buyers to be aware of the risks they face. Then they can make informed decisions.

Secondly, house price falls are great news for people working their way up the ladder. The savings on the next house will far outweigh their losses on their current house. The reverse is very much true right now. Folks cannot generally afford to get bigger family homes.

Thirdly, the sudden increase in housing activity will be a boon for all of the retailers that rely upon it, e.g. furniture stores, curtains, carpets, etc. It'll also be good new for Estate Agents - but you can't win them all!

We have to get back to a more sensible and sustainable average house price to average wage ratio. People who have been bidding over the asking prices will have to feel the heat. It'll be a hard lesson worth learning. We need to get to the point where people laugh at Kirsty and Phil when they think that offering 495K on a 500K house is hard negotiation.

@Remytherat

I would like homes to become affordable for our kids and young adults. If that means my home falls by 50% then I'm cool with that. Who wouldn't be?

What about all the young adults who have just bought at inflated prices as their first step on the ladder who are suddenly in negative equity and won't be able to buy anything bigger so are stuck in a small flat/house with a growing family? I don't think they'd be particularly happy with a 50% reduction in house prices.

People who overpay will always suffer that risk whether it's houses, bitcoin, TSLA, Tulips., etc. The warning signs have been very clear for a long time - see ratios.

If they view their house as a home and cut their cloth accordingly then they'll be able to ride out the pain. Many did in 89-93.

@swirlsy

House price crashes don’t happen in a vacuum.

Who claimed they did?

Would you also be happy for them to face unemployment?

That's a risk regardless. Have you not seen the current job stats re youth unemployment.

And have you not seen the figures for total unfilled vacancies?

@sst1234 what point are you trying to make?

She wants to disagree with you, come what may. You’ve had the temerity to depart from the ‘perpetually rising house prices are a good thing and anyone who doesn’t think the same is a big meanie’ doctrine, and thus must be ruthlessly punished.

Post “the sky is blue” or something. See what happens.

@swirlsy

Seriously, how could anyone be 'cool' with a catastrophic housing crash

What is a catastrophic crash?

I wouldn't have an issue with losing 40% of my house value if it meant it was easier for my dc to buy & I could buy a bigger house (don't think I will move again though).

Many homeowners have no issue with prices ever increasing so I'm not sure those who want a drop are somehow worse.

A house price crash wouldn't make it easier for your dc to buy unless they are cash buyers. House prices only crash when people can't afford to buy.

I don't understand the logic of people who seem to think that lower prices will allow more young people to get on the ladder. The same people will get on the ladder regardless of how high or low house prices are, because this number is constrained by the number of available houses.

A house price crash wouldn't benefit first time buyers needing mortgages, it would benefit cash buyers (i.e. the rich, usually investors).

@gattofantastico

On a personal level, a crash would be great for my adult kids who are desperate to buy and won't affect dh and me - we're oldies, have been in the market for decades and will have no need to move from our home. On a national level, it would be a disaster.

If your kids can't afford to buy now, it's even less likely that they would be able to buy during a crash - unless they have a huge amount of cash.

If they need a mortgage, forget it.

The problem with the housing market isn't really the price of houses

This is relevant to a limited degree, because the price is determined by what people can afford to pay. If prices are high, then it's because people can afford to pay the prices.

Part of the problem is inequality - the fact that the distribution of wealth has become increasingly unequal. Some people can afford to buy multiple houses, driving prices higher, while others can afford none.

Big drivers of inequality include things like inheritance and bank of mum and dad. If people couldn't pass money down from one generation to the next, then prices would be more in line with wages. However, wages are becoming less and less relevant to prices.

I don't understand the logic of people who seem to think that lower prices will allow more young people to get on the ladder.

I don't understand the logic that ever increasing prices allow more young people to get on the ladder?

A house price crash wouldn't benefit first time buyers needing mortgages, it would benefit cash buyers (i.e. the rich, usually investors).

I was a FTB in 2010 & bought my first home then & no I was not a cash buyer. The price falls from the 08 crash certainly helped me.

However, wages are becoming less and less relevant to prices.

I agree & its wrong. Plus our economy is far too reliant on house prices increases & money has been used to prop it up as opposed to investing in other areas which is one reason we have a skills shortage in certain job industries.

@MidnightMeltdown a crash would benefit some FTB, depending on the amount of deposit they've saved, LTV and the area they're buying in, as well as benefiting the lucky few already on the ladder who have sold up and are renting temporarily and taking a gamble on falling prices.

But I completely agree with your general point. Neither booms or crashes are helpful for the majority. Trouble on these threads is that people can be very self serving and won't look beyond their own personal circumstances, whether that's sitting on a gold mine of a house because they bought decades ago, or because they got lucky and jumped in as a FTB when house prices did crash. That's just lucky personal gain, being in the right place at the right time, rather than looking at the wider impact of boom and crash.

I bought in 2010 after the dip, it was hard to get a mortgage without a 20% deposit, so it makes it both harder and easier for FTBs. Harder if you don't have the deposit and there is less supply as people don't sell, easier as prices are lower. I'm in an area seen as desirable and the prices still dropped temporarily after 2008. I wish prices would at least stay static, it's nearly impossible for FTBs and for anyone trying to move up the ladder and finding a bigger house or flat is now out of reach whereas it would have been possible before.

On another thread, a poster said they thought that the reason there are less mid-market shops now, and less choice, is because housing has hoovered up all the money. I think there is some truth in this (along with online shopping and all the other changes leading to retail businesses failing), housing does hoover up a lot of income and deposits have to be so big now.

@swirlsy

I don't understand the logic of people who seem to think that lower prices will allow more young people to get on the ladder.

I don't understand the logic that ever increasing prices allow more young people to get on the ladder?

A house price crash wouldn't benefit first time buyers needing mortgages, it would benefit cash buyers (i.e. the rich, usually investors).

I was a FTB in 2010 & bought my first home then & no I was not a cash buyer. The price falls from the 08 crash certainly helped me.

Increasing house prices don't help, but neither would a crash - unless FTBs are putting down a very high deposit.

This isn't 2010, things have changed a lot since then. The last crash was largely down to irresponsible lending, which resulted in people defaulting on their mortgages. Measures have been put in place to prevent that from happening again. Lending criteria are much stricter and mortgages must be stress tested by law. Also, most people are now on fixed rates. It's unlikely that the 2008 crash would happen again - at least not to the same degree.

House prices may dip if interest rates increase significantly, but that doesn't help FTBs needing a mortgage. What they aren't spending on the house, they will pay in interest to the bank instead.

@cocoatata

On another thread, a poster said they thought that the reason there are less mid-market shops now, and less choice, is because housing has hoovered up all the money.

There might be some truth in this, but housing is also creating a lot of money - for some people.

When parents or grandparents die, high house prices mean huge inheritance for those fortunate enough to inherit. This a accumulated wealth increases inequality and pushes prices higher. I think what we're seeing is a bigger disparity between rich and poor.

I don't think that people, overall, are poorer now than they were in say, the 70s, when house prices were lower relative to wages. I think shops are closing because we are reaching 'peak stuff'. People are realising that they simply don't need more and more and more - and they have no place to store it all because they can't afford a big house!

unless FTBs are putting down a very high deposit. Most FTBs have to do this anyway, hence the bank of mum & dad & they certainly need to do so if they want the best rates.

Also, most people are now on fixed rates. It's unlikely that the 2008 crash would happen again - at least not to the same degree.

Yes hence why I never said house prices would actually crash....

House prices may dip if interest rates increase significantly, but that doesn't help FTBs needing a mortgage.

Like I said I bought after the 08 dip, I wouldn't be able to buy that property as prices stand now.

On another thread, a poster said they thought that the reason there are less mid-market shops now, and less choice, is because housing has hoovered up all the money.

I agree, it's not good to have so much income & the economy reliant on housing to fund growth.

When parents or grandparents die, high house prices mean huge inheritance for those fortunate enough to inherit. This a accumulated wealth increases inequality and pushes prices higher. I think what we're seeing is a bigger disparity between rich and poor.

Your chance of owning a home is determined for many on whether their parents owned & can help them which does drive inequality.

Inheritances on average are still not that big & will likely peak when boomers start to die (although some economists say the glut of property for sale will depress prices). I also think people underestimate care costs & how long they will live which eats into inheritance. Plus I think care in the home may end means tested inc house value & I wouldn't rule out a wealth tax.

@swirlsy
*
unless FTBs are putting down a very high deposit. Most FTBs have to do this anyway, hence the bank of mum & dad & they certainly need to do so if they want the best rates.*

No they don't. The average FTB deposit is only about 15%. That still leaves a huge mortgage.