Are MN homeowners as deluded as HPCers?

[Cybercynic]

Last few days there has been spike in the number of posts on potential house price declines. In the UK prices have already dipped more than 3% since August. I find it amusing that many HPCers are frequenting MN to report such news and potentially express glee on those that have bought.

However, even more amusing is the response of home owners suggesting how prickly they are to the remote possibility of house price declines. (PS: I am a homeowner and bought 20 years ago. While I have made equity gains over the years, I support overall declines in prices otherwise I feel my kids will be forever renting in this country).

While I hold no brief for doomsayers and think most of those are crazies, I believe the homeowners on this forum are turning increasingly prickly at facts and they offer the following standard responses to prospect of price reductions:

Response#1: House is not an investment it is a home. OR if you buy for long term you will always be okay

Counter: Ok then stop worrying about what doomsayers say. Let the prices decline by 10-25% and be okay with it.

Response#2: UK prices will never go down because it is an island and we just 'love' immigration

Counter: Please check out what is happening in Australia and New Zealand. Both factors apply there and they already have >10% yearly declines so far and more is expected

Response#3: If prices decline I will simply refuse to sell. Nobody can force me to sell.

Counter: Yes, you don’t need to sell because you can refuse to participate in the market. However, that does not stop price decline just as prices went up even when you refused to sell your own property in a rising market. House prices are determined at margins. Valuations are based on comparable transactions (whether you sell or nor). Unless there is a sellers strike announced similar to the train strike next week, not sure how this argument stands.

Response#4: There wont be any re-possessions

Counter: Agreed there will be few repossessions. It takes a long time to repossess and therefore, Banks will work with borrowers to find ways to make sure homes are not taken away. But one does not need forced sales to price declines. Australia, Canada, New Zealand, Sweden have all seen declines in the last 1 year without repossessions. And as I said earlier, UK has had declines >3% since Aug. And we are not even in recession yet officially. House prices are a function of affordability and I for one do think that era of <1% interest rate is over and average will hover around 4-5% for some time and with those rates you cannot have rapid growth.

Response#5: If one hopes for price reductions throughout, one must be a horrible person 'cause some people will feel pain

Counter: HPI has caused more pain to generations. And therefore, please explain a situation when we can have affordable housing without price declines. Affordability either comes with consistent wage growth and that aint happening without rampant inflation and resulting interest rate increases. So please let us know what advise they have for the younger generation to become home owners and who want affordable housing. And please do not suggest council housing since you will need to first check the govt finances to make that suggestion

No, I haven't seen this. IME most home owners are glad they are; they find it far preferable to the instability of renting and don't obsess over the fluctuations in value, because they know that the value has risen massively over the last few years and that a drop doesn't mean a house is a poor investment and that buying it was a wrong decision.

You appear to have constructed an argument and counter argument entirely of your own, it's not what I'm seeing on other threads

This.

I didn't buy my house as an investment, I bought it to live in.

I’ve not seen much of this. Surely most people are buying a home, not an investment, and understand that paper gains are meaningless.

More of an issue for people who own investment properties but that’s the nature of investing. Share prices have also had a correction 🤷‍♀️

I haven’t seen much of this either.
The biggest worry I have about a house price crash is that it doesn’t exist in a vacuum, and the corresponding economic conditions aren’t usually favourable to first time buyers. They will, in general, need higher deposits, lending criteria will be tightened etc.
For me personally I’d welcome a significant drop as we’re looking to upsize, so it would benefit us.

Yes I have seen this on here in recent months. Lots of defensiveness and reasons why prices wouldn't fall. And now that they are, lots of reasons why they won't fall far and it doesn't matter anyway.

However, whatever side of the camp you are on, you are just guessing and maybe hoping for the scenario that will best support your own situation. Just like all the 'experts' on sm and tv.

House prices vary dramatically around the country and the sensitivity to the market varies a lot. Housing shortage here so prices are still rising , up 20% on august 2020 when we bought!

Wow. That's quite an in-depth interview with yourself that you've conducted there.

In my area south east HP are most definitely falling or stagnating.

We bought just before covid and have renovated. I fully expect the house to be worth less than we hoped but we hope to love here 15/20 years and then downsize so who knows

However like you I want the prices to be affordable for my kids who can only afford a small flat maybe right now and that's with us given them a huge deposit so either wages need to go up by 20/30% or prices need to come down.

The Bubble has burst in this area for sure.

The conditions were unsustainable

Thanks for your super contribution to the thread. You are a star.

Prices drops are not happening Australia-wide, it's very dependent on where you live. A house down the street from me with no bathroom or kitchen just sold for an insane price last week.

😂😂

What do HPC and HPI mean?

The vast majority of people dont own houses as investments. They are homes

I think the op has a point. Some posters just won't accept that they are going to drop.

round here, prices have stagnated things aren't selling and I think we will see lots of reductions after Christmas

Indeed. House prices in one or two states have dropped, but in my state they are still increasing and are predicted to continue doing so.

In my area, prices have risen enormously. I’m expecting them to level off or drop as people resume foreign holidays. An enormous amount of housing stock was turned over to air b n b during covid, and I’d hope it comes back into residential use one way or another.

I never see this noted as a factor on these threads.

Gosh. What did you expect - you're the one calling Mumsnetters deluded.

I guess there is one more argument we are seeing a lot of - they might drop everywhere else but not in this one particular special area where I am.

Personally, I am hoping for a gentle fall and a few years without rises. It won't be too painful for homeowners, but over time might improve affordability a bit.

We sold in the spring and are renting while we look around in the new area. It is nice not to see houses going to 'offers over' within hours of being listed, actually having time to view and consider, the really inflated properties and new builds reducing and being more realistic (desirable area btw, historically has not fallen as far as neighbouring areas but still some correction).

I would be very surprised to see prices fall by very much where I live in London. There is a massive housing crisis/shortage in London. Rents are insanely high.

I haven't seen any posters saying that house prices aren't dropping. Just @DeadHouseBounce, @Cybercynic et al (or maybe he's the same poster!) claiming that people are in their desperate attempt to flood forums with their mantra.

House prices have dropped - no shit!! We don't need anyone to tell us that. Just like we don't need anyone to tell us they rose massively, ridiculously high, way way above inflation for the last few years.

So: Do I wish I'd spent my life up to now in private rentals, worrying if this will be the month the landlord serves notice? Wondering if my kids will need to move schools, whether I'll need to re home my pet? Whether I'll even be able to find another affordable rental?

No.

I guess there is one more argument we are seeing a lot of - they might drop everywhere else but not in this one particular special area where I am.

Not seen this either except in your post.

So what if they say these things? Your very in depth 'amusement' is weird.

I know, who can be arsed to care so much what anonymous people on the internet think about the movement of house prices?

House Price Crash and House Price Inflation

The former is also a website.