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What Are The Benefits Of Cheaper House Prices In The Uk?

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If prices fell another 30-40%, besides this being good for a l;ot of ftb's (such as me). Why would this be good for the country?

I was reading the thread on average wage drops and it suddenly struck me that maybe it wouldnt be such a good thing. any thoughts??

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What are the Benefits of Cheaper House Prices?

Well, it wont cost as much to buy one for a start.

but if house prices suddenly drop why is that good for the country. its clearly good for ftbs, etc.

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but if house prices suddenly drop why is that good for the country. its clearly good for ftbs, etc.

It is good for the country because it reduces costs

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but if house prices suddenly drop why is that good for the country. its clearly good for ftbs, etc.

Money can be spent in the wider economy rather than purely to service large debts.

A FTB (or anyone with mortgage) mortgaged to the hilt will be restricted in what they can spend money on as they will not have much left over after mortgage payments and taxes.

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Money can be spent in the wider economy rather than purely to service large debts.

A FTB (or anyone with mortgage) mortgaged to the hilt will be restricted in what they can spend money on as they will not have much left over after mortgage payments and taxes.

ok thats great for individuals. for the greater economy, why??

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If prices fell another 30-40%, besides this being good for a l;ot of ftb's (such as me). Why would this be good for the country?

I was reading the thread on average wage drops and it suddenly struck me that maybe it wouldnt be such a good thing. any thoughts??

The path towards lower prices would be very harmful to banks and government revenue hence taxpayers would also suffer.

The final destination would be extremely beneficial as we could individually and collectively spend less of our money on shelter and more of it on things from which we derive more utility.

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but if house prices suddenly drop why is that good for the country. its clearly good for ftbs, etc.

Well apart from a small period where BTL replaced FTB's - First Time Buyers ARE the housing market. Without them it simply does not exist. They are the base of the pyramid. If they cannot buy a place at a reasonable price then the whole system will collapse.

A fall in prices would also be better for those wanting to upsize, apart from those who bought in the last couple of years.

It would also leave more money in people's pockets to spend elsewhere.

It would be good for proper landlords who know what they are doing.

It would be bad for those who develop property simply to sell on for a quick profit.

It would be bad for those wishing to downsize to pocket the difference. However many of these have ended up dipping into this cash to help their dependents who cannot afford to buy a place anymore.

It would be bad for the banks as they would have more debt writeoffs due to repossessions etc...

However at least it would get it over and done with.

On the whole - lower properties prices are better for most people. There really is no valid argument in the opposite direction. IMO.

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If prices fell another 30-40%, besides this being good for a l;ot of ftb's (such as me). Why would this be good for the country?

I was reading the thread on average wage drops and it suddenly struck me that maybe it wouldnt be such a good thing. any thoughts??

The best price for houses is effectively construction costs (for a comparable house) plus a bit for land. So, outside of the more packed areas of the SE, a 3 bed semi should cost no more than £75k max.

As other commentators have said, any more than this just drains cash from the economy, to a small number of landowners.

I think the issue here is that a house price crash hurts a lot of people.. but the pain is a direct of allowing a house price bubble in the first place. However, trying to avoid the crash means that more people will get hurt, because the longer a bubble goes on the more people have to have participated.

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Because you have some time in your life to do some living? , rather than servicing your debts? , a person I know bought at the peak and will be paying a huge % of their take home pay on servicing the mortgage.

Imagine what you could do with the money if a mortgage only lasted 4 years , circa 2006 I very nearly was in a position to buy the mortgage would have lasted 5 years. Meaning disposible income goes up and I can do other things with it.

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Interesting topic. Even more interesting that nobody really has any sensible answer.

Most people around here want to see a price crash so they can get something for nothing.

Greed - there's your answer.

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Surely it would be better for the prices to stay relatively stable for a substantial period until wages caught up with current prices. This avoids throwing millions more into negative equity.

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Normal families on average wages with no inheritance would actually allowed to have kids, not just single chavs on benefit.

Any boomer currently refusing to lower their price and allow decent families to develop deserves to be mugged by the feral youth at age 80.

Edited by DementedTuna

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Interesting topic. Even more interesting that nobody really has any sensible answer.

Most people around here want to see a price crash so they can get something for nothing.

Greed - there's your answer.

Something for nothing? -

Surely, something for nothing is what owners are getting when the price rises above construction cost?

Edited by Stars

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Large fast house price falls would be very bad for the economy, mainly as a result of the banks having to write down more loans so more losses so less lending for stable businesses meaning good busineses will go bust meaning more unemployment. Also banks would not fund entrepreneurs so new exciting busineses would not startup in the UK they would go to where the money was for investment.

For the economy the best scenario would be houseprices to stabalise no HPC and no HPI - means banks can take a final writedown on losses, recapitalise and start lending to busineses and entrepreneurs so creasting employment. This needs to be couple with moderate wage inflation so over the medium term house prices become affordable again on sensible earnings multiples.

Will it happen - not a chance in hell. Property in the UK is not a home it has been turned into an investment. The worsed case scenario would be big drops quickly, speculators and flippers come in with hot money HPI off to the races again and we are all back to sqaure one with the only happy people the flippers that got out in time.

Edited by ralphmalph

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Interesting topic. Even more interesting that nobody really has any sensible answer.

Most people around here want to see a price crash so they can get something for nothing.

Greed - there's your answer.

In order for the UK to become economically competitive on the international arena, it must be able to compete on price with competitors in other countries.

The cost of products and services made in the UK has a disproportionately large cost going towards:

-rent/leases

-labour cost

the first cost isobvious, the second is high because the cost of living in the UK is very high. The cost of living is high because the "labourer" employed by a productive enterprise has to pay a "bubble tax" for the property they dwell in. They also have to pay a property tax to the bus driver (because the bus driver needs an inflated salary to have shelter), and to the grocery shop (because the grocery shop has to pay inflated lease costs, not to mention inflated labour costs for their employees who also need shelter).

all in all, the "inflation" in properties has to be paid from the rest of the economy. And since foreigners are usually unwilling to finally divvy up the "bubble tax" this ends up in jobs being offshored from the UK and Britain increasing its current account deficit massively month on month... with only one end-game in sight.

the root cause of this endgame is inflation of fixed asset prices in a pyramid-scheme bubble.

Edited by hayder

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I cannot see many benefits of cheaper houses. Everywhere I have been in the world with a successful economy and limited space has high housing costs. The high prices also drive regeneration, where it would not be viable otherwise. This has led to many areas in this country being improved rather than left to decay.

It is fairly easy to survive in the UK. Most of us have have TV, internet, plentiful food, education, car, health service, overseas travel and so on. Although owning a house takes a big chunk of income I think it gives people something to believe in and strive for which is important in a society which does not share a common religion or culture.

I know it is bad news for many HPCers who are hoping for prices to halve (which I don't believe they will), but for society, I think higher housing costs can have some benefits.

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If prices fell another 30-40%, besides this being good for a l;ot of ftb's (such as me). Why would this be good for the country?

I was reading the thread on average wage drops and it suddenly struck me that maybe it wouldnt be such a good thing. any thoughts??

It allows more of the population to be able to buy a home = more community essential jobs move to deprived (expensive) inner cities.

It increases sales in the property, finance, logistics, utilites and construction industury. More sales = more jobs = reduction in unemployment.

Stamp duty payments are massively increased = more money to pay off debt = likelyhood of less tax increases and buplic spending cuts elsewhere.

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I cannot see many benefits of cheaper houses. Everywhere I have been in the world with a successful economy and limited space has high housing costs. The high prices also drive regeneration, where it would not be viable otherwise. This has led to many areas in this country being improved rather than left to decay.

It is fairly easy to survive in the UK. Most of us have have TV, internet, plentiful food, education, car, health service, overseas travel and so on. Although owning a house takes a big chunk of income I think it gives people something to believe in and strive for which is important in a society which does not share a common religion or culture.

I know it is bad news for many HPCers who are hoping for prices to halve (which I don't believe they will), but for society, I think higher housing costs can have some benefits.

the only end-game of continuing high prices will either be Britain defaulting on its liabilities or the BOE forced to increase money supply to inflate away the value of the pound. There's no "third way" around it.

What you are expecting above is for Britain's trade partners to PAY for the inflated property prices in the products and services they buy from the UK. Judging by Britain's current account deficit, that view is out of touch with reality.

Britain can only become a true economy (as opposed to the "spivonomy" of the past decade) by actually making and selling products and services to others, in order to pay for the products/services imported which are not made in the UK. Maintaining an inflated root asset price that massively distorts the base cost of the entire economy is not gonna cut it. Perhaps nominal "houseprices" can be maintained to placate the feelings of "owners" and "mortgagees", however the £500k house will only be worth $200k in that instance... can't get away from a global economy.

If you do want to detach from the world economy then vote BNP.

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If prices fell another 30-40%, besides this being good for a l;ot of ftb's (such as me). Why would this be good for the country?

I was reading the thread on average wage drops and it suddenly struck me that maybe it wouldnt be such a good thing. any thoughts??

One thing good is that it should help to reduce our trade deficit. The trade deficit is (or at least was pre-crunch) partly funded by us borrowing money from abroad against the high value of our houses. This activity was keeping the pound strong even though we were importing more than we were exporting. We were using the foreign money being lent to us to buy imported goods, and UK manufacturing could not compete because the pound was overvalued. From 1997 to 2007 UK manufacturing hardly grew. In countries like Japan, Germany and China, their industries grew much more while they lent money to us which we used to buy their goods. The net result for the UK was that many lost good jobs in manufacturing (I think 1 million manufacturing jobs lost in this period) and many others ended up with a lot of debt (i.e. big mortgages). A fall in house prices would help reverse this, via a weaker pound..

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If prices fell another 30-40%, besides this being good for a l;ot of ftb's (such as me). Why would this be good for the country?

I was reading the thread on average wage drops and it suddenly struck me that maybe it wouldnt be such a good thing. any thoughts??

Economic/social mobility.

High house prices devalue work, and take us back to a time when all that matters is to be born rich.

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If prices fell another 30-40%, besides this being good for a l;ot of ftb's (such as me). Why would this be good for the country?

I was reading the thread on average wage drops and it suddenly struck me that maybe it wouldnt be such a good thing. any thoughts??

Some of those mothers who'd like to stay at home and look after their own babies/toddlers, rather than shoving them into nurseries, might actually be able to afford to do so.

Crazy that this has become a 'luxury' too many can't even think of.

(I'm talking about the 'working' classes here - as in those who work for a living.)

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Interesting topic. Even more interesting that nobody really has any sensible answer.

Most people around here want to see a price crash so they can get something for nothing.

Greed - there's your answer.

Eh? Can you even read?

Money spent not on debt repayment can be spent on other things, or the same money can be spent on bigger houses (or both). Either way a better quality of life is the results for the average homebuyer, and a healthier economy.

I have to say I found this thread topic just bizarre. Imagine if there was a thread aksing "Why would we want car servicing to cost less?" or "Why would we want plumbers to charge less?". I mean, WTF? You might as well say "Pyramid schemes - are they actually a good thing?"

Just f*cked up to think that making something more expensive, having to get into more debt, in order to buy something smaller and less pleasant, was a GOOD thing. This mentality is so depressing and destructive, and frankly inexplicable to me, as a sane person.

:blink::blink:

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