Jump to content
House Price Crash Forum
singlemalt

House Price Fall = Bad

Recommended Posts

Sorry people I've got nothing new to add really, this has been discussed on here many times before.

Just an anecdote. Even with all the belt tightening going on at present some people still seem unable to reason things through logically and arrive at a sensible conclusion.

Acquaintance trying to sell his 1-bed flat for 70k. Nice little place, modern interior but area is definitely on the wrong side of the tracks. Been on the market for about 1yr. He's slapped on new magnolia, fresh ground coffee, lemons and limes in a glass bowl, twigs etc. :lol:

To be fair he's even dropped the price a little.

Last month when Halifax announced a price fall in their index he ardently said he would refuse to drop his price any further (he's got loads of equity btw, paid a pittance (about 20k some years ago).

I reasoned that if his place had fallen by about £2000 the place he wants to buy had also dropped, by the larger sum of £3500 a £1500 shift in his favour with the added benefit that his place is now more affordable for the kind of person who would likely buy it.

He - Not interested! just saw the headline price fall.

I didn't even waste my time and try to explain that by subsequently getting a smaller mortgage would mean he'd ultimately pay less interest over the years.

For some 'House Price Fall = Bad' just seems hardwired :huh:

Share this post


Link to post
Share on other sites

Sorry people I've got nothing new to add really, this has been discussed on here many times before.

Just an anecdote. Even with all the belt tightening going on at present some people still seem unable to reason things through logically and arrive at a sensible conclusion.

Acquaintance trying to sell his 1-bed flat for 70k. Nice little place, modern interior but area is definitely on the wrong side of the tracks. Been on the market for about 1yr. He's slapped on new magnolia, fresh ground coffee, lemons and limes in a glass bowl, twigs etc. :lol:

To be fair he's even dropped the price a little.

Last month when Halifax announced a price fall in their index he ardently said he would refuse to drop his price any further (he's got loads of equity btw, paid a pittance (about 20k some years ago).

I reasoned that if his place had fallen by about £2000 the place he wants to buy had also dropped, by the larger sum of £3500 a £1500 shift in his favour with the added benefit that his place is now more affordable for the kind of person who would likely buy it.

He - Not interested! just saw the headline price fall.

I didn't even waste my time and try to explain that by subsequently getting a smaller mortgage would mean he'd ultimately pay less interest over the years.

For some 'House Price Fall = Bad' just seems hardwired :huh:

I doubt he thinks that far ahead. Lower the price less money in his pocket at this point in time.

Share this post


Link to post
Share on other sites

Sorry people I've got nothing new to add really, this has been discussed on here many times before.

Just an anecdote. Even with all the belt tightening going on at present some people still seem unable to reason things through logically and arrive at a sensible conclusion.

Acquaintance trying to sell his 1-bed flat for 70k. Nice little place, modern interior but area is definitely on the wrong side of the tracks. Been on the market for about 1yr. He's slapped on new magnolia, fresh ground coffee, lemons and limes in a glass bowl, twigs etc. :lol:

To be fair he's even dropped the price a little.

Last month when Halifax announced a price fall in their index he ardently said he would refuse to drop his price any further (he's got loads of equity btw, paid a pittance (about 20k some years ago).

I reasoned that if his place had fallen by about £2000 the place he wants to buy had also dropped, by the larger sum of £3500 a £1500 shift in his favour with the added benefit that his place is now more affordable for the kind of person who would likely buy it.

He - Not interested! just saw the headline price fall.

I didn't even waste my time and try to explain that by subsequently getting a smaller mortgage would mean he'd ultimately pay less interest over the years.

For some 'House Price Fall = Bad' just seems hardwired :huh:

Could it be that his flat price is a "real thing", and possible reductions on a future property is "just a theory", an abstraction?

I'm saying this because I remember reading (a long time ago, sorry, no source link) that the capacity for abstract thought varies considerably amongst humans. Most people have troubles with it.

.

Edited by Tired of Waiting

Share this post


Link to post
Share on other sites

Could it be that his flat price is a "real thing", and possible reductions on a future property is "just a theory", an abstraction?

This certainly works the other way round when buying cars.

25 years ago I watched while a mate offered £1800 for a car, asking was £2250.

Seller didn't like the abstract 'loss'.

But when my friend put £1800 in twenties on his kitchen table he liked the real 'gain' and agreed the sale.

Stood me in good stead that early experience.

Share this post


Link to post
Share on other sites

This certainly works the other way round when buying cars.

25 years ago I watched while a mate offered £1800 for a car, asking was £2250.

Seller didn't like the abstract 'loss'.

But when my friend put £1800 in twenties on his kitchen table he liked the real 'gain' and agreed the sale.

Stood me in good stead that early experience.

:P Funny.

Share this post


Link to post
Share on other sites

This certainly works the other way round when buying cars.

25 years ago I watched while a mate offered £1800 for a car, asking was £2250.

Seller didn't like the abstract 'loss'.

But when my friend put £1800 in twenties on his kitchen table he liked the real 'gain' and agreed the sale.

Stood me in good stead that early experience.

I can see how that might work. Some years ago I watched someone count out £40000 in crisp £20 notes. Before then if you'd said £40000 to me it wasn't something tangible.

Share this post


Link to post
Share on other sites

The only bad thing about falling house prices is that mortgage holders lose equity, possibly all of it. But if you're staying in the housing market, falling prices, if they're across the board, just mean that if you're trading upwards, the extra money you need to find for the bigger / better house is likely to be less.

Falling prices benefit all first-time buyers and most upsizers.

Share this post


Link to post
Share on other sites

Run this by your delusional friend.

An agent friend of mine confirmed that vendors are on cloud cuckoo at the moment. What really gets them is that when a property does go under offer it then gets valued by a surveyor. He said 99% of the time, the surveyor valuation comes under the agreed price, sometimes by huge amounts. He said said that even with this independent report, some vendors refuse to budge and sales just constantly fall through, and as they do, the valuations get lower & lower, but some vendors still refuse to lower their price. He said that delusional vendors all think they are millionaires.

These high prices will work in favour of the people wanting lower prices once the vendor panic starts settling in. He says he can start to feel it.

Share this post


Link to post
Share on other sites

Run this by your delusional friend.

An agent friend of mine confirmed that vendors are on cloud cuckoo at the moment. What really gets them is that when a property does go under offer it then gets valued by a surveyor. He said 99% of the time, the surveyor valuation comes under the agreed price, sometimes by huge amounts. He said said that even with this independent report, some vendors refuse to budge and sales just constantly fall through, and as they do, the valuations get lower & lower, but some vendors still refuse to lower their price. He said that delusional vendors all think they are millionaires.

These high prices will work in favour of the people wanting lower prices once the vendor panic starts settling in. He says he can start to feel it.

In what part of the country?

Share this post


Link to post
Share on other sites

Run this by your delusional friend.

An agent friend of mine confirmed that vendors are on cloud cuckoo at the moment. What really gets them is that when a property does go under offer it then gets valued by a surveyor. He said 99% of the time, the surveyor valuation comes under the agreed price, sometimes by huge amounts. He said said that even with this independent report, some vendors refuse to budge and sales just constantly fall through, and as they do, the valuations get lower & lower, but some vendors still refuse to lower their price. He said that delusional vendors all think they are millionaires.

These high prices will work in favour of the people wanting lower prices once the vendor panic starts settling in. He says he can start to feel it.

Love it! Thanks for posting.

Share this post


Link to post
Share on other sites

Run this by your delusional friend.

An agent friend of mine confirmed that vendors are on cloud cuckoo at the moment. What really gets them is that when a property does go under offer it then gets valued by a surveyor. He said 99% of the time, the surveyor valuation comes under the agreed price, sometimes by huge amounts. He said said that even with this independent report, some vendors refuse to budge and sales just constantly fall through, and as they do, the valuations get lower & lower, but some vendors still refuse to lower their price. He said that delusional vendors all think they are millionaires.

These high prices will work in favour of the people wanting lower prices once the vendor panic starts settling in. He says he can start to feel it.

Nice post.

This guy's only an acquaintance (a friends friend) so tbh I'll just let it run its course then hear about the fallout later on. I've already given him as much help as he deserves as he's way too stubborn.

Share this post


Link to post
Share on other sites

Sorry people I've got nothing new to add really, this has been discussed on here many times before.

Just an anecdote. Even with all the belt tightening going on at present some people still seem unable to reason things through logically and arrive at a sensible conclusion.

Acquaintance trying to sell his 1-bed flat for 70k. Nice little place, modern interior but area is definitely on the wrong side of the tracks. Been on the market for about 1yr. He's slapped on new magnolia, fresh ground coffee, lemons and limes in a glass bowl, twigs etc. :lol:

To be fair he's even dropped the price a little.

Last month when Halifax announced a price fall in their index he ardently said he would refuse to drop his price any further (he's got loads of equity btw, paid a pittance (about 20k some years ago).

I reasoned that if his place had fallen by about £2000 the place he wants to buy had also dropped, by the larger sum of £3500 a £1500 shift in his favour with the added benefit that his place is now more affordable for the kind of person who would likely buy it.

He - Not interested! just saw the headline price fall.

I didn't even waste my time and try to explain that by subsequently getting a smaller mortgage would mean he'd ultimately pay less interest over the years.

For some 'House Price Fall = Bad' just seems hardwired :huh:

Would you accept lower wages just because there's a chance the end product your company creates may become a little cheaper?

It's entirely reasonable to attempt to get top whack for your wares.

Share this post


Link to post
Share on other sites

We should arrange compulsory holidays in Zimbabwe for such people.

Why?

Zimbabwe's rate is 3.6%

http://www.thezimbabwean.co.uk/index.php?option=com_content&view=article&id=34226:zimbabwes-year-on-year-rate-of-inflation&catid=42&Itemid=38

for August 2010 compared

UK's rate is 4.6% for August 2010

Now I'm sure you're going to say that Zimbabwe's figure is grossly distorted by government lies, by manipulation of the items in the spending basket, by funny accounting to do with printing money...

but I might say the same about the UK!

Share this post


Link to post
Share on other sites

Would you accept lower wages just because there's a chance the end product your company creates may become a little cheaper?

It's entirely reasonable to attempt to get top whack for your wares.

Indeed it is.

But I don't think your analogy is appropriate because the vendor in the OP's story would have a personal benefit from buying cheaper, if they sold a bit cheaper, whereas they have no benefit in your scenario (other than perhaps keeping their job).

Share this post


Link to post
Share on other sites

Indeed it is.

But I don't think your analogy is appropriate because the vendor in the OP's story would have a personal benefit from buying cheaper, if they sold a bit cheaper, whereas they have no benefit in your scenario (other than perhaps keeping their job).

If everyone dropped their wages by 10% then the price of goods and services would also drop 10%, this is ideal for those on low incomes because of the significant price drop in high end products.

Now get out there and fight for your low wages! You know it makes sense.

Share this post


Link to post
Share on other sites

Would you accept lower wages just because there's a chance the end product your company creates may become a little cheaper?

It's entirely reasonable to attempt to get top whack for your wares.

That is nothing like the same problem posed.

* Your example affects income generation (not simply an optional purchase committment)

* Your hyperthetical person probably buys far more products from other vendors that he needs to exist. I.e. the product he creates is not important to him.

* The original example, a house, is usually the lagest financial multi-year committment an average person makes during their life.

You do miss out a lot of details, but there are scenarios where your above example would also be true, for example if the product being talked about was a replacement for accommodation as well. i.e. something that most people pay a significant part of their wages/income towards providing themselves. Yes some people do take a pay cut because their employer provides them accommodation.

But the fact you talk of creating a product, means it is a manufacturering business which kind of limits appropiateness. Since a consumer who is also a person doesn't normally look for a way to enter into a binding agreement over the supply of a product, it is hard to see how this can be a quirk of a job offer. I say quirk because it is not a perk, since a perk is something you get that is considered a reward/benifit-in-kind and this isn't since you would be paying for it in a wage cut.

A closer analogy, using your smaller scale thinking would be:

Would you accept to rip up your sandwich shop loyaly card (that has been providing you with 1 free sandwich every two weeks during your working lunchtime, 5 days a week, which is effectively a 10% discount on sandwiches); if the sandwich shop said they can drop their prices on sandwichs by 15% for all purchases.

I do think being human is entirely reasonable, i.e. the best for ME! Call this greed, self-respect, survival-of-the-fitest, a winner, to label a few; take your pick.

Edited by Odin

Share this post


Link to post
Share on other sites

Could it be that his flat price is a "real thing", and possible reductions on a future property is "just a theory", an abstraction?

I'm saying this because I remember reading (a long time ago, sorry, no source link) that the capacity for abstract thought varies considerably amongst humans. Most people have troubles with it.

.

debt is real,house prices are a matter of opinion.

merv said so.

quite a bit more brutally frank than the political"intelligensia"

...as long a you know how to read between the lines.

this could have interesting connotations.

..didn't bush say WRT the US,there are a millions of people in the US hanging on every word of the pope.

...now THAT is prescient....he wasn't terribly specific about what sort of hanging they would be doing.

Americans were never very good at the "long drop"

....might be why their security visa is called an ESTA....it'll be a c0ck-up of biblical proportions.

Edited by oracle

Share this post


Link to post
Share on other sites

Would you accept lower wages just because there's a chance the end product your company creates may become a little cheaper?

It's entirely reasonable to attempt to get top whack for your wares.

Isn't that's exactly what's happened in much of the private sector? - wage drops as sales are lower and prices had to be dropped to meet market demand?

It's entirely reasonable to drop your price to get a sale or keep a job.

Share this post


Link to post
Share on other sites

That is nothing like the same problem posed.

* Your example affects income generation (not simply an optional purchase committment)

* Your hyperthetical person probably buys far more products from other vendors that he needs to exist. I.e. the product he creates is not important to him.

* The original example, a house, is usually the lagest financial multi-year committment an average person makes during their life.

You do miss out a lot of details, but there are scenarios where your above example would also be true, for example if the product being talked about was a replacement for accommodation as well. i.e. something that most people pay a significant part of their wages/income towards providing themselves. Yes some people do take a pay cut because their employer provides them accommodation.

But the fact you talk of creating a product, means it is a manufacturering business which kind of limits appropiateness. Since a consumer who is also a person doesn't normally look for a way to enter into a binding agreement over the supply of a product, it is hard to see how this can be a quirk of a job offer. I say quirk because it is not a perk, since a perk is something you get that is considered a reward/benifit-in-kind and this isn't since you would be paying for it in a wage cut.

A closer analogy, using your smaller scale thinking would be:

Would you accept to rip up your sandwich shop loyaly card (that has been providing you with 1 free sandwich every two weeks during your working lunchtime, 5 days a week, which is effectively a 10% discount on sandwiches); if the sandwich shop said they can drop their prices on sandwichs by 15% for all purchases.

I do think being human is entirely reasonable, i.e. the best for ME! Call this greed, self-respect, survival-of-the-fitest, a winner, to label a few; take your pick.

The idea the OP is trying to get across is that lower house prices are good for the economy (I think), while I agree there are both winners and losers from lower house prices, which is why it's such a political hot potato. Home owners don't want to hear that their house prices are having a detrimental impact on the country and generally prefer to see housing go up in price. Home owners do benefit from higher prices, which is why they don't want them taken away.

As a rule of thumb vendors prefer higher prices and buyers favour lower ones, sellers are always better off maximising their profits. The optimum result for the OP's friend would be to do this and then negotiate a reduction on his next purchase.

My earlier point was that it makes as much sense to reduce the flat price as it does to ask for lower wages, nobody is going to this, not with housing, wages, food or anything else you can think of.

Edited by Chef

Share this post


Link to post
Share on other sites

Isn't that's exactly what's happened in much of the private sector? - wage drops as sales are lower and prices had to be dropped to meet market demand?

It's entirely reasonable to drop your price to get a sale or keep a job.

Of course, but sellers aren't better off when they have to sell their goods at lower prices. They're tangibly worse off, which is why it's entirely logical to hold out for as much as possible.

Edited by Chef

Share this post


Link to post
Share on other sites

Of course, but sellers aren't better off when they have to sell their goods at lower prices. They're tangibly worse off, which is why it's entirely logical to hold out for as much as possible.

Not when the trend in prices is down. Either take 10% off your target price now or or 20% off next year. I agree it's difficult to do, but surely some sale is better than no sale at all? They're not sellers if they never sell!

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 152 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.