If a house price crash sounds like good news, you should think again

[BorrowToLeech]

22 minutes ago, PeanutButter said:

I personally don't wish for economic disaster.

A crash in house prices isn’t an economic disaster, it’s the end of an economic disaster.

Edited November 30, 2018 by BorrowToLeech

[AdamoMucci]

2 hours ago, Dorkins said:

It's weird, with literally every other thing for sale when the price goes down more people are able to afford it. I guess you have to be a housing economist to understand why bricks and mortar are different.

If people think the cost of food going down is a good thing, think again. F'in morons.

[Wayward]

55 minutes ago, Riedquat said:

She seems to be saying an HPC would cause fewer houses to be built. That's only a problem for FTB if it pushes prices up, so therefore her argument is based on "a house price crash would cause house price inflation." Got to love the logic there.

 

A HPC would suit me, I have savings and can take advantage but many won't be able to take advantage in the way they think.  One thing is guaranteed...the nation will not be better housed because we have a HPC.  We will still have the old, cramped and inadequate housing stock.  Therefore why do folks think they will become better housed in the event of a HPC??...the dynamics of the redistribution will be complex.  I don't remember in the early 1990s lots of people taking advantage of low house prices...folks were struggling to make ends meet and hence the low house prices...

[Dorkins]

1 hour ago, happyguy said:

When job are lost and people have no job or earn less money people will not be able to afford it.  Lenders will also become far more risk averse to many will not be able to get a mortgage.

...so then house prices will keep falling further until they reach the point at which lenders are willing to lend or even the point at which people are able to buy without a mortgage.

Early 90s, guy in a pub in a Northern former industrial town trying to sell you a terraced house you could buy with your credit card. We're going back there.

Edited November 30, 2018 by Dorkins

[Dorkins]

49 minutes ago, PeanutButter said:

I personally don't wish for economic disaster. A long slow levelling out of house prices is far better.

House prices have been mental in London/SE since the early 2000s. Many people have been priced out since then. 15-20 years is long enough to wait, I don't want them to have to wait another 15-20. Just crash it and let people have the home they should have had two decades ago.

[Sour Mash]

5 hours ago, hurlerontheditch said:

A HPC wont happen in isolation. Interest rates will rise, unemployment will rise and people who at the moment can get a mortgage may have their jobs made redundant and no longer able to buy. yes, some will have cash saved up but this number wil be few

Yep - it's been obvious for a long time now that we're only going to see meaningful reductions in property prices along with a rather nasty recession.

  As long as the economy is appearing to go well and interest rates are low, there isn't going to be any sort of a useful drop in prices.  Plus of course, much of the economy depends on credit creation through bank lending for property.  One crash triggers the other.

[BorrowToLeech]

23 minutes ago, Wayward said:

One thing is guaranteed...the nation will not be better housed because we have a HPC. 

In the short term we’ll still have shit buildings, but those buildings will be owned by the people who live in them. 

In the long run, a fall in land prices enables a more diverse set of developers and self-builders to build bigger better homes.

We didn’t have BTL in the 90s, so the comparison isn’t a good one.

[Burbujista]

1 hour ago, happyguy said:

What she is saying quite correctly is ion that a country where there is a housing shortage less affordable homes will be built 

 

Exactly.  People here who wish for an economic disaster think will not affect them personally.  I am amazed that people who want the economy to crash and burn think it will only affect large corporate organisations and home owners.  An economic crash will affect probably 95% of the population in terms of redundancies, lower salaries.

So many people do not understand that if companies do not make as much profit or lose money they will make staff redundant or close down altogether.  Maybe they just think they are indispensible!  Or work for the council or are teachers! 

When job are lost and people have no job or earn less money people will not be able to afford it.  Lenders will also become far more risk averse to many will not be able to get a mortgage.  

Yes if no one is buying new houses developers have no incentive to build houses.  If people stopped buying beans companies who make beans would not supply as many cans of beans.  With less developments built the level of houses built under 106 agreements will fall. 

What you talk isn’t completely right... this is because you assume that the crisis has to be caused by a demand shock (as we normally have), but if there is no-deal it will be an epic supply-driven shock. Some people might lose their job because of the supply chain disruption, but it is really likely that some others, especially those who are not as dependent on the supply chain can make even more money than before (at least in a devalued £, not in real terms).

In any case, I know that I will have no problem because I can migrate to Europe, get a job there and avoid the storm... to then move back and buy in South East England.

[Dorkins]

30 minutes ago, BorrowToLeech said:

In the short term we’ll still have shit buildings, but those buildings will be owned by the people who live in them.

Even a shit building is likely to be looked after much better by its owner occupant than by some distant landlord who thinks 50 quid's worth of magnolia paint every 5 years is already more luxury than these scumbag tenants deserve.

[hurlerontheditch]

2 hours ago, BorrowToLeech said:

In the short term we’ll still have shit buildings, but those buildings will be owned by the people who live in them. 

In the long run, a fall in land prices enables a more diverse set of developers and self-builders to build bigger better homes.

We didn’t have BTL in the 90s, so the comparison isn’t a good one.

Look at iteland. It had a price crash post GFC but also had a recesssion. Huge increase in unemployment and emigration. People still stuck in negative equity to this day

[PeanutButter]

I literally just walked past a man with a giant blue face tattoo walking his dog and telling his mate that if there's a crash he'll buy a house. 

 

Make of that what you will. 

[Si1]

4 minutes ago, PeanutButter said:

I literally just walked past a man with a giant blue face tattoo walking his dog and telling his mate that if there's a crash he'll buy a house. 

 

Make of that what you will. 

Bullsh#t?

[Riedquat]

55 minutes ago, hurlerontheditch said:

Look at iteland. It had a price crash post GFC but also had a recesssion. Huge increase in unemployment and emigration. People still stuck in negative equity to this day

So the price crash is the upside even if there are more downsides. No-one can sensibly claim that an HPC is a bad thing overall. They can claim that it might happen as a results of other factors that will be overall worse when you balance the positives and negatives.

[winkie]

4 hours ago, Freki said:

Affordable housing is linked to affordable land. If land owners expectations were bearish for the future, it will free up land and enable actual house building. 

One problem in this country is that you have a wholesale of land and only the likes of Barrat and Persimmon can do the house building work. 

In some European countries, you've add for a plot with proposed plan of a house. It means you can hire an architect and control yourself the material purchases and the rest.

Agree.....a small builder was refused permission to build on some of the land they owned was forced to sell to a mega big housing corporation, they got the permission to build ....... something not right, not fair equal and certainly doesn't add up.....rules for some are totally different for others.?

[oatbake]

9 hours ago, hurlerontheditch said:

A HPC wont happen in isolation. Interest rates will rise, unemployment will rise and people who at the moment can get a mortgage may have their jobs made redundant and no longer able to buy. yes, some will have cash saved up but this number wil be few

I'd rather borrow £100k at interest rates of 4% than £150k at 3%.

[Fromage Frais]

7 hours ago, Dorkins said:

It's weird, with literally every other thing for sale when the price goes down more people are able to afford it. I guess you have to be a housing economist to understand why bricks and mortar are different.

The big kicker is not just the time waiting for price to adjust its the "magnifier" effect which when in play makes falling or stagnating prices halt the party.

you have a flat 100k with 100k 50% mortgage mortgage.  You sell for 300k and you now have 200K equity for the next place which you buy for 400K with another 50% mortgage .

So in essence if credit cost and availability would be the same even with a pay rise and the ability to service that 200k mortgage you would have had to have found 100k from savings (impossible for most).  In the event of price stagnation or dreaded falls.

The mistake that high house price folks make is that this is not sustainable and step one is immediately wiped out without BTL or indeed the government in the form of HTB replacing the FTB ....the purest snake that eats itself example.

In this scenario once prices stop rising the market is automatically utterly ******ed the only stable housing market is where a average joe can buy an average home for 10/20% down + the mortgage multiple of the time.

In Norfolk at present this would be 108k mortgage (4.5 x 24k) + 30k deposit   = 138k the average is 230K 60% in excess of this Norfolk has "Retirement" attraction but even with this considered a 30-40% average fall should not be unexpected in the unlikely event of a free market returning.

IMHO the brexit forecasts are utter bull as with the market currently stagnant all moves up are already unaffordable and only lower rates or more government stimulation will prevent falls that are near "worst case scenario".

The bizzare thing is that Henry Pryor who i like is on twitter posting that 30% falls would be a disaster....yet is already making offers 10/20/30% off!

Edited November 30, 2018 by Fromage Frais

[Fromage Frais]

19 minutes ago, oatbake said:

I'd rather borrow £100k at interest rates of 4% than £150k at 3%.

Bingo

Its like my parents we had 15% mortgage rates and had to economise to keep the family 4 bed detached home with 100ft garden.

That to me is like complaining Emily Ratajkowski does not make me breakfast in bed on Sunday mornings.

 

Edited November 30, 2018 by Fromage Frais

[Dorkins]

1 hour ago, Fromage Frais said:

The bizzare thing is that Henry Pryor who i like is on twitter posting that 30% falls would be a disaster....yet is already making offers 10/20/30% off!

30% falls would be a disaster, needs to be more like 70-80% in most of London/SE to get back to sanity.

[Dorkins]

1 hour ago, Fromage Frais said:

Bingo

Its like my parents we had 15% mortgage rates and had to economise to keep the family 4 bed detached home with 100ft garden.

That to me is like complaining Emily Ratajkowski does not make me breakfast in bed on Sunday mornings.

 

One day Millennials will be telling their kids how they saved for 10 years to get a deposit to buy 25% of a shared ownership flat.

Assuming they ever have kids that is.

[2buyornot2buy]

4 hours ago, hurlerontheditch said:

Look at iteland. It had a price crash post GFC but also had a recesssion. Huge increase in unemployment and emigration. People still stuck in negative equity to this day

No true. Most just gave the house back. 

[Kosmin]

7 hours ago, Freki said:

Affordable housing is linked to affordable land.

This really gets to the heart of it.

 If our system of housebuilding means that we have keep the price of land very high in our to facilitate even a moderate amount of building, I think we ought to consider other systems.

One possibility would be to nationalise the land, but outsource the building to private enterprise. That way, efficient builders earn money through building expertise, but not through hoarding land and timing their building.

 

 

[opt_out]

18 minutes ago, Kosmin said:

One possibility would be to nationalise the land, ...

That is the best solution, it's called Land Tax.

[Kosmin]

3 hours ago, Fromage Frais said:

The bizzare thing is that Henry Pryor who i like is on twitter posting that 30% falls would be a disaster....yet is already making offers 10/20/30% off!

Maybe he benefits from high prices. What's important for him is not prices falling, but being able to claim to buyers that he can negotiate a better price than they alone could. Maybe he seems more useful to clients in a stagnating or correcting market than in a full-blown crash. Even if he still has clients when prices crash, presumably they pay him less, as it's based on the price they pay.

Edited November 30, 2018 by Kosmin

[Kosmin]

14 minutes ago, opt_out said:

That is the best solution, it's called Land Tax.

In addition to a land tax, where corporations are holding land which has planning permission, or which they intend to get planning permission, I think it might be a good idea to take it out of their hands. Compulsory purchase at the price they paid plus inflation, rather than the current market price.

[Bear Goggles]

Those that can’t afford a house might still not be able to afford a house in future -  shocker.

I reckon most of them would prefer to take their chances in a HPC than live with status quo. 

Also I reckon that article wins the largest number of metaphors per sentence award for 2018.