House Prices Falling - Good or Bad?

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Edited by:"Dilithium"Found 2nd Sep 2017
With house prices now reported as falling across a third of the UK, express.co.uk/lif…ces does that give hope to the young for improved affordability, or fear to homeowners of negative equity?

good or bad?

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OllieSt3 m ago

And what do you intend to do after you've sold


Move out

Good. A home should be a place to live, not an investment.
96 Comments

Good for anyone wanting to get on property ladder, if you own your home or makes no difference as long as you still live in it.
Just noticed a house go on sale down the road from me, in roughly 10 years it's gone up in price by less than 10k to 160k.

Edit, for anyone who invested in property to get rich quick, remember investments can go up or down.
Edited by: "shadey12" 2nd Sep 2017

Depends who you are and at what stage of life.

Good, pre 1950s everyone rented anyway, this notion of us being a nation of home owners only occurred after WW2 due to tumbling prices caused by a severe lack of humans which in turn led to things like windrush.

Bad for those who want to move.

Bad for those who want to get a mortgage in a downward moving market.

Bad for those have worked hard all their life and have a large mortgage which may go into negative equity.

Good for people with loads of cash who can buy a bargain outright.
Edited by: "davewave" 2nd Sep 2017

A larger equity in your property means cheaper mortgages for home owners.
Edited by: "kester76" 2nd Sep 2017

kester767 m ago

A larger equity in your property means cheaper mortgages for home owners.


An environment of reducing house prices does not encourage banks to offer cheaper debt! Please consider your argument.

Good. A home should be a place to live, not an investment.

Original Poster

Where people who work in our vital services such as; nurses, police, teachers etc, now totally unable to afford to buy or rent, something has to give.

The cost of living has simply become unaffordable.

In Birmingham, bins remain full due to strike action. In London HMOs are everywhere, destroying communities in desperate attempt to supply low paid industries with a transient workforce.

However, the final element for a true collapse (of historical proportions) is still to play out. Rising interest rates.

If interest rates were to rise, a great many now walk a tight rope of total ruin.
Edited by: "Dilithium" 2nd Sep 2017

coathanger58 m ago

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coathanger58 m ago

Where people who work in our vital services such as; nurses, police, …Where people who work in our vital services such as; nurses, police, teachers etc, now totally unable to afford to buy or rent, something has to give. The cost of living has simply become unaffordable. In Birmingham, bins remain full due to strike action. In London HMOs are everywhere, destroying communities in desperate attempt to supply low paid industries with a transient workforce.However, the final element for a true collapse (of historical proportions) is still to play out. Rising interest rates.If interest rates were to rise, a great many now walk a tight rope of total ruin.


Rates are bound to rise, but I can't imagine to any great extent, and I'm unsure about the 'great many' you talk about due to any property price reductions. It's part of the reason why lenders have been insistent on larger deposits. 95-105% deposits of the past were the 'handing back the keys' transactions that happened with previous price reductions. Whilst lenders have been far stricter with their lending criteria the private landlord borrowing is seen by lenders as lucrative and a safer option business and therefore more relaxed requirements exist. In any case those buying for investment will snap up any bargains with the blessing of the lenders. Building affordable housing is the way forward whatever the market conditions may be but I'm afraid it's now a pipe dream to think that a married nurse and a policeman are going to be able to afford a 2 bedroom starter home in places like London with any property price reduction that may occur. I think it's ugly, but believe it's the reality.
Edited by: "OllieSt" 2nd Sep 2017

We bought ourhouse for 21k about 30 years ago. It was valued at 200k in 2009, but has dropped back to 175k. We have noticed price going up in our area, and most houses seem to be sold in under a month. We are taking advantage of this and will put the house up for sale.

The problem is, if prices are falling it's not because of an increase of supply to the market, but a reduction in demand. And that must be, not because people no longer want to buy houses - people are still desperate for good quality housing, but because consumers cannot afford to buy because they are poorer. That's not a good place for the country to be at, and it is rather worrying what might be just around the corner.

Predikuesi6 m ago

We bought ourhouse for 21k about 30 years ago. It was valued at 200k in …We bought ourhouse for 21k about 30 years ago. It was valued at 200k in 2009, but has dropped back to 175k. We have noticed price going up in our area, and most houses seem to be sold in under a month. We are taking advantage of this and will put the house up for sale.


And what do you intend to do after you've sold

OllieSt3 m ago

And what do you intend to do after you've sold


Move out

davewave2 h, 4 m ago

An environment of reducing house prices does not encourage banks to offer …An environment of reducing house prices does not encourage banks to offer cheaper debt! Please consider your argument.

I worded it badly. What I meant to say was as my house price increases it gives me more equity in my home and as it's less of a risk to the mortgage provider I get cheaper deals.
As house prices drop it goes the other way making it more expensive. Just means I have less money to spend and you get the same knock on effect.

VDisillusioned39 m ago

The problem is, if prices are falling it's not because of an increase of …The problem is, if prices are falling it's not because of an increase of supply to the market, but a reduction in demand. And that must be, not because people no longer want to buy houses - people are still desperate for good quality housing, but because consumers cannot afford to buy because they are poorer. That's not a good place for the country to be at, and it is rather worrying what might be just around the corner.


Could also be that more houses are being built than at anytime over the last 10 years and immigration going down. I blame brexit (or is it thank brexit)

Original Poster

I believe one of the primary reasons for falling prices is due to the retraction of foreign investment. That can only be a good thing in the housing market.

Immigration is still net gain to the population by well over 200,000, so it's not due to less people.

Falling prices are also due to the tax changes made recently to Buy To Let, therefore removing the house of cards effect of ever chasing false and self fulfilling price increases.

The next 6 months will make transparent where things are heading, but I would think more than twice if considering buying at this stage.

I must live north of the M25..oh wait I do

I don't see (but I've not been looking) any local news of house prices dropping in fact I think our house prices have risen by a £1 or two

Must be a southern thing?

coathanger1 h, 31 m ago

I believe one of the primary reasons for falling prices is due to the …I believe one of the primary reasons for falling prices is due to the retraction of foreign investment. That can only be a good thing in the housing market.Immigration is still net gain to the population by well over 200,000, so it's not due to less people.Falling prices are also due to the tax changes made recently to Buy To Let, therefore removing the house of cards effect of ever chasing false and self fulfilling price increases.The next 6 months will make transparent where things are heading, but I would think more than twice if considering buying at this stage.


I would have thought foreign investment would be high due to the pound's weakness. I agree that prices are softening, and I believe that's due to nothing more than there's too much froth in the price. There's no such thing as a straight line graph. I don't believe we will see any considerable price crashes. I live 20 mins from Central London and the price difference between where I live and Central London is significant enough to suggest there's still enough meat on the bone for slow steady increase. For areas that have been gentrified, there's no turning back. I do believe London, along with a few other cities are a special case though. I think a good indication is if/when the ridiculous practice of group viewing comes to an end which is not quite the case at the moment.

In my opinion buy to let will continue as lenders see borrowers in this market as safer. What I think will happen is that new landlords will have a much tougher time getting finance whereas those with an existing portfolio will fare better. There are already rates for landlords with x amount of properties that are lower than first time investors. Without doubt there needs to be a change to ensure that landlords are ensuring that their properties are maintained to a decent level. There is a way of thinking that suggests tenants will foot some of the bill for tax changes that are being phased in over the next few years. I know a few friends that choose to let rather than buy for various reasons. An increase in their rent for the above would not initiate them moving from their rented home.
Edited by: "OllieSt" 2nd Sep 2017

Original Poster

OllieSt1 h, 15 m ago

I would have thought foreign investment would be high due to the pound's …I would have thought foreign investment would be high due to the pound's weakness. I agree that prices are softening, and I believe that's due to nothing more than there's too much froth in the price. There's no such thing as a straight line graph. I don't believe we will see any considerable price crashes. I live 20 mins from Central London and the price difference between where I live and Central London is significant enough to suggest there's still enough meat on the bone for slow steady increase. For areas that have been gentrified, there's no turning back. I do believe London, along with a few other cities are a special case though. I think a good indication is if/when the ridiculous practice of group viewing comes to an end which is not quite the case at the moment.In my opinion buy to let will continue as lenders see borrowers in this market as safer. What I think will happen is that new landlords will have a much tougher time getting finance whereas those with an existing portfolio will fare better. There are already rates for landlords with x amount of properties that are lower than first time investors. Without doubt there needs to be a change to ensure that landlords are ensuring that their properties are maintained to a decent level. There is a way of thinking that suggests tenants will foot some of the bill for tax changes that are being phased in over the next few years. I know a few friends that choose to let rather than buy for various reasons. An increase in their rent for the above would not initiate them moving from their rented home.


You clearly live in an alternative universe.

To suggest those renting are able to incur increases in the landlord's tax in their own rent is delusional.

Rents are already way too high.

To say further increases, in the landlord simply shifting their additional burden of cost on to the tenant, shows either a lack of awareness, or a lack of compassion and encourages greed.

What you have expressed is the rich getting richer, and the poor getting poorer AND paying the rich person's taxes.

Madness.

coathanger38 m ago

You clearly live in an alternative universe.To suggest those renting are …You clearly live in an alternative universe.To suggest those renting are able to incur increases in the landlord's tax in their own rent is delusional.Rents are already way too high. To say further increases, in the landlord simply shifting their additional burden of cost on to the tenant, shows either a lack of awareness, or a lack of compassion and encourages greed.What you have expressed is the rich getting richer, and the poor getting poorer AND paying the rich person's taxes.Madness.


Landlords rent out property to make a profit. You make not like it, but those are the facts. If they are having their profits reduced due to higher taxation they have a few ways to try and offset that, one of them being higher rental. It's not rocket science. The market will dictate how far it can go but it's bound to have an impact.

Here's a link
Edited by: "OllieSt" 2nd Sep 2017

Original Poster

OllieSt39 m ago

Landlords rent out property to make a profit. You make not like it, but …Landlords rent out property to make a profit. You make not like it, but those are the facts. If they are having their profits reduced due to higher taxation they have a few ways to try and offset that, one of them being higher rental. It's not rocket science. The market will dictate how far it can go but it's bound to have an impact.Here's a link


I'm aware of how it works, but the comment you made was "An increase in their rent for the above would not initiate them moving from their rented home".

People simply cannot afford their current excessive rents, with more than a million facing eviction by 2020
theguardian.com/soc…ent

I think it's clear enough what initiates people moving out...onto the street.

coathanger1 h, 17 m ago

I'm aware of how it works, but the comment you made was "An increase in …I'm aware of how it works, but the comment you made was "An increase in their rent for the above would not initiate them moving from their rented home". People simply cannot afford their current excessive rents, with more than a million facing eviction by 2020 https://www.theguardian.com/society/2017/jun/24/social-housing-poverty-homeless-shelter-rentI think it's clear enough what initiates people moving out...onto the street.


I was talking about a friend who has a successful business, and is married with 3 kids and rents a detached property with plenty of land. No he's not going to be moving out due to his landlord increasing the rent if that's what he chooses to do.

Benefit freezes and lack of social housing should not and will not become the issue of private landlords. It would be interesting to see if the extra tax being raised by the government from landlords is ring fenced and used to build more social housing. Your link makes mention of rental rises, perhaps that is partly to do with the extra taxation. If people are having to leave a property because they couldn't afford any potential rent increase, I would guess that the landlord feels that he/she could achieve the extra rental rate elsewhere. If he/she can't, then they would be the loser, if they can it proves that there is someone who is prepared to pay the price.

The real deal is the lack of social housing which needs to be addressed. Build them and that would reduce the rental rates in parts of the sector. The couple renting a 2 bed place for £1500 per week will obviously be unaffected.

I suppose the bottom line is that I know the private rental market to be far more than housing for those that should be in social housing or those that want to save for a mortgage but will find it virtually impossible to do so.

As I said more social housing ticks so many boxes but is not going to happen. To then start pointing fingers at private landlords is to be side tracked. As I said in an earlier post, landlords look to make profit, it's not their job to replace/prop up the social welfare system.

Original Poster

OllieSt15 m ago

I was talking about a friend who has a successful business, and is married …I was talking about a friend who has a successful business, and is married with 3 kids and rents a detached property with plenty of land. No he's not going to be moving out due to his landlord increasing the rent if that's what he chooses to do.Benefit freezes and lack of social housing should not and will not become the issue of private landlords. It would be interesting to see if the extra tax being raised by the government from landlords is ring fenced and used to build more social housing. Your link makes mention of rental rises, perhaps that is partly to do with the extra taxation. If people are having to leave a property because they couldn't afford any potential rent increase, I would guess that the landlord feels that he/she could achieve the extra rental rate elsewhere. If he/she can't, then they would be the loser, if they can it proves that there is someone who is prepared to pay the price. The real deal is the lack of social housing which needs to be addressed. Build them and that would reduce the rental rates in parts of the sector. The couple renting a 2 bed place for £1500 per week will obviously be unaffected.I suppose the bottom line is that I know the private rental market to be far more than housing for those that should be in social housing or those that want to save for a mortgage but will find it virtually impossible to do so.As I said more social housing ticks so many boxes but is not going to happen. To then start pointing fingers at private landlords is to be side tracked. As I said in an earlier post, landlords look to make profit, it's not their job to replace/prop up the social welfare system.


...and your last comment is what has created the crisis.

Landlords know if they increase rents they'll still get let. The issue being, let as HMOs.

HMOs are bringing low waged low skilled transient workers in, but pushing families and native people out.

Mental health is of epidemic proportions, the biggest factors being; social insecurity caused by homelessness (or fear of), debts, and family break up (with debts again the primary cause).

For those reasons and many more, a house price collapse could potentially cure more ills than it causes. ...and I'm more than aware the damage it will cause

coathanger2 h, 50 m ago

You clearly live in an alternative universe.To suggest those renting are …You clearly live in an alternative universe.To suggest those renting are able to incur increases in the landlord's tax in their own rent is delusional.Rents are already way too high. To say further increases, in the landlord simply shifting their additional burden of cost on to the tenant, shows either a lack of awareness, or a lack of compassion and encourages greed.What you have expressed is the rich getting richer, and the poor getting poorer AND paying the rich person's taxes.Madness.

If you rented a property out would you expect to meet the costs of mortgage and taxes or would you operate it at a loss because otherwise it would be greedy?

Original Poster

davewave23 m ago

If you rented a property out would you expect to meet the costs of …If you rented a property out would you expect to meet the costs of mortgage and taxes or would you operate it at a loss because otherwise it would be greedy?


I understand the point you're making, but it's the question of whether landlords help, or hinder the population housed appropriately when housing is so limited.

A landlord simply becomes an unwelcome additional cost, whereby without, housing would be less expensive.

Cornwall and it's quaint villages becoming ghost towns over winter is an extreme example of a different kind. Communities destroyed through multiple home ownership, another factor to the mess that is damaging our society.

There needs to be another way, a mass social housing building program.

But that would mean harm to property values, as supply would force prices down, and those involved in leasing out seeing their own portfolios drop dramatically.

Andy@XCite7 h, 39 m ago

Good. A home should be a place to live, not an investment.


Reminds me of a Tommy Cooper joke.

I arrived home to find my wife sobbing her heart out.
"Why are you crying?" I asked.
She replied, "I'm homesick".
"But this is your home", I said.
"I know", she answered, "and I'm sick of it".

GwanGy:


GOOD FOR THose who want to move
good for those who want to buy
only a tiny percent may go into negative equity (v recent buyers)
more sensible house prices helps most.

owning has become a mantra , for two reasons 1 House prices increase over time 2 the rental market is such a dire and shitty alternative.
If there was a reasonable alternative , eg renting from council, housing association or other less profit oriented body then many people would be very happy to take that, myself included.

Hosue prices as multiples of average wage have increased too much.
Gov should enable councils, housing associations to build more, and better homes
.


Property is limited by the number of properties in built up and popular areas.

More reasonable prices can be found in less popular areas...supply and demand drives prices.

If you want to pay less then move to a less popular area. Simple!

Even simpler if you're getting free housing...don't be so picky!
Edited by: "davewave" 2nd Sep 2017

Prices aren't linear, they staircase. Sometimes they go up, sometimes down and sometimes they stagnate but if you extrapolate over the long term they will always go up and that's unlikely to change anytime soon.
Edited by: "g8spur" 2nd Sep 2017

New taxes on buy-to-let properties will play a large part in this too I'd imagine, seeing as potential landlords would in a few years being taxed on their entire income from rent (which could in theory leave them in the red on a monthly basis).

House prices falling are not really a good sign unless I'm missing something?
Wages aren't going up dramatically and the value of the pound is shrinking, too much mortgage debt and we could be heading into another recession.

g8spur2 h, 15 m ago

Prices aren't linear, they staircase. Sometimes they go up, sometimes down …Prices aren't linear, they staircase. Sometimes they go up, sometimes down and sometimes they stagnate but if you extrapolate over the long term they will always go up and that's unlikely to change anytime soon.

True, if you avoid overborrowing then you'll survive the high rates and or dropping prices (which can lead to repossession when banks squeeze highest risk loans ie negative equity borrowers)

Good.

Rising values have for decades now been out of touch with inflation and cost of living, so a price crash was always inevitable at some point.

With the younger generations essentially being priced out of the market too, this only further increases the chances of a crash.

They should be 60% of what they are right now for any real future progress to be made though.

And I'm a fully paid up homeowner and have no issues with the decreased value because my life is not all about greed and me, me, me.

davewave33 m ago

True, if you avoid overborrowing then you'll survive the high rates and or …True, if you avoid overborrowing then you'll survive the high rates and or dropping prices (which can lead to repossession when banks squeeze highest risk loans ie negative equity borrowers)


Isn't that another way of explaining "not living beyond your means"

Hopefully the SJW's won't read that I wouldn't want to offend anyone

I know, I know I was brought up to save for everything - I'm from a different era and things must be much harder for everyone!!! (Wonder who is going to explain the two main reasons getting onto the housing market is difficult now without being targeted).

It was hard for me too - my dad bought his home for about £4k and when he first rented it it only cost a few shillings a week - a few shillings a week ffs - you can't buy a bag of sweets for a few shillings these days.
Edited by: "philphil61" 2nd Sep 2017

If you are a first time buyer it is good as houses are cheaper.
If you are looking to move, your house will be worth less but so will the one you will buy.
If you aren't looking to move then it makes no difference unless you are looking to remortgage in which case your LTV may be affected.
House prices are over inflated in the south. Them coming down will make housing more affordable for normal wage earners which is a good thing.
Up here in the north, prices have remained pretty stable. Normal people can afford housing if they earn an average amount.
On the whole and on balance, I would say neutral to good.

If they're falling, there's a long way to go around my way (South Glos). I bought just over 4 years ago, and a couple of weeks ago the house next door was listed at 63% higher than what I paid - and sold within days. It's ridiculous, way overpriced.
Edited by: "drasim" 2nd Sep 2017

Original Poster

Interesting, the gerenal consensus appears to be of approval in favour of falling values.

I'm not sure that's been the case in any house price fall before.

coathanger20 m ago

Interesting, the gerenal consensus appears to be of approval in favour of …Interesting, the gerenal consensus appears to be of approval in favour of falling values.I'm not sure that's been the case in any house price fall before.


Interesting, your analysis is a wonderful endorsement of your own bias. Let us not interrogate the specificity of the wider input - but simply enjoy your conclusion.

reddit1 h, 50 m ago

Good.Rising values have for decades now been out of touch with inflation …Good.Rising values have for decades now been out of touch with inflation and cost of living, so a price crash was always inevitable at some point.With the younger generations essentially being priced out of the market too, this only further increases the chances of a crash.They should be 60% of what they are right now for any real future progress to be made though.And I'm a fully paid up homeowner and have no issues with the decreased value because my life is not all about greed and me, me, me.


You are fully paid up because you bought at a time when houses were cheap. Well done you for being born at the right time you must have worked hard for that to happen.

If 60% was wiped off house prices hundreds of thousands of people would go bankrupt and the UK would be financially crippled. As long as you are ok though!

High house prices are a disaster to most of us, it is a structural fault-line, a handicap, it means we are economically inefficient and less competitive as foreigh countries find our exports expensive. That's why a lot of foreigners, high power ones, come to South East to work, as they earn like good money and send money home where their houses cost much less.

For example, how can a British person living in a £500,000 house/flat competes with a foreigner living abroad in a £250,000 house/flat? (Even when this foreigner comes to the City to work, earn the same money as a Brit, saves the money and then buys a home back home, though rent is a bit of a damper.)

That's why we have to depreciate our currency to be competitive repeatedly in "black" events since WW2, from US$5 to £1 to now less than €1 for a £1.

g8spur18 m ago

You are fully paid up because you bought at a time when houses were cheap. …You are fully paid up because you bought at a time when houses were cheap. Well done you for being born at the right time you must have worked hard for that to happen.If 60% was wiped off house prices hundreds of thousands of people would go bankrupt and the UK would be financially crippled. As long as you are ok though!


I bought when prices were expensive compared to my salary and it was a struggle for 2 of us to be able to afford a mortgage, so by no means easy then.

If 40% were wiped, the country would not go bankrupt because more people would be able to get onto the housing ladder and any spare money that they might have could be spent on improvements or goods from other markets.

Having a continuing scale of rising value that is way out of touch with rises in income is always going to end in tragedy, so the 'as long as you are OK' philosophy has been working well for those enjoying the increase in their values, to the detriment of many, whilst forgetting that when they themselves come to move further on up the ladder, they too would have to pay a lot more for the privilege.

A drop or a crash would ultimately be beneficial to the economy and societies and also reduce the amount of greedy landlords that at the moment hols many a renter to ransom, especially when the regulations regarding their responsibilities and accountability are being shred, making it easier for them to get away with providing sub standard housing.

I prefer a system where a decent roof over the head should be a right of everybody and if that means me sacrificing some of my own property value, then I am happy to do so.

OP the facts you quote may well be correct but using the Daily Express as your source isn't the wisest of choices lol. Apparently, they also believe we will have a heatwave in December and Brexit will be a success
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