FAO: Rave

[Nick]

Go on then, tell us all you told us so:

House prices fall 2.5 percent in March :: HEXUS.channel - The online home of the UK technology channel

Though I still maintain that this makes sod all difference to home owners unless you want to move...

But you know what? I'm actually semi-pleased it's happened, that way maybe developers will build sensibly priced homes for first time buyers, something in the £50-60,000 region so they can get a foot on the ladder.

And for the record, I think that Endowment mortgages should be banned, so at least that way you can build up some equity by paying off a capital plus interest mortgage, which will give you the funds needed to move up to a bigger property if need be.

Anyhoo... I reckon there'll be a six month, maybe a year long, slump and then it'll stabilised and start to pick up again.

For those of you looking at buying, hang on until after Christmas, there'll be some bargains around then for sure.

[tiggerai]

yes, but it's not a crash is it??? We're due a correction, we knew that... the prices weren't sustainable at last years prices.

I'm quite glad the prices are dropping and there's talk of the interest rates going down, because then I might be able to afford another chunk of my house! hooray.

[TheAnimus]

You can't ban intrest only mortgages, for some people they're the right veichal for them, if my gran for instance said she was going to release some equity via an intrest only mortgage, i'd have to say thats a fine idea for everyone (except us inheritors, but hey, its not our money anyway).

What is shocking is the way a lot of the main stream media are reporting it, even in the london free papers, whom have a mostly london demographic, where only one statistical source has found ANY drop in prices, and where almost all where +/- <0.2&#37; changes, with the mode been 0%, where still reporting this is a major fall like 1992.

No its not going to be anything like that, enless people are on products they don't understand and can't afford, rates are still very low, no one should be defaulting, as such there will just be reduced liquiditiy, if you have the option, why would you sell your house now?

The international money market still has a glut of money with nothing to do, it won't be too long before competition is brought back to the mortgage market.

As for doom sayers, who've been prophasising the fall for years, they're incredibly wrong, because stagnatant prices like this (which actually are still AHEAD of base YTD (year to date) are only an issue if you've bought a property excepting to make a fast buck, rather than a home to live in, or a long term investment. I graduated 2 years ago, a mate was given some 50k by his parents to buy a place, another mate told him how stupid he was to buy at a time when house prices where so high. Most analysits belive house prices will fall by no more than 5 to 10%. doubling that number to 20%, he's still made more money than base over the last 2 years, yet i doubt Micheal will think that, he will be all smug thinking he's right, failing to take into account how stupid he is.

[Honoop]

House prices need to fall by a hell of a lot in order for me to be able to afford to buy a house in St Albans!

It's still good news though, I certainly don't want to be renting forever and would quite like to buy within the next couple of years.

[TheAnimus]

It's still good news though, I certainly don't want to be renting forever and would quite like to buy within the next couple of years.

Sorry to break it to you hun, its not good news for you enless a large number of people die/move away. Or your a cash buyer, who has the cash whilst the majority of the market doesn't. Otherwise a fall in house prices, normally systematic of a worsening economy, isn't good.

Those without the money to buy houses before (because like it or lump it the others where able to somehow come up with the dosh) won't get a windfall, those people will still earn more relatively than the others.

Think of it this way, a house is worth x what-ever currancies, purely because its scarse resource. There are more people wanting to buy, than there are houses, so some people get left behind. If the x dosen't change, or even drops a few percent. The formulea for derivivng it still stays the same.

But don't worry, the world is, apparently due an influenza outbreak that will kill off many people. Then houses will be less scarse, thus cheaper.

[dave87]

I know a general slow down in the economy is not something that is welcomed by most, if any, but surely the fall in house prices is just a price readjustment which has been long overdue?

I do however agree, that those most affected are those who have moved recently, or intend to move, as the question of negative equity could become a real possibility for some.

[TheAnimus]

think of it in mars bars dave87.

if your a shop, you've got 5 customers all wanting mars bars, but only 3 mars bars to sell.

Customer 1 has &#163;1.07, 2 has &#163;1.00, 3 has &#163;85p, 4 has 30p, and 5 has 20p.

Now, obviosuly 4 and 5 get no mars bars, and 85p would be the price.

Lets pretend that someone was willing to lend to them, at 4 times the money they had.

1 has &#163;4.28, 2 has &#163;4.00, 3 has &#163;3.40 4 has &#163;1.20, and 5 has 80p.

4 and 5 again get no mars bars, whilst the average price is now &#163;3.40.

Lets say that no one is willing to lend money at that rate again, from now on its only 2 times.

again, 4 and 5 get no mars bars.

Enless a glut of reposessions happen, there will be no extra mars bars comming into the shop. Enless people are forced to sell their mars bars, why would anyone sell them at a point when they get half what they could of a short time ago.

What i'm saying is even if house prices fall, the poor people will still be screwed, whilst the demand is still the same.

[schmunk]

House prices need to fall by a hell of a lot in order for me to be able to afford to buy a house in St Albans!

It's still good news though, I certainly don't want to be renting forever and would quite like to buy within the next couple of years.

I'm selling one, if you're interested...

(honest, I really am!)

[dave87]

Surely the point is that the gap between 100 and 110k is easier to bridge than the gap between 300-330k. So as prices fall, more people should be able to afford a house?

[TheAnimus]

Surely the point is that the gap between 100 and 110k is easier to bridge than the gap between 300-330k. So as prices fall, more people should be able to afford a house?

1 house, means 1 person can afford it.

2 house, 2 people can afford.

1 house thats 100k cheaper than least year, is still only going to be that price because 1 person can afford it.

Enless your talking about the gap between LTV (Loan to Value).

[dave87]

What I'm suggesting is that with fewer places offering 100&#37; mortgages, and the rise in house prices that we have seen in recent years, the people just entering the housing market are the ones that are going to benefit from this slowdown.

Partially coming out of the sub-prime lending crisis in the US, but also from the predicted economic slowdown, the availability of credit in the UK is decreasing, and as such those with equity (an existing house) or those able to make a deposit are going to benefit.

Surely this is the correction that people have been hoping for, and does it without the numpties in Downing Street intervening and cocking it up even more? And perhaps more importantly, without bankrupting a large proportion of society?

I will admit, my grasp of Economics isn't fantastic (A Level) but does that not make sense?

[Honoop]

Right...

don't get it and don't want to get whatever point it is you are trying to make here. Mine was just an off the cuff comment that I will one day be wanting to buy a house so therefore a drop in house prices looks good from where I am sitting. Not really bothered that my mortgage might cost more so therefore it isn't really good news since I am not thinking of doing this for a fair while yet - so in all honesty I don't really want or need your finanical insight into this because when I am in a position to buy I will see a Finanical Advisor, and you are not one.

I'm sure you mean well... but I just find your comment depressing in all honesty. I live in one of the most expensive towns in the UK for houses, that's depressing enough thank you very much.

[Mike Fishcake]

The Daily Mash - HOUSES WORTH LESS THAN THE BRICKS THEY ARE MADE OF

I love the Daily Mash.

[TheAnimus]

I will admit, my grasp of Economics isn't fantastic (A Level) but does that not make sense?

LTV ratio changing will have an effect, but it will only benefit thouse who have savings.

think of it as if someones rich enough to have savings, odds are they could afford the higher monthly payment too, and afford a higher price.

people with 100% mortgages would of been at the lower end of the market anyway, and all that will happen is the prices will fall to match the new 90% available budgets.

my point is its still going to be the same few who can't afford to get a leg up.

Sorry honop, wasn't meaning to depress you.

[dave87]

Rich enough is surely a lifestyle question?

There are people on 12-15k a year that will be saving as much as possible in order to get themselves on the property ladder, yet there will also be people on 30k+ who will have very limited savings?

Obviously the general correlation is that the higher the wage you earn the greater the savings you can put away, but those claiming that they have no chance of getting on the property ladder, yet are earning a decent wage (and I am talking 30k+), are either looking in the wrong place - i.e. London prices rather than Kent or Essex ones, or are living beyond their means if they want to enter the property market.

[TheAnimus]

Oh indeed, but 12-15k a year, the difference between 100&#37; LTV and 80% LTV isn't going to be enough to out buy someone who's on 30k even in these crunched times.

My point is, with the same number of houses up for grabs, don't expect all of a sudden house prices to become more affordable, because if the house prices drop because of mortgage liquidity, then so will how much you can afford. If you couldn't afford a &#163;200k flat before, you won't be able to afford a &#163;150k after. Enless your a cash buyer, but odds are if that was the case, you would of been able to afford 200k with a greatly reduced mortgage.

As for wages vrs home ownership, yup, its not just how much you earn, but what your willing to settle for, and what sacrafices you're willing to make.