Brief thought

[andrewducker]

I wonder if falling house prices are bad for the economy in a way I haven't heard mentioned - because they put people off from moving somewhere for a new job, because they can't sell their property without losing money.

Free-flowing workers are good for an economy, surely having the better-off ones stuck in one place must be bad for it.

Comments

[naath.livejournal.com]

Except of course houses being cheaper means more people can afford to move to better-located/nicer/larger/whatever houses.

About 40% of people have mortgages (apparently, er, I lost the cite for that but I was looking it up because Lord whatshisface claiming the "majority" of people were benefiting from low interest rates). Clearly only some of them ever actually coughed up the huge house prices of recent years.

Moving house always costs money, but IMO you had a house and now you have a different house and you haven't "lost" any meaningful money. You still have the investment, if house prices go up later then you'll have all your imaginary money back; only attached to this new house now. And if prices are lower then the difference between "this house" and "that nicer house" is now a smaller sum; so you should be happy!

Of course some people are stuck in negative equity and would have very big problems if they tried to move, I don't have a figure for how many people that is though.

[andrewhickey.livejournal.com]

Exactly.
In fact, falling house prices also lead to falling rents, which would actively *encourage* those like me, who can't currently afford to buy anywhere even though they're on above-average salaries because the market is so stupidly skewed, to move.

[strawberryfrog.livejournal.com]

In fact, falling house prices also lead to falling rents

Except that they haven't.

Right now, it's harder than usual to find a room to rent in London at the usual prices. What it looks like is that less people buying means more people renting, right when there are fewer buy-to-let landlords.

Link

[marrog.livejournal.com]

Except of course houses being cheaper means more people can afford to move to better-located/nicer/larger/whatever houses.


Except not really, because those cheaper mortgages are still harder to get now than the more expensive ones were before the crash. So in practice folk who weren't already on the property market are more stuffed than before even though prices have gone down.

[naath.livejournal.com]

Except if you took on the huge mortgage that you now can't get you'd be super-stuffed when the interest rates hit 10% and you can't afford it...

(personally I am risk-averse in that way and was (and am, but less relevantly now) totally unwilling to borrow such huge sums - so I think I'm less stuffed because the bank's idea of what I can repay and mine are now more in line)

[octopoid-horror.livejournal.com]

It's really funny when people claim they've "lost" money on their house, when they're not talking about anything relating to the price they paid, but meaning what it was worth at the top of the market, when they weren't selling or buying.

[andrewducker]

This is very true.

My main issue with prices dropping is that I will have less of a percentage to put down when I move, which means I'll get charged more. Also, if I've paid off £x,000 of my mortgage then it would be nice if that stayed paid off, rather than the percentage of my flat that I own going down.

[pete stevens (from livejournal.com)]

stamp duty.

3% of £250k is a lot of money. 4% of £500k is a lot more money.