Home Prices Falling...............current events?

Question

http://uk.news.yahoo.com/skynews/20071119/tuk-new-survey-shows-home-prices-falling-45dbed5.html

Is this a good or bad thing for first time buyers and people already on the property ladder?

Answer 1

It's a bad thing for people already on the property ladder as their houses will be worth less.

For people who may have recently bought a house, they could find that their mortgage is more than their house is worth. (Negative equity). If the difference is more than their savings, they might be "trapped" in the house because they can't afford to sell it and move.

For first time buyers it is harder to say - it is good that the prices are coming down because people want to get on the property ladder. The cheaper houses will allow more people to get a foot in, and reduce the number of people borrowing huge multiples of their salaries. This could have a positive effect on the number of people in financial difficulty.

On the other hand, if the prices keep falling, first time buyers who buy now will be in the same negative equity position as people who are already on the ladder.

The trap of negative equity may hit first time buyers harder, as they are likely to be younger. This means they may have less in the way of savings, and be more likely to want to move than older people. (Younger people are more likely to have lifestyle changes, such as getting married and starting families where they may need a different house.)

Answer 2

I think it is a very good thing. For years properties seem to have risen in price for no apparent reason. It is of course down to supply and demand. If people are prepared to pay outlandish prices for average properties then prices go up. I still thing house prices are artificially high and therefore I do not think that first time buyers will be helped. Mortgages are harder to get because of the Northern Rock trouble. As to people already on the property ladder they just sit tight until the trend swings the other way again.

Answer 3

It will be an excellent thing if it shakes out all the 'buy to let' nonsense which has distorted the market for years. First time buyers will then have a chance to get on to the property ladder. For those already on the ladder, if they bought their house as a commodity (i.e. a place to live), they will be fine. If they bought it simply as an 'investment' - well, investments are inherently risky.

Answer 4

Good thing for first time buyers but not so good if you are turning over properties looking to make an investment.
If you have a house and are just sitting tight that would be fine too, not a good idea to sell until things start to rise.
I actually heard it was a predicted 0% increase in house prices not actually a fall.

Answer 5

Good.

16

Answer 6

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Answer 7

Good for first time buyers as at present the only people who can afford houses are the rich and builders.

Answer 8

Where i am, real estate is rising faster than you can say "broker"!!! Am glad & grateful i was able to buy my lovely home when the market was down. Its now trippled in value & i'm happy as can be!
xx

Answer 9

good thing if you have cash.