So, if you bought a house you'd want the price to go down?
Are you suggesting that negative equity is a better position than an investment?
Of course houses are usually bought as homes and that's very important but that's not what you asked.
(Me, I'm not... in any way intoxicated, Wed 19 Oct 2011, 21:01, 1 reply)

The trouble is...
... the value of *everything* has to go up by the same amount.

If someone bought a house 25 years ago and it increased in value by a factor of ten, but wages over the same period increased by less than that, you wouldn't be able to afford it given a similar job.
(gordonjcp, Wed 19 Oct 2011, 21:51, closed)

I'm not disputing that.
In fact all I am saying is that if you can already afford a house and are buying one or already own one then you're better off if prices go up.
(Me, I'm not... in any way intoxicated, Thu 20 Oct 2011, 1:00, closed)

Until your kids want to leave home and house prices have gone up by 5 times in real terms and they can't afford to rent, let alone buy without you chipping in.

Negative equity isn't so much of a problem for people who've bought a home. It is for those that have made a desperate plunge into a run away housing market and then get caught out buy the inevitable bust caused by ever rising house prices and people making desperate plunges into the market, egged on by an industry that feeds on greed.
( Ring Of Fire A petty, drooling belming butthurt retard., Thu 20 Oct 2011, 6:43, closed)

Actually
that's not quite true.

The real trouble starts when interest rates rise.

Someone today buys a house which will cost them £1,000/month - you assume they can afford £1,000/month. Doesn't matter if the value of their house falls, so long as they can pay the £1,000, they can just sit it out.

But when interest rates rise, and they suddenly need £1,500/month, and haven't got it, then the shit hits the fan. That's when people start losing their homes, and walk away peniless at best.

That's a real risk now. Interest rates are as low as they have ever been. If rates were to rise to where they were 15 years ago, your £1,000/month now would be more like £2,500 - 3,000.
(username failed moderation, Thu 20 Oct 2011, 10:26, closed)

That’s the outcome of people jumping into a rapidly inflating housing market and taking a gamble.
( Ring Of Fire A petty, drooling belming butthurt retard., Thu 20 Oct 2011, 11:24, closed)

It's cetainly clear
that this cycle always makes some people money, and always ends up in a bubble where the tailenders get royally shafted.

I wouldn't argue in favour of ever increasing house prices, but it's a market - not any conscious policy. It drives itself.
(username failed moderation, Thu 20 Oct 2011, 11:30, closed)