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Junkyard..... In reality though, how many 'homeowners' would be in negative equity if prices dropped by 30%?
Only people who bought during the boom and who over extended themselves would really end up in negative equity. Many who moved during this time will have lots of equity from their previous house.
People have a mindset of not wanting to sell that for 'less than it is worth', but their idea of 'what it is worth' is based on a 2007 valuation. Somebody who bought in 96 (for arguments sake), wouldn't lose anything now if they sold for 30% off 2007 price; paper gains don't exist until you sell and have the money in your hand.
So we can either worry about those in neg equity and maintain the status quo, or bring in legislation to regulate the market for the greater good. Have your legs broken, or break the legs of your children?
Well assuming annual sales of 700,000* houses and a 30 % reduction on todays prices [ takes us back roughly 7 years] so about 5 million homes of 17,500,000 million homes
Quite a few basically and enough to reduce mobility.
i am not saying it wont happen[reduction] but it wont help mobility
tha t is higher than i thought and the middle links shows surprising rapid increases in price.
sales
* actually 810,000 last year !! that is surprisingly high
http://www.bbc.co.uk/news/business-16284992
tables to get average prices
http://www.communities.gov.uk/housing/housingresearch/housingstatistics/housingstatisticsby/housingmarket/livetables/
house numbers
http://news.bbc.co.uk/1/shared/spl/hi/guides/456900/456991/html/
But 810,000 sales doesn't equal 810,000 first time buyers though, and it is ftbers that are those likely to be at risk of negative equity.... Others will have years of built up equity from monthly mortgage payments, and house price inflation.
I understand your point about mobility and that is fair enough. What about the mobility of the younger generation/ lower paid, who can't afford prohibitively high housing costs (house prices and rental rates). Should this ever increasingly large group of people pay the price to protect people in negative equity?!
I cant help but think a 30% drop in house prices will not happen in many areas when rents are so high. Demand for places to live isnt falling.
Such a drop would put us in negative equity pretty much or zero equity, but not a problem really if we want to buy a bigger house.
how many 'homeowners' would be in negative equity if prices dropped by 30%?
Pretty much the whole BTL market?
Of course, the Government could do something overnight to stimulate the housing market - restrictions on the expenses that can be offset against rental income.