House prices are falling? Brilliant!

Does anyone really care if house prices go down? Not many, if a new survey is to be believed...

Last Updated: 31 Aug 2010

For weeks now, gloomy warnings about the imminent fall in house prices (anything from 1% to 30%, depending on who you believe) have been prompting much wailing and gnashing of teeth in the press about the consequences for the economy. But perhaps all those columnists were barking up the wrong tree – according to a new survey, the majority of us don’t actually want prices to keep rising…

The study, conducted by ICM on behalf of a BBC show called ‘The Truth About Property’, discovered that just 22% of us wanted prices to go up – but 46% were happy for prices to stay exactly the same, and 28% actually wanted prices to fall. The theory is that when prices go down, it makes it easier for us to clamber up to the next rung of the property ladder – because even if the price of our own home falls, the price of a more expensive home comes down proportionately. So in real terms, we have to borrow less money to trade up.

What’s more, there are some sections of the market for whom falling prices are a win-win situation – notably first-time buyers (as long as they can actually get a decent mortgage to take advantage) and those with no debt on their homes (according to the survey, a third of homeowners have paid off their entire mortgage). None of these lucky souls have to worry about negative equity either.

All of which rather gives the lie to the idea that a drop in house prices will precipitate a spiral into depression and possibly the end of the economic world as we know it. In fact, the ICM survey found that even a 10% drop in prices wouldn’t stop us shelling out on other stuff – almost two-thirds of respondents said they would keep spending the same amount (or possibly even more) on shopping and leisure activities.

As fully paid-up members of the glass-half-full club, this is just the kind of news we like to see (and we imagine retailers will be equally delighted). Perhaps all that Britain needs to get through this very modern housing market disruption is just a good old-fashioned stiff upper lip...

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