Why are house price crashes more damaging than rises?Experts have analyzed five reasons, do you agree

2022-09-10 0 By

As a commodity, the house not only has the function of comfortable living, but also has a good appreciation. If the owner is in urgent need of money, selling the house can solve the urgent need, so many people even if the loan also want to buy a house.However, when the housing supply exceeds the supply, the housing price will rise accordingly. Once the housing price keeps rising, ordinary people will not be able to afford the house and enjoy the dividend brought by the house.At this time, if the housing price slump, it means that the cost of buying a house is reduced, can reduce the pressure of life, obviously is a good thing, why insiders say that the damage of the housing price slump is greater?There are five main reasons:First, the financial sector has had a huge impact, may cause the financial crisis is close to the real estate industry and financial industry, falling house prices can make the enterprise to earn profit decreased dramatically, if the real estate investment losses, debts, a decrease in the ability of serious that may impact on state financing, financing function loss, can bring sustainable impact on the real economy,Systemic risks are building up, and when they get out of hand, they may turn into financial crises.Second, the economic impact on related industries The excessively high rise in housing prices has driven other sectors involved in the real estate industry, such as furniture, home appliances, decoration, building materials and real estate agencies, which have also gained high profits.Once the housing price drops and the real estate enters a cold period, these industries will be directly or indirectly affected. Forced to be cold, capital tightening will have a great impact on economic development, which is very unfavorable.Third, the real estate industry capital turnover difficult, slow development of people for housing market has always been “to buy or not to buy up”, so falling house prices is difficult time for the real estate industry, the house is not sell, can be a problem of capital turnover, lead to capital chain rupture, small developers cannot return a bank loan, can only be declared bankrupt.As a result, developers have less to build, and the development of real estate will naturally slow.Fourth, to own a house impact strength after the buyers to buy a house, the most afraid to hear the news is that falling house prices, house prices is no benefit for this kind of crowd, mortgage rates will not cut, also won’t supply gap, then will think, if only a little later to buy a house, a little later to buy a house you don’t have to mortgage also is so high.Moreover, for ordinary people, they have spent all their savings to buy a house, and the fall of housing price means the depreciation of the house, which is a great economic loss and a great psychological pressure to bear.Fifth, the cycle of falling home prices falling house prices could make influence real estate industry is facing a huge loss, and other industries have no real estate, downturn in the economy development will influence the development of industry, enterprise’s weak increase unemployment, no income of people will choose to abandon housing foreclosures, will affect the banking system, Banks’ bad loans rate increase,Have to choose to reduce loans, small and medium-sized enterprises without the maintenance of loan funds, the company will be difficult to continue to develop, thus forming a vicious circle.