pobby

This week I had dinner with afriend who told me that about a year ago he purchased a new build house for £420,000.He has about £120,000 of deposit equity in the property.Thinking that he might downsize ,he has had the property valued and was told he should consider dropping the price by between £30,000 to £50,000 from the original purchase price.He was not bothered as he said he would hang on a bit until the price picked up!Oh yes and by the way the mortgage is an IO arrangement! This tale fits in well with another friend of mine.He has 2 properties on IO mortgages.One he lets out which probally covers the rent as he purchased that one about 5 years ago and the other he lives in which he aquired in 2004.Again his total mortgages amount to £300,000.Mind yiou ,as he told me,he cant possibly loose as house prices will go up by 8% year on year!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Today I have just got from the local library Empire Of Debt by Bill Bonner and Addison Wiggin.I have only just dipped into it but I think this could be a well scary read.Any folks here read it?

Hi to everyone.I am also a newbie to this site and already are addicted.I have seen a lot of very intelligent posts but have to say they are posted by bears!I am 50 something and have my own modest home.Yet I remember so well the last recession as head of a {now closed} family business.The amount of folks that I knew that lost their homes/businesses was to say the least depressing and many of those hard working people were not youngsters. Sadly,I think it will happen again,and I dont think it will be long in coming.Yes it will be different this time but the effect will be the same although it may have more devastating consequences than the Thatch/J.Major crash.The younger members of my family have no chance right now-----not even of renting in the Reading area unless they club together and share a grotty flat in an area where you really wouldnt want to live. I for one where one of those many people that after the last crash thought that many had learnt a hard lesson and property would never boom again in such a crazy way but there you go.I got that wrong big style! Mybe even that young mortgage broker/btl guy that I have met recently{and he boasted of spending £15,000 in a year on cough cough ladies of a professional nature }might have to sell his Ferrari--------must admit if he does I may have a little snigger.

afriend of mine who is in his mid fifties purchased,with shared equity a house at the beginning of the 80s.It cost £34,000 pounds.Being worth now approx.£170,000 he has realised that he will have to pay around £75,000 to own it outright.Seemed like a good deal at the time!

I wonder if any one has further details on this thread.I lived throughout the 80s opposite Early station,about 100 yards from the fuel depot.One night,I cannot remember the date, I was surprised by an explosion at the station.A utility wagon, was on fire and workers were trying to move it away from the platform.Didnt think any thing about it at the time but I wonder if this incident has any thing to do with this topic???????????????????

I saw this graph and I do think it very important to consider the element of infaltion.In 1970 my basic wage was £16, yes £16 a week,with overtime I would average £24 per week.Not a bad wage at the time.By 1980 I earnt around £200 pounds a week in a management position although I guess maybe around £160 to £170 a week would be a little more typical. 1970 approx£2,500 to £3,000 would have got you a smallish 3 bedroom semi in Reading worth by 1980 around £25,000.So house price inflation appeared to run very much in a linear fashion to wages certainly up to that point. Put another way,many of my friends who were single around that time had no bother buying on one wage.The same house in Reading right now is priced at around £180,000 meaning a single person would need to earn £1,000+ per week to achieve the same. Truly,I have very few friends or aquaintances,who even at the top of their careers are earning that.

Very interesting graph!Taking the average income to house price it seems to sit happily at 3.5 times annual salary.I have little doubt that it will return to this ratio and that is not through rampant wage rises. I have to agree that it is certainly a one sided gamble and one not worth taking.