Electricity

If ownership is so expensive and so limiting why is this website full of people who desperately want to be owners?

Do you disagree with the general point that mortgages interest rates are lower than rental rates and thus each year that passes requires a bigger crash to break even?

Why do you feel it a bad assumption? The smallest homes are LA/Council built homes, council building has died down so it makes sense that average new builds are now bigger than say 50 years ago when the councils were building lots of tiny flats Here is some 2015 data The average (mean) usable floor area of dwellings in 2015 was 94m2 . Homes in the social sector tended to be smaller (67m2 ) than homes in the private rented sector (76m2 ). Owner occupied homes (108m2 ) were larger than social and private rented homes. I know you are trying hard, but its clear people have more residential floor space than 20 years ago and a lot more than 40 years ago and that is not even taking into account the many millions of loft/garage conversions and side/rear extensions

its not meaningless for them

Maybe we will look back on today and think people who cooked their own food were savages pumping out toxins from their ovens and toasters for their poor kids to breath in Probably not

This website will exist because no matter the price of housing some people will always feel it too expensive. This is even true for today, there are parts of the country where housing costs less than the reinstatement value yet some members post that its a bubble and overpriced and ready for a crash. For instance two areas that come to mind are stoke-on-trent and Telford both very cheap areas where a 3 bed house can be had for under £100k which is less than the reinstatement value of the property (that is to say if it was destroyed in an accident the cost of rebuilding it on the same plot would be more than the £100k cost to buy it) And we do have more residential floor space now than in 1996 1996 population = 58.17 million. housing stock = 24.54 million units. Therefore 29.5 sqm/capita @70sqm/Property 2016 population = 65.64 million. Housing stock = 28.50 million units. Therefore 30.4 sqm/capita @70sqm/property Residential floor-space per capita is up ~3.1% vs 1996 That is probably an under estimate as it does not include the millions of extensions and loft conversions and basement additions done over the last 20 years

Indeed air quality is much more than just cars, home cooking is a large part of it and so are gas boilers In many way the car 50 feet down the road is less of an issue than the toast you burnt this morning But as I say, most people dont buy the green propaganda. They know it is a trivial risk and they wont run away from their burnt toast or wear a gas mask when making the Sunday roast. They have more pressing needs and wants and issues to deal with

Most landlords are fine because most landlords do not have a mortgage The second biggest group are landlords with small mortgages The smallest group, both in numbers and total properties are the higher level landlords (say >65% LTv) but even that group who may represent maybe 20% of the private let stock is doing well at the moment with 2% interest rate mortgages vs 5%-10% yield rents (depending on the region). Maybe this isn't what we want to heat but it is the current reality. They will be ok until interest rates go up which could take another 10 years by which time most of them will have paid down debts further and the number who own outright will have expanded.

You are unlikely to get 5% return, tax free, on your forgone deposit. As much as people like to say the stock market returns this or that the reality is that even on this website where people are slightly more informed about finances the majority have their savings in a savings account paying close to zero. Lets be generous and say 1.5% in a savings account that is the lost opportunity on the deposit not 5% Your method is not great, what you should do is compare buying to renting. Use a mortgage balance outstanding calculator to see what the two are So using the example of a £100k house, £20k down, 2% interest rates vs £600pm rent payments If you overpay the mortgage and pay exactly the same as in rent, £600pm, by the end of year 5 your mortgage is down to £50,577.90 and by year 10 your mortgage is down to £18,064.16 and in 12 years and 7 months your mortgage is paid off What this means is, by year 5 the £100k house needs to have crashed in price to £72.66k to just break even with not having bought for £100k five years earlier and by year 10 the £100k house needs to have crashed in price to £42.44k to just break even with not having bought for £100k ten years earlier This is the situation at year 10 Bought = £18,064 mortgage remaining Not bought = £20,000 deposit x 1.02^10 = £24.38k in your deposit savings account at year 10 with ten years 2% interest compounded For the two to be in the same position the person who did not buy needs to be able to buy for £18,064 + £24,380 = £42,444 That means the person who did not buy needs the £100k house in 2017 to fall in price to £42,444 in 2027 to be in the same boat as the person who did buy in 2017 Add maintenance costs if you wish but then add rent inflation over 10 years and rent moving costs etc it wont change things much. For each year you wait you need prices to crash harder to cover the higher rents vs mortgage interest

I was thinking about inner London which in my area is up 75.4% compared to mid 2012 according to LR data So we need a 43% crash to get back to mid 2012 levels here in inner east London Also during the last 5 years I have paid closer to 2.5% interest rater than 5% rent so saved over £15,000 annually on rent being lower than mortgage interest. If you take the lower mortgage payments vs rent payments I would need prices to fall even further to cover that Simply put prices would have to drop by about 55% today for not buying in 2012 and having continued to rent to have made sense for me By 2022 (in five years time) prices would need to be down more than 70% from today price to make buying in 2012 a bad decision. Again due to paying soon less than 2% interest on a much lower 2012 price purchase vs paying 5% rent on today's value in rent to a landlord. Each year that prices don't crash, they need to crash harder to cover the higher rent payments vs low interest rate mortgage payments. I had this discussion before with someone. If a typical BTL (nationwide) is 6% yield and a mortgage is 2% interest then over a five year period prices need to crash 20% for a renter just to break even. If prices crash 19% renting would have been the worse choice. Low interest rates provide some degree of house price crash insurance

Yes all fair points So how many properties do the highly leveraged own? And what leverage would you consider highly leveraged? For instance is 50% LTV high leverage? Lets say for arguments sake there are 500,000 BTL properties that are owned by high leverage landlords with high leverage mortgages. Let's say its reasonable that they divest over the next 10 years. That would be an additional supply of 50,000 annual units. Is that enough additional annual supply to cause a crash?

Oh I think a London correction is likely perhaps 10% off over the next year or two. Perhaps half of that 10% off has already happened. The lower end BTL type properties here in z2 are down 5-10% already I just don't see a 50% crash don't shoot me for that. I wouldn't mind a 50% crash if that happened I could actually afford the home I want and upgrade from my flat. I just don't see it as I realise now that there are so many people much more wealthy than I am. Even plenty who earn less but just have more family help and generational Inheritances behind them I think outside the SE a correction is less likely. Parts of the north and midlands didn't move at all over the decade so they are down 30% in real terms already and are looking cheap. Eg parts of Birmingham you can get a 3 bes house for 120k which is less than reinstatement value!

Prices are expensive is not the same as prices are unaffordable. I believe prices are indeed expensive very expensive in London but somehow they seem to be sustainable by the fact that the city has sustained these prices for years now. Like I said I can't afford a £2-3m terrace in zone 2 I perhaps could have 20 years ago when they were £200-300k but definitely not now. I don't know anyone who could afford a £2-3m house. Doesn't mean these people don't exist plenty have been sold to established that there is a market for them at these prices. The missing bit in the jigsaw is inherited and gifted wealth. When I look at just income these super expensive zone 2 prices seem absurd but when I realises there was £200 billion or so in annual gifts/Inheritences things start to fit into place. £200 billion annual is enough to buy a million homes at £200k a home. That is a truly astonishing sum of money. A factor I wasn't much aware of a decade ago. As house prices go up so do gifts and Inheritances it's how higher and higher prices seem to have happened for 25 years straight.

There are all sorts of buyers everything from single income to dual income to those who have big windfall gifts/Inheritances My guess is in expensive parts of the country eg zone 2 London where terrace houses go for £1-3 million most the buyers are existing homeowners (or their kids) who have had massive HPI gains. In fact you can probably say that about almost all of London now not just z2 Existing wealth circulating around is a much bigger part of the picture than most people realise. As I keep saying some £200 billion annually is gifted/inherited. That is enough to pay for 1 million homes. Now clearly most of it doesn't go into housing but perhaps two thirds do. Everyone I know who has been gifted wealth or got Inheritences either bought a house or upgraded their house or bought a bigger house with their windfalls.

My guess is very few However some £200 billion is gifted / inherited yearly. That is a huge sum of money and my guess is at least half, likely more than half of that goes into property mostly via people buying their own home to live in That was a big part of the equation I missed a decade ago. It plays a massive part in housing and its affordability