scottbeard

I remember Hamish here! Honestly people won’t believe it now but he was way worse than Stewy. Stewy at least has some justification to about half his opinions based on energy prices (he’s wrong but at least he has an argument) Hamish was essentially in the “you can’t go wrong with bricks and mortar” camp and then when house prices fell 20% from 2007 to 2009 left and was never seen again here

Thank you that’s very kind. When I bought my current house in 2011 I took a tracker mortgage because despite everyone screaming the 0.5% rates couldn’t last in begged to differ now everyone is screaming rates must come down..::again I beg to differ

Did they really? Seem to be down 1% which isn’t really a plunge! I’ve still placed an order to sell yet more US stocks though because I really do expect some plunges at some point

Is that what you meant to type? There have been no cuts so it isn’t proven correct?

i have a lot of time for @Blobsy here i have been trying to get the fixed rate on my new house mortgage buttoned down for weeks and finally got it today 4.2% fixed for 5 years to me this is a STEAL i think base rate will average over 4.2% over the next five years never mind morTgage rates will base rates rise to 6% as @Flat Bear suggests? Well not in the next 18 months no I don’t think so: beyond that is guesswork really. But the idea that a tracker Rate for five years could possible average under 4.2% makes this fixed rate seem like a free chocolate bar

What a great clip! I used to love that programme as a child

But there is nothing special about the government in this scenario - you could apply the same comment about individual people, because every £1 that is taxed is also spent either paying people directly via benefits and salaries, or by paying companies (who then pay it to employees or shareholders). The point is that money keeps going round and round and round so if you keep going long enough every single £1 will end up with every single entity in the economy if you run it long enough...the same logic as every breath you take today has a few atoms in it that were once breathed out by Julius Caesar.

It means that investors will only buy it in exchange for more interest. The equivalent of dodgy Dave down the pub saying "lend us a tenner and I'll give you £15 on Monday" and the markets saying "hmm...I'd need £20 on Monday to be up for that risk"

Those pesky averages that aren't the norm 🤣 That's the spirit - when someone presents data that breaks down your world view, shut your eyes and ears. 🙄 Hopefully someone else reading can reassure me I'm not going mad here!

I agree, hence my comment of expecting house prices to keep drifting down whilst wages go up. A very different point to "is it affordable". FFS man - I just posted above that two people can afford houses in Wellingborough with 35% of their income on a 25 year mortgage. Not 30 or 40, 25. 65% of income left over for living and saving. PLEASE EXPLAIN WHY YOU THINK THEY ARE UNAFFORDABLE?! Unfortunately so. The last 50 years have seen women enter the workforce...but as a result it now takes a couple to afford a typical house when it used to be just a man. Childcare is a serious but temporary issue given all the benefits thrown at parents once the child turns 2, and maternity leave for the first bit.

Your post above shows average income in Wellingborough of about £1,973 a month, or maybe a bit less. Let's say £1,800. My post quotes two people on that average wage would therefore have income each month of £3,600. Rightmove says https://www.rightmove.co.uk/house-prices/wellingborough.html average property price there is about £239,000. Assume they have a typical FTB deposit of 10% and borrow the other £215,000. A mortgage of £215,000 over 25 years at 5% interest is £1,250 a month or 35% ish of their take home pay. Please explain why that is unaffordable, and a sign of the greatest HPC of all time about to happen?

Man says average house price in Wellingborough is affordable by average inhabitants of Wellingborough - BACKED UP WITH FIGURES. No comment made about London, or anywhere else in the UK. Your response: You have no data, no logic, no argument - just emojis. If you disagree, show the data as to why.

It's not intended to be, it's just - as you say - an economic lens. I'm trying to answer the question "are houses priced higher than the economic fundamentals would suggest?" and concluding "yes, but only a bit". That is not expressing an opinion either way about whether politicians should change the fundamentals. No. It's the sole metric to decide what kind of mortgage payment you can afford. What kind of house that buys depends upon all the other factors I listed too, as well as politics as you so rightly say. That's a huge, huge statement that I have no time to debate with you - but it's an interesting debate. For starters: - If your grandfather was a manufacturer of top hats - very popular in Victorian times but not today - I would say that the "fix" is you getting a more modern profession (this is a joke example, but the point is industries wax and wane over time). - If the problem is that house prices have increased because women now work so the amount of money each household has has increased significantly bidding up the houses it's very debatable that this needs "fixing". - If the problem is that the population has doubled but the housing stock only increased 50% then the yes something has gone wrong that needs fixing. However, even if you build more houses your original statement says "same size of house in the same area". Clearly that's impossible because we must have to build in different areas. No that's not correct, and centuries ago house prices relative to wages were much cheaper because land was much less scarce in those days of much smaller population and no Planning Permission needed.

That's kind of what I'm doing, except mine is a "half measure" - relocating from the South East (not London) to the Midlands (not North) and getting a house twice as big for only 50% more.

An economics professor whose lecture I went to suggested the UK long term neutral interest rate is now about 4%, though it depends what growth and productivity does: to a certain extent it cancels out in affordability terms, because if the country does well wages grow fast but then interest rates have to be higher, and vice versa.

I agree. I'd expected 20-40% falls nationally based upon interest rates going back from 0% to 5%, but actually it's all so slow that wages are catching up and doing most of the work. House prices are down 5% but wages up 15% so actually we are into the 20-40% fall zone relative to wages - but I said nominal, so i was wrong. Now i think there's still more nominal fall to come, but it's more likely the same again - house prices down another 5% and wages up another 10%.

No. I don't think a typical bin man ever lived in a 4 bed detached house. Indeed, which is why I countered your OPINION that houses in Wellinborough are unaffordable with FACTS that show they aren't. Yes - but what we've seen over recent years is house prices drifting downwards whilst wages shoot upwards. I suspect the two meet in the middle. Like you I suspected there would be a crash, but there hasn't been - I didn't see the wage growth coming, but it has. But you are still only speculating about what MIGHT happen not what has? You should. I don't think posting here is healthy for you based upon this thread.

No, it's not like that at all. Even if we still used gold coins for money they would still circulate between banks, companies, government and people because - at any one time - the coin has to be SOMEWHERE, but will eventually move to one of the others. The fact that money circulates is not connected to where it comes from. The point about the state pension being means-tested by the back door is true because of the existence of the income tax personal allowance. Because tax doesn't start at £1 of income but at £12,000 an individual is indifferent between the state giving them state pension, them taking it back as tax on their private pension, or doing neither. Whether you get a state pension of £11k and pay £5k in tax, or get a state pension of £6k and pay Nil in tax, you are in exactly the same position.

It's too simplistic to say that house prices should have moved by X% from date Y because inflation/wages have gone up X% since then. Firstly it hangs critically on that initial value being "correct" in some abstract sense: how can you pick the exact date that house prices were "correct". Secondly it ignores all the other influences on house prices, including population, housebuilding, dual incomes used for mortgages, things external to the UK such as foreign investors buying UK property etc.

No-one PREDICTED this. Some ADVOCATED it. They only just put them up!!

Real wages have not grown enough, I'd agree. However, cherry-picking some jobs that have not increased at all in nominal terms is not helpful: yes indeed, whilst other jobs have had big increases and the overall mix of jobs in the UK has changed completely. This is why we look at averages compiled by ... yes, sources like the ONS!

Average earnings in the last 2 years (Jan 2022 to today) have risen about 15%.

That's an interesting way to look at it - yes you could argue that is the case already!

But I've just shown you data that a 340k detached house shows isn't average for Wellingborough? Regardless of whether you think Wellingborough is a nice place or not (and I know it pretty well) the facts are that average house prices in Wellingborough are not miles away from what people on average Wellingborough salaries can afford. https://www.rightmove.co.uk/house-prices/wellingborough.html Properties in Wellingborough had an overall average price of £239,206 over the last year. The majority of sales in Wellingborough during the last year were terraced properties, selling for an average price of £201,958. Semi-detached properties sold for an average of £242,692, with detached properties fetching £350,532. Overall, sold prices in Wellingborough over the last year were 12% down on the previous year and 1% up on the 2021 peak of £236,774.

But those things were financed by printing money, which the market now says they can't do.