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sanddancer

Are Ftbs Really Put Off In Current Market?

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I realise this is purely anecdotal and maybe the people I know are out of synch with rest of the potential FTBs, but I know lots of couple who have either bought in the last year or are in the process of buying somewhere (mainly in London). The main factors influencing their decision to buy seem to be that they have been promoted at work so now have more money or are in long-term relationship so have someone to buy with. Those buying now seem to think they are getting in at a good time in London because prices do seem to have steadied, although they all admit that they will be paying alot more than they are now while renting.

My partner and myself were also hoping to buy early next year, but having come across this site now purely by chance, I'm quite keen to sit tight renting for a while, but my partner is less convinced as his parents are constantly nagging us about buying and everyone else we know seems oblivious to any thought of a crash. One couple we know even paid £5k over the asking price for a property 9 months ago.

If there still are these people willing to buy at silly prices, will there really be such a major crash? I can see it happening easily in other parts of the country if a major local employer makes redundancies etc, but will London be badly hit?

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My partner and myself were also hoping to buy early next year, but having come across this site now purely by chance, I'm quite keen to sit tight renting for a while, but my partner is less convinced as his parents are constantly nagging us about buying and everyone else we know seems oblivious to any thought of a crash.

One for the "It's all women's fault" brigade to consider.

JY

[explanation to follow SandDancer]

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One for the "It's all women's fault" brigade to consider.

JY

[explanation to follow SandDancer]

JY, notice it's not that he wants to buy, but that his parents want him to. Red herring IMO. Also, do you really think it's wise to try and 'point-score' about old forum topics on a newbie's thread?

having come across this site now purely by chance, I'm quite keen to sit tight renting for a while,

SD, I do think the 'sit tight' option is your best course of action right now.

Edited by zzg113

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By the sounds of it, you are in an unusual position - presumably with wealthy friends on high salaries.

If you consider an average London flat (leasehold, one/two bed) and consider 5% deposits and "old economy" income multiples - 3.25 times for a single person or 2.5 times a joint income then it quickly becomes plain to see that prices are out of kilter.

Sure, there will always be people willing/able to buy, but that is not reason enough to draw inferences that prices are acceptable or sustainable.

If an average London property is £240k (ish) and the average London salary is £45k (ish) it seems fairly clear there is an issue.

The 3.25 times single earnings = £145k (ish) which supports a £155k (ish) property... which is some way short of the average property price. The 2.5 times joint = £112k (ish), which supports a £120k (ish) property.

Bulls will find all kinds of reasons why prices are not ridiculously high (these multiples are no longer relevant, more debt is available today etc), it's up to you to decide whether they make sense or not. I think not, so I'm renting rather than buying but ultimately it is your call (and your friends' call).

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If there still are these people willing to buy at silly prices, will there really be such a major crash? 

The thing is there aren't enough of these people to prop up the market but there will always be people buying at any stage of the market cycle. The sad thing is that they are buying at the peak of the current market and the odds of the market going down are far higher than the market going up so you're better off sitting it out and saving. Let your landlord take the hit!

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No doubt his mother is the most vocal advocator of this course of action.

You fool - do you live in the 1950s?

With regards to buying in London. I've consistently stated my belief that certain locations will not crash significantly to deter FTBs.

London inner suburb prices are flat and have been flat for 3 years.

Lots of reports coming out at the moment "celebrate" the fact that the North/South divide in prices is getting less and less. What does that tell you about where housing is over-priced?

London house prices are based on a global economy. By contrast Stoke house prices are based on...........BTL hype and hope.

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If an average London property is £240k (ish) and the average London salary is £45k (ish) it seems fairly clear there is an issue.

Average London salary is about £32K, That's a ratio of over 7 X average earnings

The median average salary is probably less than £25K.

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By the sounds of it, you are in an unusual position - presumably with wealthy friends on high salaries.

Not at all (all earning below the £45k you give as average), but they are mostly in their early 30s so not that young for buying their first property and have been saving for a deposit for years. A few have moved back in with parents for a while to be able to save more money or didn't ever leave home to rent in the first place, but I think what is making the difference is that the 2.5 x joint salary isn't what is being offered anymore.

People in London seem to have accepted the stupidly high property prices as a fact of life.

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JY, notice it's not that he wants to buy, but that his parents want him to.  Red herring IMO. Also, do you really think it's wise to try and 'point-score' about old forum topics on a newbie's thread?

Jeez zzq, are you stalking me?

Explanation, as promised:

A lot of the forums energy in recent months went in to discussing the pressure men feel to purchase a property (even against their better judgment) to satisfy their woman/to become attractive to women.

The OP on this thread has introduced an interesting counter-point: she is content to rent while the market sorts itself out while the pressure is coming from her partners side.

JY

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People in London seem to have accepted the stupidly high property prices as a fact of life.

The majority of people have no idea about economics or markets, the average person couldn't even tell you what interest rates are or what they have done so the fact that the majority of people have accepted high prices does not mean that they won't come down. The average person has to rely on the occasional headline they catch in the news and unfortunately there is a huge amount of VI spin trying to talk up the market included in most of these. The fact that London house prices have started coming down YOY should be putting everybody off buying, the reason it isn't is because I wouldn't be surprised if they aren't even aware that prices have come down over the last 12 months.

Edited by munimula

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Not at all (all earning below the £45k you give as average), but they are mostly in their early 30s so not that young for buying their first property and have been saving for a deposit for years.  A few have moved back in with parents for a while to be able to save more money or didn't ever leave home to rent in the first place, but I think what is making the difference is that the 2.5 x joint salary isn't what is being offered anymore. 

People in London seem to have accepted the stupidly high property prices as a fact of life.

In that case, the answer seems to be that your friends have devalued the cost of debt - because someone will allow them to get themselves massively into debt they think they should take the opportunity.

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In the case of people I know think this is probably right then this is compounded by their parents who believe that property is always a good investment.

In the high inflation years that our parents and grandparents have experienced you couldn't really go wrong, things are different now.

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I think the answer is that some ftbs will never be put off, in much the same way that some Japanese people will never be put off eating poisonous blow fish (aprox 200 die each year!).

The question really therefore boils down to natural selection with the less intelligent and weaker minded individuals allowing themselves to be presured by banks and relations into screwing up their financial future.

It is interesting to note that both my sister and my other best fried have recently sold their houses to such poor saps, put their money in the bank and taken on rented accomodation. This is without my influence. Its not just a case of ftbs getting scared but also existing homeowners taking the money and running!

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London price dropping, the Stats show something different.

http://www.upmystreet.com/property/prices/all/l/sw1.html

And the Land Registry also show something different

http://www.landregistry.gov.uk/assets/libr...ppr_q2_2005.pdf

Forget what you see in terms of asking price, its what they sold for last year, and what they sell for this year.

They look to me that they are going up, now that is certainly not a crash.

Edited by laurejon

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You cant look too much at the figures

yes av price is up on LR but volumes are down

Its not hard to see that it is the FTB properties that are not selling, these are less value so gives the LR figure an unrealistically high figure. There are also alot more of these properties on the market than 12 months ago,

At the end of the day i think it is quite clear to see if you spend any decent amount of time reaserching the uk property market, that things aint looking rosy, but you can not make asuptions on data that you do not understand,

where does the data point to,

down me thinks

Edited by tommyboy

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London price dropping, the Stats show something different.

http://www.upmystreet.com/property/prices/all/l/sw1.html

And the Land Registry also show something different

http://www.landregistry.gov.uk/assets/libr...ppr_q2_2005.pdf

Forget what you see in terms of asking price, its what they sold for last year, and what they sell for this year.

They look to me that they are going up, now that is certainly not a crash.

The reason why houseprices shown are greater in 2005 than 2004 a moving average effect, the 2005 price includes months, within the last 12, where prices were increasing monthly. But this number also includes months where the monthly change was negative. When the number of negative months outweigh the positive month(reducing to zero months) then the S*** will hit the fan. Look at the last 3 months movements, annualised. Hope that makes sense.

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Although many people say the Land Reg figures are the most accurate I personally find them very innacurate. They certainly lag and because of theway they are calculated, initial rises should be expected when the bottom rung disappears.

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Those buying now seem to think they are getting in at a good time in London because prices do seem to have steadied, although they all admit that they will be paying alot more than they are now while renting. 

How much will it take to stop people paying a lot more than they are now renting? In my view not much. Right now they are willing to pay more than their rent because they think they are getting in at a "good time". It will only take news of sligth price falls over the next 12 months, to change people's minds. If in 12 months' time, headline prices (i.e. Nationwide, Halifax etc.) are, say 3-5% lower than today, will people still be willing to pay more for an asset that is slowly loosing value?

Look at graphs of previous stock market crashes. No crash (with the exception perhaps of the .dot bust) has an inverted V shape. All crashes are preceded by first stagnation and then a mild slide. The property market does the same, just in slow motion.

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The biggest problem we have is the abundant supply of cheap long term money.

As this situation brought the market up, it will at some stage go into reverse and bring the market down.

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Jeez zzq, are you stalking me?

Explanation, as promised:

A lot of the forums energy in recent months went in to discussing the pressure men feel to purchase a property (even against their better judgment) to satisfy their woman/to become attractive to women. 

The OP on this thread has introduced an interesting counter-point: she is content to rent while the market sorts itself out while the pressure is coming from her partners side.

JY

Don't think you really need to explain JY it was obvious that that was what you mean't :)

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I know lots of couple who have either bought in the last year or are in the process of buying somewhere (mainly in London).  Those buying now seem to think they are getting in at a good time in London because prices do seem to have steadied, although they all admit that they will be paying alot more than they are now while renting. 

I'm quite keen to sit tight renting for a while, but my partner is less convinced as his parents are constantly nagging us about buying and everyone else we know seems oblivious to any thought of a crash.   

Sanddancer, I sympathise, I also live in London and see people continuing to buy. Someone at work though was saying that he is not happy that his son has decided to buy with his girlfriend pointing out that they were buying because they want to and not because it is a good time to buy. My work colleague is an exception generally older generations like my parents and your partner's parents keep on with the 'renting is dead money' mantra. That's the point really older generations have rarely lost out by buying and people are getting used to having what they want when they want. I have resigned myself to waiting even though all my relatives think I'm crazy not to buy.

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yeah yeah, I've had several mid-20s types in my office FTB this year, Jan/Feb time.

The usual story is a couple, on £32k each, buying somewhere ghastly like the edge of Brentford, stretching to £220,000 for a 2 - 3 bed place that needs to be totally done up. Ask a few more questions and their risk looks like sheer folly. Apart from the stupidity of buying at the top of the bubble, most are on interest-only mortgages and have borrowed around £20,000 for new furniture, washing machines, carpets, redecorate, building, etc. Some are now looking around and seeing similar properties on the market in the £280,000 asking price region and thinking they'll get at least that if they sell now. They really think they're going to make 20, 30, 40K profits 12 months after buying. They dont believe prices are falling, even though the evidence is there to see.

I warned each and all of them of an impending crash, showed them all the graphs, etc. I was treated agressively for having the temerity for suggesting buying then was anything but a brilliant idea.

We'll see who was right.....

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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