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Edinburgh Housing Affordability

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Following on from the Affordability report in the main forum. See page 14 - Edinburgh severely unaffordable.

http://www.demographia.com/dhi.pdf

Luckily, the sanity is returning to the market. Small steps but in the right direction.

Edinburgh house prices are falling at the fastest rate in the recent history. And the FTB market (shoe boxes) is crashing.

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Following on from the Affordability report in the main forum. See page 14 - Edinburgh severely unaffordable.

http://www.demographia.com/dhi.pdf

Thanks, there's a lot of interesting information there.

I read a news story the other day that rated UK cities by whether it made more sense to buy or rent. (The ranking was independent of information about whether the market is going up or down, and used current interest rates. Obviously buying versus renting is going to change depending on what the interest rate is, whether the market is rising or falling, and so on.) Edinburgh was one of few cities where renting made more sense: sure, prices for flats/houses are much lower here than in many parts of the south, but rents are even lower.

For example, I live in a flat that was bought a couple of years ago for £240,000 pounds, but pay £750 pounds. I don't know how big the mortgage is, but it's hard to see that my landlord isn't losing money every month. If he has 25% in and the mortgage is at 3.5%, then he probably breaks even on the interest once you include things like building insurance and the factoring charge. But if rates go to 5%, which is still a historically low rate, he'll be losing money each month. And if he has less than 25% in, then he's already paying more than 5% and will soon be in a world of pain.

EC.

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Thanks, there's a lot of interesting information there.

I read a news story the other day that rated UK cities by whether it made more sense to buy or rent. (The ranking was independent of information about whether the market is going up or down, and used current interest rates. Obviously buying versus renting is going to change depending on what the interest rate is, whether the market is rising or falling, and so on.) Edinburgh was one of few cities where renting made more sense: sure, prices for flats/houses are much lower here than in many parts of the south, but rents are even lower.

For example, I live in a flat that was bought a couple of years ago for £240,000 pounds, but pay £750 pounds. I don't know how big the mortgage is, but it's hard to see that my landlord isn't losing money every month. If he has 25% in and the mortgage is at 3.5%, then he probably breaks even on the interest once you include things like building insurance and the factoring charge. But if rates go to 5%, which is still a historically low rate, he'll be losing money each month. And if he has less than 25% in, then he's already paying more than 5% and will soon be in a world of pain.

EC.

Do you mind giving a general idea where this is? and do you think you are getting a good deal? Basic 1 beds in Edinburgh are now starting to slip towards 400 pounds and under a month.

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Do you mind giving a general idea where this is? and do you think you are getting a good deal? Basic 1 beds in Edinburgh are now starting to slip towards 400 pounds and under a month.

It's in the West End, very posh old Georgian, and very, very nicely done. (The 1 beds that are slipping towards £400 a month never sold for £240,000.) It was owner occupied I think and so has many things you don't get in a typical furnished flat (e.g., top quality mattress, linen, and down duvet.)

I don't know if it's a good deal or not. I'm not that keen on the place because it's a bit stuffy (too posh) and the neighbourhood is dull for my tastes. But it's way nicer than some of the places I saw for £750 a year ago when I was looking.

I'm thinking I'll move in the spring, somewhere a bit cheaper and more relaxed in character, and settle in for a couple of years waiting for the market to fall some more.

EC

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I just skim read a few sections of this. Who are Demongraphia, and does anyone listen to them?

What they say makes a lot of sense, but what a lot of people say on HPC makes sense, and I unfortunately don't see our sentiments making their way into mainstream policy.

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It's in the West End, very posh old Georgian, and very, very nicely done. (The 1 beds that are slipping towards £400 a month never sold for £240,000.) It was owner occupied I think and so has many things you don't get in a typical furnished flat (e.g., top quality mattress, linen, and down duvet.)

I don't know if it's a good deal or not. I'm not that keen on the place because it's a bit stuffy (too posh) and the neighbourhood is dull for my tastes. But it's way nicer than some of the places I saw for £750 a year ago when I was looking.

I'm thinking I'll move in the spring, somewhere a bit cheaper and more relaxed in character, and settle in for a couple of years waiting for the market to fall some more.

EC

No, they sold for 170k at the peak from what I know (that`s one and a box room maybe) The point I am making is that you can rent decent enough space in central Edinburgh for about 400 p.m. in this particular space I could have done anything to the decor, landlord has not been over the threhhold in nearly five years.

Edited by dances with sheeple

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The point I am making is that you can rent decent enough space in central Edinburgh for about 400 p.m.

I haven't looked in that price bracket but it seems really low to me. On Nestoria at the moment there appear to be just six one-beds for 400 pm or less. But anyway, obviously a lot will depend on the location, condition, size of rooms, etc. I'm living with a partner and know that a small one bedroom that I would find suitable for myself feels really cramped with two people in the picture.

EC

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No, they sold for 170k at the peak from what I know (that`s one and a box room maybe) The point I am making is that you can rent decent enough space in central Edinburgh for about 400 p.m. in this particular space I could have done anything to the decor, landlord has not been over the threhhold in nearly five years.

Not sure what your definition of 'decent enough space' or 'central' is DwS but I suspect it may be different to mine. Even the archetypal 1-bed Gorgie postage stamp-sized flats are typically 450 and they are far from what I'd consider decent space!

Nevertheless your point stands-rent is cheap in Edinburgh compared to a lot of cities. I used to live in Cambridge-similar wages and house prices but rents a good 30% higher and anything good would be snapped up within hours of being marketed.

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Following on from the Affordability report in the main forum. See page 14 - Edinburgh severely unaffordable.

http://www.demographia.com/dhi.pdf

interesting link, thanks

"OECD Call to "Ease Supply Restraints:" A report on international housing markets by the Organization for Economic Co-operation and Development (OECD) expressed concern about planning regulations and their role in driving up prices and increasing price volatility"

This is a really key point - high volatility means that when prices do fall they may fall way below the long term trend before rebounding. You can also see this effect in commodity markets when supply is limited you will see these huge swings in the price.

This is the owner of Demographia:

http://en.wikipedia.org/wiki/Wendell_Cox

Edited by oligotroph

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For example, I live in a flat that was bought a couple of years ago for £240,000 pounds, but pay £750 pounds. I don't know how big the mortgage is, but it's hard to see that my landlord isn't losing money every month. If he has 25% in and the mortgage is at 3.5%, then he probably breaks even on the interest once you include things like building insurance and the factoring charge. But if rates go to 5%, which is still a historically low rate, he'll be losing money each month. And if he has less than 25% in, then he's already paying more than 5% and will soon be in a world of pain.

Don't forget that if he has 25% in, that's 60,000 pounds that could be invested better elsewhere - at around 3-4% in a good bank account. That income has to be subtracted from the calculation when considering whether the house is a good investment. Similarly if IRs go up, the interest he could be earning from the bank gets bigger.

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I used to live in Cambridge-similar wages and house prices but rents a good 30% higher and anything good would be snapped up within hours of being marketed.

I do live in Cambridge half the time and wages and house prices seem much higher. House prices certainly are, and I'm pretty certain average wages are too given the huge number of uni employees. But yes, rents are much higher as well.

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Don't forget that if he has 25% in, that's 60,000 pounds that could be invested better elsewhere - at around 3-4% in a good bank account. That income has to be subtracted from the calculation when considering whether the house is a good investment. Similarly if IRs go up, the interest he could be earning from the bank gets bigger.

yeah, good point. That's £200 a month in lost interest, which means he's losing money at the moment for sure.

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I considered Cambridge at one point (engineering) but the cost of property down there - woah!

Rents for single people in Edinburgh for £400? Are you talking shared? I thought £500+ was typical, it's been a while since I looked.

Mate of mine is renting a room to some guy who is using the rent money to pay off his mortgage - he doesn't declare it but it's only £350 per month so I think that's less than the threshold (£4.25k?).

£240k for any flat is ridiculous - my fear is that the lower quality places with fewer bedrooms (flats etc) with fall far more than proper houses/bungalows will in surrounding areas. I'd love to live near my work (outside of Edinburgh but still close by) but it costs SO much and quality & value for money really is poor - cheaper places are Livingston and Fife but with the price of petrol and my hate of long commutes I couldn't handle that. So really, it's HPC or emigration as I don't know what else I'd do. 27 this year and I'd have a decent deposit by age 30 - then I'd be looking at a 25 year mortgage up until I'm 55, never mind pension, savings, nest-egg etc - it isn't going to happen, no way. Unfortunately people are completely brainwashed into the 'property will make you rich' mantra, and will take on ridiculous mortgages as long as they can just about manage it. Offers over isn't helping any, either.... My parents just rent out a council house - not a great area or flat but it's fairly cheap and repairs are free - don't know what they'll do when older, though.

As for that report, it's been published for years but I don't know how many take notice of it. Every year Edinburgh comes up as unaffordable, I just thought it would be good to highlight this again for this year's report. Good replies so far!

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  • 276 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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