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For Those Waiting For An Hpc


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In 1997, according to the Office of National Statistics, the national average wage was £16,666.

According to the Nationwide Building Society the Average House price in 1997 was £55k.

£16,666/£55,000 = 3.3x INDIVIDUAL salary [mortgage]

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The Average First Timer Buyer mortgage multiple in 1997 was just £41.5k [Council Mortgage Lenders]

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By 2007, at the peak of the boom [according to the Office of National Statistics] the national average wage had risen to £23.5k

The Average House Price in 2007 was £185k. [Nationwide Figures. Halifax had estimated AHP higher than £185k]

£185,000/£23.5k = 7.8x INDIVIDUAL salary [mortgage]

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2011 Average House Price £166,764 [Nationwide]

2011 Average Wage £25k

£166,764/£25k = £6.6x INDIVIDUAL salary [mortgage]

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Great post Milton. Says it all. :rolleyes:

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- I do not know where you live Bruce, but if you live in the south east then percentage house price falls are WAY below inflation. So capital is getting eroded.

- You bang on all the time that interest from your savings pay your rent. That may be true, but do they also increase in line with inflation AFTER covering you rent. I suspect not.

Bloody cheek, you keep asking questions and then accuse me of banging on when I answer :rolleyes:.

I do live in the south east and could have bought the house I'm currently renting for £400K five years ago. Today I could buy it for £350K.

Actually, I say that the interest on the money I'd have to draw out of the bank, to buy the house I'm renting, more than covers my rent.

Bank interest does not increase with inflation, it varies with interest rate.

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So if your house lost 100k in value, you wouldn`t really care? Can I send you my bank details, you might as well piss it into there as anywhere else , it`s only clumps of paper after all :lol:

I wouldn't care if my house lost £100K, provided all others lost an equal proportion of their cost, so I could still move to an equivalent house. It's somewhere to live, not a yielding investment. FFS, that attitude is what got us here.

My pension, however, I would rather not have it lose 100K.

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Because I am trying to work out how you define success with regards to HPC. I want an OK house without a mortgage. That is fairly clear. You want house prices to drop. But why? So you can spend cash going on cruises? Because you want to have a mad year in a casino? Because you have a penchant for the 37 Chateau Montrachet? Or because you want to die with lots of $$$. There has to be a reason that motivates you?

And Lepista, when I buy a house I will not have to pay any rent either.

Finally, to say it like it is:

- I do not know where you live Bruce, but if you live in the south east then percentage house price falls are WAY below inflation. So capital is getting eroded.

- You bang on all the time that interest from your savings pay your rent. That may be true, but do they also increase in line with inflation AFTER covering you rent. I suspect not.

The why for me is because I don`t want a bunch of banker elites manipulating the lives of dumb sheeple anymore, for the same reason I want the Eurozone to collapse as well, only meltdown will bring people to their senses. Why should someone who works hard for average wages be in hock to a bank most of their working life just for a roof over their head?

Edited by dances with sheeple
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Because I am trying to work out how you define success with regards to HPC. I want an OK house without a mortgage. That is fairly clear. You want house prices to drop. But why? So you can spend cash going on cruises? Because you want to have a mad year in a casino? Because you have a penchant for the 37 Chateau Montrachet? Or because you want to die with lots of $. There has to be a reason that motivates you?

And Lepista, when I buy a house I will not have to pay any rent either.

Finally, to say it like it is:

- I do not know where you live Bruce, but if you live in the south east then percentage house price falls are WAY below inflation. So capital is getting eroded.

- You bang on all the time that interest from your savings pay your rent. That may be true, but do they also increase in line with inflation AFTER covering you rent. I suspect not.

buying, with cash, usually makes sense on a cash flow basis.

but not today.

Edited by Bloo Loo
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Because I am trying to work out how you define success with regards to HPC. I want an OK house without a mortgage. That is fairly clear. You want house prices to drop. But why? So you can spend cash going on cruises? Because you want to have a mad year in a casino? Because you have a penchant for the 37 Chateau Montrachet? Or because you want to die with lots of $$$. There has to be a reason that motivates you?

There are many reasons and none of them are any of your bloody business.

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I wouldn't care if my house lost £100K, provided all others lost an equal proportion of their cost, so I could still move to an equivalent house. It's somewhere to live, not a yielding investment. FFS, that attitude is what got us here.

My pension, however, I would rather not have it lose 100K.

You couldn`t if you bought with a mortgage as most do?

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To the OP. A bit surprised that anyone would still consider that we were ''waiting'' for a HPC. This crash is very simialr to 1989-1996 in that we have had a brief collapase around 15% and flat-lining the rest of the time, meaning inflation continues to erode values.

There are two three bed detached built in 1993 on the market near me. Both were bought before the 2007 peak. The one on at £189950, was bought at £180,000 in September 2003 and the other on at £199950, was bought for £190,000 in October 2004 (courtesy of nethouseprices.co.uk)

So both properties will probably sell for less than what was paid out 7.5 years and 8.5 years ago respectively once the negotiations have dragged the asking price down. Furthermore, both have had refitted kitchen units and double glazing (not standard spec in 1993) under the present owners. That is an awfully long time to have money tied up in a house and spend a fortune in refurbing on top. House owning really has been dead money now for almost a decade.

It reminds me of when I was house hunting in 1996 when houses bought for 70K at the 1989 peak were coming on seven years later around 5-10k less than that. Of course, 1996 was the time to buy, But I don't believe we are quite there yet. We may have had a 30% real correction in prices already not dissimiar to the overall collapse in the 90s, but we did start from a much more inflated point this time around.

Edited by crashmonitor
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...

And Lepista, when I buy a house I will not have to pay any rent either.

...

But you are - you're paying because your money is tied up in a house, not earning interest for you. Instead, your asset is falling into a state of disrepair (unless you're maintaining it, of course - but then you're spending money on it)

You're also spending money on house insurance (I hope) - something you don't have to do if renting.

You're also paying to maintain, upkeep and replace all the fixtures and fittings, something I, as a renter, do not have to do.

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Bloody cheek, you keep asking questions and then accuse me of banging on when I answer :rolleyes:.

I do live in the south east and could have bought the house I'm currently renting for £400K five years ago. Today I could buy it for £350K.

Actually, I say that the interest on the money I'd have to draw out of the bank, to buy the house I'm renting, more than covers my rent.

Bank interest does not increase with inflation, it varies with interest rate.

Nah, you have not answered the question and before you try to dodge the question by posting stuff about 'not buying a depreciating asset' please do realize that you are not being super amusing with your predictably cyclical answers. You are either trying to save money because you want to do something with it or because you are anally retentive about money. Which is it? :-)

And as for your 50K off your rental house, hmm. Average yields are about 5% at the moment. You have rented the place for 5 years. I am guessing you have to pay about 1500 per month. As such, you will have forked out about 90K during which the property will have dropped in value by about 50K. An IO mortgage at 3.5% would be about 1.15K per month. Which would have been about 70K over 5 years.

Seriously though, whoopee do, we are quibbling over a few K. I spend that on a night out on the piss. Seriously, if I get to your age and am still trying to justify my life’s worth by claiming that I STR at the correct time then I will be troubled. There is a clinic in Switzerland that would be beckoning….

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I like my LL, he sorts stuff out when I ask him to.

I'd like to mention neighbours, I have fine neighbours right now, can't fault them. Time before last when I owned a place I had a right d*** for a neighbour, I was glad to move to get away from him. Wish i'd been renting then. I'm sure there are many people stuck with nasty neighbours that wished they'd rented. It's worth every penny in rent not to be stuck somewhere, if that's dead money then I'll happily kill some more :lol:

I agree.

I too like my LL, so am content renting here.

At our last house, we found ourselves living next door to the neighbour from hell.

The house also turned out to be riddled with damp, so I thank my lucky stars we did not own that place. With only a 6 month rental it was so easy to look for somewhere else and get away from there.

As time goes on I become increasingly nervous about buying and tying up our savings, and trapping ourselves into a property there would be no quick escape from in the current market conditions, if we needed to leave for job, or any other reasons.

I also wary of the ever increasing costs involved in home owning, for example my LL has just spent £1000 on roof repairs, and ok although it is not likely to happen, there is always a risk interest rates could go up.

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You couldn`t if you bought with a mortgage as most do?

Why would that make any difference? Unless you are thinking of leaving the housing system altogether, in which case, why didn't you rent? Negative equity is not an issue if all house prices slump together, until you can't afford to pay the loans back. THEN, it's a serious problem.

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And as for your 50K off your rental house, hmm. Average yields are about 5% at the moment. You have rented the place for 5 years. I am guessing you have to pay about 1500 per month. As such, you will have forked out about 90K during which the property will have dropped in value by about 50K. An IO mortgage at 3.5% would be about 1.15K per month. Which would have been about 70K over 5 years.

Wrong, read some of my previous posts for the correct figures, I can't be bothered to type it out again for you.

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Seriously though, whoopee do, we are quibbling over a few K. I spend that on a night out on the piss. Seriously, if I get to your age and am still trying to justify my life’s worth by claiming that I STR at the correct time then I will be troubled. There is a clinic in Switzerland that would be beckoning….

You don't seem happy, wet nappy?

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But you are - you're paying because your money is tied up in a house, not earning interest for you. Instead, your asset is falling into a state of disrepair (unless you're maintaining it, of course - but then you're spending money on it)

You're also spending money on house insurance (I hope) - something you don't have to do if renting.

You're also paying to maintain, upkeep and replace all the fixtures and fittings, something I, as a renter, do not have to do.

But I would own it....

I could take the money I spend on a car and stick it in a bank. The interest would probably cover the cost of my bus tickets. But I would not be to able to move around with the freedom that I enjoy as a car owner. The freedom is worth more to me that the money I save catching the bus. Hence I buy a car.

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Why would that make any difference? Unless you are thinking of leaving the housing system altogether, in which case, why didn't you rent? Negative equity is not an issue if all house prices slump together, until you can't afford to pay the loans back. THEN, it's a serious problem.

Most people never could pay the loans back, they gambled (and lost) on ever higher house prices, that is the point I am making.

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But you are - you're paying because your money is tied up in a house, not earning interest for you. Instead, your asset is falling into a state of disrepair (unless you're maintaining it, of course - but then you're spending money on it)

You're also spending money on house insurance (I hope) - something you don't have to do if renting.

You're also paying to maintain, upkeep and replace all the fixtures and fittings, something I, as a renter, do not have to do.

And for renting...

Unless you are happy to stay on a rolling periodic tenancy you will have to re-sign a contract every 6/12/x months and this usually comes with a £50+ 'admin fee'.

You still need contents insurance for your own stuff. For me, this was about half of what I pay for contents & building.

Unless you are renting fully furnished you still need to invest in beds, sofas, TVs, kettles, toasters, possibly even a fridge or washing machine if white goods are not included.

Rent levels can change as well. Although the rent market is just as localised and the buying market so they may go up or down depending on where you are. Over the length of a mortgage I'd bet the would go up though, particularly in the SE.

You still have to pay council tax & utilities (although some may be included in the rent).

Unless you are a good/lucky investor you will be seeing the real value of your investment pot being decreased by inflation year on year.

Swings and roundabouts.

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Nah, you have not answered the question and before you try to dodge the question by posting stuff about 'not buying a depreciating asset' please do realize that you are not being super amusing with your predictably cyclical answers. You are either trying to save money because you want to do something with it or because you are anally retentive about money. Which is it? :-)

And as for your 50K off your rental house, hmm. Average yields are about 5% at the moment. You have rented the place for 5 years. I am guessing you have to pay about 1500 per month. As such, you will have forked out about 90K during which the property will have dropped in value by about 50K. An IO mortgage at 3.5% would be about 1.15K per month. Which would have been about 70K over 5 years.

Seriously though, whoopee do, we are quibbling over a few K. I spend that on a night out on the piss. Seriously, if I get to your age and am still trying to justify my life's worth by claiming that I STR at the correct time then I will be troubled. There is a clinic in Switzerland that would be beckoning….

My rental is similar to Bruces...its dropped from 400 when bought by the landlord to around £300 today.

The rent is the same as Bruces. The landlord spent in the last two years around 9K on double glazing...with other repairs and things close to one years rent.

If I won the lottery, yes, I would buy the place, knock it down and turn it into a dream boat...or maybe I wouldnt....depends if getting on with my life meant getting around the globe, for which a house is not needed, or if I wish to vegetate in the vegetable patch complete with statues and other garden centre niceness.

What I do know, is that I am spoiled rotten by the size and cost of the place.

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You don't seem happy, wet nappy?

Very happy thanks. It is summer over here in Aus and lfe is good. On on the subject of nappies though, I suspect you will be wearring one before me. In your rented care home :-)

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Very happy thanks. It is summer over here in Aus and lfe is good. On on the subject of nappies though, I suspect you will be wearring one before me. In your rented care home :-)

Southeast Oz then.

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For 3yrs now we've had the drip drip of ~0.2% nominal drops, nothing significant, sure by the end of the year we get maybe 1-2% drops, well whoopde doo.

If we continue to have similar drops, are you still going to wait it out, or will there come a point where you throw the towel in ?

(For the sake of argument, let's ignore any HPC in real terms, in terms of gold or your asset of choice)

House prices local to me around 50% down from peak in nominal terms (even more in terms of gold and foreign currency) - not everywhere is like London/SE.

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House prices local to me around 50% down from peak in nominal terms (even more in terms of gold and foreign currency) - not everywhere is like London/SE.

But I want to live in the south east. And do not talk to me about nominal. I am earning $AUD at the moment. Nominal is my friend :-)

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House prices local to me around 50% down from peak in nominal terms (even more in terms of gold and foreign currency) - not everywhere is like London/SE.

But I want to live in the south east. And do not talk to me about nominal. I am earning $AUD at the moment. Nominal is my friend :-)

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