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I saw this today, in the Halifax HPI report, and I think it explains why, and what would need to change to get a serious drop:

"Mortgage payments for a new borrower in the second half of 2011 were at their lowest

as a proportion of disposable earnings for 14 years. Typical mortgage payments for a

new borrower - both first-time buyers and homemovers – at the long-term average loan to

value ratio, stood at 27% of disposable earnings in the fourth quarter of 2011. This was well

below the average of 37% recorded over the past 27 years

Good, they can put interest rates back up.

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I saw this today, in the Halifax HPI report, and I think it explains why, and what would need to change to get a serious drop:

"Mortgage payments for a new borrower in the second half of 2011 were at their lowest

as a proportion of disposable earnings for 14 years. Typical mortgage payments for a

new borrower - both first-time buyers and homemovers – at the long-term average loan to

value ratio, stood at 27% of disposable earnings in the fourth quarter of 2011. This was well

below the average of 37% recorded over the past 27 years

There are 2 ways of looking at that though.

It's very to cheap to buy now luvverley let's all live happily ever after

OR

Interest rates are at an artificially low level which is skewing affordability by 10% below the historic norm and it might not last.

Our banks don't do 25 year fixes because they like people to get in debt, then up the interest rates....

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Ive been paying my relatively small mortgage down for 10 years now and the last three have seen my payments reduced significantly to 3.49% (Halifax srv). At minimum pyments required I will own my house 100% within eight years.

I do not need permission to paint my house.I do not need to wait for a londlord to paint it either. I actually enjoy painting my house and get a great deal of satisfactio from it. Before anyone mentions the cost to maintain or replace a boiler, I had a new system installed when I moved in and chose to pay no maintenance contract payments on it either and its never let me down. I expect to maybe have to replace the boiler in perhaps another 8 years.

Maintenance costs for homeowners are often blown up out of all proportion to reality, by some die hard renters. A boiler or door lock doesn`t break every five minutes you know.

I certainly wouldnt buy now unless I felt I had paid a realistic valuation and that is difficult to quantify apart from comparing to sold prices within the last ten years (maybe) and offering near 2004/2002 prices . Personally I would though be willing to pay more for something I really liked than maybe someone else would, but then I have always followed my own instinct even when buying a car..all of lifes purchasing choices are not necessarily driven by the making or saving of money alone...My God how sad is that?

I think the choice of nice houses to buy in areas appealing to an individual are thin on the ground but also nice houses with decent landlords are also thin on the ground if (like very many)one is tied to a particular catchment area..

Too many times you hear arguments for and against buying by people "who would say that wouldn`t they" Now I`m going downstairs in my illiquid depreciating asset knowing I own 66% of it and (if needs be) could own all of it next week. I personally feel proud to be buying my home and no one has right of entry through my door now or next month, unless I invite them in, or I have shot someone or am on the most wanted list.....

I've been saving about £1200 on the price of the house i am renting instead of buying + the interest from my STR fund, I've well over 20K a year better off plus i've seen a house bigger,better and very similar to the one I sold in 2007 sell for 100K below what I sold it for. I estimate by renting I am 200K better off. That 200K is the difference between a great retirement or a lifetime of stress.

Each to their own. Everyone needs to get the best deal they can for themselves and their famillies.

In my opinion, supporting the housing pyramid scam right now is a mugs game, if I were mid twenties right now I'd be off, not worrying about UK house prices. The country is knackered.

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There are 2 ways of looking at that though.

It's very to cheap to buy now luvverley let's all live happily ever after

OR

Interest rates are at an artificially low level which is skewing affordability by 10% below the historic norm and it might not last.

Our banks don't do 25 year fixes because they like people to get in debt, then up the interest rates....

odd to buy a financialised asset when borrowing is at its cheapest.

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odd to buy a financialised asset when borrowing is at its cheapest.

Isn't that a good time to buy...if you can afford it ?

odd to buy a financialised asset at a premium price that you need to stretch yourself to buy when borrowing is at its cheapest.

Edited by TheCountOfNowhere
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Isn't that a good time to buy...if you can afford it ?

odd to buy a financialised asset at a premium price that you need to stretch yourself to buy when borrowing is at its cheapest.

You will always pay a premium when the cost of debt is cheap as debt is the fundamental driver of asset prices, hence why theyve been going up for 30 years as the cost of debt has come down over 30 years as the cost of debt is effectively Yield (or at least has a high correlation to Yield which is what it is from a working Cap perspective) needed to service the debt). As for whether its worth buying a yielding asset at that point is entirely dependant on the individual circumstances and a myriad of factors, everyone has different requirements, circumstances and goals and all that compacts to make a market

Edited by Tamara De Lempicka
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The one thing you cannot buy is your time back.

Is living without paying a mortgage a waste of your life? Jesus it's only a property, and if you buy it in the UK probably a grim one at that. Who is wasting time here? You're a long time dead son, find something more interesting to do with your life than pay a poxy mortgage.

I wouldn't count on things like a Greek default or a financial run to save your skins

My skins ok thanks, and will remain ok even if I never buy a house.

It is actually possible to live an interesting and varied life without a mortgage. Hard to believe I know. In fact, just to warp your mind some more if you can take it... having a mortgage actually limits your choices! Amazing.

Edited by cybernoid
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I wouldn't count on things like a Greek default or a financial run to save your skins as the one thing that's been demonstrated so far is that the elite can and will make this up as they go along. They write their own rule book and by god they'll write it so technically Greece will never default.

I would count on it.

Currently the two major parties that support any normal policy have about 30-40% vote share (the two of them together!).

If they agree to the new cuts, that will drop even lower..

Guess now, who has gained vote share and when are the next elections? The communists who live in their own pre-Gorbatchov world. and next elections are rumoured for April..

So when Greece goes down, what happens next? Portugal? What happens to the libor rate?

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Having heard it all over 80 times, as someone whose rental circumstances are almost the diametric opposite of this Hulking Shangri- La, I would be interested to see Rightmove (or similar) links to £400k properties available for sub £1k per month..,.

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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 ?

Average wage today is £26k.

Average House Price [Q3 2011] is £166.5k

So at 3.5x salary. [Which is the long term average house price to earnings ratio: 3.5x salary]

You should be able to afford a £166k home. Instead you can only afford a £91k home.

26k x 3.5sal = £91k

By betting on a £76k drop in the average house price, I'm only aligning my expectations with the long term average ratio of house price to earnings affordability, that is mathematically likely. And has chronologically, stochastically been the case.

* On the subject of affordability, I havent included in the equation, Utilities, Food and Council Tax, which have all increased exponentially against their historic averages as well.

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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]

********************************

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

************************************************

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]

************************************************

2011 Average House Price £166,764 [Nationwide]

2011 Average Wage £25k

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

*****************************************************

Edited by Milton
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Really? You've never said this before - what a revelation.

It happens to be true and proves that renting is not dead money even when you don't pay any mortgage interest at all. I know it upsets you faux bears that I keep throwing a spanner into your well rehearsed propaganda spiel, but someone has to.

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Having heard it all over 80 times, as someone whose rental circumstances are almost the diametric opposite of this Hulking Shangri- La, I would be interested to see Rightmove (or similar) links to £400k properties available for sub £1k per month..,.

Best i can do at the moment

http://www.rightmove.co.uk/property-to-rent/property-36525533.html

http://www.rightmove.co.uk/property-for-sale/property-18312996.html

£1200pm vs.£475k

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Average wage today is £26k.

Average House Price [Q3 2011] is £166.5k

So at 3.5x salary. [Which is the long term average house price to earnings ratio: 3.5x salary]

You should be able to afford a £166k home. Instead you can only afford a £91k home.

.

Do you think banks will go back to taking only one income into account though ?

It's much more commonplace to take 3.5-4x joint income.

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Thank you. Something doesn't add up there....

For context, the gross yield on the place I rent is almost 3 times that, with huge demand (places in the same block suffer next to no voids). Which makes buying for cash the soundest option (if only I could get an offer accepted....).

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Having heard it all over 80 times, as someone whose rental circumstances are almost the diametric opposite of this Hulking Shangri- La, I would be interested to see Rightmove (or similar) links to £400k properties available for sub £1k per month..,.

I can't be bothered but can assure you that the figures I quote are true and accurate. There are many on these forums who enjoy similar, and often better, deals.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=174874&view=findpost&p=3252646

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I can't be bothered but can assure you that the figures I quote are true and accurate. There are many on these forums who enjoy similar, and often better, deals.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=174874&view=findpost&p=3252646

I think the point is the repetitious nature of your posting and how it should apply to everyone else.

Rents where I am don't do the almost negative yield you claim.

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Not a bad effort but the 475k house looks to be a lot better than the 1200pcm house, probably 50-100k difference.

Garage makes a bit of a difference but I don't think condition makes much, Kitch/Bath are not exactly knockout.

I live nearby and rented last year at £795pm and it sold when we were kicked out for £265k which IMHO gives some certainty to the "values". What's that? 3.6% gross yield?

Terrace next door to me now is for sale, based on condition and estimated selling price I think my landlord s making about 3.8% gross yield.

High demand, desirable area too.

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I think the point is the repetitious nature of your posting and how it should apply to everyone else.

Rents where I am don't do the almost negative yield you claim.

Sorry but I have neither the time nor the inclination to type pages of text to explain, in a non repetitive way, what I can explain in a few words.

Anyway, it's no more repetitive than "renting is dead money", "paying your landlords mortgage" and all the other annoying phrases that the VIs love so much.

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Is living without paying a mortgage a waste of your life? Jesus it's only a property, and if you buy it in the UK probably a grim one at that. Who is wasting time here? You're a long time dead son, find something more interesting to do with your life than pay a poxy mortgage.

My skins ok thanks, and will remain ok even if I never buy a house.

It is actually possible to live an interesting and varied life without a mortgage. Hard to believe I know. In fact, just to warp your mind some more if you can take it... having a mortgage actually limits your choices! Amazing.

You seem to have the wrong end of the stick. I'll only going into the market when I'm ready and that'll when I have 70% of the funds there to do it, with a backup plan to pay the remaining. The last thing I want to do is pay a mortgage the rest of my life, no intention of that at all.

All I'm suggesting is by the time I hit 30 I will be wanting to do other things in my life that owning my own home will bring. What I do find odd though is for someone after the age of 30 to have put so much effort into saving where they could buy comfortably now to more or less delay buying and wait for some golden period of buying up a house that could never materialise.

Edited by sundance_kid
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What I do find odd though is for someone after the age of 30 to have put so much effort into saving where they could buy comfortably now to more or less delay buying and wait for some golden period of buying up a house that could never materialise.

I'm sure I've explained it more than once :rolleyes:.

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You seem to have the wrong end of the stick. I'll only going into the market when I'm ready and that'll when I have 70% of the funds there to do it, with a backup plan to pay the remaining. The last thing I want to do is pay a mortgage the rest of my life, no intention of that at all.

All I'm suggesting is by the time I hit 30 I will be wanting to do other things in my life that owning my own home will bring. What I do find odd though is for someone after the age of 30 to have put so much effort into saving where they could buy comfortably now to more or less delay buying and wait for some golden period of buying up a house that could never materialise.

I could buy "comfortably" as with a reasonable mortgage but...

I'm not the Incredible Hulk, I don't have the cash equivalent of a house in the bank. So for every £10,000 extra I need to borrow so I can buy, I need to earn £30,000. That would take 6+ years to save as cold hard cash out of my disposable income. If I save that over 6 years, it means I have to earn £90,000 less over the following 20 years, the magic of compounding seeing that HPI is no longer compounding. Without rampant HPI, that approach makes sense. So instead of buying and worrying about the cheques I wrote against my soul, I can rent and get on with my life raising my children closer to my own terms even if I can't decorate the nursery like a scene the Ikea catalogue.

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  • 429 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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