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LittleBro

Things Are Just Insane.....

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Hi all,

Long time member, rare poster.

I feel compelled to post after the events of the last 24 hours.

A friend told me yesterday she's just moved. Moved as her two year mortgage came up for renewal and the home she bought for £225k at the end of 2013 was valued at £400k. Sold at full asking in 3 weeks.

We rent of family while looking to buy (we have young kids and my wife wants a nest). The place we rent is in Hertfordshire and was valued 2 months. Been valued today to put up for sale and its increased over 20%.

It's fuelling the notion that it's buy now or never and people are doing silly things. Mortgage companies must be loving it.

Individuals continue to lay more and more for something that isn't costing any more!

Given I've put on hold a lot of things to get a sizeable deposit, it makes me feel unwell when I see prices rising faster than I can save. Part of me thinks I should rent forever, part of me thinks it's surely got to stop soon!

Disheartened of Herts,

.

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I can see what you mean. Asking prices seem to be on the rise again especially in places like Herts wher a 3-bed semi seems to be about 600K. Even where I live in Wilts close to the M4 in a market town on the main GWR rail link to Paddington asking prices have risen this year by a considerable amount. I haven't worked out the percentage rise but it's definitely more than in the past. All I can think is that the ripple effect from PCL (Prime Central London) is rippling outwards but it can't go on for ever unless there are more "props" waiting in the wings. It will doubtless end in tears for some.

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I agree with your sentiments LitteBro. It is insane but I suspect it will not continue like this for ever. I felt that property was overvalued in 2003, now it looks like I was a complete fool. However the debt ratio's are now so absurd that it will grind to a halt at some point. Hold you nerve and diversify your savings.

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I've seen the same too.

I know two people who can't afford debt they have signed up to, I nodded and thought in my head they were fools and no way would it go through.

But both have (one a mew on a BTL bought only last year, the other residential mortgage on 7 times income) without issue.

I know someone else who sold their home in outskirts west london for almost 35% more after owning for 18 months. I thought no way would they sell it for that. But they got an offer, mortgage company valued it significantly lower, seller remained stern on the price and the buyer paid far more (30k!) than the mortgage company said it was worth!

Surely must mean we are at another top?

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I feel this too. Also in Herts. Affordable at a reasonably good wage 5 years ago, now more expensive than London apparently. Rent and childcare is going up and I'm now thinking of bringing plans forward to emigrate.

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Don't forget the gnawing nightly debt fear you would have if you bought now. unfortunately you are too clever to live in ignorant bliss.

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Don't forget the gnawing nightly debt fear you would have if you bought now. unfortunately you are too clever to live in ignorant bliss.

+1! Whilst many would react to a hpc destroying their 'wealth' with shock and horror, most people on here once plunged into negative equity would say I bloody well knew this would happen, without the least bit of surprise!

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I agree with your sentiments LitteBro. It is insane but I suspect it will not continue like this for ever. I felt that property was overvalued in 2003, now it looks like I was a complete fool. However the debt ratio's are now so absurd that it will grind to a halt at some point. Hold you nerve and diversify your savings.

I was the same. In 2003, I decided to go overseas while it cooled down. How wrong? I'd buy any house I could today at 2003 prices.

I'm certain I was right, no one could ever have predicted the measures we've seen to support the economy.

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Buy now... Prices will double from here in a year.

maybe not a year, but it seems they will never falter.

People are adamant that prices will never ever slow, let alone fall.

It is different this time... ;)

It is! There's so much political intervention. My opinion is it's not done any good for the man on the street. It has, however, helped business which you could argue have perhaps helped the man on the street.

I feel this too. Also in Herts. Affordable at a reasonably good wage 5 years ago, now more expensive than London apparently. Rent and childcare is going up and I'm now thinking of bringing plans forward to emigrate.

it is crazy here. Emigrating doesn't appeal. Nor does taking 5 x salary for 25 years at the risk of interest rates and thus my total repayments rocketing while the asset I buy drops in value.

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It must end soon .... flat sold Nov 2012 for 337k, sold Nov 2015 515k ie 3 years later (52% increase). Another sold Jan 2015 555k asking price Mar 2016 reduced to 610k.

I suspect that it is driven by fear, if you don't buy now then you will never be able to buy and the new government are totally commited to HPI so you maus buy especially as savings rates (and by implication mortgage rates) are getting lower and lower.

that's the problem, fear is huge! Eve my own wife has said "we just need to get on the ladder", almost even if this means we buy in an area we don't want to live!

We can rent a much nicer house than we can buy, fir the same monthlies. Trouble is, if we rent what we could buy and save the rest, we'll struggle come retirement.

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It's a SE thing. There is no need to emigrate. Just move to a more affordable part of the country where prices have only increased slightly.

thas definitely an option. Been looking at Rugby and Market Harborough. Trouble is, there's no reason to live there, other than house prices. Our family, friends and work us in the SE. As we've not been the financial geniuses that seemingly every homeowner ever is, we don't have the multiple hundreds of thousands of pounds of equity our peers almost all have.

It's massively the haves and have nots and doesn't look like that will ever be undone anytime soon.

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Don't forget the gnawing nightly debt fear you would have if you bought now. unfortunately you are too clever to live in ignorant bliss.

That is a concern. I can afford the repayments now, but what if the long overdue IR rise comes?

That fear has kept me out the market for years, which I look like paying for the rest of my life.

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Well, LittleBro, I could have written most of your comments. Things are insane and getting insaner! And we are being punished for not wanting to take on eye watering amounts of debt. However, if I wanted to join this 'Ladder' game now, I would be taking on even more debt than a couple of years ago! Apart from having family pestering me about buying, I have pretty much switched off and I'm now working towards FIRE (e.g. wish I could afford one, http://www.retirementinvestingtoday.com/).I get comments about why I am saving so much (and not putting it in to a house, etc), but I think it will become clear to all these HPI crazies once I have the option to stop working and move somewhere where I can enjoy the sun!

My thought of the day; Whenever someone says 'don't miss the boat', tell them 'f*ck the boat, I'm getting an aeroplane'!

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Hi all,

Long time member, rare poster.

I feel compelled to post after the events of the last 24 hours.

A friend told me yesterday she's just moved. Moved as her two year mortgage came up for renewal and the home she bought for £225k at the end of 2013 was valued at £400k. Sold at full asking in 3 weeks.

We rent of family while looking to buy (we have young kids and my wife wants a nest). The place we rent is in Hertfordshire and was valued 2 months. Been valued today to put up for sale and its increased over 20%.

It's fuelling the notion that it's buy now or never and people are doing silly things. Mortgage companies must be loving it.

Individuals continue to lay more and more for something that isn't costing any more!

Given I've put on hold a lot of things to get a sizeable deposit, it makes me feel unwell when I see prices rising faster than I can save. Part of me thinks I should rent forever, part of me thinks it's surely got to stop soon!

Disheartened of Herts,

.

So, where did she move to? STR, or perhaps upsized?

Individuals make their own financial decisions. Silly things? Hope it's not a call for Bailout 8.0 when HPC begins. Your mortgage debt is your mortgage debt, not my family's mortgage debt, in a market where others outbid us.

Free choice... informed or not informed... we're in a market. I like the look of everything coming including higher stamp duty 2nd home buyers, and on BTLers, and so much more, for lower house prices ahead. I will push back against the victim excuses ala 2008 for buyers of 2003-2007. Eg: "They didn't know what they were doing" / "Media" / They just wanted a home." / "Banks made them borrow more they should of."

Each of us has to TAKE OWNERSHIP OF OUR OWN FINANCIAL DECISIONS in life. Renter savers have to. Owners who chose to sell or not to sell. Market. Multi-£Trillion market. Many of us want homeownership.

I'm here for HPC, not another excuse fest, lobbying for bailouts to protect the HPI mad gainz for those who outbid me, and to protect equity of the long-wave HPIers and BTLers, and all the others who've tipped up here over the years claiming we're just resentful/jealous of their HPI.

Playtimes Over.

Edited by Venger

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Buy buy buy at these prices, if you want to. Just take ownership of your own financial decisions.

I've been following this site since 2007 and you deserve absolute credit as one of the few who has railed against the HPC sympathisers to those on the other side of our equation whose complete disregard to carrying out any kind of due dilligence with regards the biggest financial decision they would ever make has played a massive part in leading us to where we are now and playing into the banksters hands. We've had to suck up the shitty end of things for well over a decade. Like you say, any HPC'er who wants sympathise with those who will now learn the hard way how stupid they have been, whilst believing us to be the stupid ones all this time can indeed donate as much as they wish to their 'plight' if they so want to, I just wish they would quit bleating on about it on here. You either want a HPC or you don't.

My expectation is that this market segment will behave in the same fashion as any other market which has topped out. Supply will increase, volume will decrease for quite a while before prices begin to crumble.

Many of us think that the entire market pricing structure is driven by the high priced segment, as all other properties are priced based on compromises versus the ideal (location, size, commuting etc). When the top end crumbles, everything else will follow.

There have been a lot of discussions on this site related to the fact that the poor market fundamentals will require a catalyst before prices resume their logical downward path. The new property tax regime, along with the decoupling of mortgage rates from the Base Rate, will, in hindsight, prove to be the catalysts.

Affordability Backwards .....In the slightly extreme example where the buyer commits more than half of their salary to mortgage payments to begin with, the initial interest payment on a £100,000 repayment loan at a 15 per cent interest rate is the same as that for a £300,000 loan at 2 per cent.

Bear Hug: Becomes more interesting when capital repayments are considered. £15k wipes out 15% of 100k loan and only 2% of £300,000k. Or very roughly, doubling payments compared to interest-only will clear your debt in 6 years at 15% or 50 years at 2%!

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Many boomers bought the houses that they'd live in for the rest of their lives, and raise their families in, at the beginning of their working lives, before they had families.

I feel that the kind of laddderism that you're assuming here is part of a perhaps unwitting attempt by society at large to turn a blind eye to the failure of the boomers to build sufficiently to ensure that their children, and pretty soon their children's children, enjoy the access to housing that boomers did nothing to earn but enjoyed nevertheless.

I think the other rather insidious idea lurking in your thinking is that it is somehow a problem if somebody pays too much for a house and ends up stuck in it. When so many hard working young people are totally excluded from even having the option to purchase property expecting any sympathy for people who not only had that option but acted on it is a dog that won't hunt as far as I am concerned.

We cannot have a housing market where there is no downside to paying too much, that way lies madness. If these people paid too much and were relying on calm economic waters forever so that they could build up some equity and trade up, f**k 'em. Houses are for living in. Taking on debt is about making and keeping promises. Some people will have bad luck; we can't protect people from the vagaries of chance, the idea that we can is stupid fantasy. The whole idea of starter homes and ladders strikes me as total boll0cks, cut from the same idiotic cloth as much of the rest of the apparently endemic HPI+++ for-f**king-ever madness

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Yes it's disgusting, and makes me feel sick too.

I've spent years trying to save a deposit - I thought that was the responsible thing to do. Taking on a mortgage was a big commitment, I thought. There are no jobs for life any more - I've been made redundant repeatedly. Interest rates have been at historic lows - I was a child, but I remember watching the Chancellor on the telly on Black Wednesday. Bad idea to take out an 100% mortgage.

When I began my career I started doing the sensible thing and putting money away against a rainy day or a house deposit, when the time was right. But ten years later we're in a situation where I can't possibly earn enough to keep up. The housing market has totally and utterly left me behind. Prices have risen in London more than my entire gross wage for just about every year I've been here.

What did I do wrong, that I can't manage to secure just one half-decent flat? I thought I was doing the responsible thing!

I'm too competitive, and slightly resentful of my friends' housing positions already - especially those of them who have a spare flat they rent out. If I could see people I knew cashing out with 200k of free money while I have to head to work every day and grind out actual value for my employer for a fraction of that I'd be very mad.

Over twenty or thirty years this country has become a selfish, blinkered, unfair, and just a miserable place to live for a vast section of society who used to have a fair chance - and the people running things either don't see it or don't care.

It worries me to think that for the next generation, they've never seen truly affordable housing. It'll be like a folk memory - and neo-feudalism will be 'just they way things are', the same way most of us shrug our shoulders and accept the inherited wealth of the Queen or the Duke of Westminster or the kids of Russian oligarchs.

Edited by irrationalactor

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Yes it's disgusting, and makes me feel sick too.

I've spent years trying to save a deposit - I thought that was the responsible thing to do. Taking on a mortgage was a big commitment, I thought. There are no jobs for life any more - I've been made redundant repeatedly. Interest rates have been at historic lows - I was a child, but I remember watching the Chancellor on the telly on Black Wednesday. Bad idea to take out an 100% mortgage.

...

It worries me to think that for the next generation, they've never seen truly affordable housing. It'll be like a folk memory - and neo-feudalism will be 'just they way things are', the same way most of us shrug our shoulders and accept the inherited wealth of the Queen or the Duke of Westminster or the kids of Russian oligarchs.

I feel pretty much the same - old enough to remember the late Eighties crash (and ffamily members who got caught out by it) so decided to do the sensible save-a-deposit route to buying a home only to see prices increasingly disappear into insansity. I now have a huge deposit but bizarrely find myself far far worse off (from a house buying point of view) than when I started.

It will change one day - although whether the cycle will turn in time for me to benefit from it I doubt. Due to my age I'll have to buy soon or not at all so I'm slightly resigned to missing out on fifteen years of rising prices and then getting hammered by fiteen years of falls or stagnation.

Regarding the next generation - I partially agree - however all those twentysomethings will have parents, grandparents who do own and are living a very nice lifestyles to act as a constant reminder that it wasn't ever thus.

And there's a lot of nasty susprises lurking in the future - the interest-only 'time-bomb' from the mid-2000s boom, the new BTL tax changes, the lack of personal pensions, the stagnation of wages meaning debt isn't being eroded by wage inflation. There's a lot of people relying on massive HPI just to stop the wheels coming of the wagon but as proprty is always at some point tied to wages (either by the amout people can afford to pay in mortgage payments or as rent) at some stage the rises are going to stop.

Just please let it be soon!

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I can relate to many things here. In 2008 I decided to save for a large deposit deciding I wanted to live somewhere nice but never wanted to borrow much more than £100k or buy a small flat in cash (in part due to anger towards banks). In 2009-13 that was looking achievable but prices here in Bristol have become insane in the last year or so and that is no longer realistic unless I want to live in an ex-council estate on the edge of the city or inner city drug den. Anecdotal stories from friends buying here have all come up against 'mystery buyers' from London and estate agents must be absolutely loving it. Friends recently days before ready to complete get the news a mystery London buyer offering £10k more in cash so straight away up their offer, that kind of thing. I have seen houses sold in Sept 2015 fro £200k recently put on the market in 2016 with an increase of £100k! Most house now are all marketed with offers above. It is truly unbelievable and definitely NOT the time to buy a house here. That said many new build 1-2 bed flats are seeing reductions.

Whether it's true or not that there is a flood of London buyers moving West I can't believe it can continue at this pace as local wages are not that high and Bristol is not London, not everyone from the capital wants to move here as there is just not the jobs or infrastructure and many poor schools. Yes you could commute to London but that would probably slowly destroy you.

Patience is the key, most people in only ever think ahead in terms of months to a year or so and many always outreach themselves which in the past has been proved a good (lucky) decision but may not be in the long term future. It's frustrating at times but you have to take the longer term view and keep building that deposit for a house you can live in for 10 years if you are able too. Good luck.

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My thought of the day; Whenever someone says 'don't miss the boat', tell them 'f*ck the boat, I'm getting an aeroplane'!

I love that saying, you should trademark it!

It is so true that fear plays a big part in the current "rush" to "get on the ladder".

But fear is often a victim (or the consequence of) short-term thinking. I can absolutely understand why people become so desperate to buy because they fear that prices will race away from their ability to buy.

But actually, history and a longer-term view teaches us that nothing goes up in price forever.

The amount of financial risk that some FTBs are taking on is truly eye watering. And it's not just mortgage debt - it's all kinds of debt. Car loans, credit cards, store cards, home improvement loans, short-term "payday" loans.

This toxic "perfect storm" of financial irresponsibility is NOT going to end well. The long-term consequences will be as truly devastating to society as the relentless rise in house prices has been to a generation of FTBs. But in the forthcoming cyclical downturn in house prices the situation will be flipped 180, and it will be mortgage holders who will be struggling, and FTBs will be the ones laughing.

History can be very ironic like that.

It won't be long now. We are nearly into the second half of the Big Wait™ for house prices to return to sensible levels relative to average incomes. For those with the patience and long term view to survive this storm, it will provide some absolutely fantastic buying opportunities in around 10 to 15 years time from now.

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I hope you are right. However I see a new generation bought up on a diet of free money and debt. You are fed debt from and early age, and taught money means nothing. With the Boe intention to keep rates at zero or below zero indefinately why not take advantage. It doesn't have the same meaning as older people have its 400k instead if 150k, so what, in already have 50k studentbdebt which costs me nothing.

Personally I think high rates would be good for the economy, reduce house prices, give people more money in their pocket to spend, etc etc. Itvwouild also encourage people to save in something other than property.

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