What Do I Do Now?

[TheRivieraKid]

Hi. First time poster here so go easy. Just needed to vent some frustration about this whole mess.

I have, over the last few days, realised that buying a family home in the area we currently live is now unaffordable. I'm married with two children and we do live in an expensive area in the South. But this area was affordable when we first started out renting here. Now the kids are settled in school we really don't want to have to move. We earn a decent amount, could probably get a mortgage for £320k, have enough for a 10% deposit based on that figure. Unfortunately the cheapest 3 bed houses are £400k+.

Now I don't know what to do? Wait and hope for a crash? Even if that happens it'll be 5/6 years before we'd be able to mortgage somewhere. What will happen to my savings during that period? I worry the govt will just start printing a ton of money and devalue the pound. Will my savings become worthless? Will all the owners be laughing once their mortgage debt reduces relative to huge inflation?

Just feel completely stuck. Does anyone actually feel comfortable that this madness will end? And when it ends, will it benefit the home owner or the saver/renter?

[TheRivieraKid]

*confident not comfortable

Also, I'm getting really pissed off at older friends and associates who seem to look down on the renter sector. Especially when I earn more than these c***s, who just happened to buy at the right time with massive deposits from mum and dad.

[Sandwiches33]

There are a lot of early indications its about to go tits, many folk I talk too now realise the average house being 10x the average wage is stupid and starting to think it all looks a bit shaky and they arent the " numbskull anarchists" you get on here.

In my area at least it looks like they are running out of suckers, some stuff been on the market for well over a year, sometimes a sold goes up but then its back on the market a little later.

The thing I am watching is the jobs market. Ignore what the media tells you, good jobs are drying up and even good jobs lack stability now, if you want to buy a house you need to stay in it long enough to make it worthwhile, 5 - 10 years? who can say they will have a job in that time? BHS are going under thats 11000 jobs now I know there are mostly low paid but still you dont hear about the 10 jobs here and there. The high street is being replaced with a big robot warehouse, most other stuff is automated or outsourced, our economy is based on nonsense.

Dont worry about it, save some money, enjoy life. As soon as the rest of the world realises its a ponzi and tries to get out itll be too late. As I have said before when it starts to go down it will NEVER recover, there will be no economy of good jobs left to ever rise it again no matter how much stupid credit they throw at people. The workforce that is left will become ever more mobile and ever smaller.

As the UK crumbles all the foreign money will try to get out, banks will panic and I will sit and laugh.

[ccc]

You are not alone. Don't really have any advice. ****** knows what is going to happen.

As above - save a bit of money and enjoy yourself. Hopefully things will come good for you.

[I'm out]

If I was you I would defer thinking about it until after the referendum, because the outcome of this will have big implications for house prices. If we have Brexit then Sterling will probably fall, and may necessitate an interest-rate rise which should burst the house price bubble. There will also be a recession, but if you have a job which is likely to survive that then you could be well placed to buy a house at a sensible price within 12 months.

[TheRivieraKid]

Thanks for the replies. Do you think savings will be safe when everything comes to a head? Would it be time to buy stocks of gold etc. I know people say hyper-inflation won't happen in a western economy again but who knows.

Also, people keep telling me I should just buy a smaller 2bed place that I could afford, and trade up later. This seems like a bad idea too, not just for quality of life but being stuck in the house for a long time if the market goes tits up.

Our current rent on a 3 bed house is 3.1% of the current zoopla value. Even if we could mortgage this place with a 10% deposit our monthly housing expenditure would almost double. It's absolute craziness!

[Alba]

There are a lot of early indications its about to go tits, many folk I talk too now realise the average house being 10x the average wage is stupid and starting to think it all looks a bit shaky and they arent the " numbskull anarchists" you get on here.

In my area at least it looks like they are running out of suckers, some stuff been on the market for well over a year, sometimes a sold goes up but then its back on the market a little later.

The thing I am watching is the jobs market. Ignore what the media tells you, good jobs are drying up and even good jobs lack stability now, if you want to buy a house you need to stay in it long enough to make it worthwhile, 5 - 10 years? who can say they will have a job in that time? BHS are going under thats 11000 jobs now I know there are mostly low paid but still you dont hear about the 10 jobs here and there. The high street is being replaced with a big robot warehouse, most other stuff is automated or outsourced, our economy is based on nonsense.

Dont worry about it, save some money, enjoy life. As soon as the rest of the world realises its a ponzi and tries to get out itll be too late. As I have said before when it starts to go down it will NEVER recover, there will be no economy of good jobs left to ever rise it again no matter how much stupid credit they throw at people. The workforce that is left will become ever more mobile and ever smaller.

As the UK crumbles all the foreign money will try to get out, banks will panic and I will sit and laugh.

If this scenario comes to pass it will be a lot more than house prices that you will have to be concerned about!

[19 year mortgage 8itch]

Didn't anyone tell you it was raining?

[Alba]

Thanks for the replies. Do you think savings will be safe when everything comes to a head? Would it be time to buy stocks of gold etc. I know people say hyper-inflation won't happen in a western economy again but who knows.

Also, people keep telling me I should just buy a smaller 2bed place that I could afford, and trade up later. This seems like a bad idea too, not just for quality of life but being stuck in the house for a long time if the market goes tits up.

Our current rent on a 3 bed house is 3.1% of the current zoopla value. Even if we could mortgage this place with a 10% deposit our monthly housing expenditure would almost double. It's absolute craziness!

The problem is that the UK is fixated on property ownership. This is not the case in France and Germany etc, but then they have better tenant protection.

Apart from the insecurity of renting you appear to be financially better off.

There are so many pros and cons withe either renting or buying. I have done both over many years so can list the pros and cons, but at the end of the day you have to approach it from your personal preferences and circumstances.

Over 12 years ago I was an avid follower of this site and when I was gazumped during a property sale and purchase,decided to rent because I believed what was being said concerning the impending HPC. I stayed out for a period and was quite badly burned financially when the market took off as it cost me substantially more to eventually buy back in. I have this innate need to own my own property but find I am probably more asset rich and cash poor, I have also experienced problem neighbours on occasion and often reflected that being a renter I would have had more flexibility to move away from the problem. If I could have more rental security I would probably still consider renting. You have to weigh it all up.

If you have good DIY skills and really want to own a property then perhaps self build or renovation would get you more bang per buck. Buying a smaller property and hoping it will increase in value may not help as the more expensive properties will also increase in value, and you will be stuck.

[streamingfreedom]

Over 12 years ago I was an avid follower of this site and when I was gazumped during a property sale and purchase,decided to rent because I believed what was being said concerning the impending HPC. I stayed out for a period and was quite badly burned financially when the market took off as it cost me substantially more to eventually buy back in.

I had the opposite experience where in 2007 I was taking voluntary redundancy and going back to University full time, had owned a house 3 years and needed to sell to give up work. Many people at work said I was mad and prices would only go up, I should try to let it out/get a part time job etc. I knew that wouldn't work. In wondering what to do, found this website and realised we were at a ridiculous peak, I had overpaid in 2004 anyway and sold the house at a tiny loss for a quick sale.

2 Years later that house had dropped 20%. Today it is still worth less than I paid for it. This is in Nottingham.

On the other hand, the insane HPI and a move to the South East, first child coming along has meant I can't afford to buy despite being on twice the salary I was on when i took that redundancy.

Seems like a lose-lose situation. At least I am doing a job I enjoy working for a great company and I enjoy life, despite paying 40% of my net pay in rent. A thing I try to think about as little as possible to avoid high blood pressure!

[Assume The Opposite]

. What will happen to my savings during that period? I worry the govt will just start printing a ton of money and devalue the pound. Will my savings become worthless? Will all the owners be laughing once their mortgage debt reduces relative to huge inflation?

Just feel completely stuck. Does anyone actually feel comfortable that this madness will end? And when it ends, will it benefit the home owner or the saver/renter?

There doesn't seem many escape exits available for joe public. Our housing market is so skewed towards people having to go into debt to the bankers.

While many people worry about the government 'printing money' it's important to remember or research if you don't know about how our money supply is created:

UK Money supply:

3%: Created by government

97% Created by private banks as debt

Basically private banks create our money supply when they make loans.

As they have an incentive to make profits, they pump most of it into the housing and stock markets, causing huge asset inflation.

This isn't a theory, the Bank of England confirmed it in a 2014 publication:

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q1prereleasemoneycreation.pdf

http://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity

Apologies for not giving you much options but it's important to understand the debt based western financial system and the problems first.

Positive Money have some excellent videos and information about how it all works on their website.

Edited April 28, 2016 by Assume The Opposite

[TheRivieraKid]

Yeah, thanks again for the responses. I'll have a read through the links you posted, cheers.

There must be so many other angry people out there. I feel totally let down by this country. Mostly the smug faced baby boomer generation.

[StainlessSteelCat]

If you want to own right now - I think you have to get out of the South East. There are still, well not exactly cheap but, vaguely affordable areas outside of it - and in many places prices are falling or stagnant at best.

I don't care what you're earning, £320K is a ridiculous amount for what sounds like a normal family house. The UK has collectively gone insane. It will end at some point, but it has gone on for far longer than anyone expected. For now, work on plan B - whatever that is.

[streamingfreedom]

If you want to own right now - I think you have to get out of the South East. There are still, well not exactly cheap but, vaguely affordable areas outside of it - and in many places prices are falling or stagnant at best.

I don't care what you're earning, £320K is a ridiculous amount for what sounds like a normal family house. The UK has collectively gone insane. It will end at some point, but it has gone on for far longer than anyone expected. For now, work on plan B - whatever that is.

+1 fully agree with this. London and South East won't become recover to sensible levels without repossessions occurring on a decent scale.

[CunningPlan]

Yeah, thanks again for the responses. I'll have a read through the links you posted, cheers.

There must be so many other angry people out there. I feel totally let down by this country. Mostly the smug faced baby boomer generation.

There are lots of us. I won't even go to the local pub because it is full of boomers that think £20 for sausage and mash and £7.50 for a glass of wine is normal (but the young shouldn't spend £1 / day on an iphone). Their free money has helped prices to rise well beyond the reasonable.

How old are your kids and is your job portable?

[TheRivieraKid]

Yeah. It seems like these BTL boomers believe they have grafted hard for all their apparent wealth, and the yoof just aren't working hard enough etc. It really annoys me!

Kids are primary age, job in London (not portable) and living in a commuter town.

And yes, the prices are just silly. How has it gotten to this level? Unfortunately it seems the ruling classes in this country have far too big of an interest in property values to let things correct.

[sPinwheel]

God knows. It's a crappy situation.

[GreenDevil]

I think house prices will rise until they become unaffordable. Then they are owned by the lucky few. The next generation are renters only. They wont have a chance to buy a property. I expect this will eventually mean better rights for tenants, as the masses who vote demand it. Once the boomers are dead and buried their will be policy shifts by politicans. Lower transation volume will also stagnant the housing market and tax revenue But these things take a long time. As has been said before, enjoy your ££, have nice holidays, no point getting stressed over a big fat loan you dont want anyway.

[Neverwhere]

I think house prices will rise until they become unaffordable. Then they are owned by the lucky few. The next generation are renters only. They wont have a chance to buy a property. I expect this will eventually mean better rights for tenants, as the masses who vote demand it. Once the boomers are dead and buried their will be policy shifts by politicans. Lower transation volume will also stagnant the housing market and tax revenue But these things take a long time. As has been said before, enjoy your ££, have nice holidays, no point getting stressed over a big fat loan you dont want anyway.

And the Housing Benefit bill when Generation Rent retire?

[Bland Unsight]

And yes, the prices are just silly. How has it gotten to this level? Unfortunately it seems the ruling classes in this country have far too big of an interest in property values to let things correct.

This is the fantasy of control - that somehow there is a entity, the powers that be (TPTB), which has agency in the way that a human being has agency, i.e. it is imagined that TPTB want things and can do thing to get the things that they want.

I favour the c0ck-up theory of history over the conspiracy theory.

The idea that there are "ruling classes" with an interest in property strikes me as a fantasy and the idea that these ruling classes understand what they are doing well enough to control matters strikes me as an extension of the fantasy into the realms of the absurd.

It is a ridiculously complicated and essentially unpredictable system. You just have to make your choice about how you want to surf it.

If you personify the system and attribute to it intents and the idea of shadowy actors manipulating prices then I can understand why you might be angry, but I can't relate to that at all. Though the moving parts are people the system's behaviour is not the sum of the wishes of the individuals. Being angry at the system is as fruitless as being angry at the weather.

If you are done with renting then buy somewhere you can afford to buy and are happy to be stuck in for a bit, (should events take a turn that made it difficult for you to sell up).

But don't be angry. It's pointless unless it can inform action.

Edited April 28, 2016 by Ghost Bird

[spunko2010]

My views are pretty counter to a lot of people on here, in that I think the crash will come hard and fast in the SE. We're already seeing Prime London prices dropping by the week. Someone posted a statistic that 50% of Prime London homes are selling for 10% under asking now. Who could have imagined reading that a year ago? The media are being primed for a fall, BTL is on its last legs, many wheels are in motion - another building society failure will seal the deal.

Just wait, you've waited this long.... Might I suggest a Morgan 3 Wheeler? Always wanted one of those, or the EV3 out soon. When the prices fall a bit on those I'll probably get one.

[Bunfight]

I completely sympathise with the OP.

We live in the North East, have a very good income and I still won't throw away my hard work on overpriced property. I could go out and buy a bigger house than what we have but I know the current 'Market' is unsustainable. The situation here, whilst mental, is made to look sane and cheap in comparison to the South. Saying that I know of friends of friends who have just paid 475k for a house in Middlesbrough (the posh bit apparently - I kid you not).... I've also given up discussing my views with anyone I know, I'm starting to be seen as potty I think.

I'd also avoid a house to do up. A colleague who is very handy is almost putting himself in an early grave doing just that.

It will rectify, mathematics says so.

Stay strong, bide your time - it's definitely going to pop soon.

[Fully Detached]

I completely sympathise with the OP.

We live in the North East, have a very good income and I still won't throw away my hard work on overpriced property. I could go out and buy a bigger house than what we have but I know the current 'Market' is unsustainable. The situation here, whilst mental, is made to look sane and cheap in comparison to the South. Saying that I know of friends of friends who have just paid 475k for a house in Middlesbrough (the posh bit apparently - I kid you not).... I've also given up discussing my views with anyone I know, I'm starting to be seen as potty I think.

I'd also avoid a house to do up. A colleague who is very handy is almost putting himself in an early grave doing just that.

It will rectify, mathematics says so.

Stay strong, bide your time - it's definitely going to pop soon.

I agree with you completely except for your last sentence, because as much as I want you to be right, the words definite & soon have been the downfall of many an investor, trader, and gambler. Soon can stretch out for far longer than anyone would imagine possible. It already has, in the case of UK house prices.

That doesn't mean I recommend throwing in the towel and taking on an insane amount of debt for a shitty pile of bricks, of course - quite the opposite in fact. But I strongly recommend not living in the future with hopes based on a significant crash, because a lot of your life can pass you by while you're effectively on hold waiting for something to happen soon.

[TheRivieraKid]

The bit about life passing you by really rings true for me. It almost feels like our 'family life' can't properly begin until we have our own house. i know that's the wrong way to look at it but it's difficult. The constant worry at the back of our minds that maybe the LL will decide to sell up in a few months etc..

It's made easier by the fact the houses we want are now out of reach. Decision to buy or not has effectively been made for us.

[Bunfight]

I agree with you completely except for your last sentence, because as much as I want you to be right, the words definite & soon have been the downfall of many an investor, trader, and gambler. Soon can stretch out for far longer than anyone would imagine possible. It already has, in the case of UK house prices.

That doesn't mean I recommend throwing in the towel and taking on an insane amount of debt for a shitty pile of bricks, of course - quite the opposite in fact. But I strongly recommend not living in the future with hopes based on a significant crash, because a lot of your life can pass you by while you're effectively on hold waiting for something to happen soon.

Very true and wise words.

But surely we've nearly reached that point? The countries fecked, personal debt is astronomical, etc, etc.

There can't be any more props to keep this held up can there?

For me the slow build up of sentiment in the media is heralding the final leg.