Buy or ( wait ) Rent ?

[JoeDavola]

Just now, carrick01 said:

If in the 50s someone ""can't be bothered with work any more" are we really expecting him to own or aspire to a house?

The person I was referring to has over £500,000 of property assets, and a big fat pension due to kick in when he's 60, so he'll be fine.

[JoeDavola]

And yes, I think the state pension age will go up a lot - but - I think there'll be more people on benefits due to illness when they hit a certain age to keep them fed until the pension kicks in.

[carrick01]

14 minutes ago, JoeDavola said:

The person I was referring to has over £500,000 of property assets, and a big fat pension due to kick in when he's 60, so he'll be fine.

Why are we worry about him buying a house or struggling with the mortgage payments then.

[2buyornot2buy]

24 minutes ago, JoeDavola said:

With regards to the young (actually not that young, I'm talking about my contemporaries approaching their mid-30s), they seem to:

- not care how small/no garden the house is, as long as they can make the payments every month

- many have decided not to have children, I'm including couples with a low 'middle class' income - many of these folk don't seem to want to have kids any more - I don't know whether it's a financial thing or a cultural thing i.e. we've been brought up to view the traditional family life as 'boring' and don't want to make the sacrifice of children

- people on minimum wage, no benefit jobs who have no chance of saving for the future, buying a house, or any of that. They end up quite nihilistic and drink a lot.

- the 'underclass' with their free council homes, who have been breeding like rabbits from the age of 15 and are soon to be at an age when they'll become grandparents 

I'm guessing we're the same ages. All my married friends wanted kids. All pretty much have had kids. They're all fairly middle class. You get to a certain stage in life, not age necessarily, where a garden is highly desirable. The problem is, now that garden cost 100k more or move 10 miles out. 

 

I agree, most see only the debt servicing costs rather than the capital amount. Interest rate rises will be very messy. 

[carrick01]

13 minutes ago, JoeDavola said:

And yes, I think the state pension age will go up a lot - but - I think there'll be more people on benefits due to illness when they hit a certain age to keep them fed until the pension kicks in.

Again this is something that will cause issues in the future but again there will be people working in there 70s and beyond. Probably some by choice.

I not saying prices are okay and really would like to see them go down but is everybody going to live in a house with a big garden.  I know plenty that has no interest in having a garden (even ones with kids). There is no typical family any more and probably never was but there are not far more single people, single parent families. People getting divorced and living on there own - getting divorced in there 60s.  Apartments and terrace houses have there use - they need to be regulated (size rise) and service charges. 

[2buyornot2buy]

25 minutes ago, carrick01 said:

Everybody has different life experience but I know people that are working into there late 70s.  Some through choice and some  not.  I know employees in their 20s that are quite "unproductive" and do the bare minimum. Some in manual jobs and some not. For people under 48 its already 68 - so do you really think its going less than 70 for someone in their 20s?

If in the 50s someone ""can't be bothered with work any more" are we really expecting him to own or aspire to a house?

How many typical 20 year olds do you know that are saving for the pension except through company, public sector or government "workplace pension" scheme.  

We will all just rent detached house with big gardens the rest of our life - that's the answer.  Belfast will look a lot nicer but also a lot bigger.

 

The difference is working at 70 will become the new norm not the exception. It's not possible. It just womt work. 

Life expectancy is levelling off. It will probably fall again when the next high fat, love a drink cohort comes through. Will pension age drop? 

Let's call it what it is. We are farming the young. Expecting them to pay for benefits for the longest living, most prosperous generation in history. All the while moving the goal posts impossibly out of reach. 

 

[2buyornot2buy]

2 hours ago, carrick01 said:

Again this is something that will cause issues in the future but again there will be people working in there 70s and beyond. Probably some by choice.

I not saying prices are okay and really would like to see them go down but is everybody going to live in a house with a big garden.  I know plenty that has no interest in having a garden (even ones with kids). There is no typical family any more and probably never was but there are not far more single people, single parent families. People getting divorced and living on there own - getting divorced in there 60s.  Apartments and terrace houses have there use - they need to be regulated (size rise) and service charges. 

The ponzi model depends on not the few working past 70 but All. It will collapse if they don't. 

 

It's not about gardens. It's about lifestyle full stop. We're giving the young a poor quality of life and loading them up with debt to pay for the ones before. Then moving the goal posts a little further every few years. 

It'll get to the stage where they can't afford kids, and then the whole infinite debt model just collapses. 

Edited July 30, 2017 by 2buyornot2buy

[carrick01]

1 hour ago, 2buyornot2buy said:

The ponzi model depends on not sure few working past 70 but All. It will collapse if they don't. 

 

It's not about gardens. It's about lifestyle full stop. We're giving the young a poor quality of life and loading them up with debt to pay for the ones before. The moving the goal posts a little further every few years. 

It'll get to the stage where they can afford kids, and then the whole infinite debt model just collapses. 

If you are thinking of selling up and banking the "crazy increase"  you are basically hoping that someone (probably a younger couple) buys your house and enough of this type goes under so you can buy the same or better at a lower price?   You are working the Ponzi scheme and VI in drops.

[2buyornot2buy]

29 minutes ago, carrick01 said:

If you are thinking of selling up and banking the "crazy increase"  you are basically hoping that someone (probably a younger couple) buys your house and enough of this type goes under so you can buy the same or better at a lower price?   You are working the Ponzi scheme and VI in drops.

Doubt it will be a FTB but could very well be. I certainly am a VI in drops. Before I sell or after, I really don't care. I'll be trading up so a 30% fall will benefit me either way. I'm a homeowner who thinks if prices dropped 40% tomorrow I'd be happy. 

I'm about 35 years off my state retirement age BTW. I want sensible house prices. Every single person in my generation should be a VI on drops. I'm not sure what you're trying to get at? 

Are you a homeowner? Do you want them to drop? 

If society is prepared to repeat the mistakes of the past, fuel crazy increase and pay silly money for new build hutches, I'll take a step back, remove myself from the market and not participate. The Ponzi won't go on forever, I don't want to be holding the turd wrapped parcel when the music stops. I don't even want to be in the room. 

 

 

[yadayada]

3 hours ago, JoeDavola said:

 

- many have decided not to have children, I'm including couples with a low 'middle class' income - many of these folk don't seem to want to have kids any more - I don't know whether it's a financial thing or a cultural thing i.e. we've been brought up to view the traditional family life as 'boring' and don't want to make the sacrifice of children

Voluntary extinction. That'd better be one hell of a fulfilling career there, to make sure you don't torture yourself with regret and remorse, looking forward to your last few pointless years in an upscale nursing home. Overtly depressing. Got any morphine?

- the 'underclass' with their free council homes, who have been breeding like rabbits from the age of 15 and are soon to be at an age when they'll become grandparents 

The winners in the lottery of existence. A positive, life affirming, joyful, full, fascinating way to live.

 

[JoeDavola]

6 hours ago, yadayada said:

Voluntary extinction. That'd better be one hell of a fulfilling career there, to make sure you don't torture yourself with regret and remorse, looking forward to your last few pointless years in an upscale nursing home. Overtly depressing. Got any morphine?

Agreed. I don't get where they're coming from - where this dislike of kids stems from.

[BelfastVI]

On 28/07/2017 at 6:27 PM, darkmarket said:

Millions of BTL mortgages are functioning thanks to housing benefit, I don't see what you mean by this.

If their income assessments are honest.

Does this include equity release loans?

We are talking here about FTBers and others buying homes to live in and the associated mortgage they will need. Buy-to-Rent is a whole different ball game.

Long gone are the days of self assessment mortgages and good ridance to them, Anyone who has applied for a mortgage in the last 8 years can tell you the lengths you have to go to to document your claims of earnings and rightly so.

Hav'nt heard of equity release for quite some time. I doubt it.

[2buyornot2buy]

4 minutes ago, BelfastVI said:

We are talking here about FTBers and others buying homes to live in and the associated mortgage they will need. Buy-to-Rent is a whole different ball game.

Long gone are the days of self assessment mortgages and good ridance to them, Anyone who has applied for a mortgage in the last 8 years can tell you the lengths you have to go to to document your claims of earnings and rightly so.

Hav'nt heard of equity release for quite some time. I doubt it.

In fairness the op, who hasn't come back was talking about stocking up on BTL. Why you'd post on HPC about starting BTL empire I'm not sure. 

 

You're right about the earnings. The bank asks for p60s. Unfortunately those earnings include tax credits and child benefit. So banks would also let me borrow 6 times joint income. I would have had to have gone to great lengths to get it. 

3 pay slips and a p60. 2 utility bills. 

Can you imagine trying to scan those 15 pages. Probably would have taken at least 15 minutes. 

[yadayada]

On 30/07/2017 at 11:11 AM, JoeDavola said:

The person I was referring to has over £500,000 of property assets, and a big fat pension due to kick in when he's 60, so he'll be fine.

Sounds like he's already achieved a certain level of financial success. He's probably making a reasonable income before he gets out of bed.

[BelfastVI]

14 hours ago, 2buyornot2buy said:

In fairness the op, who hasn't come back was talking about stocking up on BTL. Why you'd post on HPC about starting BTL empire I'm not sure. 

 

You're right about the earnings. The bank asks for p60s. Unfortunately those earnings include tax credits and child benefit. So banks would also let me borrow 6 times joint income. I would have had to have gone to great lengths to get it. 

3 pay slips and a p60. 2 utility bills. 

Can you imagine trying to scan those 15 pages. Probably would have taken at least 15 minutes. 

You seriously believe people are forging P60's and pay slips to borrow money. 

[Option5]

11 minutes ago, BelfastVI said:

You seriously believe people are forging P60's and pay slips to borrow money. 

Yes, definitely .

[2buyornot2buy]

3 hours ago, BelfastVI said:

You seriously believe people are forging P60's and pay slips to borrow money. 

Wooo. I never suggested that. 

Just stating the "lengths" people have to go through to borrow 6 times joint income. Scan a p60 and some bank statements. Hardly arduous now is it?

I was also pointing out that benefits count as income. 

We're maybe not at self certification levels of reckless lending. But it's still pretty reckless. 

 

 

Edited August 1, 2017 by 2buyornot2buy

[BelfastVI]

On 01/08/2017 at 0:48 PM, 2buyornot2buy said:

Wooo. I never suggested that. 

Just stating the "lengths" people have to go through to borrow 6 times joint income. Scan a p60 and some bank statements. Hardly arduous now is it?

I was also pointing out that benefits count as income. 

We're maybe not at self certification levels of reckless lending. But it's still pretty reckless. 

 

 

The CML reports the loans at to be no where near the 6 times house hold income you refer to. Scanning your official record of your previous years income is not difficult at all. perhaps obtaining that job might be.

I don't believe I have ever sold a house to a person on benefits. 

I don't believe the lending criteria can be described as reckless. it was in the boom but there has been massive changes since then, much needed. in Ni we have either the lowest or one of the lowest loan to income ratios in the UK and amongst the lowest house prices to go with it.

[The_Equalizer]

7 minutes ago, BelfastVI said:

I don't believe the lending criteria can be described as reckless. it was in the boom but there has been massive changes since then, much needed. in Ni we have either the lowest or one of the lowest loan to income ratios in the UK and amongst the lowest house prices to go with it.

Still doesn't make them in any way cheap though. The trouble being how many buyers look beyond what it will cost them each month? In this incredibly low interest rate environment the risks are obvious.

[BelfastVI]

1 hour ago, The_Equalizer said:

Still doesn't make them in any way cheap though. The trouble being how many buyers look beyond what it will cost them each month? In this incredibly low interest rate environment the risks are obvious.

 

Personally I do believe the houses are reasonably priced. the surprising thing is perhaps the fact that I would like to see them that way.

Yes one has to be careful about basing their decision on some 2 year teaser rate. I always tell people to go for 5 year fixed repayment loans. I would like to see as many people as possible obtaining home ownership well before they retire from working.

[darkmarket]

1 hour ago, BelfastVI said:

Personally I do believe the houses are reasonably priced. the surprising thing is perhaps the fact that I would like to see them that way.

It would be surprising if you admitted they were overpriced. When they are, it's expected that you'd say they're fair value and you'd like to keep on saying so.

The trouble is you don't provide a convincing justification. Admittedly loan-to-income rates are low, but that reflects the high levels of negative equity. The wider economy is on artificial support unlikely to last and its future is not bright, income multiples are still too high, there are still temporary props in place, the interest rate environment is already changing, more junk mortgages have been sold to vulture funds who still haven't called in, etc.

[darkmarket]

 

Quote

Incomes falling by close to £2k per year despite jobs growth

Average Northern Ireland incomes are falling at a rate of nearly £2,000 per year as the economy continues to lag behind the rest of the UK, according to a forecast.

PwC UK economic outlook also said house prices were 44% behind their pre-recession peak and would remain below those of other UK regions for at least another three years.

Based on the year so far, PwC forecast that prices would rise by around 1% during 2017, compared to a UK average of nearly 4%.

 

http://www.belfasttelegraph.co.uk/business/news/incomes-falling-by-close-to-2k-per-year-despite-jobs-growth-35939514.html

If this was for the entire UK, there'd be some sense of urgency about addressing the problem. As it is there's no reason to believe things are fine, prices are fair and they'll always go up.

[Sour Mash]

19 hours ago, darkmarket said:

 

 

http://www.belfasttelegraph.co.uk/business/news/incomes-falling-by-close-to-2k-per-year-despite-jobs-growth-35939514.html

If this was for the entire UK, there'd be some sense of urgency about addressing the problem. As it is there's no reason to believe things are fine, prices are fair and they'll always go up.

Seems to me that credit availability, not income, is what has been driving prices.

If banks are willing to create credit in ever larger amounts, in order for people to punt into housing, it doesn't really matter that salaries aren't keeping pace.

Of course the banks risk getting burned when the creditors can't keep up payments on loans which should never have been extended to them .. but we know from recent history that the banking system will get a nice big bailout from the government (taxpayer) when all goes belly-up so no worries, eh?  Carry on privatising the profits and socialising the losses.

 

[2buyornot2buy]

15 minutes ago, Sour Mash said:

Seems to me that credit availability, not income, is what has been driving prices.

If banks are willing to create credit in ever larger amounts, in order for people to punt into housing, it doesn't really matter that salaries aren't keeping pace.

Of course the banks risk getting burned when the creditors can't keep up payments on loans which should never have been extended to them .. but we know from recent history that the banking system will get a nice big bailout from the government (taxpayer) when all goes belly-up so no worries, eh?  Carry on privatising the profits and socialising the losses.

 

+1. Expansion of credit has been driving prices for decades now. MMR removed self certification but it hardly matters when you can easily borrow 6 times joint income easily enough. 

That's 6 times income. Not earnings. 

[2buyornot2buy]

On 8/7/2017 at 11:54 AM, BelfastVI said:

 

I don't believe I have ever sold a house to a person on benefits. 

I'll call balls to that. 

You've never sold a house to someone in receipt of child benefit? Tax credits? 

Every household you've sold to is either childless or one member of that household earns 60k+?

See its about clarity. I have no idea what the CML dataset looks like. Nor do you. 

 

In the absence of clarity. I'll take the NIRPPI. 4.5 times household income is credit bubble territory. It's not a healthy figure going forward. There's zero room for pension provision there. Christ to buy the state pension at 69 you'd need a 250k pot. How do you expect a household buying at 32 on a 30 year mortgage at 4.5 times earnings to save a pension? It's not possible for most. Something will give.