Jump to content
House Price Crash Forum

Its Been Another Year


Recommended Posts

"Comfortably affording these house prices"? Some places may not be so bad, but are you denying that large numbers of the FTBs who do buy aren't taking on huge and potentially unsustainable amounts of debt? What about those parts of the country where average house prices are 10x average salary for the area? Are you suggesting that young singletons in London working in shops, as nurses, teachers, and the like can comfortably afford these £150,000 studio flats?

Well, are you?

Billy Shears

It would appear so! :blink::blink::blink::blink:

Link to post
Share on other sites
  • Replies 54
  • Created
  • Last Reply

Top Posters In This Topic

Top Posters In This Topic

"Comfortably affording these house prices"? Some places may not be so bad, but are you denying that large numbers of the FTBs who do buy aren't taking on huge and potentially unsustainable amounts of debt? What about those parts of the country where average house prices are 10x average salary for the area? Are you suggesting that young singletons in London working in shops, as nurses, teachers, and the like can comfortably afford these £150,000 studio flats?

Well, are you?

Billy Shears

But even in London FTB's are looking to areas such as E17 Walthamstow as a place to get "starter home" some are under the £120k stamp duty freshhold. 20 minutes by tube to centre of town...Been in local press (London Evening Standard) as a place for FTB's to consider.......And as a young singleton in london many want to share with mates before they settle down to serious issue of purchasing a property.

Edited by beenhearingthisforyears
Link to post
Share on other sites
£1150. Like the yield on that?

300k gives a return of 4.6%

Not a fortune, but then there is a long term capital gain, and an opportunity to write down some profits on another property for a prof Landlord.

I could borrow 300K fixed for 25yrs interest only at 4.6%.

I would then have a property that you buy for me, and it costs me nothing!!! other than the time to arrange the mortgage.

Not bad eh, but it gets better, what will the rent be in 2016 ?.

A gamble for sure, but I have never seen rents go down only up.

Sorry, I forgot to Mention.

I would guess that in 15yrs that flat will be worth 600K.

What do you estimate it to be worth?. More than 600k or less ?.

Link to post
Share on other sites
What do you estimate it to be worth? More than 600k or less?

I don't care, I'll be living in a bigger place.

Don't you think that 4.6% (gross) is close to sod all? I'm only covering an IO mortgage! Far better returns elsewhere...

Edited by Nijo
Link to post
Share on other sites

I thought we should see a final low in 2008-2010,

I bought near the end of 2003, a bad time to buy according to this site. By 2010, I'll be a quarter of the way in to my 25 years of mortgage. I don't understand why anyone who is in the position to buy, would wait that long?

Bubb is the worst kind of VI, he's hoping for the crash so he can become the next BTL mogul.

Edited by Peach
Link to post
Share on other sites

I bought near the end of 2003, a bad time to buy according to this site. By 2010, I'll be a quarter of the way in to my 25 years of mortgage. I don't understand why anyone who is in the position to buy, would wait that long?

Bubb is the worst kind of VI, he's hoping for the crash so he can become the next BTL mogul.

I'm not 100% convinced of the timing, form, or depth of a crash.

If I bought now, then I would have a mortgage for ten years. If there was a 20-30% crash over the next year, as some believe, then I could buy the same house and clear the mortgage in five years.

I haven't gone through all the necessary calculations as to what would happen if I bought a house, as they are quite complicated. I would lose interest earnt on my deposit, I would have to purchase buildings insurance, and pay for maintenance to a greater degree than I do now. However I'm fairly certain that when all costs are counted, it is cheaper for me to rent than to buy on IO. So the only reason to buy now would be if there are significant capital gains to be made in property over the next five years or so. I don't believe this to be the case.

Billy Shears

Link to post
Share on other sites

Cheapest 3 bed flat on Rightmove in Walthamstow is 150K. Cheapest 2 bed flat is £133K. To get 3x salary assuming 10K deposit, a salary of 41K is necessary. If we have a working couple then that's 20.5K each. How much do people working in shops, bus drivers, cleaners, etc. earn. Maybe with the new starting salaries for teachers of 19K two teachers both working could afford a 2 bed flat.

But is this what's really happening for all FTBs, or are there a significant proportion of them who are way overstretched?

Billy Shears

Link to post
Share on other sites

Cheapest 3 bed flat on Rightmove in Walthamstow is 150K. Cheapest 2 bed flat is £133K. To get 3x salary assuming 10K deposit, a salary of 41K is necessary. If we have a working couple then that's 20.5K each. How much do people working in shops, bus drivers, cleaners, etc. earn. Maybe with the new starting salaries for teachers of 19K two teachers both working could afford a 2 bed flat.

But is this what's really happening for all FTBs, or are there a significant proportion of them who are way overstretched?

Billy Shears

Many people look at 1 beds when FTBing.........and if they do go for 2 bed - say with help from parents as is happening - they can rent out a room. Not saying anyone should be forced into these measures....but some people do have this choice and are going for it....

and if London is - by your calculations above - just about do-able..then what about other parts of Uk?

Edited by beenhearingthisforyears
Link to post
Share on other sites

"Bubb is the worst kind of VI, he's hoping for the crash so he can become the next BTL mogul"

You must be joking.

There are far better opportunities in other markets.

Jealousy is an emotion which will consume you.

Am certainly not jealous of you. Have a strong income, don't need to spend my time spinning on a forum spouting posts far too long for anyone to bother reading till the end. I concur that your long waffly, pious opinions would be better off in an offline diary. Posters to this forum aren't looking for "far better opportunities in other markets", they're looking for a home.

Edited by Peach
Link to post
Share on other sites

I too am sick and tired of waiting, and I now resigning myself to the fact that I have totally missed the boat and it's now too far gone to have any chance on getting onboard. :( ...........ever.

I don't believe that's true either. I earned far more in '99 as a IT contractor than I do now. But I couldn't afford to buy until 2003 when I was a permie. I just couldn't get all my ducks in a row if you know what I mean. Yes, it erks me that I'm not in a 5 bed detached house (as I clearly deserve!). I know this doesn't really stand true in the South East. But I don't believe that prices will/can remain unaffordable for everyone.

Edited by Peach
Link to post
Share on other sites

I too am sick and tired of waiting, and I now resigning myself to the fact that I have totally missed the boat and it's now too far gone to have any chance on getting onboard. :( ...........ever.

I gave an example of London - Walthamstow E17, 20 mins out of centre by tube. Being cited as a place that could have potential and FTBers in London are looking at places like this, i bed under £120K so no stamp duty. And no-one talk of places under £120k and thinks of London. Look at your target area - and know nothing of your circumstances/area you are so sorry to sound patronising - but sometimes there is a way - if you are sick of renting/waiting etc, etc. i got to that stage last year and went for it.... just depends if you would totally feck yourself over even trying to buy.

Link to post
Share on other sites

I've decided to buy. I'm renting and in no urgent rush but I'm currently viewing properties. If I can get a 10-15% discount on the right house in the area I want then I figure it's better to do that now rather than wait maybe 2-3 years for them to come down by say 20%. I've weighed it all up and I have a decent deposit approx 15% and can fix for 10 years at 4.odd - the waiting has done me in. :blink:

Last chance to tell me I'm mad or spur me on.

Link to post
Share on other sites

I've decided to buy. I'm renting and in no urgent rush but I'm currently viewing properties. If I can get a 10-15% discount on the right house in the area I want then I figure it's better to do that now rather than wait maybe 2-3 years for them to come down by say 20%. I've weighed it all up and I have a decent deposit approx 15% and can fix for 10 years at 4.odd - the waiting has done me in. :blink:

Last chance to tell me I'm mad or spur me on.

I got a good deal last year (that i am happy with) can afford the mortgage and really that is all i am worried about at this stage. Sick of renting/moving. love my new flat/location etc. Mortgage is fixed 2 yrs 4.49% and if it hikes up, will rent out a room. Not good at sitting on the deposit i had, and did not want to risk it on markets. Some people play them well, i would be a nervous wreck. Do your homework. i have set aside funds to pay mortgage as i work freelance. Everyone has a different story/needs etc. If you can get a deal and are going in with eyes open.good luck to you.

Link to post
Share on other sites

Oh I forgot to mention the mortage will be approx 300 a month more than I'm paying in rent at the moment so it will be tough, but fortunatley I have 25k coming my way in the next couple of months...well on the drip over the next two / three years by way of some inheritance money - it's knowing I will have this cushion that finally tipped the balance for me and the nagging and the kids and the instability of renting and the......

Link to post
Share on other sites

We have a chancellor who wants to be prime minister. he will want to be prime minister for more than a year...

Therefore I think we are looking at two or more years of low interest rates and more public spending to prop up the economy. Gordon's Golden Rule about borrowing may get bent a little more and then there may be a little spurt of inflation ahead of the election (more money put into circulation)

This will be to try and keep the voters happy for the next election. This means no HPC for several years IMO as a HPC is not a votewinner.

After the election will come a little more inflation, raised taxes and raised IRs and devalued sterling.

If there is to be a crash it will be after the election, but inflation will erode the depth of any nominal falls in price.

If you were Gordon Brown what else could/would you do to secure a 4th term in office for NuLabour?

Employment levels rose during the last year.

GDP has been stable and positive for many years

Productivity per worker per hour is growing YOY

Consumer spending is high.

Mortgage lending had its highest ever January this year.

Interest rates are low

You can get a repayment mortgage fixed at 4.69% for 10years

The public will be fed this information and they will continue to buy houses in 2006.

Link to post
Share on other sites
Guest muttley

This will be to try and keep the voters happy for the next election. This means no HPC for several years IMO as a HPC is not a votewinner.

You've said this before.Your implication is that the Chancellor can postpone an economic downturn indefinitely.

Brown is already sitting Canute-like,trying to hold back the waves of bad news on the economy.Sure he can lower IRs,increase spending,devalue the currency,but all these have their consequences.The business cycle is pointing down.The best Brown can hope for is a soft landing before the next election.

Link to post
Share on other sites
Posters to this forum aren't looking for "far better opportunities in other markets", they're looking for a home.

Heh, as I said, everybody is different. Some people are looking for a home now, others are looking for better opportunities to ride out what they see as a bubble. I for one appreciate all the economic insight posted on this forum - although by no means do I take it as gospel. Everybody has to make their own decisions.

Link to post
Share on other sites

I gave an example of London - Walthamstow E17, 20 mins out of centre by tube. Being cited as a place that could have potential and FTBers in London are looking at places like this, i bed under £120K so no stamp duty. And no-one talk of places under £120k and thinks of London. Look at your target area - and know nothing of your circumstances/area you are so sorry to sound patronising - but sometimes there is a way - if you are sick of renting/waiting etc, etc. i got to that stage last year and went for it.... just depends if you would totally feck yourself over even trying to buy.

A one bed flat means pretty much it's being bought by a single person. So at £120K assuming a 10K deposit, that's still about 36K salary to get a 3x + deposit mortgage. Lots of young people in London will be on 18K or less, which means a potentially ruinous 6x + deposit mortgage. At 5% interest only the mortgage will be £458.33 a month, which is probably affordable, but if the mortgage rates and/or included fees and insurance go up to 7%, then IO would be £641.66, probably quite tight on that salary. And we still haven't allowed for investment to pay off the capital.

In Leicester you can get a three bedroom semi or town house for £80K, though in the areas with those prices you'll be able to stay up all night posting stories onto the "chavtowns.co.uk" site.

Billy Shears

Link to post
Share on other sites

A one bed flat means pretty much it's being bought by a single person. So at £120K assuming a 10K deposit, that's still about 36K salary to get a 3x + deposit mortgage. Lots of young people in London will be on 18K or less, which means a potentially ruinous 6x + deposit mortgage. At 5% interest only the mortgage will be £458.33 a month, which is probably affordable, but if the mortgage rates and/or included fees and insurance go up to 7%, then IO would be £641.66, probably quite tight on that salary. And we still haven't allowed for investment to pay off the capital.

You make an interesting point, when was property last affordable in London - to those on £18K salaries?

Link to post
Share on other sites

You've said this before.Your implication is that the Chancellor can postpone an economic downturn indefinitely.

I'm not implying that at all. Perhaps I worded it badly.

After the election will come a little more inflation, raised taxes and raised IRs and devalued sterling.

If there is to be a crash it will be after the election, but inflation will erode the depth of any nominal falls in price.

There could be a huge crash for all I know after the election. I'm just saying GB will try for the 4th term using any trick he can. The bill for his tricks will come in the form of raised taxes and rates after the election. Bumps in inflation occur quite regularly in our economy. There could be another one after the election which could effectivley null out nominal falls in house prices.

If the pound gets devalued then that is not exactly unique. The pound tanked after Black Wednesday in 1992 after all. Some now refer to this as White Wednesday as the economy grew rapidly afterwards.

Link to post
Share on other sites

Is it better to rent? Has the boat well and truly gone?

Reasons for the boom:

Structural - Labours hidden policy to disenfranchise ordinary people:

(1) From 1999 There have been a raft of legal changes which give massive financial breaks to rich investors/landlords, while young families and owner occupiers have been strangled by removing devices such as SIPPs which acted to make sure there was a level playing field.

Owner occupiers have seen the removal of SIPPS since 1999, and now have to afford a mortgage from post tax income, with the real tax burden increasing each year.

For example, today, an investor can comfortably afford to purchase a home for £140,000, because mortages expenses are tax deductable. An ordinary buyer with the same income will struggle to meet payments on a £100,000 mortgage from post tax income. You cannot compete against that.

(2) Mass immigration.

There has also been another hidden Labour policy - mass immigration. The millions and millions of tenants and workers deflate real wages, land and capital rise massively in price as you own less of your own country.

(3) Low interest rates and false inflation measure

Your savings are argueably being lent out below the real rate of price inflation in raw materials and commodities and real living costs. Taking on debt (borrowing someones savings) and buying iron, steel, or chocolate would have made you money! There has been a massive 'wealth transfer' as the Chief Economist of the BOE talked about.

Renting over buying.

Because of these structural features brought about by Nu-Labours legal changes, it will always be cheaper to rent from a Landlord than buy.

If you are in the private sector, competition is likely to increase with continued wage deflation making it more difficult as the increased flexibilty, productivity, short term contract society, which worked for you under Thatcher now works against you under Labour.

If you are in the public sector, with job security and strong unions, you are much better off, but still have the structual distortion in favour of investors, which will act to reduce you real income and transfer your wealth to investors. I would think about a fixed rate loan and buy if you can afford a decent purchase.

I would also lobby your union about the structural imbalance which leaves investors with tax breaks and you paying the diffrence in higher houseprices, with the removal of SIPPS.

For most people ID cards in 2008 will lock them down in a much higher tax burden, reducing real incomes and affordability further, while investors will have tax advantaged REITS on the scene in 2008.

Edited by brainclamp
Link to post
Share on other sites

Hi Cabman

I completely sympathise with your frustration - who isn't fed up about how long it's been? But here's the thing - what are you going to do about it? Go and buy yourself a house? Ah-hah, that's the thing - you can't, can you, not without getting into dizzingly terrifying amounts of debt, if then - and that is true for so many people in this country that that's why prices must come down.

Also, when thinking 'it's never going to happen', remind yourself that it is absolutely a symptom of a bubble that people think it's never going to end - it really is, happens every time. So cheer up, luv, it definitely will happen!! :D

But even in London FTB's are looking to areas such as E17 Walthamstow as a place to get "starter home" some are under the £120k stamp duty freshhold. 20 minutes by tube to centre of town...Been in local press (London Evening Standard) as a place for FTB's to consider.......And as a young singleton in london many want to share with mates before they settle down to serious issue of purchasing a property.

Walthamstow's old news - friends of mine started buying places up and doing them up there in 2000 and have made a tidy packet - most of the money there's been made and people buying there now, just like anyone buying anywhere, is buying at the top of the market.

And it's bloody miles out!!

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.

  • 439 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.