eek Posted March 28, 2006 Share Posted March 28, 2006 Some would say we are in a new paradigm of permanently high house prices. Given that we are always being told that past performance is not necessarily an indication of the future, this could be the case. Given the changing demographics of this country since 1995 it would be hard to imagine a scenario where you could ever buy a flat in Zone 2 for 2.5 times an average/reasonable single person's salary. Most would say, as soon as prices look like they're dropping, FTBs and trader-uppers will pile back in, ensuring prices don't fall far. So, it would take a massive paradigm shift for property to become abhorrent to the masses to such an extent for prices to fall back to these levels. What happens is that property becomes risky so only the most credit worthy can borrow. When we bought after the last crash (in 1994) only one building society would lend to us and that was with no other debt and only borrowing 1.5 times my income. If and when the crash comes it will be painful not because people won't want to borrow but because few will lend to them. Quote Link to comment Share on other sites More sharing options...
RichM Posted March 28, 2006 Share Posted March 28, 2006 Charming Just as an example of the couple affordability thing. 2 people earning ave wages round here of about 25k. 50k combined * 3.5 is 175k, exactly what a 2 bedroom family starter home costs in the area. If they went up by 50%, then yes the whole thing would fall to pieces. great. no kids though. bummer. Quote Link to comment Share on other sites More sharing options...
Casual Observer Posted March 28, 2006 Share Posted March 28, 2006 great. no kids though. bummer. I had the same worry when my wife and I bought in 1975, and needed both incomes. Inflation helped us, but we didn't know that at the time. Sometimes you have to bite the bullet, otherwise it just gets worse if you wait. Oh yeah, that was complete BS. I think that should go in the myths/FAQ section - property hasn't always been hard to buy at all... There's only a few years out of the last 50 when it has not been hard. The rest of the time it has been very hard to buy a first house. 1975, joint salaries of about 4k, first house 11k at 11% interest for a very undesirable small house near the Essex oil refineries. Plus ca change, and all that. Quote Link to comment Share on other sites More sharing options...
Marina Posted March 28, 2006 Share Posted March 28, 2006 I remember reading somewhere that retrospective taxation was a violation of human rights. It would be great if someone were to make a legal challenge Brown on this. I would imagine a few well healed land owners may fancy their chances Edit: Found it: http://www.taxationweb.co.uk/taxlaw/article.php?id=13 Well I am glad that Achilles' Heel healed okay. Quote Link to comment Share on other sites More sharing options...
Karen Posted March 28, 2006 Share Posted March 28, 2006 I had the same worry when my wife and I bought in 1975, and needed both incomes. Inflation helped us, but we didn't know that at the time. Sometimes you have to bite the bullet, otherwise it just gets worse if you wait. There's only a few years out of the last 50 when it has not been hard. The rest of the time it has been very hard to buy a first house. 1975, joint salaries of about 4k, first house 11k at 11% interest for a very undesirable small house near the Essex oil refineries. Plus ca change, and all that. I believe RichM & his wife are both highly educated. If it's hard for them, how is the average Joe going to pull it off? Quote Link to comment Share on other sites More sharing options...
Casual Observer Posted March 28, 2006 Share Posted March 28, 2006 Charming Just as an example of the couple affordability thing. 2 people earning ave wages round here of about 25k. 50k combined * 3.5 is 175k, exactly what a 2 bedroom family starter home costs in the area. If they went up by 50%, then yes the whole thing would fall to pieces. I do think that this is a big factor in today's problem. I know many people will disagree with me on this (they have before) but 30 years ago most people bought their first house when they got married, on 2 incomes. Today, there are far more singletons expecting what couples used to settle for, IMO. If someone can shoot me down with stats, I'll be happy to accept that this is just from my experience, nothing more. Quote Link to comment Share on other sites More sharing options...
Karen Posted March 28, 2006 Share Posted March 28, 2006 I do think that this is a big factor in today's problem. I know many people will disagree with me on this (they have before) but 30 years ago most people bought their first house when they got married, on 2 incomes. Today, there are far more singletons expecting what couples used to settle for, IMO. If someone can shoot me down with stats, I'll be happy to accept that this is just from my experience, nothing more. How common were stay at home moms 30 years ago? I'm 38, and I know it was common for both me and most of my friends for the mom to stay at home at least until the youngest started school. Quote Link to comment Share on other sites More sharing options...
RichM Posted March 28, 2006 Share Posted March 28, 2006 I had the same worry when my wife and I bought in 1975, and needed both incomes. Inflation helped us, but we didn't know that at the time. Sometimes you have to bite the bullet, otherwise it just gets worse if you wait. by "bite the bullet" I assume you mean have children and not buy a flat/house! There's only a few years out of the last 50 when it has not been hard. The rest of the time it has been very hard to buy a first house. 1975, joint salaries of about 4k, first house 11k at 11% interest for a very undesirable small house near the Essex oil refineries. Plus ca change, and all that. They must have seen you coming I believe RichM & his wife are both highly educated. If it's hard for them, how is the average Joe going to pull it off? highly educated yes... at the school of hard knocks and university of life. Quote Link to comment Share on other sites More sharing options...
Casual Observer Posted March 28, 2006 Share Posted March 28, 2006 They must have seen you coming That's all a couple of professionals could afford back then. Nicer houses in the area I'd lived in previously were about 25k by "bite the bullet" I assume you mean have children and not buy a flat/house! . No - buy the house/flat, save, get promoted/better job, do without, have kids, struggle, worry and somehow get by. Just like people used to, before they thought they were owed the world. Quote Link to comment Share on other sites More sharing options...
Karen Posted March 28, 2006 Share Posted March 28, 2006 highly educated yes... at the school of hard knocks and university of life. I'm sorry, I must have confused you with someone else. I believed you were a psychologist or something similar. Quote Link to comment Share on other sites More sharing options...
tahoma Posted March 28, 2006 Share Posted March 28, 2006 Just like people used to, before they thought they were owed the world. I have to say that despite myself I agree with CO here. There is a 'disease' in the under 40's wherupon they feel they constantly 'deserve' better, without the preliminary 'earning' part. HOWEVER, I bought my first house. a decent 30's 3-bed semi, for 3x my then earnings. A 26 year old SHOULD be able to do the same today. Quote Link to comment Share on other sites More sharing options...
RichM Posted March 28, 2006 Share Posted March 28, 2006 (edited) Just like people used to, before they thought they were owed the world. Miaoow! I'm sorry, I must have confused you with someone else. I believed you were a psychologist or something similar. Yeah but psychology is a load of ******. I learnt more growing up on the mean streets of Chadwell Heath. Getting through cubs was tough, too. Edited March 28, 2006 by RichM Quote Link to comment Share on other sites More sharing options...
Casual Observer Posted March 28, 2006 Share Posted March 28, 2006 Miaoow! Right though, aren't I? I have to say that despite myself I agree with CO here. There is a 'disease' in the under 40's wherupon they feel they constantly 'deserve' better, without the preliminary 'earning' part. HOWEVER, I bought my first house. a decent 30's 3-bed semi, for 3x my then earnings. A 26 year old SHOULD be able to do the same today. Well, I'm not sure how "should" works in this context. The reason prices are as high as they are is that enough people are paying present day prices. How can anyone enforce "should"? Quote Link to comment Share on other sites More sharing options...
RichM Posted March 28, 2006 Share Posted March 28, 2006 Right though, aren't I? As it happens, no, you're not. Quote Link to comment Share on other sites More sharing options...
Guest wrongmove Posted March 28, 2006 Share Posted March 28, 2006 do without, have kids, struggle, worry and somehow get by. Have you gone completely mad !!! Wash you mouth out with soap ! Quote Link to comment Share on other sites More sharing options...
tahoma Posted March 28, 2006 Share Posted March 28, 2006 Right though, aren't I? Well, I'm not sure how "should" works in this context. The reason prices are as high as they are is that enough people are paying present day prices. How can anyone enforce "should"? That's a big 'how'. House prices should be attached to the fundamentals of affordability. If someone works a decent wage, they should be able to afford decent food, warmth... and shelter. Housing is currently spun up into a bubble through speculation, and a correction must occur. It will not be pleasant, but afterwards there will be considerable relief. Just like a visit to the dentist. Quote Link to comment Share on other sites More sharing options...
Casual Observer Posted March 28, 2006 Share Posted March 28, 2006 How common were stay at home moms 30 years ago? I'm 38, and I know it was common for both me and most of my friends for the mom to stay at home at least until the youngest started school. Very common, in my experience. My wife gave up full-time work when our first son was born in 1980, and went back full time when the youngest was 14, 20 years later (although she did get an evening data entry job for a few years when things got tight). All our friends and family did similar. I think the situation is a bit chicken and egg - women with children worked to be able to have more consumer goods, therefore house prices rose to match the available money, therefore women HAD to work to pay the mortgage. This generation would have been better off if they'd not been so greedy. . House prices should be attached to the fundamentals of affordability. . But they are!! How do you think people are buying them? As it happens, no, you're not. Very enlightning - thanks! You've shot down my supposition with brilliant logic. Quote Link to comment Share on other sites More sharing options...
tahoma Posted March 28, 2006 Share Posted March 28, 2006 (affordability of houses) But they are!! How do you think people are buying them? 'People' are not buying them. Speculators are. Quote Link to comment Share on other sites More sharing options...
RichM Posted March 28, 2006 Share Posted March 28, 2006 Very enlightning - thanks! You've shot down my supposition with brilliant logic. hey, I'm not the one coming out with ridiculous overgeneralisations like: This generation would have been better off if they'd not been so greedy That's as silly as the bears on here who blame all their problems on the greed of boomers. Unhelpful. I don't expect anything. I am just not prepared to jeopardise my (prospective) family's financial security by buying an overvalued asset. Quote Link to comment Share on other sites More sharing options...
teddyboy Posted March 28, 2006 Share Posted March 28, 2006 (edited) I have to say that despite myself I agree with CO here. There is a 'disease' in the under 40's wherupon they feel they constantly 'deserve' better, without the preliminary 'earning' part. HOWEVER, I bought my first house. a decent 30's 3-bed semi, for 3x my then earnings. A 26 year old SHOULD be able to do the same today. I agree 100% with everything in this post but I may add.... The times that people speak about were when marraiges STAYED TOGETHER and the house purchase was reliant on the MALE (generally) earning the cash. We are in a different society now. Now to buy it has to be BOTH PARTNERS to get the 3.5/4 times salary. A single guy cannot possibly get a mortgage for the price the want for a basic FLAT. It has to be a luxury apartment!!! The biggest problems facing people today are 1) Staying in a job and the new one 2) Staying in a relationship. I know if I bought then there would no way I could afford to buy out my partner. Yes there are a lot of 'I WANT.. I WANT.. I WANT..' out there but it is a minority. I am sensible with money and have good saving and I am struggling to buy. I dont want a crash 'per se' I want correction of about 30% TB Edited March 28, 2006 by teddyboy Quote Link to comment Share on other sites More sharing options...
Casual Observer Posted March 28, 2006 Share Posted March 28, 2006 hey, I'm not the one coming out with ridiculous overgeneralisations like: That's as silly as the bears on here who blame all their problems on the greed of boomers. Unhelpful. I don't expect anything. I am just not prepared to jeopardise my (prospective) family's financial security by buying an overvalued asset. OK, I was being a bit tongue in cheek, having a rare pop back in the anti-generation battle I'm often on the other side of. But your choice not to buy an over-valued asset is fine. It's your call, and I hope you get it right (I think you may well do so). I was just saying that years ago, people were prepared to start with less, and do without for longer. I know that I, and all the people I know, did just that. Quote Link to comment Share on other sites More sharing options...
tahoma Posted March 28, 2006 Share Posted March 28, 2006 (edited) I agree 100% with everything in this post but I may add.... The times that people speak about were when marraiges STAYED TOGETHER and the house purchase was reliant on the MALE (generally) earning the cash. We are in a different society now. Now to buy it has to be BOTH PARTNERS to get the 3.5/4 times salary. A single guy cannot possibly get a mortgage for the price the want for a basic FLAT. It has to be a luxury apartment!!! The biggest problems facing people today are 1) Staying in a job and the new one 2) Staying in a relationship. I know if I bought then there would no way I could afford to buy out my partner. Yes there are a lot of 'I WANT.. I WANT.. I WANT..' out there but it is a minority. I am sensible with money and have good saving and I am struggling to buy. I dont want a crash 'per se' I want correction of about 30% TB I'm talking about 1998, not all that distant. I was single, and earning 20K - the average wage at the time I believe. A single person - male or female - should be able to buy a decent home on the average wage. It was tough for me for the first couple of years, but not ridiculous. A couple should be able to fly it. Should... and here we are. Edited March 28, 2006 by tahoma Quote Link to comment Share on other sites More sharing options...
Casual Observer Posted March 28, 2006 Share Posted March 28, 2006 'People' are not buying them. Speculators are. But the speculators will need the tenants to pay for their mortgages, so it's the same thing. Or is in the long term, when cash flow problems outweigh growth prospects. There's a wonderful balancing mechanism in palce - that's how markets work. Things may get out of kilter every so often, but they always revert. Just look at our very own graph on the front page. Quote Link to comment Share on other sites More sharing options...
RichM Posted March 28, 2006 Share Posted March 28, 2006 There's a wonderful balancing mechanism in palce - that's how markets work. Things may get out of kilter every so often, but they always revert. Just look at our very own graph on the front page.Exactly, the invisible hand of the market will sort stuff. Just not necessarily on a convenient timescale. Quote Link to comment Share on other sites More sharing options...
Karen Posted March 28, 2006 Share Posted March 28, 2006 Very common, in my experience. My wife gave up full-time work when our first son was born in 1980, and went back full time when the youngest was 14, 20 years later (although she did get an evening data entry job for a few years when things got tight). All our friends and family did similar. I think the situation is a bit chicken and egg - women with children worked to be able to have more consumer goods, therefore house prices rose to match the available money, therefore women HAD to work to pay the mortgage. See, I have been staying at home for the past 12 years. I'm a freak today. I have been trying to re-enter the work force with little luck. I think I would be better off telling people I have been a crack ho for the past 12 years than a stay at home mom. And the worst part is, woman are worse than men. Men seem to respect it, woman look at me like "how could I do such a thing?" Quote Link to comment Share on other sites More sharing options...
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