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HPCheese

Homeowners - Please Explain

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This is how it can work. Mates in London are doing it. Bought 1 bed flat in dodgy East End 5 years ago, and prices have increased to a greater % than the area they are moving to. So now they can afford a 2 bed in a area that is slightly further out. So for them local HPI was a positive. Many people have bought in London in their early 30's and then move out of London when they marry/children etc.

Edited by beenhearingthisforyears

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This is how it can work. Mates in London are doing it. Bought 1 bed flat in dodgy East End 5 years ago, and prices have increased to a greater % than the area they are moving to. So now they can afford a 2 bed in a area that is slightly further out. Many people have bought in London in their early 30's and then move out of London when they marry/children etc.

Still another minority sub-group though.

Doesn't explain why HPI is good for most homeowners.

Also, while in London people generally earn a bit more money. They put more into their mortgage each month so when they move they have a bigger deposit to buy elsewhere. The relative expense between London and Hull will (probably) always be there for obvious reasons - the advantage of moving to a cheaper area has nothing to do with HPI.

Edited by HPCheese

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Still another minority sub-group though.

Doesn't explain why HPI is good for most homeowners.

London is a big place. So think it is more common than you would think. Many people come to London in their early 20's rent for few years, then buy in 30's and move out to "greener" areas when they have kids. Most of my friends now in 30's are following that pattern. Not a majority tho , agreed.

Also return on improvement investments can increase with HPI. You know a coat of paint and a vase of flowers and £20k suddenly added. In a falling market would not be the case. The improvements seem to get inflated too.

Still another minority sub-group though.

Doesn't explain why HPI is good for most homeowners.

Also, while in London people generally earn a bit more money. They put more into their mortgage each month so when they move they have a bigger deposit to buy elsewhere. The relative expense between London and Hull will (probably) always be there for obvious reasons - the advantage of moving to a cheaper area has nothing to do with HPI.

I am talking about people keeping same job and so earning same money but moving to different "cheaper" area. In the example i gave my friend benefited from HPI in his area and then moved to a place that hasn't risen so quickly. I spoke to him yesterday and therefore know the facts.

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One possiblel benifit of higher prices is that the quality of the older housing stock has been much improved, especially in the less well off areas.

2001 - Take a typical rundown terraced house in a working class area of a Northern industrial town - No D/G, No C/H, leaky roof etc. Cost £20,000 to buy and £20,000+ to 'do-up' - Resale price when done up £40,000 - so, no real incentive for anyone to bother improving them.

2004 - Fast forward a couple of years - Now £40,000 to buy, £20,000+ to do up but the resale price is now £79,950 - The businessman get's his profit and society a much improved property!

2006 - Those properties though have now mostly gone and those that do come on the market probably sell for as much as they would 'done up'!

Edited by 737

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I am talking about people keeping same job and so earning same money but moving to different "cheaper" area. In the example i gave my friend benefited from HPI in his area and then moved to a place that hasn't risen so quickly. I spoke to him yesterday and therefore know the facts.

Valid point, but equally valid in a falling market if you move from an area which has fallen to an area which has fallen more. I don't think this would be the first benefit of HPI to spring to mind if you asked the average man/woman on the street.

I think Ignorant Steve hit the nail on the head - it's all about 'one-up-man-ship' and the feeling of success that comes from knowing you're in a position enviable to others.

e.g. Shop Worker buys flat in 1999 - prices inflate - young local doctor buys an identical flat next door. Shop worker is now as 'successful' as the doctor.

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  • 315 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%



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