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Relax, Relax, Its Just A Little Pin Prick

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stop all the crap on here now

average house = 170k

which means with just a couple ticks up in ir, your IO mortgage will be 17k a year before paying for any of the extras or council tax, and you will never own the property.never mind you need to leave a little to feed your family.and what you gonna have left to buy the cars and goods ehhhh ?

You canny kid a kidder

now off you go back to the land of make believe you dirty thick bulls

Edited by homeless

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Guest Bart of Darkness

At least it hasn't veered wildly off-topic and turned into a flirt-athon.

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stop all the crap on here now

average house = 170k

which means with just a couple ticks up in ir, your IO mortgage will be 17k a year before paying for any of the extras or council tax, and you will never own the property.never mind you need to leave a little to feed your family.and what you gonna have left to buy the cars and goods ehhhh ?

You canny kid a kidder

now off you go back to the land of make believe you dirty thick bulls

I remember someone saying something similar to me in 1975, when I bought a 10k house at 11% mortgage rate. My salary was 2.8k pa.

Also 2 years later when I really stretched myself and borrowed 15k to trade up to a 3 bed semi at 17k

I'm glad I took no notice.

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stop all the crap on here now

average house = 170k

which means with just a couple ticks up in ir, your IO mortgage will be 17k a year before paying for any of the extras or council tax, and you will never own the property.never mind you need to leave a little to feed your family.and what you gonna have left to buy the cars and goods ehhhh ?

You canny kid a kidder

now off you go back to the land of make believe you dirty thick bulls

We know all about your little pin *****.

:D

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A distant ships smoke on the horizon.

Yup thats the good ship housing market, steaming towards newfoundland and all those icebergs, it'll never sink, honest :lol:

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I remember someone saying something similar to me in 1975, when I bought a 10k house at 11% mortgage rate. My salary was 2.8k pa.

Also 2 years later when I really stretched myself and borrowed 15k to trade up to a 3 bed semi at 17k

I'm glad I took no notice.

Bet you were glad you had high inflation to erode the value of the debt meaning it became easier within a few years though. Are you one of these people that say 'It's hard for the first couple years then gets easier' to the younger generation today without realising that the economic conditions have changed entirely since you bought your first house? If you do you just persuaded them to commit financial suicide. Well done. Then they say ignorance is bliss don't they?

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Bet you were glad you had high inflation to erode the value of the debt meaning it became easier within a few years though. Are you one of these people that say 'It's hard for the first couple years then gets easier' to the younger generation today without realising that the economic conditions have changed entirely since you bought your first house? If you do you just persuaded them to commit financial suicide. Well done. Then they say ignorance is bliss don't they?

I'm not ignorant, though you may well be.

I say that if inflation is low then mortgage rates will be low, and hence affordable. If IRs go up than inflation will be higher, and, as you say, this is helpful to mortgagees.

It's real IR's that count. And housing is a market - it always has to be affordable, otherwise the market falls. It's affordable to some now - that's why prices haven't fallen. Get it?

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I'm not ignorant, though you may well be.

I say that if inflation is low then mortgage rates will be low, and hence affordable. If IRs go up than inflation will be higher, and, as you say, this is helpful to mortgagees.

It's real IR's that count. And housing is a market - it always has to be affordable, otherwise the market falls. It's affordable to some now - that's why prices haven't fallen. Get it?

No actually. I totally disagree. I think house prices are massively overpriced, unnafordable to most and are bound to fall sooner or later as a result. I sincerely hope you do not give advice to impressionable young first time buyers and encourage them to overstretch themselves. Just because it worked out for you it doesn't mean it will for them.

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No actually. I totally disagree. I think house prices are massively overpriced, unnafordable to most and are bound to fall sooner or later as a result. I sincerely hope you do not give advice to impressionable young first time buyers and encourage them to overstretch themselves. Just because it worked out for you it doesn't mean it will for them.

Totally disagree with what??

Edited by Casual Observer

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Totally disagree with what??

That house prices are affordable. I agree with the original poster. The only thing propping up the bottom of the market now is BTL landlords and FTBs that are over stretching themselves. If I was to buy now I would have to borrow 6 times my salary to even get the most basic accomodation. That would be around £850 a month from my take home pay of £1500 a month. Add on council tax and I would have around £500 a month to live on before I pay bills. It's just not affordable. The smallest shift in interest rates upwards any time over the next 25 years and I am stuffed, because inflation is low and I will not see any significant increase in my wages. Multiply this across the entire population and can you not see how it is heading for a car crash? If nobody buys at the bottom of the market then the next people up can't sell and the chain collapses from there up. I am a highly qualified engineer with 15 years experience working in my field and I doubt I would increase my salary much by moving elsewhere. I dread to think how most lower paid earners would manage.

Edited by SCUMBAG

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That house prices are affordable. I agree with the original poster.

If they weren't affordable (to enough people) then they wouldn't be selling. But they are. Just because you can't afford one, or consider them unaffordable to you, is irrelevant, since sufficient others are buying at current prices.

When they stop being affordable prices will fall.

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If they weren't affordable (to enough people) then they wouldn't be selling. But they are. Just because you can't afford one, or consider them unaffordable to you, is irrelevant, since sufficient others are buying at current prices.

When they stop being affordable prices will fall.

It depends on how you define affordable. Affordable in the short term it may appear to be. In the long term it is distinctly unnafordable and has been for some time. I can honestly say I know of nobody since 2001 that has not bought without significant help from their parents. That does not imply an affordable market. There are too many people saying 'Get on the ladder now before it is too late' and bullying FTBs into doing something they can not really afford to do.

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It depends on how you define affordable. Affordable in the short term it may appear to be. In the long term it is distinctly unnafordable and has been for some time. I can honestly say I know of nobody since 2001 that has not bought without significant help from their parents. That does not imply an affordable market. There are too many people saying 'Get on the ladder now before it is too late' and bullying FTBs into doing something they can not really afford to do.

By chance, the house my wife and I struggled to buy in 1975, on 2 reasonable salaries, sold last year for £175k. That doesn't seem any less affordable today than it did 30 years ago. I think the problem is that, today, a singleton would expect to be able to buy it, whereas then it took both our incomes (and about 4 years' hard saving). My brother-in-law had bought a large semi in an affluent area for 3k, 10 years earlier, and told us we were mad to overstretch ourselves.

Edited by Casual Observer

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If they weren't affordable (to enough people) then they wouldn't be selling. But they are. Just because you can't afford one, or consider them unaffordable to you, is irrelevant, since sufficient others are buying at current prices.

When they stop being affordable prices will fall.

That depends on your definition of affordable. Unless you have the cash in the bank, buying a house is a process spread over decades. For housing to be "affordable", there has to be a reasonable chance that people taking on this debt will be able to get out the other end and pay off the house. High salary multiples are possible in the short term, in particular if the purchaser relies on some sort of unknown and unplanned fortuitous future circumstance to pay off the loan. If I took out a 10x salary mortgage and only paid the interest payments, I might, just might, be able to scrape by on the money left over every month. But any sort of unexpected expense, and I'd be wiped out. If I lost my job, I'd be wiped out. If other costs went up outside my control, I'd be wiped out. I'd expect that the chance that I would get wiped out and repossessed during the 25 years mortgage would be high. And then I'd have the balloon payment at the end to content with. But, if I go and lie to buy tomorrow, I could service the interest payments. For a while. Would this make property at that level affordable for me?

Secondly, we're only talking about first house purchases here. Remember that there are other "rungs" on the ladder. If FTB properties get so expensive that it will take the FTB their entire working life (including time to build a deposit before purchase) to pay it off, and not enough money is left over to save additional money to buy a "second rung" property, then how is this going to be sustainable? At present, second rung properties will typically be bought by people who bought some years ago when property was cheaper, and hence they are not as saddled with debt, and the higher prices they will get on selling their property will help them bridge the larger gap to a second rung property. But if property stuck at current real prices, then more and more of future property owners will be taking on these huge mortgages, and then be less likely to be able to move up. Who will buy the second rung properties allowing second rung home-owners to move up. Who will buy properties at the top end of the market when the owners need to move, die, etc? For property to be affordable, I believe that prices have to be such that the property market as a whole "works" in a sustainable fashion. I don't believe that current prices are sustainable, and hence feel that property is not affordable.

In society we have the situation that different people doing different jobs get different salaries. Behind my laptop screen I can see the repeat of "The Apprentice" where people are competing for a 100K job. But what about nurses, teachers, firefighters, police, and others. These people are typically on lower salaries to your typical project manager, etc. If these people cannot buy houses in various areas then how will society continue to "work" in those areas? This is a problem that will take some time to develop as if houses jump 300% in a single month, there will still be plenty of teachers, nurses, etc. who bought their houses before the boom. But as the boom continues, how will people who leave those professions, for whatever reason, be replaced if theoretical new recruits to those industries can't afford housing. Some may come and rent, providing that affordable rental properties are available, but will they stay in these areas in the long term if they can't afford houses. So if house prices are such that society cannot continue working in the long term, then I don't consider those prices affordable?

You say that houses are affordable if they sell. But affordable for who? If people buy BTL properties even though the rent does not provide sufficient return to make it a reasonable investment (better than putting the money in the bank) because they expect capital gains. But this model (which I believe is the situation we have now) can only work when we have eternal capital appreciation, eventually (again I believe we there now) at a rate greater than inflation. Once BTL gets into the situation where only capital appreciation makes the sums add up, then I don't classify those prices as affordable, and the whole situation contains within it the seeds of its own doom.

As an analogy, it would be possible for me to eat a whole kilogram of chocolate today on top of my normal food and drink and not get fat. If I try eating a whole kilogram of chocolate every day, over and above what I normally eat, then I'm confident that I'd get fat. It's no good saying that housing is affordable if I can buy a house tomorrow. It's a matter of not just looking at the immediate situation, but the long term situation. Wasn't it in Norfolk that a large chunk of FTBs, 10% or so, were being repossessed within a few years of buying?

Since I've gone on here a bit, I'll summarise. Affordable, my *rs*.

Billy Shears

By chance, the house my wife and I struggled to buy in 1975, on 2 reasonable salaries, sold last year for £175k. That doesn't seem any less affordable today than it did 30 years ago. I think the problem is that, today, a singleton would expect to be able to buy it, whereas then it took both our incomes (and about 4 years' hard saving). My brother-in-law had bought a large semi in an affluent area for 3k, 10 years earlier, and told us we were mad to overstretch ourselves.

How much, in terms of multiplies of the average salary, did that house cost 30 years ago? How much, in terms of multiples of the average salary is it worth now? You say that it doesn't seem any less affordable now than it did then. But, do hard figures back up your assertion?

Billy Shears

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  • 301 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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