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munimula

House Prices Have Devalued Perception Of Money

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Talking to dad last night - parents bought a house in mid-2003 for £285K and have just put it on the market for £475K. I said, 'that's incredible, especially considering many places haven't gone up that much in that time. That should make you over £150K which is excellent'.

To this my dad's reply was 'really, do you think so? I don't see it as that much'

I think that people have lost touch with reality. If 5 years ago I had told my dad that he would be living in a £475K house he would have thought I was crazy. Now 'it's not that much'. They have made £150K which is more than the 4-bed house they bought in Wellington, Somerset in only 2001 which cost £135K then!!! The reason that he feels it isn't that much is because properties everywhere are all overpriced to the same amount and he thinks in terms of what property will this money buy. The fact that an average family car is still around £15K and a 50" HD LCD TV is only £2000 doesn't make him feel any wealthier.

All this when inflation has only been 2% a year.

Does anybody else experience this kind of reaction?

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It's all relative - if he bought it for speculation/BTL then he's made a good profit - otherwise he's going to have to find another overpriced property to live in with the proceeds from this one...

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George, King and Brown & Co have devalued money.

They have also trashed the future ability of this country to manufacture and compete with the rest of the world and they have also seriously damaged financial stability of the whole country.

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Guest Guy_Montag

I see the same thing from the other side:

"I'll borrow an extra £10k for this one" or "it's only £150k!" etc.

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It's all relative - if he bought it for speculation/BTL then he's made a good profit - otherwise he's going to have to find another overpriced property to live in with the proceeds from this one...

Actually, much to my joy - they are putting the money in a bank and going into rented until they work out what to do next. I'm hoping that as the interest rates rise this could really work out for them.

The value of money really has been devalued though. Also consider deposits, in 1998 I looked at a 3-bed house in Bristol - £52K (today around £200K)

My deposit today is only around 15% of £200K

My deposit today at the old price is about 60%

At current house prices, even though I have a sizeable deposit it doesn't really make much difference - I still need a massive mortgage so the value of that deposit seems less.

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In Cardiff former council houses are on sale at £250k

Quarter of a Million pounds for a council house - FFS

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In Cardiff former council houses are on sale at £250k

Quarter of a Million pounds for a council house - FFS

My parents place only has 1 bathroom and doesn't even have mains sewage and it's nearly £1/2M

OK it has a view and is in a desirable location but the price is ridiculous although my parents just don't see that, they just don't register that 65% increase in the last 3 years is unsustainable and think that prices will keep going up.

They believed that where they live is a 'hotspot' and that there would be a queue of people looking to buy although they've only had 3 serious viewings in over 6 weeks which as I pointed out hardly constitutes a rush to buy there. However, you only need one person and they currently have that person with an offer on the table....

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Actually, much to my joy - they are putting the money in a bank and going into rented until they work out what to do next. I'm hoping that as the interest rates rise this could really work out for them.

Yep, good timing I reckon

Is that what made them sell - the pending interest rate rises?

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Guest Guy_Montag

Actually, much to my joy - they are putting the money in a bank and going into rented until they work out what to do next. I'm hoping that as the interest rates rise this could really work out for them.

The value of money really has been devalued though. Also consider deposits, in 1998 I looked at a 3-bed house in Bristol - £52K (today around £200K)

My deposit today is only around 15% of £200K

My deposit today at the old price is about 60%

At current house prices, even though I have a sizeable deposit it doesn't really make much difference - I still need a massive mortgage so the value of that deposit seems less.

My landlord bought my flat in 2003 for £27k (in 2001, it went for £19k), one went last month with an asking price of over £60k. £60k for a 35 sqm flat! A 60s flat! In the North East! & judging by the amount of shit lying next to bins, in need of a major makeover.

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munimula : There appears to be a glut of expensive properties where i live, nothing ever seems to sell, as soon as you go over 450k you get some really massive houses. Perhaps the area just has alot of money, but it feels like there isnt enough money in the whole uk to buy all the expensive properties around worcester, and there appears to be alot of overlap... If im honest the expensive existing property now looks better value because the lower end of the market and and new builds in up and coming areas seem sooo over priced...

130k = 2 br flat

144k = Terrace house

135k = Ex council house

225k = newbuild 2 bedroom flat (diglis)

335k = newbuild 3 bedroom terrace (diglis)

However at the 'top' end

155k = 3 bedroom newish house in the suburbs

200k = 3 bedroom town house

220k = 4 bedroom detached

300k = Nice largie detatced house

400k = Very large detached house

500k = Massive house with garden down to the river, country Mansion

Pricing seems very odd, serious amounts of supply at the top end, nothing sells because no money, but the low end is still rising... It almost feels like the low end will overtake the bigger properties and become more expesive...

Is your parents house worth 475k? will it sell? keep us posted ;p

Edited by moosetea

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Yep, good timing I reckon

Is that what made them sell - the pending interest rate rises?

No, simply because mum doesn't want to stay there (isolated) and partly to cash in because they have no pension provisions etc. They hope to secure their future a bit better by moving.

Personally I think the timing is great, I just pray they get the cash in the bank and rent and wait. Things could be so different in 2 years time.

Imagine cashing in £1/2M now and property prices go down 20% - 40%

They could be looking at buying properties that are £600K-£750K now no probs or buying the same and putting money aside for retirement.

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Pricing seems very odd, serious amounts of supply at the top end, nothing sells because no money, but the low end is still rising... It almost feels like the low end will overtake the bigger properties and become more expesive...

I think this is true in a lot of places. The market is compressed and the differentials are really odd. The cheap and bad stuff has inflated so that it's not that far below the decent stuff, almost like they are two separate markets.

I think however the correction of prices comes about, fast nominal falls, or slow real falls, there is also going to be some correction to the differentials, with recent new-builds and dodgy locations falling much more than the quality stuff. There was a degree of that in the last crash, but I suspect this time the differentials are even more out of whack.

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I think this is true in a lot of places. The market is compressed and the differentials are really odd. The cheap and bad stuff has inflated so that it's not that far below the decent stuff, almost like they are two separate markets.

I think however the correction of prices comes about, fast nominal falls, or slow real falls, there is also going to be some correction to the differentials, with recent new-builds and dodgy locations falling much more than the quality stuff. There was a degree of that in the last crash, but I suspect this time the differentials are even more out of whack.

I wonder if this is because of low interest rates? With low interest rates and low wages the housing ladder is dead or significantlt slowed, this has two effects...

The lower rung is raised to a very high level because you can get a large morgage

The debt on upper rungs cannot be eroded away so they cant rise any higher, as costs and taxes rise people are trying to sell there assets but noone earns enough to buy.

We end up have a short stubby ladder, 1000ft off the ground

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I think this is true in a lot of places. The market is compressed and the differentials are really odd. The cheap and bad stuff has inflated so that it's not that far below the decent stuff, almost like they are two separate markets.

I think however the correction of prices comes about, fast nominal falls, or slow real falls, there is also going to be some correction to the differentials, with recent new-builds and dodgy locations falling much more than the quality stuff. There was a degree of that in the last crash, but I suspect this time the differentials are even more out of whack.

I think it's just a sign of people desperate to get on the housing ladder. Buying the cheapest stuff on the market as affordability constraints bite and pushing the prices of the cheapest property up.

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I think the true cost of this loss of perception is the cost to the psychology of much of the population. Many people will be disatisfied with their jobs as they will never earn enough to pay for a house. They will consequently be pushing themselves to achieve what is unatainable.

I think we will see a huge increase in alchoholism and violence as these frustrations kick in. For a large proportion of the population - particularly men, they are unable to achieve what their parents did. Work hard and raise a family.

Please before the usual crowd come on saying work harder and stop whinging, lets remember that not everyone is capable of being a brain surgeon. There is no shame (and should be an enormous amount of pride) in working for a living, providing for your family and watching them grow. To me it doesnt matter if your a plummer, doctor, architect or shovel sh1t on a mushroom farm to achieve this.

And again before anyone else buts in to say its always been like this. It HASN'T. I grew up on an estate built for railway workers and their families. Today you would need to earn at least £70K to live in the same house.

Not many ticket collectors earn this.

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Guest STR2004

I've thought exactly this for some time now. The point that really brought it to mind was my teenage daughter saying to me "This one's cheap Dad" whilst browsing the local property rag. It was £180K for a 2 bed (dump IMO). I then asked her how long did she think it would take to save that amount up if I gave her £10 pocket money every day (a fortune in her mind), her response "... a couple of years I guess ...".

When I pointed out that it would take her nearly 50 years to save £180K at £10 per day she wouldn't believe me until we did the math. Current property prices really have made people lose sight of how BIG some of these sums really are to the average Joe.

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In short yes. If you have 100k in the bank now it hardly goes very far in terms of house buying. Whereas any other time the equivalent amount would have left you with a tiny mortgage if any.

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In short yes. If you have 100k in the bank now it hardly goes very far in terms of house buying. Whereas any other time the equivalent amount would have left you with a tiny mortgage if any.

In MoneyWeek last week there was an article discussing how much you need to live like a millionaire.

They defined this as having a 5-bed house, 2 holidays a year, help at home and a nice car.

The consensus was £3M although Michael Winner apparently has stated that to live like a proper millionaire now you need at least £30M

The reason for this is mostly to do with property costs.

When I started playing the lottery in 1995, £1M would have bought a really nice house and left plenty of spare change.

Fast forward to 2006 and you'd only buy a 2-bed flat to be left with the same amount of spare change

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I agree with all of this. People still talk of 'only' £150k, which is a standard terrace where I work, yet very few people could afford it.

It also makes me laugh when you read the 'inflation expectations' surveys - I think the majority have been brainwashed to think inflation is the price of DVDs! Yet when it's housing inflation perceptions are astronomical!

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When I pointed out that it would take her nearly 50 years to save £180K at £10 per day she wouldn't believe me until we did the math. Current property prices really have made people lose sight of how BIG some of these sums really are to the average Joe.

Totally agree. What I think might work with people is to dig out newspapers in their local area from around 2001, and make them look hard at the EA listings... then look at today's.

That really hits home as to how much things have changed.

All this is just another symptom of people's overwhelming complacency when it comes to property prices.

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Totally agree. What I think might work with people is to dig out newspapers in their local area from around 2001, and make them look hard at the EA listings... then look at today's.

That really hits home as to how much things have changed.

All this is just another symptom of people's overwhelming complacency when it comes to property prices.

Would be interesting to show the comparison with overall Debt from 2001 to 2006.

This country is funked!

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Oh no, it's 'cos we're all, on average, "richer", that we can all talk in tens and hundreds of "Ks".

Just like once only the truly richer could.

See, NL is creating a "classless" society.

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Posted this a while back, but I really do agree that people haven't got any clue about the value of money or the implications of repaying debts any more.

e.g. Someone has 20k on credit cards and they think that it's really not such a big deal. Then when you point out that at an IR of 10% for the card, and payments of over 200 quid a month, it will take 15 years to pay off the debt there's a sickening look of horror on their faces.

People really need to wake up to what their future hold when they get into debt - I don't think it paints a pretty picture a lot of the time...

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Guest Bart of Darkness

See, NL is creating a "classless" society.

You could be right there. Most chavs certainly have no class.

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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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