Parents

[Web Girl]

My folks have been nagging my Husband and I for a good couple of years as to why we arent ploughing every spare penny into a deposit, working extra jobs and doing loads of overtime...generally not having a life until we save a deposit...

I dont think they were thinking it would take that much effort cos of the 'what it was like in our day' speeches we had been getting and we were told that the £1300 they gave us for the wedding would have been a 'very good start...'

I personally dont want more than a 80k or 90k mortgage on our current wages (I would like to live without the fear of rising interest rates, have a bit of spare cash and would like to know if 'bubs' came along, we would be ok if I didnt work for a year or two) so would therefore need atleast a 30k deposit for a pokey 2-up, 2-down...not exactly, er, wonderful...

BUT NOW...my folks are looking to move into a bungalow, they felt rich because of house price increases, now they have reaslised that the increases are irrelavant, what really matters to them and what they failed to realise is that not only has their house price doubled, so has the bungalow of their dreams and therefore the gap of say 20k they would have had to pay is now in the region of 40k...

I asked them, 'but surely if you expected us to have saved 30-40k in 3 years for a deposit, you should have easily saved the 40k to 'upgrade' in 30 the years you've been together, yeah...?'

It was said rather sarcastically and was met with strange looks and then eventually they agreed...

So yeah, from going from feeling 'rich' because their house was gaining £100 a day, they paid x ammount, now worth y ammount...they are now realising they are going to have to save longer, work longer and no early retirement as planned...

Couple that with the fact my Brother cannot afford to move out, so even if they do get a bungalow, they are restrictd on location for my Brothers work.

Also put in a daughter (me) who will probably be looking a considerable distance out of the area to be able to afford a house, they will hardly see me, and there will be no grandchildren for the foreseeable future...

Great hey?

[Casual Observer]

Also put in a daughter (me) who will probably be looking a considerable distance out of the area to be able to afford a house, they will hardly see me, and there will be no grandchildren for the foreseeable future...

Great hey?

Always been the same. When I married in 1975 we had to move 60 miles away from parents' home in NW London, to the ar5e end of Essex (near the oil refineries - nice )

All my mates had to move some distance out

Edited June 14, 2006 by Casual Observer

[OzzMosiz]

Always been the same. When I married in 1975 we had to move 60 miles away from parents' home in NW London, to the ar5e end of Essex (near the oil refineries - nice )

All my mates had to move some distance out

Should've bought in 73 then and then wage inflation would've eroded your mortgage so you could've lived nearer parents and friends.

You really missed the boat!!

[Casual Observer]

Should've bought in 73 then and then wage inflation would've eroded your mortgage so you could've lived nearer parents and friends.

You really missed the boat!!

No, in 1973 prices were incredibly high plus we were in a severe recession. They called it stagflation. House prices stayed the same for about 5 years, whilst wages doubled.

[Guest]

No, in 1973 prices were incredibly high plus we were in a severe recession. They called it stagflation. House prices stayed the same for about 5 years, whilst wages doubled.

So where did the peaks in the house-prices-expressed-in-terms-of-salary-multiples graph come from, then?

[Robbrent]

Don't worry about it, all my family know I could afford something far bigger and better than our current abode they have given up nagging me because they get the HPC lecture of me (they know I am right), but I have told them I refuse to pay the silly prices venders have been asking.

I have a good lifestyle, with plenty of money left over to save and spend as I wish, Ii laugh at the prospect of IR

[Casual Observer]

So where did the peaks in the house-prices-expressed-in-terms-of-salary-multiples graph come from, then?

As incomes rose and prices remained static, the ratio dropped. In the late 70's prices rose again.

[Antsy]

As incomes rose and prices remained static, the ratio dropped. In the late 70's prices rose again.

Anyone know if there is some kind of calculator to discover what x amount in 1975 is worth in today's money? I only ask as my parents and I haave been having a similar conversation. The house they bought off plan in 1975 for 19k is now on the market for 250k and I want to know how thiss all compares to the real world...

[Unexpected]

Always been the same.

No! It hasnt! Even the bulls dont think its always been the same. But then you're not a bull, are you?

[TwentyOneEleven]

I'm sure your parents are just looking out for you and want the best for you ... that's what they do isn't it? Mine still don't understand why Mrs TwentyOneEleven and I haven't yet brought into property and spend our money on snowboarding, surfing and skydiving rather than saving for a house ... although we are saving a substantial amount each month towards the inevitable property purchase! My Dad has been banging on for ages about how house prices only ever go up and that they only really ever fell once (in the 90s), and admitedly "they did fall hard", but that won't happen again! Bless!

[Time to raise the rents.]

Nope, never had that hassle.....

[TwentyOneEleven]

Nope, never had that hassle.....

...so are you actually married then TTRTR? ... or does Pamela Palm and her five sisters do the trick for you?

[Dr Doom]

...

Great hey?

Yeah. I mentioned before, my parents have been offering to lend me money to buy a flat.

(where could they have got such an idea?)

My dad seems content to argue with me till blue in the face about a impossibility of a HPC,

renting is dead money, you can't live in your gold, they won't let it happen, etc, etc.

The really confusing thing is he turned into a real bear in 2003/2004 and sold most of his BTLs.

Then just recently he starts telling me what a great idea it is to buy property.

I consider my parents to be as bad as borrowing from a bank. They just

want me in debt to them so they have total control over me.

[iLegallyBlonde]

Generally ours mind their own business but the one and only time my MIL stuck her oar in was to advise us to sell our house and just get rid of it, needless to say she won't be opening her mouth again.

They all now accept that basically we would need our inhertience at the moment to get the house we want/need so they are hoping for a crash now too.

[apom]

No, in 1973 prices were incredibly high plus we were in a severe recession. They called it stagflation. House prices stayed the same for about 5 years, whilst wages doubled.

Third, Mr King is nervous that homeowners may not realise that although low interest rates make mortgage repayments affordable, high inflation will not erode the value of their borrowing, as it did in the 1970s - and when they do catch on, house prices will plunge.

http://business.guardian.co.uk/story/0,3604,843624,00.html

[Casual Observer]

No! It hasnt! Even the bulls dont think its always been the same. But then you're not a bull, are you?

As someone pointed out, it was much easier about 10years ago, but it was the same in the 70s. Multiply the ratio of hp/salary by the ratio of 1975 mortgage rates/2006 mortgage rates and you can work it out for yourself.

There was a thread some months ago that showed the affordability of mortgage repayments over the years. It was remarkably linear (no surprise really, since it's mortgaged repayments that fix market prices, not salary ratios) apart from the golden period of the 90s.

A nice house in NW London (Edgware) in 1973 was about 15k. Typical FTB salary in the area was around 1.5k, mortgage IRs about 11%. You do the maths.

Third, Mr King is nervous that homeowners may not realise that although low interest rates make mortgage repayments affordable, high inflation will not erode the value of their borrowing, as it did in the 1970s - and when they do catch on, house prices will plunge.

http://business.guardian.co.uk/story/0,3604,843624,00.html

But some people on here don't appreciate that prices rise to the level of affordability of the initial repayments, they don't factor in a comfort zone to deal with future increases in IR.

Anyone know if there is some kind of calculator to discover what x amount in 1975 is worth in today's money? I only ask as my parents and I haave been having a similar conversation. The house they bought off plan in 1975 for 19k is now on the market for 250k and I want to know how thiss all compares to the real world...

But don't forget to take into account the higher IR they had to pay (11% in 1975).

Here's a clue. The first house I bought in 1975 was 10.5k, it was on Rightmove late last year for about 160k, I think.

That seems to be as affordable, at today's mortgage rates and salaries, as it did to m and my wife then

[Unexpected]

But some people on here don't appreciate that prices rise to the level of affordability of the initial repayments, they don't factor in a comfort zone to deal with future increases in IR.

So the lesson to be learned from this is:

Always buy when interest rates are high. Always sell when interest rates are low.

[Casual Observer]

Third, Mr King is nervous that homeowners may not realise that although low interest rates make mortgage repayments affordable, high inflation will not erode the value of their borrowing, as it did in the 1970s - and when they do catch on, house prices will plunge.

http://business.guardian.co.uk/story/0,3604,843624,00.html

Mr King IS nervous, or Mr King WAS nervous (in 2002, when this article was published)?

[Time to raise the rents.]

...so are you actually married then TTRTR? ... or does Pamela Palm and her five sisters do the trick for you?

What a shmuck.

[Unexpected]

A nice house in NW London (Edgware) in 1973 was about 15k. Typical FTB salary in the area was around 1.5k, mortgage IRs about 11%. You do the maths.

Here's a clue. The first house I bought in 1975 was 10.5k, it was on Rightmove late last year for about 160k, I think.

Were you a FTB back in 1975 CO? You must have been on much more than average wage if you could afford 10.5k considering that in 1973 the typical FTB wage was around 1.5k and interest rates were about 11%

[music man]

Great post - I liked this best.

I asked them, 'but surely if you expected us to have saved 30-40k in 3 years for a deposit, you should have easily saved the 40k to 'upgrade' in 30 the years you've been together, yeah...?'

Fuzzy Logic is generally a euphomism for blindness to non mainstrem media talk.

If this was in on the BBC people would freak. Duh - what's this info then? No understanding and thus shut their poor little cerebral cells down.

Made me chuckle anyway.

[Casual Observer]

So the lesson to be learned from this is:

Always buy when interest rates are high. Always sell when interest rates are low.

You're always better off with lowprices/high IRs than t'other way round. But you deviate, siince I was explaining why it was also hard to purchase in 1975. The rose coloured glasses brigade on here always assume it was easy. They tell me that factory workers could afford to buy detached houses over 10 years, but don't explain why builders bothered to build semis, terraces and flats, or why families chose to rent.

Were you a FTB back in 1975 CO? You must have been on much more than average wage if you could afford 10.5k considering that in 1973 the typical FTB wage was around 1.5k and interest rates were about 11%

Yes I ws a FTB. On about 2.2k ( I thought I said 1.5k was typical in 1973 - you forget we had wage inflation of about 15-20% pa!) My wife was working of course, on about 1.5k. We had about 1k savings, which we'd saved for many years (seems pathetic now). We borrowed 10k and the mortgage repayments were tough in the early years.

Edited June 14, 2006 by Casual Observer

[apom]

Mr King IS nervous, or Mr King WAS nervous (in 2002, when this article was published)?

when people realised........... its a slow to respond market...

[bigben]

You're always better off with lowprices/high IRs than t'other way round. But you deviate, siince I was explaining why it was also hard to purchase in 1975. The rose coloured glasses brigade on here always assume it was easy. They tell me that factory workers could afford to buy detached houses over 10 years, but don't explain why builders bothered to build semis, terraces and flats, or why families chose to rent.

Yes I ws a FTB. On about 2.2k ( I thought I said 1.5k was typical in 1973 - you forget we had wage inflation of about 15-20% pa!) My wife was working of course, on about 1.5k. We had about 1k savings, which we'd saved for many years (seems pathetic now). We borrowed 10k and the mortgage repayments were tough in the early years.

and mortgage interest tax relief

[Guest]

The rose coloured glasses brigade on here always assume it was easy. They tell me that factory workers could afford to buy detached houses over 10 years, but don't explain

Because the banks LOST money in real terms in the 70s, because some people stopped making payments well before the bacnks had initially expected. Inflation ******ed the banks over.

Stop denying that people got MASSIVE cost of living rises in the 70s. Whether they saw them coming or not is another matter.

Baby boomers were lucky.

The outlook for us from here is more of being screwed than not, based on the best information available RIGHT NOW. Historically high interest rates are going one way only. Historically low interest rates are going one way only.