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davidhpc

Lowest House Prices In Real Terms

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Have house prices ever been lower in real terms (affordability etc) than in 1997 or whenever the bottom of the last trough was?

In my city in the UK, it seems a debtless couple could have bought an average house and paid for it completely in maybe 5 years, and that is without struggling too much, just living on one wage and the other paying the mortgage off.

All this 'never be able to afford a house' talk seems quite funny, because a guy I know, bought his first house in his late 40's in 1997 and he just told me last week that he has just finished paying for it and is retiring next year.

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Have house prices ever been lower in real terms (affordability etc) than in 1997 or whenever the bottom of the last trough was?

In my city in the UK, it seems a debtless couple could have bought an average house and paid for it completely in maybe 5 years, and that is without struggling too much, just living on one wage and the other paying the mortgage off.

All this 'never be able to afford a house' talk seems quite funny, because a guy I know, bought his first house in his late 40's in 1997 and he just told me last week that he has just finished paying for it and is retiring next year.

Yep, there was no need to set up a National Lottery when we already had one - the UK Housing Market.

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Have house prices ever been lower in real terms (affordability etc) than in 1997 or whenever the bottom of the last trough was?

In my city in the UK, it seems a debtless couple could have bought an average house and paid for it completely in maybe 5 years, and that is without struggling too much, just living on one wage and the other paying the mortgage off.

All this 'never be able to afford a house' talk seems quite funny, because a guy I know, bought his first house in his late 40's in 1997 and he just told me last week that he has just finished paying for it and is retiring next year.

Yea but your friend was 40 so has substantial deposit and bought at the bottom of the market

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no, he just had a 5% deposit. he, still is, just a postman and his wife has a basic office job.

his house was 50k. there were many around at that time for that price.

i'm just wondering if we will again see a return to that affordability?

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no, he just had a 5% deposit. he, still is, just a postman and his wife has a basic office job.

his house was 50k. there were many around at that time for that price.

i'm just wondering if we will again see a return to that affordability?

I don't think we will. The transfer of wealth has been too great and property investment has become too entrenched. The lucky ones who are now mortgage free in their forties or fifties, and still earning, will be able to afford to buy up loads of investment properties as soon as the rental yields become viable again.

Houses will become more affordable but not that affordable, and stricter lending criteria will prevent a lot of FTBs from being able to afford the homes they deserve. What good is a 30% drop in prices when lending criteria go back to strictly 3 x single income, 2.5 x joint and interest rates are higher?

Edited by bugged bunny

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i think we may see close to it. and here's why, in layman's terms

i know a team of 3 guys who build houses. bespoke and off-plan. it takes them less than 6 months a house, they bring two other guys in for a couple of weeks a house. a bricklayer and a plasterer that are like lightning. so it is basically 6 months work. they say that the materials for the shells that they build cost about the same again.

so really, to build a house all you need is to pay three skilled mens for 6 months, double up to 1 year for the materials, plus the land.

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I don't think we will. The transfer of wealth has been too great and property investment has become too entrenched. The lucky ones who are now mortgage free in their forties or fifties, and still earning, will be able to afford to buy up loads of investment properties as soon as the rental yields become viable again.

Houses will become more affordable but not that affordable, and stricter lending criteria will prevent a lot of FTBs from being able to afford the homes they deserve. What good is a 30% drop in prices when lending criteria go back to strictly 3 x single income, 2.5 x joint and interest rates are higher?

IMHO A significant drop in prices will change peoples perceptions of property as an investment. They will quickly forget the years of boom only view property as an investment that bankrupted a massive number of people. This will help keep the property prices down, along with some significant unemployment figures.

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Yea but your friend was 40 so has substantial deposit and bought at the bottom of the market

ffs nohpc what it is makes you assume every 40 year old has a wad of cash?

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Have house prices ever been lower in real terms (affordability etc) than in 1997 or whenever the bottom of the last trough was?

I think the through this time will be deeper than 1997, since a long global recession/depression comes along with it.

For those with cash or jobs property will be ridiculously inexpensive. Nevertheless, it will be seen as a risky investment,

since house prices only ever go down, and the birth rate is so low.

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IMHO A significant drop in prices will change peoples perceptions of property as an investment. They will quickly forget the years of boom only view property as an investment that bankrupted a massive number of people. This will help keep the property prices down, along with some significant unemployment figures.

I agree that perceptions will be changed temporarily. But the British public (and foreign investors) won't forget just how easily money was made on BTL by your average Joe who was prepared to take a punt.

This boom has seen higher levels of property speculation than the last. IMHO this trend that will continue. Especially in view of the pensions crisis.

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I agree that perceptions will be changed temporarily. But the British public (and foreign investors) won't forget just how easily money was made on BTL by your average Joe who was prepared to take a punt.

This boom has seen higher levels of property speculation than the last. IMHO this trend that will continue. Especially in view of the pensions crisis.

People will rather become property speculators somewhere in Asia, don't you think?

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I think the through this time will be deeper than 1997, since a long global recession/depression comes along with it.

For those with cash or jobs property will be ridiculously inexpensive. Nevertheless, it will be seen as a risky investment,

since house prices only ever go down, and the birth rate is so low.

I agree.

Oversupply will also be a problem. Recession/depression = lower demand. People attracted into this economy will look elsewhere and more people already here will go abroad. People without jobs can't buy, other people will be waiting for the market to bottom out.

Booms and busts always tend to overshoot as well. Momentum has carried the boom (or bubble) further than ever before, so it stands to reason that the bust will go lower than before. Although relative affordability only matters if you're one of the lucky ones still with a job who isn't up to their eyeballs in debt.

As to when depends on how long the Government would keep propping up house prices with things like Income Support for Mortgage Interest and housing benefit to tenants of private landlords.

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People will rather become property speculators somewhere in Asia, don't you think?

In the short to medium term, yes I think you're right. If the British economy collapses completely (of which there's a fair chance IMO), then perhaps it will take more than 15 years before property speculation returns to these shores.

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From memory, in early 1989 a friend of mine bought a typical victorian 3 bed terraced house, on a lie to buy (yes you could get them then too if you knew how) for IRO £60k, in 1992 he was re-possed. In 1994 houses like my friends were going for IRO £30k, I know because I bought my house in 1994. This year ( I consider this year to be the peak, with the collapse beginning in August/Sep when the bond market melts down) similar houses were selling for IRO £150k, I know because I have sold mine to rent.

With that in mind I would think by 2011 I should be able to pick up a similar property for £70k. (Although I plan to scale up).

That's my take on it anyway for what it is worth.

Edited to add, when it goes, it will happen suprisingly quickly in house market terms. Remember to old market addage, bulls climb the stairs, bears fall out the window. Well, this bear is leaning out as far as it can trying to see what the bull is doing and all he has hold of now is the net curtains. :o

Edited by Lord Lister

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