Jump to content
House Price Crash Forum
Sign in to follow this  
The Janitor

Isn't The Bubble Rather In The Rental Market?

Recommended Posts

Do you think that in most towns a single spouse can afford the average rent assuming that the other half stays at home to raise the kids? (And have money left for a pension, and more importantly, to keep paying the rent in their old age)?

If rental costs were say, 15% of home take, would people be so obsessed about home ownership? I wouldn't.

The rationale used in this board is than buying cost more than renting in terms of monthly outgoings. However, renting is freaking expensive. Finger in the air, the "book" value of a house shouldn't be more than 100 rental payments.

I would say that most people on this board still have a distorted view of what the cost of housing should be!. A timid 50% crash would bring most houses more or less to the level of current rental outgoings, that is, 50% of home take. Add council tax, 200% inflated gas bills, and there's nothing left. I would say that the average mortgage for the average wage earner, say £1600/month should be something in the region of £400 AT MOST. This again would be the "average" property, say a terraced 2 bedroom house with a small garden. Is this sensible, have costs ever been like this relative to earnings?

Share this post


Link to post
Share on other sites
Good point. To borrow Eric's mantle - credit cards, ovedrafts, general easy credit - rent has been bid up in the "good" times.

IMO reality is about to hit home.

just inflation generally... many employers built on sand paying wages based on imaginary wealth and tenuous revenue

Share this post


Link to post
Share on other sites
Do you think that in most towns a single spouse can afford the average rent assuming that the other half stays at home to raise the kids? (And have money left for a pension, and more importantly, to keep paying the rent in their old age)?

If rental costs were say, 15% of home take, would people be so obsessed about home ownership? I wouldn't.

The rationale used in this board is than buying cost more than renting in terms of monthly outgoings. However, renting is freaking expensive. Finger in the air, the "book" value of a house shouldn't be more than 100 rental payments.

I would say that most people on this board still have a distorted view of what the cost of housing should be!. A timid 50% crash would bring most houses more or less to the level of current rental outgoings, that is, 50% of home take. Add council tax, 200% inflated gas bills, and there's nothing left. I would say that the average mortgage for the average wage earner, say £1600/month should be something in the region of £400 AT MOST. This again would be the "average" property, say a terraced 2 bedroom house with a small garden. Is this sensible, have costs ever been like this relative to earnings?

Can't argue with any of that, although can't agree all that radically with it either or I'll get in trouble with the "we've got loads of houses, no need to build more" brigade on here. Fact it, we haven't got as many HOUSES* as we need in the places we need them**.

* Note, HOUSES, not flats, not 'properties', not appartments... HOUSES.

** Not using this as some sort of bullish argument, just saying that we'd have a massively different property sector if shitty little flats weren't considered perfectly acceptable for couples with kids.

Share this post


Link to post
Share on other sites
Do you think that in most towns a single spouse can afford the average rent assuming that the other half stays at home to raise the kids? (And have money left for a pension, and more importantly, to keep paying the rent in their old age)?

If rental costs were say, 15% of home take, would people be so obsessed about home ownership? I wouldn't.

The rationale used in this board is than buying cost more than renting in terms of monthly outgoings. However, renting is freaking expensive. Finger in the air, the "book" value of a house shouldn't be more than 100 rental payments.

I would say that most people on this board still have a distorted view of what the cost of housing should be!. A timid 50% crash would bring most houses more or less to the level of current rental outgoings, that is, 50% of home take. Add council tax, 200% inflated gas bills, and there's nothing left. I would say that the average mortgage for the average wage earner, say £1600/month should be something in the region of £400 AT MOST. This again would be the "average" property, say a terraced 2 bedroom house with a small garden. Is this sensible, have costs ever been like this relative to earnings?

they are like this in countries with lax or no planning laws. ie rents are about half or 1/3 the take home wage of what we pay.

not surprisingly the price of homes is just a bit above build cost and land (but because of lax planning or no planning the price of land you can build on is no higher than any other land, so in this country that would be about £5k an acre)

Share this post


Link to post
Share on other sites
Good point. To borrow Eric's mantle - credit cards, ovedrafts, general easy credit - rent has been bid up in the "good" times.

IMO reality is about to hit home.

wrong, rents have little to do with credit. they do have a small effect as when you expand credit you tend to create more jobs and jobs that pay better but it isn't a big affect

by far rents are dictated by supply and demand. in this country supply is GREATLY limited "thanks" to "planning permission".

a simple fact is we build about 180k homes a year and destroy about 120k homes a year (net is about 60k)

the Spanish build about 800k homes a year and destroy about 100k homes a year (net about 700k)

so why is it the Spanish whom have a lower population than us can build 10x as many homes??

Share this post


Link to post
Share on other sites

I was told by a mate today that his son was looking for a flat in a desirable area, the Management Company gave him 3 properties and informed him that number 3 the cheapest was offering a free 42" LCD TV with Freeview and built in DVD, a Laptop Computer Wi Fi ready, and a 12 months Broadband contract, option 3 with BT Yahoo.

Hope it is still available after the sale of my property. :)

Share this post


Link to post
Share on other sites
Supply/demand setting price isn't numbers of "buyers" or "homes"; it's about available/needed money. (And Spain is nothing to do with it, except as an indicator.)

people don't borrow money to pay the rent, so it is a much clearer picture to supply & demand.

this country doesn't have enough homes/flats/rooms so the amount we pay in rent is very very high in comparison to many factors. the biggest and clearest is the take home pay to rent ratio of the UK (restricted supply via planning laws) and other countries.

here, on average we pay 50% or more of take home pay on the average house. in countries where planning is more lax this is closer to the 25% mark!

Planning laws are a VI system in place to keep rents high, that is a FACT!

Share this post


Link to post
Share on other sites
Planning laws are a VI system in place to keep rents high, that is a FACT!

This is true. Especially if you think of 'rents' in the broader sense to encompass the rentable value of owner-occupied property.

Edited by thecrashingisles

Share this post


Link to post
Share on other sites
this country doesn't have enough homes/flats/rooms

Well, you could have knocked me down with a feather. :unsure:

Edited by Ferret

Share this post


Link to post
Share on other sites
Cells, you are right. There is about an acre per person in the UK. If you gave everyone an acre and free reign to do as they please in a few months we would have thousands of new world-beating industries exploding into our view.

Luckily we have hundreds of people subsisting in flats who can tell us to shut our bins instead.

4 acre per family.

why are even the renters on a HPC website such NIMBYs.

removing planning laws, or at least planning laws for homes, doesn't mean we are going to destroy all our current stock and build a family home every 4 acres. it means that we will build homes until an equilibrium is reached, whereby buying a plot of land (about £5k today per acre) and building a home makes little financial sense.

i believe that would add about 5m to our stock, of which imo 2m would be within London.

that would push rents down to about half of what they are and prices POST CRASH will seldom be higher than build cost.

5m homes each taking up 200m sq would add 1m sq mt.

in total we have 250,000m sq mt

so losing 1/250,000 of our land is going to somehow blight us according to renting NIMBYs

Edited by cells

Share this post


Link to post
Share on other sites

I am unsure of the building cost in the UK however in NZ the costs are way haigher then 10 years ago

Materials have risen faster then "inflation", we require costly resource conscents and building inspections (a buy product of lax regulations 15 years ago that lead to 1000's of leaky homes being built... now the regs are too tight IMHO)

But more then anything else the land itself is expensive. Builders have also moved away from building a home for a couple to spec building with very good margins, they are simply not interested in working on a fixed cost basis when so much could be made during the boom years.

I am looking at building here myself once i can get a section at a realistic price. thinking about 12-18 months and by off a desperate investor :lol:

then build and contract in labour from unemployed builders :rolleyes:

has anyone here ever lived in a thatched house?

thanks kiwi

Share this post


Link to post
Share on other sites
Within London? :huh: Or within the M25?

if planning laws where lax imo we would see 1.5-2m new "homes" within London (M25). more accurately I think we would see 3m more bedrooms within London and a lot of "commuters & family" would move back into London instead of travailing in 50-100 miles a day.

I think London would expand from about 7 to 9m

Edited by cells

Share this post


Link to post
Share on other sites
has anyone here ever lived in a thatched house?

I Had an ex customer who lived in a thatched house.

The terms of their insurance was that if the property was empty for more than 24 hours they had to turn the gas and eletricity off from the mains.

Bloody awkward if you have a fridge and freezer full of food. :(

Share this post


Link to post
Share on other sites
if planning laws where lax imo we would see 1.5-2m new "homes" within London (M25). more accurately I think we would see 3m more rooms within London and a lot of "commuters & family" would move back into London instead of travailing in 50-100 miles a day.

I think London would expand from about 7 to 9m

I've often wondered at the 'inefficiency' of London in terms of population density and quality of life per square metre. Take an area like Fulham which is basically just rows of two-storey terraces and imagine what it would be like if the same area were filled with high quality 5 or 6 storey blocks of flats. You could house more people to a higher standard AND have more green space and trees.

Edit: I think I'm right in saying that K&C is one of the most densely populated parts of London, which doesn't stop it being the nicest.

Edited by thecrashingisles

Share this post


Link to post
Share on other sites
I've often wondered at the 'inefficiency' of London in terms of population density and quality of life per square metre. Take an area like Fulham which is basically just rows of two-storey terraces and imagine what it would be like if the same area were filled with high quality 5 or 6 storey blocks of flats. You could house more people to a higher standard AND have more green space and trees.

Edit: I think I'm right in saying that K&C is one of the most densely populated parts of London, which doesn't stop it being the nicest.

imo a laxer planning permission on the whole would see us living more densely and closer to work, denser per kmsq but in bigger homes/flats contrary to the belief that ever man + dog will move into the centre of some field 40miles away from everything and build a shithole.

K&C is the densest place i have lived by far, they are mostly flats 5 odd stories high and lots and lots of them there. It is the nicest place I have lived but probably more to do with affluence than density of living.

Also note how people are happy to live in flats there, yet flats anywhere else are for ignorant reject benefit claimants. :rolleyes:

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 399 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.