Thursday, May 14, 2015

All about the Red and Blue Wings of the Homeownerist party

BBC: Could a UK politician ever vow to bring down house prices?

Someone else has had the same thought someone here had years ago.
I remember that in the same thread a home owner (with the emphasis being on owner as opposed to mortgagee) saying that they would be de be pleased if prices dropped 50% because then they could afford to move and get a decent one. I'm now in a similar position myself hence the continued interest in this subject.

Posted by tenyearstogetmymoneyback @ 07:43 AM (2937 views)
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5 Comments

1. mister ed said...

You need to take advice from our resident free-market-capitalist local-government-employee house-price-ramper, Libertas. He assures everyone that rising house prices are no obstacle to buying a bigger house or a house in a better area, with better schools, environment etc.

A Libertas quote from another thread:

"Owners... soon amass a vastly improved deposit as they pay down their mortgage and get capital gains. They then have a choice, move to a bigger place in the same neighbourhood, or remain in a similar or maybe smaller place in another neighbourhood."

Of course, by simply doing the maths it becomes obvious that since house prices rise by a percentage, the more expensive houses rise more in real terms compared to the cheaper houses, and therefore become more out of reach as time goes on to those wanting to trade up to a bigger place and/or better area.

I'm sure Libby will be on here replying to your post with the financial secret to overcoming this. I think the answer lies in having rich parents who can bung you a few hundred grand to make up the shortfall between what you can borrow and the price of the house you want to buy. I always find that the simplest answers are usually the best. :-)

Thursday, May 14, 2015 10:20AM Report Comment
 

2. mombers said...

@1 There were a bunch of articles a while back about the plight of the 'second steppers' - those who needed to tap Mum And Dad again when moving to a more expensive house...

Thursday, May 14, 2015 12:07PM Report Comment
 

3. britishblue said...

Mombers@2.

I move quite a few second steppers now. Many are keeping their flat which they own and renting it out and stepping up and moving into a rented property. They cant afford the extra £150,000 for another room but want to keep their feet on the rungs of the ladder, even though it is the bottom run and they maybe renting a larger property up until their family grows up.

Thursday, May 14, 2015 12:59PM Report Comment
 

4. sibley's b'stard child said...

Not yet. Once the HPI beneficiaries die off in enough numbers to be replaced by the priced-out electorate, then yes.

Until then we can expect the usual platitudes and bungs to the 1%

Thursday, May 14, 2015 02:00PM Report Comment
 

5. mister ed said...

@3 Britishblue

That's interesting. It could be that this is the way things will go from now on, with people deciding to rent the bigger place just for a few years until the children fly the nest.

There is the problem not only of getting an extra room, but also of moving into an area with good schools for the children.

For an extra room where I live (say trading up from a 2-bed flat to a 3-bed semi) you're looking at an extra £250,000 at least. And even that doesn't mean you'll be in the catchment area of the really good schools. For that you need to look at paying an extra £400,000.

The joke is, of course, that even after paying all that money, there's no guarantee you'll get a place in the school of choice. Even worse, if you don't get in your first choice, there's a good chance you don't get a place at your second or third choice, because the places there go to those parents who elected those as their FIRST choice. And so you then snake down the ladder of despair to the sink school on the far side of town... and are several hundred grand in debt to boot. :-)

In these circumstances it makes sense to rent in the good area, and then if you don't get the place in the good school at least you haven't mortgaged yourself to the hilt for no gain.

I sold up a few years ago in order to rent in a really good area and get my kids into excellent schools. Once they've gone off to Uni or started work, I'll buy (or rent) a smaller place.

Of course, there is the small matter of my children then having to cope with ridiculous house prices and not being able to afford to buy, though my advice to them is to emigrate and have done with it. ;-)

Yup, it's a crazy system we live in.

Thursday, May 14, 2015 02:05PM Report Comment
 

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