Roll up. Make your housing market prediction here.

rozeepozee

And then I read this http://news.ft.com/cms/s/8b59cd22-612a-11da-9b07-0000779e2340.html eek!

inmypocketnottheirs

Rozee, very valid points. I don't think you can compare the UK with housing markets anywhere else in the world. The structure of the domestic market here is inherently different to anywhere else. We have decades of short supply, there simply is not enough housing stock to go around. The main criteria imho is Location,Location, Location. If you can buy at the right price i.e. 10% or more below the current market and create instant equity, then this should help to buffer. Personally, because of shortage of supply round here (Cheshire) I can not see any dramatic fall.

Just wish someone could tell me another way to provision for retirement!!!!!

adr0ck

Meanmachine

i'm still waiting for "the most basic of recent historical research" to tell me that one person on average wage can afford an average priced house in the past 10 -15 years

come on wheres the most basic historical reserach??????????

meanmachine_2

adr0ck wrote:

Meanmachine

i'm still waiting for "the most basic of recent historical research" to tell me that one person on average wage can afford an average priced house in the past 10 -15 years

come on wheres the most basic historical reserach??????????

Are you being serious?

How about this: the average wage in 1994 was £18K. The ave house price was 60K.

Today, the average wage is somewhere between 22K and 25K, depending on the index you use.

The ave house price is between 165K and 200K, again depending on the index.

I think even you can work out the differential there.

EDIT: Oh, and before you ask, base rates were just 5.25% at the time.

adr0ck

meanmachine

i take your point..........but where i am:

average house £120 -£130 k

average wage £20 -£22 k

so i guess its not as bad as national average

I also think this is a valid point:

"Some people compare the average monthly mortgage payment against take home pay as an alternative measure of affordability. We reckon it's probably a more valid measure too. At the moment it's around 30%, which is about the same as the historical average. On this basis, houses are fairly valued. In the late 1980s however, this figure rose to 60%. So you can see why house prices had such a torrid time in the early 1990s."

from motley fool

meanmachine_2

But 14% interest on a house worth just 50K is much the same as a 5% rate on a house worth 150K, isn't it?

All that's changed is wages, which have gone up a bit.

The OECD's figure is actually "32% overpriced". Which sounds about right. again, in 1994, houses were very cheap - at about 20% under the historical norm.

That's why the rises since then seem so spectacular - and why it's impossible for prices to keep climbing.

To return to the normal trend, I think I read that today's (2004's) prices need to stay flat for 7 years!!!

adr0ck

i agree....i believe that prices will remain about what they are now for approx 5 - 10 years

but i don'y believe were going to see a drop in prices (just not enough supply)

i believe asking prices are approx 10% overpriced

i just don't think theres going to be a drop in prices as were simply not building and restoring enough houses especially when you take into consideration that were now living more seperate i.e. the number of people per house is dropping (through divorce...people getting married much later, people living longer etc etc)

kinster_2

more and more people these days have other forms of income. Can be either passive income or income from businesses. It is not just based on wages

bunking_off

meanmachine wrote:

Are you being serious?

How about this: the average wage in 1994 was £18K. The ave house price was 60K.

Today, the average wage is somewhere between 22K and 25K, depending on the index you use.

I'm not a statistician. But can you give a source for your figures? Thing is, £18k - £22k = 22% growth over that 11 yr period, ie salary inflation <2% per year. Just seems a bit low to me. I know that the current official salary inflation index is at approx 118, where July 1999 is 100 - that would suggest perhaps 35-40% salary inflation back to 1994. That would imply that average wages back in 1994 were a bit lower than you suggest.

Not undermining the overall thrust of your argument - the price multiples have undoubtedly surged. However, I think a fairer figure to look at is cost to service a mortgage on an average house, rather than the actual house price - after all, it's this figure that matters to the running of household accounts.

inmypocketnottheirs

Valid points from ardr0ck and kinster. The question is I guess where would you rather be in 25 years time? A tenant who has paid £150K on rent with nothing to show, based on £500 a month rent (no increases), or with a pile of bricks and mortar to call your own. And where has there ever been an example over 25 years of any one ever losing money on property?