The sadness/ madness of hpi

Pobby

Was having a little think tonight. We decided to buy a smaller house 10 years ago. Nice area, south west city on the coast, 2 decent living rooms, nice large kitchen with breakfast area and two double bedrooms. We were able to expose many of the late Victorian features. New kitchen, windows and a bit of a makeover and it was job done.

The price we paid was 3.5 times an income of £10k a year. They were changing hands last year at about 4 times that amount.

My point is this house would have to have been bought by someone earning around £40k a year had they have bought last year. It would be very interesting if someone could explain to me the logic, or indeed the why this has happened.

I have my own theories! Lol

wymondham

I don't think logic comes into it, or reasoning or anything else....... it was a spiral of banks lending more and people wanting more....

amcluesent

>why this has happened.<

'Social justice'. The woolly left were desperate to have coloured/immigrant communities own houses.

treliac

ac - think this is going too far for the house prices board.

Which part of Westminster do you pace?

North_Sea_Bubble

Banks and house buyers believing that RISK was no present.

Bismarck

Pobby wrote: »

Was having a little think tonight. We decided to buy a smaller house 10 years ago. Nice area, south west city on the coast, 2 decent living rooms, nice large kitchen with breakfast area and two double bedrooms. We were able to expose many of the late Victorian features. New kitchen, windows and a bit of a makeover and it was job done.

The price we paid was 3.5 times an income of £10k a year. They were changing hands last year at about 4 times that amount.

My point is this house would have to have been bought by someone earning around £40k a year had they have bought last year. It would be very interesting if someone could explain to me the logic, or indeed the why this has happened.

I have my own theories! Lol

I thought something similar with our house and wondered how I'd have been able to afford it if I tried to buy it now, after 7 years of appreciation...then I though of the job, locally I'd need to be able to fund that...and it just didn't add up because it simply wasn't do-able without huge sacrifices or a heck of a lot of equity.

Pobby

Even in the South East, under 40 miles from London, a decent 3 bed terrace was only £45k 10 years ago. Very affordable on 2 x minimum wage!!!! A friend on mine was telling me that a month or so ago one, which needed a total refurb went for £160k !!!! That was considered cheap.

No wonder the wheels are falling off right now.

GDB2222

In summer 2006, I was chatting to a local man in Norfolk that I have known most of my life but I only see about once a year. A very decent, sensible man. He was telling me about how his daughter and son-in-law were in the process of buying a bigger house "before the prices rise even further". I said rather innocently that I thought that prices were too high and would probably fall. He thought about it for 2 or 3 seconds and said, "No, I don't think so. They really need to buy now, whilst they still can." And that was it. Well, I was the city slicker who was out of touch with house prices locally, surely?

My conclusion from this sample of one is that ordinary folk weren't speculating on house prices rising, they were simply scared that prices would rise out of their reach.

It's a huge shame, and I would have curbed lending if I had been in charge of the country - and no doubt I would have been thoroughly vilified for doing so.

Pobby

I agree, market forces, greed and fear. In fact I did the same in the late 80`s. Sold my house to fund a business. Lived for a while in a flat above the premises but was advised to buy quickly as I ``might miss the boat``. The £400 a month mortgage nearly doubled as interest rates increased. Looking back a very silly move.

Jonbvn

As for any market, the two issues are always Fear & Greed. Clearly, we are well into the "fear" part of the market ATM, after a prolonged period of greed.

Incisor

amcluesent wrote: »

>why this has happened.<

'Social justice'. The woolly left were desperate to have coloured/immigrant communities own houses.

So if white people borrow and pay too much for a house [as they have been] there is no house price inflation but if non-white people borrow and pay too much [as they have been] then there is house price inflation. Sounds good so far, but given the amount of house price inflation, I would imagine that plenty of white people must have been blacking their faces when buying a house. And now we can thank the non-whites for bringing house prices back down by whiting up when they buy a house thereby bringing the prices down.