Why Are High House Prices A Good Thing?

Really2

hundredk wrote: »

Death does redistribute but if that the inheritance is a smaller sum, say the 25k, there may be more of an inclination to spend it on things that do not subsequently get redistributed, eg cars, hols etc (or pay off the cc). As the figure gets larger, say 50k or 100k there may be much more consideration in investing in an asset such as property.

If I got £25K and I was looking to buy or had a mortgage I know where it would go and it would not be on a car (lets face it you are more likely to inherit at a owning or looking to own stage of your life).

Spending it still redistributes it, eg. you buy car, people get paid from that sale etc.
The money you paid does not disappear but you may have squandered it.:)

hundredk

Really2 wrote: »

If I got £25K and I was looking to buy or had a mortgage I know where it would go and it would not be on a car (lets face it you are more likely to inherit at a owning or looking to own stage of your life).

Spending it still redistributes it, eg. you buy car, people get paid from that sale etc.
The money you paid does not disappear but you may have squandered it.:)

What if the figure was 10k,.or 5k..or £500. The point I was making is that the smaller the inheritance, the more likely it is to be lost (ie not available for redistribution) by those inheriting spending on items that are not then realised in your estate. Buying a car does not redistribute it to future generations because the car depreciates. I would think that many who inherit at owning stage would not necessarily just bank it to pass to next generation - more likely spend a chunk of it in retirement :beer::j:T and "just" aim to leave the house.

SandC

Not so sure about that Really. My friends and I are all swiftly heading towards 40 next year or the year after and I'm the only one who has lost parents (still have a wonderful stepmum) and mine were considered 'old' by not having me until the age of 40.

By that reckoning my friends stand to be around retirement age themselves before losing their parents (some of them still have grandparents too).

Edited to say I see what you mean now, it's also about paying off any mortgage if you already own. Even then, I would not expect any of my friends to still have a mortgage at retirement age.

Really2

SandC wrote: »

Edited to say I see what you mean now, it's also about paying off any mortgage if you already own. Even then, I would not expect any of my friends to still have a mortgage at retirement age.

But many leave the money to grand children not child when they get over a certain age (if your child was set for life would you leave it to them or the grandchildren starting out?)

the point is no mater the size the wealth gets redistributed it is not stuck at old people then it disappears.

A higher population means it has to distribute further.

My point is in saying "it only benefits the elder" is simply not true as the wealth in time will be distributed to the younger.

TDS_2

House prices rising at a greater rate than incomes only benefit those people that are able to crystalise the profit. Either people who no longer need a home or those that own property in addition to their home. Government and those involved in the property market also gain. The general public do not gain anything.

lostinrates

SandC wrote: »

...... it's also about paying off any mortgage if you already own. Even then, I would not expect any of my friends to still have a mortgage at retirement age.

This is very valid. In my family if both siblings were home owners purchasing on ''normal'' 25 year term at average 30 year old start date (can't remember who gave me that average last time, and an older one) then were my parents to die in the next few years and we stood to inherit then one would be almost finished/finished mortgage term, where as I will have just started! A it happens we know exactly what will happen to any remaining mone: of which I hope there is none!- in various scenarios.

Kenny4315

I'd rather live in a high priced economy than a low one, as within that market its all relative, cost of living and salary demands, etc. Go and check out the price of luxury goods in low value economies, they're beyond the realms of all but the super rich.

Mozette

PasturesNew wrote: »

£65k for a 4-bed has been a reality in many areas in the last 10 years ... then it got crazy.

My parents spent just a tad more for a 3-bed semi 13 years ago ... then it went nuts. I guess it's now worth about £200k but £250k at peak.

There are still 4-beds in some areas at £65k so it's not completely bonkers.

If BTL-style lending had never happened, if 6x joint income had never happened (stayed at about 3x), if lie-to-buy had never happened .... many houses in many areas wouldn't be much more than that.... say £100k for a good sized house in an average area.

I agree with you; I remember within the last 10 years a friend of mine buying a house for just over £100,000 (3 bed semi, nice road, good area for schools etc) and her saying to me "who'd've thought the likes of us would have a house worth over £100,000?" - it seemed like all the money in the world then! Same house was valued at the peak at about £350,000.
That's a rise of a quarter of a million pounds in less than 10 years. Why?
Madness. (When I say 'worth' and 'valued', it is with a degree of irony!)

dopester

Really2 wrote: »

I will leave all my estate to my son, or his grand children.

Got a will? You ought to get one. I've made one.

It can be a bit of a downer to think about, and you can often find yourself delaying constantly to get done.. but afterwards you know you did something very responsible.. and peace of mind should you not reach a merry old age.

Even if rules of intestacy would see your son sorted out... you don't want to put them through... lets see... Will Search (professional service) and then maybe years of administration of the estate and solicitors taking their cut with fees if you die intestate.

lostinrates

dopester wrote: »

.

Even if rules of intestacy would see your son sorted out...

Hmm. to a degree. Presumably a lot of parents who'd like their kids to inherit want them to get the house too, being where the bulk of most peoples ''wealth'' is. I'm not sure if the cash amount has risen that goes to spouse before children, but lots of younger people who house own won't have lots over £120k which is what I believe it used to be: to leave to their kids. I have no idea about intesticy laws now they have all changed but I have seen families ripped apart by them.

Wills are important however simple you think your stuff is.