Why house prices are certain to fall

nearlynew

chucky wrote: »

70% of the property in the UK is owner occupied. property must be affordable to the majority of the UK for 70% to already own.

I wonder how many of that 70% could afford to buy their own house today?

ruggedtoast

chucky wrote: »

70% of the property in the UK is owner occupied. property must be affordable to the majority of the UK for 70% to already own.

Based on pre 2004 prices it was. Its not very affordable for first time buyers now and its a big question mark over the future of property here if FTBs remain locked out.

Me and Mrs RT have a deposit and (touch wood) reasonably safe jobs, and we're having a tough time despite the places we're looking at being on average £50,000 down on a couple of years ago.

There are a lot of other people we know in their 30s, with degrees and white collar jobs and student loans, just having their first kid, or postponing kids altogether because of house prices, who are in despair.

Its off topic a bit but some of my family dropped out of school, got a council bedsit, sat on a waiting list for a few years, eventually got a council flat in a nice area because of where they were born, had kids, bought it, sold it as soon as they were allowed for £100,000 straight profit, bought another house, and sold that. They're now just exchanging contracts on a place worth a quarter of a million and their mortgage is next to nothing.

Because they're family I'm obviously happy for them on a personal level. It would be easier to feel more happy for them if they hadnt got drunk once and said what they thought rather than what they were meant to think - and said how funny they thought it was that my wife and I had gone to University and got qualifications as well as getting fancy office jobs, but would probably struggle forever, whereas they had been given a huge windfall for basically, going on the dole and having children.

chucky

ruggedtoast wrote: »

Based on pre 2004 prices it was. Its not very affordable for first time buyers now and its a big question mark over the future of property here if FTBs remain locked out.

i 100% agree with you that property is expensive. my point is that i disagree that property is unaffordable due to the large number of people buying it. FTB's have got it hard at the moment.

ftb's will have to rent or live with parents etc until LTV's increase they will be able or have a better opportunity to buy.

ruggedtoast

chucky wrote: »

i 100% agree with you that property is expensive. my point is that i disagree that property is unaffordable due to the large number of people buying it. FTB's have got it hard at the moment.

ftb's will have to rent or live with parents etc until LTV's increase they will be able or have a better opportunity to buy.

Lets hope so.

In my opinion the real problem is the odd basket of disjointed policies that have been imposed on us since the 80s all of which seem to cover the fault line of property ownership.

On the one hand you have right to buy, then you have Brown hammering pension funds so that people suddenly see their home as an investment vehicle, then you have mass immigration to keep wages down, then theres too many people and not enough flats so its all BTL and tax breaks for people who wouldnt ever need to do that if they'd never heard of Equitable Life.

Just built some bloody council houses, impose some border controls and give people a decent pension. Surely its not rocket science.

orangefender

I hope you're wrong for all out sakes...how long can a society continue to function by rewarding those who don't contribute at the expense of those that do. Unless house prices fall within reach in the next few years, brain drain is going to become a massive problem for the UK as ambitious hard working people make the decision to start families abroad.

chucky

ruggedtoast wrote: »

Lets hope so.

In my opinion the real problem is the odd basket of disjointed policies that have been imposed on us since the 80s all of which seem to cover the fault line of property ownership.

On the one hand you have right to buy, then you have Brown hammering pension funds so that people suddenly see their home as an investment vehicle, then you have mass immigration to keep wages down, then theres too many people and not enough flats so its all BTL and tax breaks for people who wouldnt ever need to do that if they'd never heard of Equitable Life.

Just built some bloody council houses, impose some border controls and give people a decent pension. Surely its not rocket science.

i agree with all that you have said.

i actually believe that shared-ownership could be the future of owning property.
they're just putting another rung at the bottom of the housing ladder to accomodate FTB's.

mewbie_2

chucky wrote: »

i agree with all that you have said.

i actually believe that shared-ownership could be the future of owning property.
they're just putting another rung at the bottom of the housing ladder to accomodate FTB's.

OF course, that will keep the whole scam going for a while yet. Plus making property ever smaller should help. Most people could sleep 4 to a bed without difficulty.

the_ash_and_the_oak

chucky wrote: »

70% of the property in the UK is owner occupied. property must be affordable to the majority of the UK for 70% to already own.

dont really understand this. pretty sure its more that if 70% of the property in the UK is owner occupied then property must have been affordable for 70% of the UK 'at the time they bought at'

if 7 people out of 10 with a pound each buy a £1 trinket then 70% can afford trinkets. if prices rise to £10 then can 70% of them still afford trinkets?

nembot

chucknorris wrote: »

Why on earth do people keep saying this? Are they blind? Is it that they see just what they want to see?

House prices for the last 50 years or so have risen then eventually got above affordability levels and crashed back, recovered then increased again. This is normality right now, we are just near the bottom of the crash part of the cycle, next we will be in the stagnation phase (if not in it already) then we will see gentle (sustainable increases) followed by more substantial increases. Eventually probably in about 15-20 years someone else (or maybe you again) will be saying on this website thank god prices are crashing and we will go back to normality, but this is normality.

It's clear this is a cyclic event and you are absolutely correct apart from the missing 20%, before finally reaching normality.

Lets not fight, we can talk about this in a year or two

chucky

the_ash_and_the_oak wrote: »

dont really understand this. pretty sure its more that if 70% of the property in the UK is owner occupied then property must have been affordable for 70% of the UK 'at the time they bought at'

if 7 people out of 10 with a pound each buy a £1 trinket then 70% can afford trinkets. if prices rise to £10 then can 70% of them still afford trinkets? (i guess they could if they sold to each other?)

no because - if you buy in 2003 the property it is bought at 2003 prices.
you will be or should be paying your mortgage at 2003 house prices.

your salary will be a 2009 salary which should be higher than it was in 2003 so all in all it should be much more affordable than it was then.

over-payments (if possible) would make your mortgage cheaper too.

your selling-to-each other is the key here - hence the concept of getting on the property ladder.