British Houses Headed for long term decline - Moneyweek.

chucky

Spartacus_Mills wrote: »

What are you burbling on about ?

you still here?

Spartacus_Mills

MatteH wrote: »

This is verging on the absolutely hilarious.

Most people in their late 20's to early 30's that own, are struggling with a mortgage on very modest property. People who have the same if not better careers & earning power than their parents did, but due to high HPI have a much lower standard of housing. Quite often with couples both having to work full time, which wasn't that common when i was growing up in the 1980's.

With out a massive drop in real terms of the current average property value (like which happened due to periods of high inflation in wages throughout their parents lifetimes), how do you think these people will be able to buy the 4+ bed detached properties their parents own?.

If properties become cheaper in real terms, then what does that say about the value of your 'investment'?. The baby boom generation are in for a real shock when they all try to downsize!!!!. Personally, i expect to see the large 'boomer' properties lose around 40-50% of their current real value to enable the younger generation to trade up.

Maybe even without any more nominal drops in value, because i don't see the easy credit returning.

I generally agree with this. What is clear is the large scale rises of the past cannot go on into the future. The Wilsons proclaimed prices double every seven years. The Burberry wearing old hag even promoted a property bond that offered to turn £10,000 to £80,000 in 21 years as their mantra was property doubles in value every 7 years. This logic would see pricing of a £200K house hit £1.6 Million in 21 years. Clearly absurd and not going to happen.

I do not see easy credit returning any time soon either in spite of what the government may want to see and it is not in any of our interests to see easy credit returning either.

The demand side should start to ease, certainly in the South and South East, as we get an outflow of the economic migrants who came to this country during the good times and now wish to return home. We are already starting to see it.

There certainly does need to be a massive drop in value in relation to wages to make the market more accessible to the first time buyers needing to get a foot on the ladder and the people trading up. It is not in anyones interest for this not to happen apart from those sitting on a plainly overvalued asset class.

Spartacus_Mills

chucky wrote: »

you still here?

Obviously.

You avoided the question, again, what on earth are you burbling on about ?

chucky

Spartacus_Mills wrote: »

I generally agree with this. What is clear is the large scale rises of the past cannot go on into the future. The Wilsons proclaimed prices double every seven years. The Burberry wearing old hag even promoted a property bond that offered to turn £10,000 to £80,000 in 21 years as their mantra was property doubles in value every 7 years. This logic would see pricing of a £200K house hit £1.6 Million in 21 years. Clearly absurd and not going to happen.

I do not see easy credit returning any time soon either in spite of what the government may want to see and it is not in any of our interests to see easy credit returning either.

The demand side should start to ease, certainly in the South and South East, as we get an outflow of the economic migrants who came to this country during the good times and now wish to return home. We are already starting to see it.

There certainly does need to be a massive drop in value in relation to wages to make the market more accessible to the first time buyers needing to get a foot on the ladder and the people trading up. It is not in anyones interest for this not to happen apart from those sitting on a plainly overvalued asset class.

a good post Spartacus - i agree with all of that.

ukcarper

MatteH wrote: »

This is verging on the absolutely hilarious.

If properties become cheaper in real terms, then what does that say about the value of your 'investment'?. The baby boom generation are in for a real shock when they all try to downsize!!!!. Personally, i expect to see the large 'boomer' properties lose around 40-50% of their current real value to enable the younger generation to trade up.

.

A drop of 50% would make my 4 bed detached in the Southeast £135k although I think it’s value could easily fall I think it will be a long time before it reaches that value. As an aside two house the same as mine sold in 2007 both to people in there 30s one of which has sold again this year for 3% less than it sold in 2007 again to people in their 30s.

HAMISH_MCTAVISH

Spartacus_Mills wrote: »

I generally agree with this. What is clear is the large scale rises of the past cannot go on into the future. The Wilsons proclaimed prices double every seven years. The Burberry wearing old hag even promoted a property bond that offered to turn £10,000 to £80,000 in 21 years as their mantra was property doubles in value every 7 years. This logic would see pricing of a £200K house hit £1.6 Million in 21 years. Clearly absurd and not going to happen.

Clearly. But none of us would disagree.

The long term average capital gain for property is inflation plus 2.9%. Most of us would be quite happy with this, I'm sure.

The 10% rises seen in the last 10 months are not sustainable forever. Nobody is claiming they are.

I do not see easy credit returning any time soon either in spite of what the government may want to see and it is not in any of our interests to see easy credit returning either.

There is a difference between easy credit and cheap credit. I would suggest it is very much in the interests of anyone buying a house to get the cheapest credit they can.

The demand side should start to ease, certainly in the South and South East, as we get an outflow of the economic migrants who came to this country during the good times and now wish to return home. We are already starting to see it.

We have seen it. And yet net migration was still positive last year. In a recession. Because as bad as it was here, it was worse elsewhere.

UK population grew by 408,000 people last year. There were 250,000 new households formed. There were just 80,000 houses built.

The immigrants are still coming in bigger numbers than people are leaving. Even if they didn't, population would still be growing through births exceeding deaths as lifespans increase.

The bottom line is the UK cannot afford to shrink due to the pensions liability. Governments will keep growth positive by doing whatever they have to with migration.

There certainly does need to be a massive drop in value in relation to wages to make the market more accessible to the first time buyers needing to get a foot on the ladder and the people trading up. It is not in anyones interest for this not to happen apart from those sitting on a plainly overvalued asset class.

Which would be 70% of households in the UK. We live in a democracy, no politician that ever wants to get re-elected will vote for lower house prices.

You have a choice. You can slave away to pay a mortgage for 25 years, or rent for 60 years. The mortgage for 25 is still, even with prices at peak levels, a third of the cost of the rent for 60. (factoring in inflation) As long as that situation remains, prices can and will continue to rise.

the_ash_and_the_oak

dont forget fellers when you make a decision to rent something or buy something its not 25 years vs 60 years unless its one house you are going to live in for that amount of time (eg someone who buys a flat and then trades up 6 years later vs someone who rents for 6 years and then decides to buy the buy vs rent calc is just for those 6 years)

the_ash_and_the_oak

also tbf people who sell property number 1 after 8 years more likely to get another 25 year mortgage than a 17 year mortgage if prices have risen more than wages in those years imo

ukcarper

I can see the point in renting in the short term. But I am just about to become mortgage free, which has taken me 38 years. I have paid less in mortgage payments than I would have done in rent over that period and am now looking forward to living rent free for the rest of my life and whether my house is worth 250k or 125k doesn’t make any difference to that.

the_ash_and_the_oak

thats a good point thats missed by many imo. when you look at the hpi of the past its pretty obv that buying is a better deal than renting and if the hpi of the past is repeated in the future then that will continue to be the case imo