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Debate House Prices
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British Houses Headed for long term decline - Moneyweek.
Comments
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HAMISH_MCTAVISH wrote: »[/FONT][/COLOR]
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.
That goes without saying but unless you have a whacking great deposit you cannot get anywhere near cheap credit although you can get credit.
Credit is there at the moment and has been all the way through.
However it was easy credit that stoked the market and that has dried up. That is a good thing IMHO.
HAMISH_MCTAVISH wrote: »[/FONT][/COLOR]
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.
How many single occupancy dwellings last year were converted to multiple occupancy dwellings ?
How many flats were built last year ?
The government can try to do what they want, if people want to go back they will. I believe we will see a lessening of demand for property as we get an outflux of immigrants which has already started.
We also cannot ignore affordability. That is absolutely crucial to the market functioning on an ongoing basis.
HAMISH_MCTAVISH wrote: »
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.
You have a flawed assumption here. The fact you finish the mortgage after 25 or however many years does not mean you have no financial liability towards the property. It needs to be maintained, repaired, decorated and any problems remedied at your cost which by and large is not the case for the renter. So you are not really comparing like for like just by looking at the cost of the mortgage against the rent. With renting you also have the flexibility that if you do not like the area you can simply up sticks and move.
I say that as a mortgage holder who is happy that I am coming to the end of my mortgage shortly.
Prices may go up and they may not. Demand alone will not make prices go up inexorably as prices need to be affordable.
"There's no such thing as Macra. Macra do not exist."
"I could play all day in my Green Cathedral".
"The Centuries that divide me shall be undone."
"A dream? Really, Doctor. You'll be consulting the entrails of a sheep next. "0 -
Thats not the point if house prices only increased with inflation it would still be cheaper to buy than rent.
As I have said earlier my first house was aproxx 5.5x average salary in 1972 and is 7 may be 8x now thats doubled in 37 years not 7.
well tbf it does depend on your starting point. If houses only increased by inflation from today onwards and rent was cheaper than mortgage interest and you invested the difference in something that was rising faster than inflation?Prefer girls to money0 -
My mortgage on 1st house was about £40 a month, if house was 4x the price it was mort would be have been £160 if I was still there and paying it it would be £160. it would now cost £800 to rent .0
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the_ash_and_the_oak wrote: »well tbf it does depend on your starting point. If houses only increased by inflation from today onwards and rent was cheaper than mortgage interest and you invested the difference in something that was rising faster than inflation?
But how long would rent stay cheaper than Mortgage House near me £180k mort cost with out deposit at 4% Approx £950 month 25 yrs rent approx £800 at 3% inflation about 6years until £950.0 -
Spartacus_Mills wrote: »We also cannot ignore affordability. That is absolutely crucial to the market functioning on an ongoing basis.
Oh absolutely, and I'm glad you brought that up.
In 1990, the average mortgage was 68% of after tax income.
Today, the average mortgage is just 30% of after tax income.
The long term average is 38% of after tax income.
So I was wondering....... Which is more affordable, 30% or 68%?
Because houses were much cheaper in 1990, yet people paid far more for them.....;)“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Oh absolutely, and I'm glad you brought that up.
In 1990, the average mortgage was 68% of after tax income.
Today, the average mortgage is just 30% of after tax income.
The long term average is 38% of after tax income.
So I was wondering....... Which is more affordable, 30% or 68%?
Because houses were much cheaper in 1990, yet people paid far more for them.....;)
that's cheating though Hamish - what rates are they calculated at - SVR/tracker or fixed rates?0 -
My old man reckons he couldn't even afford a pint when he bought his first house all those years ago, reckons people nowadays don't realise how easy it is.This is a system account and does not represent a real person. To contact the Forum Team email forumteam@moneysavingexpert.com0
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Spartacus_Mills wrote: »
You have a flawed assumption here. The fact you finish the mortgage after 25 or however many years does not mean you have no financial liability towards the property. It needs to be maintained, repaired, decorated and any problems remedied at your cost which by and large is not the case for the renter. So you are not really comparing like for like just by looking at the cost of the mortgage against the rent.
The mortgage or rent is the biggest component by far. Average repair/decoration costs are tiny by comparison. In my experience no more than 10% of the rent/mortgage costs over a long term average, often much less.
Maintenance on my second house has cost less than £100 a year so far. On my first house it was 10K over 20 years, but we did redecorate and redo bathrooms and kitchen, etc, (optional really, only done at the insistence of the wife) and it is a large detached....
With renting you also have the flexibility that if you do not like the area you can simply up sticks and move.
Yes, but you pay dearly for the privilege.
Prices may go up and they may not. Demand alone will not make prices go up inexorably as prices need to be affordable.
As in previous post. The price is only a part of the cost. Houses are more affordable now than in the early 90's,, by a long shot. And more affordable than the long term affordability average.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
that's cheating though Hamish - what rates are they calculated at - SVR/tracker or fixed rates?
From memory it is calculated as the average of all mortgages on the actual deals they took.
I believe there is a similar but lower stat in the DCLG housing stats thread, but it's from gross income, not net.
Worth pointing out that real world rates today are still around 5%, much as they were at peak, so it's not particularly skewed by low base rates either.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
the_ash_and_the_oak wrote: »who thinks debt is wealth?
Anyone whoever participated in the carry trade?
That is opportunity :beer:'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0
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