British Houses Headed for long term decline - Moneyweek.

undetterred

Joeskeppi wrote: »

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.

Thats the problem many will not forgo anything,its a given right to own a home,all the furniture that goes with it and drive a top motor.

Spartacus_Mills

HAMISH_MCTAVISH wrote: »

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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....

"In your experience" is meaningless, sorry.

You made a point about renting versus buying as if renters had an ongoing cost burden and buyers did not. That is plainly untrue.

However as I have bought I personally prefer buying to renting and the appeal is, in part, not having a mortgage to pay. However I am not naive enough to believe that is where my financial obligations end and sooner or later I will have to fork out for major work to be done that I would not have to pay if I was renting.

There are advantages to being a renter as there are advantages to having a mortgage. You pays your money etc etc.

StevieJ

Shall we have a laugh at previous attempts of Moneyweek to sell their odious magazine, found this on the MF discussion forum, thanks KON.

http://www.fsponline-recommends.co.uk/page.aspx?u=mwkrally&tc=NMYKK902&PromotionID=2147066234&

This was earlier in the year, it difficult to contemplate where you could have received worse advice :eek: Good for a laugh

Spartacus_Mills

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.....;)

Due to 15% interest rates at the time.

Hardly a true comparison is it and certainly irrelevant to where we are at the moment.

Can you please provide references for all of your citations please.

Spartacus_Mills

StevieJ wrote: »

Shall we have a laugh at previous attempts of Moneyweek to sell their odious magazine, found this on the MF discussion forum, thanks KON.

http://www.fsponline-recommends.co.uk/page.aspx?u=mwkrally&tc=NMYKK902&PromotionID=2147066234&

This was earlier in the year, it difficult to contemplate where you could have received worse advice :eek: Good for a laugh

That is a terrible advert. It is like one of those get rich quick scams or diet scams you get.

It also made my eyes hurt.

chucky

Spartacus_Mills wrote: »

Due to 15% interest rates at the time.

Hardly a true comparison is it and certainly irrelevant to where we are at the moment.

Can you please provide references for all of your citations please.

he does have a point - not a complete point but he has a very valid point. interest rates had been over 10% previous to the 1990s and didn't go below 8% until about 1993ish. that isn't cheap!

interest repayments on the average house price in 1990 were less affordable than they are now (even if we use 6% or 7% interest rates) - the capital repayment part is another subject though).

all things being equal buying a house now is cheaper than 1990 for the majority of people. the cost of a house isn't the ticket price but you have to factor in interest rates, inflation etc. etc

HAMISH_MCTAVISH

Spartacus_Mills wrote: »

Due to 15% interest rates at the time.

Hardly a true comparison is it and certainly irrelevant to where we are at the moment.
.

But wait a minute.....

You bang on about house prices being too high, yet you are using an index (average price to salary) to justify that, and the long term average of that index is also skewed by 15% interest rates. In fact, records of it only go back to the 50's on one index and the 70's on the other, and it is skewed by four decades of the highest interest rates in the BoE's 300 year history.

Which is why so many of us state that the old average of 4 times income is irrelevant nowadays. Because when it was the case, interest rates were in double digits.

Hardly a true comparison then is it.... and certainly irrelevant to where we are today, now that the entire system for setting base rates has changed. (MPC vs Govt, set inflation targets, no ERM, etc etc etc)

Spartacus_Mills

HAMISH_MCTAVISH wrote: »

But wait a minute.....

You bang on about house prices being too high, yet you are using an index (average price to salary) to justify that, and the long term average of that index is also skewed by 15% interest rates. In fact, records of it only go back to the 50's on one index and the 70's on the other, and it is skewed by four decades of the highest interest rates in the BoE's 300 year history.

Which is why so many of us state that the old average of 4 times income is irrelevant nowadays. Because when it was the case, interest rates were in double digits.

Hardly a true comparison then is it.... and certainly irrelevant to where we are today, now that the entire system for setting base rates has changed. (MPC vs Govt, set inflation targets, no ERM, etc etc etc)

As stated above.

Can you please provide references for all of your citations please.

Thanks

Spartacus_Mills

chucky wrote: »

he does have a point - not a complete point but he has a very valid point. interest rates had been over 10% previous to the 1990s and didn't go below 8% until about 1993ish. that isn't cheap!

interest repayments on the average house price in 1990 were less affordable than they are now (even if we use 6% or 7% interest rates) - the capital repayment part is another subject though).

all things being equal buying a house now is cheaper than 1990 for the majority of people. the cost of a house isn't the ticket price but you have to factor in interest rates, inflation etc. etc

We also have more fixed rate mortgages now as well which has helped as well as daily interest, overpayments etc etc.

I think cherry picking a year when we had extremely high interest rates for a variety of reasons is flawed. I think he would have been better served making the point you made TBH. I am interested in the references for this information.

I would also be interested to know what affordability is on a like for like basis with regards to different types of property. The whole property market has changed massively in the last few years especially with the proliferation of 1 and 2 bed flats and these vile townhouses.

MatteH

ukcarper wrote: »

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.

You're talking nominal drops as opposed to real drops in value. If the average wage was currently £50,000 & your house was say £200,000......

If average wages went up to £100,000 & your home was still 'worth' £200,000 in 10 years, it has lost value (in relation to money). When this happened in the past it made it easy for people to trade up to those big houses. With a lot of the current generation struggling to get on the ladder with very good jobs & salaries, how do you think they will be able to afford to buy anything larger?.

One way (nominal falls) or the other (real falls) it will happen.