Support grows for 70% crash

Chris_Hinds

One other thing I forgot to mention earlier is that the majority of the houses in the UK have no *real* value at all, because they are not for sale. My own house has no value because it's not for sale right now, should I put it on the market I can put it up for an estimate based on what I think it's worth having taken advice, but what it's actually worth is something completely different. If Hamish thinks it's worth £170k to him to live there then fine, if someone else thinks it's worth more then fine. The reason property prices are high is because they are people who have the means to pay the price and the belief that the price is valid.

Modern houses will only get more expensive, unless many people opt to take a pay cut of tens of thousands. Material + Labour + Land = Cost of house. In the UK the Labour cost will be higher than say Africa, however many people claim building sites are filled with Eastern Europeans. People can't have it all ways - you can't have high incomes, low working hours, low house prices and cheap goods. It just doesn't stack up.

Regards

Chris

Gorgeous_George

Deleted_User wrote: »

Sorry to reply twice, but you've got me a little curious as to why my parents struggled so much to buy a house.

They bought their first house in Morden, Surrey. It was a 3 bedroomed terraced house. I think I remember them saying it cost them £2000. And this would fit with what a Google search through up about house prices back then:

The average house price in the UK in 1950 was £1.9k
http://www.wwwk.co.uk/culture/housing/index.htm

My dad was a Clerical Officer in the Civil Service. So was my mum, but once married I think my mum had to be demoted to Clerical Assistant as married women weren't allowed to be CO's. I don't know about the 50's but when I spent a short time in the Civil Service in the 80's the CA / CO wage was below average wage. Certainly a respectable profession - the start of a decent career. But I don't know if it paid an average wage.

Now, according to this:

http://www.thisismoney.co.uk/pensions/article.html?in_article_id=427290&in_page_id=6

The average wage in the 50's would have been about £350 per anum.

So (assuming these figures are correct, and I accept they may well not be) the average house price in the UK was five and a half times the average annual wage in the UK.

Add to that the fact that many married women stopped working and even if they did work their salary wasn't taken into account when it came to getting a mortgage.

My mum and dad loved to tell me how lucky I was to get a mortgage of thee times my salary back in the 80's. I'm fairly sure that my dad was only able to get 1.5 times his salary. Maybe it was 2 times. But not more than that. But regardless, back then the average priced house was out of reach of people earning the average salary - and certainly out of reach of anyone earning less than average salary.

These figures do tie up with the stories my mum and dad told me. And the fact that far fewer people owned their own homes back then makes me tend to believe them. Presumably home ownership has increased over the years because it's become possible for more people?

scarter

I like this post. It makes perfect sense and I thought I'd add...

... the psyche in the early 50's was affected by the recent war. People didn't want to buy houses. Also, there were many more affordable alternatives in the rental market - dominated by good quality council houses with good quality council tenants. I grew up on a council estate and the least desireable family at that time was quite respectable by today's standards.

GG

chucky

Deleted_User wrote: »

The average house price in the UK in 1950 was £1.9k
http://www.wwwk.co.uk/culture/housing/index.htm

Now, according to this:

http://www.thisismoney.co.uk/pensions/article.html?in_article_id=427290&in_page_id=6

The average wage in the 50's would have been about £350 per anum.

So (assuming these figures are correct, and I accept they may well not be) the average house price in the UK was five and a half times the average annual wage in the UK.

and your post accurately reflects on the percentage of property that was owner occupied in the 1950s - just 30%, now it's close to 70% which tells us it's easier to buy now than it would have been then

Percy1983

maybe its a case of people have finally figured 'why pay somebody elses mortgage and finish with nothing when I can pay my own'.

I must say in the longer term both me and my other half are set to inherit half a house each as we both have one brother so you could say that me wanting the price to come down will make no difference, but adversely I am not waiting for at least one set of parents to die before getting a house.

In that sense my parents have broken the chain and have started something to which will get passed on to my children etc. As it is my brother on the other hand is completely froze out of the market so is currently stuck renting and as bad as it sounds is only chance of owning a house is my parents dying.

But as with most the expected date of expiry of you parents and the time you want to buy a house etc generally don't match.

Gorgeous_George

chucky wrote: »

and your post accurately reflects on the percentage of property that was owner occupied in the 1950s - just 30%, now it's close to 70% which tells us it's easier to buy now than it would have been then

Percy1983 wrote: »

maybe its a case of people have finally figured 'why pay somebody elses mortgage and finish with nothing when I can pay my own'.

I must say in the longer term both me and my other half are set to inherit half a house each as we both have one brother so you could say that me wanting the price to come down will make no difference, but adversely I am not waiting for at least one set of parents to die before getting a house.

In that sense my parents have broken the chain and have started something to which will get passed on to my children etc. As it is my brother on the other hand is completely froze out of the market so is currently stuck renting and as bad as it sounds is only chance of owning a house is my parents dying.

But as with most the expected date of expiry of you parents and the time you want to buy a house etc generally don't match.

It's not that people want to buy their own homes - they have little choice. Thanks mainly to Maggie 'gerrymandering' Thatcher, the only viable alternative, the council home, has all but vanished - replaced by shoe box size new homes that are only suitable for teenagers who fall in love and buy their dream shoe box. Only to fall out of love when reality sets in. Oh how they wish they'd stayed with mum and dad.

Today, my recommendation to love's young dream would be to rent the shoe box (or stay with parents) and save for a family-sized home with a family-sized garden.

GG

misskool

Graham_Devon wrote: »

I don't have to read "I want prices to increase" to fathom out who want prices to increase. A bit of initiative suffices.

Wow Graham, maybe you should speak to Derren Brown and get that skill of yours on TV.

treliac

Percy1983 wrote: »

In that sense my parents have broken the chain and have started something to which will get passed on to my children etc. As it is my brother on the other hand is completely froze out of the market so is currently stuck renting and as bad as it sounds is only chance of owning a house is my parents dying.

But as with most the expected date of expiry of you parents and the time you want to buy a house etc generally don't match.

Nor whether your parents will, in fact, have a house to leave when they finally depart. Govts are very adept at relieving them of their assets long beforehand. Let's hope they never need long term residential care.

Maybe best not to count your chickens before they hatch!

Percy1983

Gorgeous_George wrote: »

Today, my recommendation to love's young dream would be to rent the shoe box (or stay with parents) and save for a family-sized home with a family-sized garden.

Thats exactly my plan, as it is I am staying with parents to speed the process of saving up, I probably could buy the shoe box house/flat now, but why bother to have to move in 2 years.

To be honest I am not against paying rent to the government as such so I wouldn't rule out a council house but I refuse to pay somebody elses mortgage. Either way is dead money but one feels much worse than the other.

As for not counting the chickens, that is also the other reason why I am not waiting. As great as it would be to inherit half a house, they don't owe me that so if they could use that money for themselves to make life better/easier then I would rather do this.

So in my case if would be a great bonus and certainly help clear my mortgage quicker, but its not part of the plan. Hence why I need prices to come down a bit further so I am not mortgaged till I die.

julieq

Graham_Devon wrote: »

Theres not much difference between wanting people priced out and wanting people reposessed.

Both sets of people can't afford property. You can add as much flounce and insults as you like, it doesnt' really make what you are saying stand.

There is a difference, in fact there are two big differences.

On an interpersonal or societal level, no-one in their right mind likes seeing people chucked out of their homes. People may be in straightened circumstances for many reasons, of which unemployment is the principal one. That doesn't mean they were bad risks when they took the loan out, it just means life has chucked in a big problem.

It doesn't follow that someone who can't get a loan at the moment when criteria have changed should be able to buy a house as of right. Criteria change, it's up to the lender to manage the situation that creates in terms of balancing their lending book as a function of risk. I'd like everyone in the country to be able to own their home, but that's never going to happen in reality because it's a competitive market with restricted supply.

And then there's an economic level, where it's a bad thing to have massive repossessions because it reduces bank asset bases further and feeds the recession. In that sense it's a bad thing to have repossessions and it's a bad thing to add risk to the pot by allowing more people in marginal financial state to buy. And of course banks aren't going to feed this process of deflation when they can get 5% on their capital by simply renting it back to the occupants (probably paid for partly by housing benefit in the case of the unemployed).

Of course the bears want repossessions because they don't actually care about the 70% of people in owner occupied houses and those employed in the general economy, they just want a cheap house and to flip the situation so that instead of what they see as f eckless chavs (MEWed up to the eyeballs) in nice houses and them renting, they have the houses instead. So they link those two objectives directly and can't separate them. It's faulty logic because ultimately they are not outside the system this creates, they will go down with it.

So claiming that a position where those wanting fewer repossessions are inconsistent unless they call for more affordable housing is a false dichotomy.

A better question to ask is whether you would prefer the economy to crash and burn so that those not in owner occupied property can buy, or whether you would prefer a relatively healthy economy in which a proportion are priced out.

Why not answer that one?

misskool

Percy1983 wrote: »

Thats exactly my plan, as it is I am staying with parents to speed the process of saving up, I probably could buy the shoe box house/flat now, but why bother to have to move in 2 years.

To be honest I am not against paying rent to the government as such so I wouldn't rule out a council house but I refuse to pay somebody elses mortgage. Either way is dead money but one feels much worse than the other.

You're lucky you can stay with your parents to save up. I couldn't (they live on a different continent) so I paid rent. It's a nice idea to be able to encourage people to do that but there are many reasons why people move out of their family home.

Renting isn't dead money, you're paying for a roof over your head.