Housing Affordability has peaked, now decreasing

chucky

Thrugelmir wrote: »

So much uncertainty at the moment, if you can get the call right there's big bucks to be made.....

there has been for a long while - as long as decisions are made rationally without emotion and at the right time there certainly is money to be had.
unfortunately there is a down side to this, others losing out on that opportunity...

treliac

honeypopper wrote: »

But people use the equity they've earnt on their first property to upgrade to the next one. They slowly move up the ladder by making a profit in each property sold.

That may have been a model for the past, but as for the future........... who knows??

Chrysalis

Thrugelmir wrote: »

Lower interest rates will hold prices up in the short term.

Even in the depths of recession those with money will be able to chase desirable property.

Whether thats a sensible investment stategy in the medium/long term is another matter. As we may experience a secondary property bubble......

yep that is why I said prices will be steady until the election. Pre election interest rates will not go up and will probably stay down for most of this year. But unfortenatly the housing market isnt the be all and end all, there are other things that are more important such as inflation and getting people to invest, low interest rates are bad for those things.

As far as housing goes I think the main problem is people should be buying a home for somewhere to live, security. In recent years people got greedy and they brought houses just to make a profit.

Graham_Devon

honeypopper wrote: »

But people use the equity they've earnt on their first property to upgrade to the next one. They slowly move up the ladder by making a profit in each property sold.

I know wages and savings are hugely imoportant too but someone working as a cashier in a shop will never be on a wage where they can save up for a nice large house.

The next property has also risen in price (in general). So actually, if upgrading, the equity you have made will only pay for the equity the existing owner has made in the house you want to buy.

Equity doesn't make you richer when upgrading. It just makes everything more expensive and costs YOU more in fee's.

It's only when downgrading, or moving to another (cheaper) area of the country that equity actually does you favours.

ukcarper

honeypopper wrote: »

ukcarper wrote: »

2 things.

1. how do people climb the property ladder if they don't make profit on the home they're selling?

2. how does inflation help someone climb the property ladder?

If your house was worth 100k and increases by 50% it's now worth 150k
If house you want was 200k and increases by 50% it's now worth 300k
Without HPI additional 100k require with HPI 150k required therefore harder to move up with HPI.

I suppose I should have said wage inflation but that normally goes with general inflation.

ukcarper

honeypopper wrote: »

But people use the equity they've earnt on their first property to upgrade to the next one. They slowly move up the ladder by making a profit in each property sold.

I know wages and savings are hugely imoportant too but someone working as a cashier in a shop will never be on a wage where they can save up for a nice large house.

See previous answer equity means nothing until you sell and downsize or just sell and not buy.

treliac

Graham_Devon wrote: »

The next property has also risen in price (in general). So actually, if upgrading, the equity you have made will only pay for the equity the existing owner has made in the house you want to buy.

Equity doesn't make you richer when upgrading. It just makes everything more expensive and costs YOU more in fee's.

It's only when downgrading, or moving to another (cheaper) area of the country that equity actually does you favours.

You're forgetting that pay has usually gone up too. What is important is the exact point in an economic cycle you buy / move. Also (as you say) people often move a bit further out, towards a cheaper area.

Graham_Devon

treliac wrote: »

You're forgetting that pay has usually gone up too. What is important is the exact point in an economic cycle you buy / move. Also (as you say) people often move a bit further out, towards a cheaper area.

Sure. It probably has. But so have the fee's you now need to pay to move house. So has the stamp duty etc.

It would actually be more beneficial if house prices rose at the same pace as wages. HPI only favours:

- Those downsizing
- Investors
- Beneficiaries of a will

It certainly doesn't help those climbing the ladder.

Chrysalis

ukcarper wrote: »

See previous answer equity means nothing until you sell and downsize or just sell and not buy.

indeed, but people feel richer, I guess its the feel good factor.

nearlynew

treliac wrote: »

. What is important is the exact point in an economic cycle you buy / move..

The "economic cycle" is not a natural phenomenon that just happens.

It is deliberately engineered and is a result of the bank being able to expand and contract credit within a debt based money system.

It is a way of stealing money without off people without them realising it.