Why now so hard to get that 1st rung on the propery ladder compared to years gone by?

Jorgan_2

jonnydoe wrote:

Some young chap even said I was being over dramatical and interest rates on student loans were low so it wasn't a problem.. (sighs)..

Low IR's are all some people have experienced, they think its normal and borrow accordingly. They have no idea how they will cope when IR's finally go up as they have not thought about it.

Pennywise

Iso wrote:

They help to fuel the boom. These TV programmes never take into account the fact that the property market has risen. They never include the expenses that will have to be paid by the "developer" when he sells the property. They get two or three agents round to value the place and then say "so the property is now worth (the average valuation) which means that (after three to six months of hard labour, bank overdraft at peak, credit cards up to the hilt etc etc) joe bloggs is going to make x amount of money."

No, that doesn't mean he's going to make x amount of money. He hasn't sold it yet and when he does sell it he's got to pay loads of fees plus he should calculate how much he has lost in earnings (most have given up their highly paid jobs) and they'd find that they had, in fact made a loss.

What I meant was, it looks good on TV, most people don't question it; in fact loads of people assume because the market has been going up for the last 10 years or so that it will continue to go up and never drop. Many people assume that because interest rates are low and have been low for years that they will stay low.

The media is helping to create a "feeding frenzy". This is fuelled by the "tv show type developers" hoping to get rich quick (see above), second home owners and BTLs.

And they never mention that the seller will have to pay around 40% income tax on their profit. In fact, they barely ever mention tax at all. I wish they'd tell the viewers why most people go onto rent their propertly once it has been renovated - it's because they've realised that they'll lose almost half the profit if they sell it, whereas the tax on the profit will be deferred if they rent.

meanmachine_2

Can we *please* stop calling it a "ladder".

With low or minus wage inflation, with the average FTBer at 34, and borrowing 6 times their peak income, there ain't no ladder anymore.

People's mindsets are stuck in the 70s.

You can't "lower your expectations" when you're at peak wage and can only afford a one bedder in Tottenham.

How can you possibly "claimb the ladder"?

It's all nonsense.

That's one reason why prices have gone up recently. There are so few sellers around. No one can afford to move up anymore.

[Deleted User]

I've just started reading a book on economics and i was wondering if there were other factors involved. There are a few other factors not previously mentioned that may have increased the relative costs of housing over the last few decades.

1. Population growth. From 1993-2003 the UK's population grew by 3%.
http://www.statistics.gov.uk/cci/nugget.asp?id=760

2. Population movement. Has there been a movement from the countryside to the towns?

3. House building rate. Are houses built at a rate that would reduce the scarcity of FTBer houses.

4. Green belt land. As cities expand, this land limits their growth and houses within the area become a greater commodity => house prices increase.

5. The sale of council houses in the 80s

Discus

lisyloo

Yet here you are.

Yes here I am again and I will continue to come back at people who deliberately mis-quote me.
The words you quoted are not mine as anyone who compares posts numbers 100 and 101 will see.

Can you tell me JimB when and where the action that you are organising is going to take place. I would like to follow it (out of curiousity) in the press as I am interested to see what effect it will have.

lisyloo

Hi Ringo,

There is also

5) Smaller households (more singles and smaller families) so more houses required.

6) More people downsizing. It should be noted that the 2nd world war ended just over 60 years ago. This means that we are entering a period where a lot of people (baby boomer generation) are downsizing thus competing with first time buyers and increasing demand for smaller properties.

7) More people buying 2nd (or more) homes as either holiday homes, single BTL or portfolio. A number of people also doing amateur development.

8) More people using houses as pensions because they are fed up of getting poor returns from rubbish pension schemes.

All of those 8 (yours plus mine) are undoubtedly factors.
But it all comes down to one thing as meanmachine implies - supply and demand.

[Deleted User]

So do we need a few more cities? The only solution I can think of that will actually work would be massive property developements on the scale of towns, with the developement of better transport links to other cities.

Other than that, can something be done about our society to encourage people to cohabit?

lisyloo

So do we need a few more cities?

I would be against massive new developement because of ecological reasons but planning laws definitely come into it.
I believe some ex-NHS sites are going to be used for low cost housing although exactly when these will be available I don't know.

Other than that, can something be done about our society to encourage people to cohabit?

High house prices :-)
It does encourage some people to share but I believe social trends are still towards more divorce and smaller families.
I was one of four children but these days more that 3 is unusual.
With higher living costs, lifestyle trends and older mothers/first time buyers then I think smaller families are a trend that's here to stay.

There could of course be some laws put in place against people have empty properties e.g. holiday homes, and I think this has happened in some parts of the country (where people no longer get a discount on council tax for holiday homes).
This use of taxation (whether it be stamp duty, capital gains or council tax) could make it harder for people who want to have lots of properties.

I presonally think that taxation and planning laws will change but it takes time, so not much help to someone who wants a house right now.

Jim_B_3

lisyloo wrote:

I would be against massive new developement because of ecological reasons but planning laws definitely come into it.

Can you expand on those ecological reasons?

As for the protest marches etc., I am waiting for you to organise them. You are the person pressing for action over discussion.

Iso

ringo_24601 wrote:

So do we need a few more cities? The only solution I can think of that will actually work would be massive property developements on the scale of towns, with the developement of better transport links to other cities.

If you don't want to make the UK into one huge, never, ending city you need to build vertically rather than horizontally. That way you can get many more dwellings onto the 'footprint' used.

lisyloo wrote:

I believe some ex-NHS sites are going to be used for low cost housing although exactly when these will be available I don't know.

It's not just NHS sites - they're called 'brown field sites' - meaning they have been used before (industrial estates, aerodromes, stations etc) as opposed to 'green field sites' meaning they have not been built on before.

As for 'low cost housing' - there is no such thing. What you mean is a 'houses sold cheap because of political pressure' where the developer sells it to the first buyer for less profit than he would normally make. The first buyer then sells it on and makes the profit that the developer didn't take.