House Price Inflation/Income/Old Age

92203

Like many of the people I spoke to at work, I was astounded to see that the housing market seems to be making a recovery, and that yearly HPI is at 9%.

What I'm having trouble comprehending is how prices can continue going up at such a rate, especially bearing in mind that incomes are not rising in line with this. I work for a major PLC who have frozen pay for the last two years, and intend doing so this year too.

I can understand that this will not affect the mobility of people who have significant amounts of equity in their homes, but for younger people with less equity in their homes, moving up from a starter to a family home must be incredibly difficult.

I am also at a loss as to what will happen to people when they reach old age and can no longer work. Who will pay the rent for the property they rent?

FATBALLZ

When generation Y gets into power it will cut all NHS funding to the current crop of house price ramping oldies, then suddenly we will have an oversupply of housing and people will be able to afford to buy property to retire in.

HAMISH_MCTAVISH

FATBALLZ wrote: »

When generation Y gets into power.

:rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl:

Oh dear god, you're a funny, funny, funny individual.

92203

HAMISH_MCTAVISH wrote: »

:rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl:

Oh dear god, you're a funny, funny, funny individual.

And what is your solution Hamish? If house prices continue rising at 10% per year, the gap between prices and earnings will continue to widen, reducing property availability to the average person on the street. This will result in a significant proportion of the UK population having no tangiable assets, and requiring state assistance for rent payments during retirement.

I personally do not see where Nationwide get their statistics from. I sold my house at the beginning of the year. It was on the market for over 6 months before I got an offer I could even consider accepting. It was a nicely presented starter home and even had a garage. I only had about 6 viewings over the entire time it was on the market and it sold for significantly less than I paid.

ukcarper

I think that fatballz has a big chip on his shoulders as he seems to think old people are creating HPI. I fit into that category I think? as do most of my friends. I have lived in the same house for the last 25 years, as have most of my friends all we have done is pay our mortgages and carried on living so I fail to see how we are responsible. OK some older people may have MEWD and some may be BTL landlords but it’s is not just old people that do that.

As for the solution I don’t know it would be nice if house prices keep pace with normal inflation so that people would increase their equity without house prices become more unaffordable but house prices do what house prices do.

Davesnave

ukcarper wrote: »

I have lived in the same house for the last 25 years, as have most of my friends all we have done is pay our mortgages and carried on living.....

And you dare to come on here and tell people this? I admire your bravery.

You'll be telling us next that you paid income tax and NI contributions too... Or is that going too far?

(I'm a closet oldie as well, but if Gen Y 'cut my NHS funding' I'll probably not notice, if my dental bill for £500 last month is anything to go by. Maybe they haven't heard of medical insurance. )

stueyhants

Prices can not rise above wage growth for long. Prices have risen over the last decade due to lowering of average IR and the more frequent use of multiple incomes to support the mortgage cost. These are one off factors that can't now be repeated to help prices increase further.

Without further reductions in the cost of servicing mortgage debt there is limited ability to increase prices and with IR at an all time low I fail to see how this could improve. Prices can rise in the short term but this will mean that homebuyers have to pay a higher proportion of their income on the mortgage but there reaches a point which you can't pay anymore and eat at the same time.

CLAPTON

As long as real earnings increase above inflation then it is clearly possible for the amount of money people spend on housing to increase above the rate of wage increases.

This can happen if people are willing to spend a higher proportion of their income on housing (i.e. most or all of the increase in real wealth) whilst only maintianing their standard of living in other ares.

this might account of say 2-3% increase in house price per annum above inflation

clearly in practice, there are other factors that affect house prices; availability of credit being a major factor plus of course the increase in population ralative to the increae in housing.

MRSTITTLEMOUSE

Davesnave wrote: »

And you dare to come on here and tell people this? I admire your bravery.

You'll be telling us next that you paid income tax and NI contributions too... Or is that going too far?

(I'm a closet oldie as well, but if Gen Y 'cut my NHS funding' I'll probably not notice, if my dental bill for £500 last month is anything to go by. Maybe they haven't heard of medical insurance. )

I'm a "loud and proud "older person who am truly sick of these "oh woe is me,why can't I have what I think is my right" youngsters on here.:rotfl:
Make me giggle daily,actually.
Well we did'nt have it all either,until we struggled hard.
Started off in a bedsit,but making huge sacrifices gets you what you want.
I have no guilt about struggling for years to pay off a mortgage and gradually getting to afford the house we aspired to,which we were only able to afford in the past four years.
We had to pay much more than the asking price for our present house because other people wanted it and it ended in a bidding war.
We did'nt complain about having to pay the extra we were just happy to get it and soon to retire we intend to end our days here.
We'll get no benefit and never have had any benefit in house price increases since we have never used any of the houses we bought as an asset only as a home.
You have to pay what things cost and house prices are no different.
When we do pop our clogs our kids will be quids in but we'll never see a penny of the equity in our home.
As far as I can see we've always just been glorified rent payers (without having the benefit of a landlord to do repairs),nothing more.

ukcarper

Davesnave wrote: »

And you dare to come on here and tell people this? I admire your bravery.

You'll be telling us next that you paid income tax and NI contributions too... Or is that going too far?

(I'm a closet oldie as well, but if Gen Y 'cut my NHS funding' I'll probably not notice, if my dental bill for £500 last month is anything to go by. Maybe they haven't heard of medical insurance. )

So whats your point what am I supposed to do

ukcarper

MRSTITTLEMOUSE wrote: »

I'm a "loud and proud "older person who am truly sick of these "oh woe is me,why can't I have what I think is my right" youngsters on here.:rotfl:
Make me giggle daily,actually.
Well we did'nt have it all either,until we struggled hard.
Started off in a bedsit,but making huge sacrifices gets you what you want.
I have no guilt about struggling for years to pay off a mortgage and gradually getting to afford the house we aspired to,which we were only able to afford in the past four years.
We had to pay much more than the asking price for our present house because other people wanted it and it ended in a bidding war.
We did'nt complain about having to pay the extra we were just happy to get it and soon to retire we intend to end our days here.
We'll get no benefit and never have had any benefit in house price increases since we have never used any of the houses we bought as an asset only as a home.
You have to pay what things cost and house prices are no different.
When we do pop our clogs our kids will be quids in but we'll never see a penny of the equity in our home.
As far as I can see we've always just been glorified rent payers (without having the benefit of a landlord to do repairs),nothing more.

To be fair I think most youngsters do what we did and get on with it. I have 3 kids all in their thirties all are buying their own houses without any help from me. Most of their friends are doing the same and this is in the Southeast.