Get ready for the storm

92203

Blacklight wrote: »

Then they're not in a position to make the largest financial commitment of their life and should go back to flipping burgers. Not everyone who earns a wage is going to buy a house.

Come off it, in many provincial towns and cities, even office staff earn punitive wages like £16 K per annun.

There are many people who do worthwhile jobs, such as working in care, but get paid very little. 10 years ago, in my home city at least, it was possible for someone doing such a job to buy a low end house.

People deserve the opportunity to feel as though they are building up some security for their future, rather than spending a lifetime feeling as though they are treading water.

I earn £27k per annun, which despite not being a lot, is actually quite a high wage for the area I live in. I could quite easily afford to buy a house right now, however I would be end up living amongst the dregs of society for the priviledge.

10 years ago, someone earning the average wage back then (16k) would have been able to afford a reasonable house in a decent area in my home city. Nowadays someone earning the average wage (25k) would only be able to afford a low end terrace in a very rough area.

I agree with you that home ownership is not a given right, however since the one eyed Scottish ogre tampered with pensions, devaluing them in the process, young people really need the opportunity to own their own homes as security for when they retire.

What we are seeing at present, is the transfer of wealth from the younger generation to the older generation. This is through a number of channels including rent payments , the purchase of over priced property, or tax contributions to fund one generation only pension schemes.

From my own personal perspective, I find the whole situation fascinating, and a little worrying too. One thing that high prices have done (which to some may be seen as a good thing), is erode the class system.

Where I live, young professionals (eg people with decent jobs) are attempting to get on the ladder by buying terraced housing in poor areas, and living amongst pre-boom owner occupiers who conversely do very menial jobs and have vastley different values.

property.advert

IveSeenTheLight wrote: »

..
Many lenders also have changed from income multiples to disposable income as a better affordability check.

About time as well ! I was advocating this in the early 1990s.

If you have an income of £2000 and expenses of £1000 then your position is not 50% as good as someone with the same expenses and an income of £4000 but only 33% as good.

Simple but widely misunderstood.

The-mouth-of-the-south

Baby boomers beware your in for a rough ride hope you still have the stamina to go the distance. Those who have been greedy and thought they could get away with it are in for a big shock. Time to bring on the great house price crash!!!

Procrastinator333

It isn't that I want to discredit anything, it was just rather surprising, if it is accurate it is something else I think I need to keep in mind.


The 31% is from q1 09, so it will be higher than that now.

There is a big drop off from about 45% pre cras to now. I wonder how much of that is prices and how much interest rates? I guess it must be interest rates as just because the price goes down, it doesn't mean your mortgage cost does.

This does quite nicely show the impact of 0.5% rates, maybe with rates this low they really can keep limping on up (ref to last few months).

I'm a bit wary of taking info from a vi at face value, but it does clearly suggest a factor holding prices up.

Doesn't change my opinion that stagnation or falls are more likely than increases and that without access to lower rates I'm better off saving than jumping in now.

Linton

92203 wrote: »

........
I earn £27k per annun, which despite not being a lot, is actually quite a high wage for the area I live in. I could quite easily afford to buy a house right now, however I would be end up living amongst the dregs of society for the priviledge.
........
10 years ago, someone earning the average wage back then (16k) would have been able to afford a reasonable house in a decent area in my home city. Nowadays someone earning the average wage (25k) would only be able to afford a low end terrace in a very rough area.
.....
Where I live, young professionals (eg people with decent jobs) are attempting to get on the ladder by buying terraced housing in poor areas, and living amongst pre-boom owner occupiers who conversely do very menial jobs and have vastley different values.

Wonderful!!! Part 1 of my theory was that acceptable FTB houses will always be nearly unaffordable to FTBers.

92203's post demonstrates Part2 of my theory. This is that should FTBer houses become locally affordable the potential FTBers will see such houses as substandard, beneath the level of someone of their position in society, and will therefore increase the "acceptability" standard until such a point that their target houses do become nearly unaffordable.

Thus 92203 and his aspirational mates dont go for the cheap houses they could afford and therefore such housing deteriorates and becomes even less desirable.

However, perhaps the final paragraph shows some hope. Society is changing - it is decreasingly occupied by an elite of "professionals" and a large reservoir of menials. Many more, perhaps a majority, of people are now getting a reasonable level of education and see themselves as "professionals", the housing situation reflects this.

IveSeenTheLight

Procrastinator333 wrote: »

The 31% is from q1 09, so it will be higher than that now.

Here's the latest link
http://www.lloydsbankinggroup.com/media/excel/2010/AffordabilityQ12010.xls

Q1 2010 is 30.9%

markharding557

The-mouth-of-the-south wrote: »

Baby boomers beware your in for a rough ride hope you still have the stamina to go the distance. Those who have been greedy and thought they could get away with it are in for a big shock. Time to bring on the great house price crash!!!

The majority of baby boomers probably are outright owners so other than falling equity how would they suffer in another crash?
I argue that boomers are best placed to ride the storm as you put it.

92203

Linton wrote: »

92203's post demonstrates Part2 of my theory. This is that should FTBer houses become locally affordable the potential FTBers will see such houses as substandard, beneath the level of someone of their position in society, and will therefore increase the "acceptability" standard until such a point that their target houses do become nearly unaffordable.

Thus 92203 and his aspirational mates dont go for the cheap houses they could afford and therefore such housing deteriorates and becomes even less desirable.

However, perhaps the final paragraph shows some hope. Society is changing - it is decreasingly occupied by an elite of "professionals" and a large reservoir of menials. Many more, perhaps a majority, of people are now getting a reasonable level of education and see themselves as "professionals", the housing situation reflects this.

You are wrong. The nation average wage (which I exceed) is £25K PA. This AVERAGE means there are lots of people earning below, above and at this level.

Many of the people I know (and work with) earn significantly less than the National Average wage and have no hope of being able to afford even a low end house in a rough area.

10 years ago, the average wage was £16k, the average house price was 68k. Today wages have inflated by roughly 50% and house prices have inflated by 150%.

You should try living in the real world, struggling up through the ranks at work, and then having to buy a house at post-boom prices, living next door to chavs who either rent or bought pre boom.

I am not a chav, do not focus my life around the football or celeb culture, do not act inconsiderately to my neighbours, do not want to call my kid Tyler or Beyonce, do not claim benefits, do not wear branded sportswear all the time, yet the only way I can afford to buy is to live amongst such people!

The-mouth-of-the-south

markharding557 wrote: »

The majority of baby boomers probably are outright owners so other than falling equity how would they suffer in another crash?
I argue that boomers are best placed to ride the storm as you put it.

The greedy ones who went into btl will be left up the creeck without a paddle

Conrad

The-mouth-of-the-south wrote: »

The greedy ones who went into btl will be left up the creeck without a paddle

I meet them every day, most will never seel, it's a long term income stream, period. Price fluctations have no bareing just as the stocks underlying pensions do not concern people investing in pensions, on a day to day basis.