utterly disillusioned

Angela_D_3

Tomthumb wrote:

It was still a gamble though, I didn't have a crystal ball and had no way of knowing whether prices were going to increase or not, we had no deposit, a six month old and a job in a supermarket - it was a major gamble! I'm not saying that house prices are still going to rise but I still think that it's good to have property and if rental rates cover the mortgage then it's worth looking into!

I am pretty out of touch on rental prices/mortgage rates etc.. is it now cheaper to rent than buy? It always used to be the other way around.

No it's been cheaper to rent for sometime where we are, we sold our house recently to a landlord recently and we could have rented it back from them for £25.00 less than our IO mortgage was and we bought it in 2001.

Angela_D_3

Mrs S - how many people do you know that got a 3% payrise this year - no teachers, no NHS staff.
And tbh i think most people would be delighted if houseprices had ONLY risen by 9% per year, it's the 15% rises causing the problems.

meanmachine_2

mrsS wrote:

I find peoples comments interesting about house prices and incomes though-I paid £42000 for the flat and was earning £4000 p a, the same flat is on the market for £115000 now, but i know that the same job would now pay me £20000- so flat has only risen 2.5 times against same starting salary I could get now of 5 times.

You either paid FAR too much for the property or it's on for too little now.

According to my calculations, it should, on average, now cost £187K.

How does that fit your argument?

Also, which bank was willing to lend you TEN times your salary?

mrsS_2

hi- no "argument" intended

obviously like all ftbs i had other half- was just relating position as regards to ME

as you say your calculations are an "average"- no need to be quite so touchy-are you trying to imply a uniform rate of increase over the whole country or something?

I think I would have noticed my property being massively more expensive than any thing else on the market- but it was the 80's and flats were going up by £1000 per week we all had to buy as quickly as we could- and we didnt have the quantity of rental properties available that we do now.

i was just trying to discuss why a ftb with 5 times my salary (and come to think of it half the interest rate) is not able to afford the same flat i could 20 years ago when it has only gone up 2.5 times.

thelawnet

mrsS wrote:

When I bought my first place 20 years ago, my morgage was £210 per month, but to rent the same property (the flat upstairs in our victorian conversion) was £450 per month. There just wasnt that much rental property around.

However-we bought a grotty 1 bed flat in a really bad area because it was all we could afford.

I find peoples comments interesting about house prices and incomes though-I paid £42000 for the flat and was earning £4000 p a, the same flat is on the market for £115000 now, but i know that the same job would now pay me £20000- so flat has only risen 2.5 times against same starting salary I could get now of 5 times.

That anecdote isn't very helpful, as you didn't say what job you do.

And indeed the £115,000 price now is much lower than average. According to
http://www.nationwide.co.uk/hpi/calculator.asp?calculate=true
a £42,000 in Q2 1986 is worth on average across the UK £188k. So it's actually 9.4x your salary for your unstated job.

And if you look at real data rather than one-off anecdotes about specific jobs and houses, http://www.housepricecrash.co.uk/graphs-average-house-price-to-earnings-ratio.php

shows in fact that prices are at their highest level ever relative to earnings.

So in other words you're talking rubbish.

meanmachine_2

mrsS wrote:

hi- no "argument" intended

obviously like all ftbs i had other half- was just relating position as regards to ME

as you say your calculations are an "average"- no need to be quite so touchy-are you trying to imply a uniform rate of increase over the whole country or something?

I'm touchy because your anecdote is total garbage.

A property costing 42K in 1986 would cost massively more than 120K now. Given that property has tripled since 2000 your example is misleading.

Please do tell us which part of the country you're in.

Then you reveal that you didn't buy a house on 4K, but it was part of a joint income.

The implication is that FTBers simply aren't "trying hard enough". And that argument makes me want to vomit.

There. Touchy enough for you?

For someone clearly so much older than me, I'd have thought you'd be acutely aware of the fact house prices can fall as well as rise. No doubt, by 1993, that 42K flat was worth less than you bought it.

And if flats were really going up by a grand a week, then your flat would now be worth around a million quid.

If you're going to drop an anecdote, at least be accurate.

EDIT: How's this for an anecdote. My parents bought their house in the mid 80s for around 60K. Dad worked in a factory earning around 10K.

The house has recently sold for 350K. An equivalent factory worker today earns around 25K.

Now tell me how you can't see why FTBers are struggling.

al_yrpal

movieman wrote:

In a recession, if 10% of the population are out of work, then 90% are still employed.

Is that really so hard to understand?

I was there, I lived through it. People stopped buying houses for about 5 years. I didn't, I bought a holiday home in Cornwall in 97, but I was one of the few, with a steady income stream from my business.

Its a fact that property sales fall because of unemployment, sorry you don't like it, but nothing else will make it happen. I repeat, it has only happened once in the last 60 years, so don't hold your breath for a big price drop. There may be a slow down, or a pause, but whilst employment stays steady and incomes are rising prices will increase. If unemployment increases substantially and prices drop you will have an opportunity to buy, but don't hold your breath because the whole world is still going great guns.

al_yrpal

RHemmings wrote:

Not everyone loses their job in a recession.

Of course they don't, but they, 'the market' loose confidence, and thus stop buying, so prices drop. Others loose their jobs resulting in a glut of reposessions sold off cheap by the lenders. Thats the way it worked last time wasn't it, or were you too young to observe it?

The key to getting prices to drop is for people in rented accomodation to go home to mum. That would start a stampede to sell in the BTL market, but it isn't realistic is it?

movieman

I was there, I lived through it.

So did I and many of my friends: and most bought big houses which they couldn't possibly afford to buy today.

The key to getting prices to drop is for people in rented accomodation to go home to mum. That would start a stampede to sell in the BTL market, but it isn't realistic is it?

How would that make a difference? Most BTL flats around here are empty because people who can't afford to pay a mortgage can't afford to pay enough rent to cover the landlord's mortgage... most of those which are rented out are at rents where they either bought years ago or the landlords are subsidising their tenant by hundreds of pounds every month.

But yeah, I forgot: 'house prices only ever go up'.

Except when they don't.

mi-key

The effect of house price rises on FTB's is pretty simple - in most areas houses have at leasrt doubled in price in the last 5 years - how many jobs have wages that double in the same time ? ( especially jobs for younger people who are generally earning less ). Offhand I dont know anyone who is getting a 20% a year pay rise.

If house prices rise much quicker than wages, then those at the bottom of the ladder get priced out pretty quickly.

You only need to look at the percentage of FTB's now compared to 5 or 10 years ago to see this.

And, if banks still only lent the traditional 3 or 3.5x income, how many more people wouldnt be able to afford anywere ? Lots of my friends who have bought in the last two years have HAD to take out 4.5 or 5x mortgages otherwise they wouldnt be able to afford anywhere.

It does annoy me when people say FTB's arent trying hard enough - OK, there is that sector that thinks they are automatically entitled to be able to buy somewhere as well as having two holidays a year and going out three times a week, but there are plenty of others who could stay in every night and save all their spare cash, and still not afford a home because they have low wages.