House prices just keep on rising

catkins

Where I live in Essex house prices have not risen at all in the last year. I keep hoping prices will come down so that I can buy but I am still convinced they will. A few more interest rises and people will not be able to afford the repayments on their mortgages. The repossession rate is already higher than it has ever been and a record number of people have gone bankrupt. On the news this morning they said that a large number of people are missing payments on their mortgage because they cannot afford them.

Sooner or later the market will come down - the longer it takes the more likely it will be to crash

RHemmings

catkins wrote:

Where I live in Essex house prices have not risen at all in the last year. I keep hoping prices will come down so that I can buy but I am still convinced they will. A few more interest rises and people will not be able to afford the repayments on their mortgages. The repossession rate is already higher than it has ever been and a record number of people have gone bankrupt. On the news this morning they said that a large number of people are missing payments on their mortgage because they cannot afford them.

Sooner or later the market will come down - the longer it takes the more likely it will be to crash

I believe that house prices will correct in some manner. But I'm not sure that repossession rates are the highest they've ever been. While they are increasing considerably, the high point of repossession was, I believe, at the top of the previous crash. And I don't think we're there yet. Are you talking about the repossession rate in your local area of Essex? If so can you tell me where you got your statistics from?

PoorDave

What would happen if we all start taking out increasingly long fixed rate mortgages? You might argue we already do...

Having seen a post of a 25 year fix at 5.5% today on MSE somewhere, it makes me wonder what effect that might have on prices. It would protect the borrower from rate rises for the whole term of the mortgage IF they stayed in the same house for 25 years.

My feeling al ready is that the increases in interest rates are not the worry they would have been years ago, as so many (myself included) are protected from them, at least initially, by fixed rates. Was this the case around the time of the last crash? One for the historians old enough to remember! (not me!)

Also the argument that BTL suffers at even a 0.25% rise in rate is negated somewhat by the availability of fixed rate BTL mortgages.

movieman

Having low wages does not preclude you from buying a house

Indeed. Someone on minimum wage can easily afford to pay twenty years' income plus interest to buy an average house. Not.

In fact, around here they couldn't even buy the crappiest of crappy flats.

The simple fact is that house prices have risen much faster than wages over the last few years, and wages are being undercut by outsourcing and cheap immigrants. High prices, low wage inflation and rising interest rates are not the conditions for a house price boom.

RHemmings

PoorDave wrote:

Also the argument that BTL suffers at even a 0.25% rise in rate is negated somewhat by the availability of fixed rate BTL mortgages.

Typically fixed rate mortgages are more expensive than variable rates. So in the initial period, the BTL investor may have higher costs than someone else with the same flat and a similar mortgage. This may cause a problem if they have to compete for tenants.

BobProperty

maryjane01 wrote:

Eastern European tradesman that work for themselves plastering, plumbing etc. may undercut UK born trades men, but they can afford to because their living expenses are lower, they will live 10 to a house and share a bedroom and work a lot of overtime. Then with that money they don't go and buy new cars, ipods, and expensive clothes, they save it to put into property.

Back in their home country, though, not in the UK.

maryjane01 wrote:

I am an Australian, and when I first arrived in London I lived in an ex council flat, that a Polish couple were subletting the rooms in. They lived in one room and six other rooms were being rented out. There were 10 of us in total in this flat, 6 rooms were being used as bedrooms, and there was no living room....

So probably overcrowded and not licenced as an HMO? Much easier to run a business and make a profit when you don't comply with the rules. (Depending on how long the poster has been in the UK, they might be able to think of a recent example of that.) Would this couple be able to afford a property in London if they didn't do this?

Hereward

movieman wrote:

Indeed. Someone on minimum wage can easily afford to pay twenty years' income plus interest to buy an average house. Not.

In fact, around here they couldn't even buy the crappiest of crappy flats.

The simple fact is that house prices have risen much faster than wages over the last few years, and wages are being undercut by outsourcing and cheap immigrants. High prices, low wage inflation and rising interest rates are not the conditions for a house price boom.

Someone on minimum wage normally couldn't buy the average property, as all those people buying £1m houses push the average property price through the roof. There are plenty of properties that they could buy if they are willing to make compromises, location, number of bedrooms property condition,, etc; however, I have yet to find a right that states that you are entitled to own your own home, some people on low incomes would be better of renting than ever trying to buy a property.

movieman

There are plenty of properties that they could buy if they are willing to make compromises, location, number of bedrooms property condition,, etc;

Where? At 3.5x of their salary they'd be on a mortgage of 35,000 pounds. Even on 6x their salary, an amount that would probably drive them bankrupt, they'd have a mortgage of 60,000 pounds.

What the hell can you buy for 60,000 pounds these days?

however, I have yet to find a right that states that you are entitled to own your own home

My parents bought a decent four-bed house on a factory-worker's salary, with my mother doing occasional part-time work to help out. To buy the same house today you'd need two people working full-time, both earning nearly twice the national average wage (probably more like three times the average wage in their town)... and, even then, my parents saw their wages increase massively over the next ten years, dramatically cutting the real cost of their mortgage.

Why shouldn't people today expect to be able to live at least as well as their parents did?

Hereward

movieman wrote:

Where? At 3.5x of their salary they'd be on a mortgage of 35,000 pounds. Even on 6x their salary, an amount that would probably drive them bankrupt, they'd have a mortgage of 60,000 pounds.

What the hell can you buy for 60,000 pounds these days?

Normally, a buyer has a deposit, so in theory they could afford more, but I could find you a few properties in my home town for around £60,000 and I'm sure if I look hard enough one for £35,000. They will not be grand palaces, but at least its a start.

My parents bought a decent four-bed house on a factory-worker's salary, with my mother doing occasional part-time work to help out. To buy the same house today you'd need two people working full-time, both earning nearly twice the national average wage (probably more like three times the average wage in their town)... and, even then, my parents saw their wages increase massively over the next ten years, dramatically cutting the real cost of their mortgage.

Why shouldn't people today expect to be able to live at least as well as their parents did?

I agree that people today should expect to be able to live at least as well as their parents, but just because they expect it does not mean that they can, or indeed should!

lynzpower

Having seen a post of a 25 year fix at 5.5% today on MSE somewhere, it makes me wonder what effect that might have on prices. It would protect the borrower from rate rises for the whole term of the mortgage IF they stayed in the same house for 25 years.

this mortgage is portable. I had a look at it earlier. its with kent & reliance.