House prices - the truth

IveSeenTheLight

Running_Horse wrote: »

Maybe ridiculously overpriced houses are now just a fact of life.

People probably thought the same throughout most of history.
It's only in the last 30-40ish years that more have been able to afford.
Prior to that owner occupancy was much lower.

RDB

Linton wrote: »

You reallyshould have some evidence, or at least a coherent argument.

But of course, you and white horse dont need an argument or evidence - you just "know" the truth.

I said house prices are overvalued and there will come a time in the future when they will be undervalued that is 100% certain.

Where is my evidence? What about all know history of house prices. They have always gone from overvalued to undervalued. This has always happened and I think this is enough evidence that they always will.

If you are suggesting that this cycle will stop and they will from now on always be overvalued then where is your evidence?

asharon

without a rightmove link this threads useless

bendix

I don't know if house prices are too high or too low. I don't really care either.

I simply won't buy in the UK, because the value for money just isn't there. My house is overseas. By the sea. In a wonderful climate. Large, a lot of land. A swimming pool. Private. Modern, spacious.

It's costing the equivalent of £100,000.

Why would I buy a crappy two up two down in some crappy suburb of London for six times that?

botchjob

bendix wrote: »

Why would I buy a crappy two up two down in some crappy suburb of London for six times that?

I love the ex-pat point of view. For whatever reason you have chosen to live in some unremarkable backwater where land and property is cheap (cheap for a reason). You therefore seem to feel you have to justify your decision by asserting that 7 million Londoners are plain stupid. Maybe you should go and have a swim in your lovely pool and cool down a bit.

IveSeenTheLight

botchjob wrote: »

I love the ex-pat point of view. For whatever reason you have chosen to live in some unremarkable backwater where land and property is cheap (cheap for a reason). You therefore seem to feel you have to justify your decision by asserting that 7 million Londoners are plain stupid. Maybe you should go and have a swim in your lovely pool and cool down a bit.

I'm an ex-pat as well.
There are many advantages to living abroad.
I would never consider selling off my UK assetts though.

My neighbours are Dutch and they maintain property in Holland.

Same with my South African Neighbours. They maintain property in their homeland.

It is certainly nice having a dip in the pool though (I don't have a personal one, but the community one is pretty nice)

Cleaver

The_White_Horse wrote: »

I am looking at a house today. it is a small cottage. no room to extend or anything. it is on for 495k. yes, half a million.

If i pushed myself to the extreme, i could just afford it, but i wouldn't.

Why are you taking days off work to go and look at houses that you can't afford and also don't want?

The_White_Horse wrote: »

who can properly afford this small cottage at half a million?

There's two type of people:

1. People who have half a million pounds sitting around.
2. People with a large amount of cash already along with an income that gives them access to substatial credit.

There is a third type:

3. People who use 'I' when they type, rather than 'i'.

Blacklight wrote: »

There's a few on round my way at over £1,500,000. With a 95% mortgage you need to be earning over £400,000 a year at 3.5x wages.

How anyone on a single wage is supposed to afford that is beyond me. Totally ridiculous when the average wage is £23,000.

My Dad has just sold his house for around £400,000, which isn't £1.5 million but is similar to the amount talked about by the OP. The people who bought it were a retired couple who both lost their partners a few years ago and have just both sold their houses. The types of people that buy these houses aren't on average wages because it isn't an 'average' house. They also probably don't take 95% mortgages very often. So this house sold for that amount because it's a really nice house in one of the nicest areas of the town. But as this is pretty simple economics you already know that, right?

An even more simple example is a mobile phone I saw in Harrods. It had lots of diamonds on it and cost £60,000, or something silly like that. I could take the same logic as you and say:

"Who can buy this phone?! The average wage is £23,000, so people would have to save all of their income for years and years! They'll never sell any of them!"

Yet we know they will sell some of these phone, mainly to rich people with lots of money. Replace 'phone' with 'house' and hey presto, you can answer your own question.

Linton

RDB wrote: »

I said house prices are overvalued and there will come a time in the future when they will be undervalued that is 100% certain.

Where is my evidence? What about all know history of house prices. They have always gone from overvalued to undervalued. This has always happened and I think this is enough evidence that they always will.

If you are suggesting that this cycle will stop and they will from now on always be overvalued then where is your evidence?

The only measure I can see for the value of a house is what people are prepared to pay for it.

If you believe that houses can be over or undervalued you must believe there is a "correct" value. How is that determined? How do you recognise it when you see it? Or is it just something you just know?

DervProf

Linton wrote: »

The only measure I can see for the value of a house is what people are prepared to pay for it.

And I think you`ll find that in most cases, what people are prepared to pay for a house is based pretty well on the maximum they can borrow for it (+ any deposit). I admit I can`t back this up with any evidence, but I think that I make a valid point.

I reckon people will have an idea on what their deposit + maximum borrowing figure is, then look through property ads to see what they can buy. Or they`ll have an idea what they want to buy, then see if their deposit + borrowing figure will cover it.


I don`t suppose many peckish people (with a sweet tooth) would be prepared to buy a Mars bar for £20 (if the asking price was that high). However, if a lender came along and said "you can buy that Mars bar for just 2p per week for 25 years", then I reckon there might be a few takers.

Linton

DervProf wrote: »

And I think you`ll find that in most cases, what people are prepared to pay for a house is based pretty well on the maximum they can borrow for it (+ any deposit). I admit I can`t back this up with any evidence, but I think that I make a valid point.

I reckon people will have an idea on what their deposit + maximum borrowing figure is, then look through property ads to see what they can buy. Or they`ll have an idea what they want to buy, then see if their deposit + borrowing figure will cover it.


I don`t suppose many peckish people (with a sweet tooth) would be prepared to buy a Mars bar for £20 (if the asking price was that high). However, if a lender came along and said "you can buy that Mars bar for just 2p per week for 25 years", then I reckon there might be a few takers.

Agreed completely - I believe that peoples being prepared to pay the maximum they can borrow has been the main driver for HPI.

If wage inflation exceeds the inflation in the costs of the bare essentials for life the amount left over increases over time pushing up the amount people are prepared to pay to fund the borrowing to get access to a limited number of houses.