Citywire: I want to give my children their house deposits - here's my plan

Graham_Devon

Woohoo, I'm off ignore

1 day though, not bad going

Really2

dopester wrote: »

That seems a fairly reasonable plan. My plan was to buy a house which can practically allow for children/adults to have their own independent space within it, so to live with us when adults. However that would narrow down whatever choices they might have in what they want to do with their lives. Where they want to live. They might want to live in London or USA or something. Could take lodgers in though, and give children option of returning home.

You must be my bearish twin.

Current layout,
Downstairs
Livingroom, Study, Playroom (was dining room but not needed as the kitchen/ diner is seperated by a doorway? ) Kitchen, dinning room, utility.

Upstairs
Master, Guest (for the parents as they get older possibly) smaller guest (to be sons room when older) Second living room (for son or parents, but currently football and games room:beer:) Sons current bedroom.

Really2

Graham_Devon wrote: »

Woohoo, I'm off ignore

1 day though, not bad going

A) your not ,I just have the high moral position of looking at your posts should I feel it usefull (Rare I know:p)

Your post is a good reason why it is good to have you on ignore.:)

Graham_Devon

Really2 wrote: »

A) your not I just have the high moral position of looking at your posts should I feel it usefull (Rare I know:p)

Your post is a good reason why it is good to have you on ignore.:)

You even make ignoring someone baffling and confusing!

I love you

dopester

Really2 wrote: »

I think his point is that accounts for the worse case if you are saving the money.

If you account for the worst (they acknowledge the last 10 was way over the top.) you would guarantee to be ok.
The point is what do you base it on. Go back 60 years and the HPI is even higher.:eek:

So if HPI is going to be less over the 16 years, for the reason he is doing it overstating it is not a bad thing. He will have saved a bigger deposit for them.

In the late 80s - early 90s slump, where someone might have seen... let's say their house slip from a peak value of say £60,000 to £38,000. Now in context of the time, that £22,000 drop in value and possible negative equity might have been tough going.

Yet we're in a different dimension for the sort of financial losses implied by an equivalent crash, or a worse/'getting better' crash. The dynamics of value expansion and contraction from the heights the property market reached to peak, well it's an altogether different order from any previous crash/crunch.

Especially at the mid-to-upper end where it's not uncommon to see on Rightmove £100,000 cut off the asking price at a time.

What was JSA, or its equivalent, paying out in 1991? Heady salaries from the boom times are under pressure for existing employees and many graduates.

The person in the article thinking it's reasonable to assume the two-bed flat today (supposed value of £199,699) is going to be around £507,306 in 16 years! Banks would have to really be flooding out big money mortgages for that to happen. To what end? United Kingdom of HPI.

And during the boom, values of course, have only been pushed up for all home-owners (including those who've not moved since... 1990 or earlier), by those selling and buying agreeing prices should be higher than in previous years. Agreeing, and with new buyer able to pay the higher price in each year, either through buying outright, with heavy deposit, or self-cert 100% mortgage for the amount.

Dopester's rough calcs (margin for error; pretty high)
Approx 22-24 million households in England and Wales.
Average of the number of houses/flats sold per year 2000 - 2007 ... guestimate = 1.2 million transactions per year.
2007+ volumes down significantly.

kabayiri

Hmm, if a strategy is worth considering, it has to be broadly applicable to many people, not just the better off.

I can think of several alternatives :-
a) buy increasing number of lottery tickets every week until you hit the 'big win'
b) invent a time machine; go back to 1973 and hand over your wad of tenners for a house (technical note : offering pound coins will give the game away)
c) use your invention in b) to go back in time and win more a) - knowing next weeks' numbers helps
d) aim to buy a house in redcar or salford or toxteth, etc. In 15 years time you should be able to pick up a tidy terrace for a few hundred quid, down to the lack of well paid jobs there

Really2

dopester wrote: »

In the late 80s - early 90s slump, where someone might have seen... let's say their house slip from a peak value of say £60,000 to £38,000. Now in context of the time, that £22,000 drop in value and possible negative equity might have been tough going.

Yet we're in a different dimension for the sort of financial losses implied by an equivalent crash, or a worse/'getting better' crash. The dynamics of value expansion and contraction from the heights the property market reached to peak, well it's an altogether different order from any previous crash/crunch.

Especially at the mid-to-upper end where it's not uncommon to see on Rightmove £100,000 cut off the asking price at a time.

What was JSA, or its equivalent, paying out in 1991? Heady salaries from the boom times are under pressure for existing employees and many graduates.

The person in the article thinking it's reasonable to assume the two-bed flat today (supposed value of £199,699) is going to be around £507,306 in 16 years! Banks would have to really be flooding out big money mortgages for that to happen. To what end? United Kingdom of HPI.

And during the boom, values of course, have only been pushed up for all home-owners (including those who've not moved since... 1990 or earlier), by those selling and buying agreeing prices should be higher than in previous years. Agreeing, and with new buyer able to pay the higher price in each year, either through buying outright, with heavy deposit, or self-cert 100% mortgage for the amount.

Dopester's rough calcs (margin for error; pretty high)
Approx 22-24 million households in England and Wales.
Average of the number of houses/flats sold per year 2000 - 2007 ... guestimate = 1.2 million transactions per year.
2007+ volumes down significantly.

All fairly true mate but I think the nominal fall was around 15% from 1989 to 1996. (well it was basically that in 1992 also)

The main jist of my point was house prices grew over 500% (if remember correct around 600%) from 1952 1977.

So using any type of documented HPI in modern times will possibly over estimate the next 16 years.

The best idea would be to take the growth from say 1990-2005, that is a more sensible estimate as that is a big part of a significant crash. (I would not go back as far as 1989 as that could end up with a large under estimate should prices not fall significantly further)

neverdespairgirl

A house deposit at the age of 18 sounds daft to me. there's a decent chance that the offspring will want university / further education of some kind. And even if working, how many people are settled for life at 18?

Generali

neverdespairgirl wrote: »

A house deposit at the age of 18 sounds daft to me. there's a decent chance that the offspring will want university / further education of some kind. And even if working, how many people are settled for life at 18?

I knew a bloke who owned a 2 bed flat when we were at uni. It was great for him because it meant that he could rent out the other room for an income.

dopester

Really2 wrote: »

The main jist of my point was house prices grew over 500% (if remember correct around 600%) from 1952 1977.

So using any type of documented HPI in modern times will possibly over estimate the next 16 years.

OK, let's take a look at your 500-600% HPI over that time-frame:

What was the average house price in 1952?

A quick searchabout (Nationwide figures)...

1952: let's say £1,900 ?
1977, after your 600% HPI, lets say £13,000?

It might have hurt at the time, been crippling to the financial system, but had a 50% crash occurred it would be a whopping £6,500 of values. A 50% crash was less likely to occur back then because of world and local conditions. Some genuine economic growth. On the up and up. Cold War which made inflation more tolerable to the markets/investors due to communist's hostile attitude to capital ect ect.

The best idea would be to take the growth from say 1990-2005, that is a more sensible estimate as that is a big part of a significant crash. (I would not go back as far as 1989 as that could end up with a large under estimate should prices not fall significantly further)

If I'm understanding you correctly here, you're saying the 1952-1977 HPI of 500%-600% is "too ambitious" to project for rises into the future, from 2010 levels.

That, over the longer term from levels today, even if values fall back a bit from here, the sort of HPI seen from 1990 to 2005 is a more realistic sort of pace we should see the flat valued on the market at £199,699 today, be projected to be approximately "worth" in 16 years from now.. 2026.

How does the 1990-2005 HPI "growth" tie in with the gentle HPI theory for the £199,699 flat today, going on to have an estimated value of £507,306 in 16 years time?

Nationwide figures chart again
1990: approx £60,000
2005: approx £158,000
(Reference: 2007: approx £180,000)

I make it practically the same sort of % ratio rise (but I'm not so good with maths, whereas you're a qualified accountant).

So this is really your expectation for HPI?

Personally I think positive HPI has fully topped out where we are now. Heart-attack to the financial system and, without going deep into it, a whole host of deflationary variables pressing down on land/property after the decades of house price inflation. What some people take "as normal HPI growth" some read the result of the last few decades having been the most extreme and persistent inflation in modern history.