Why is property unaffordable for even the relatively well-off among the population?

julieq

TheCollectorsCoach wrote: »

Yes either wages have to go up or house prices have to come down.

No, it's also possible for property ownership to shift upwards and be concentrated in the hands of those with more money or income. The rate of owner occupation doesn't have to stay constant.

That is in fact the historical norm: property in the hands of an elite.

PasturesNew

julieq wrote: »

No, it's also possible for property ownership to shift upwards and be concentrated in the hands of those with more money or income. The rate of owner occupation doesn't have to stay constant.

That is in fact the historical norm: property in the hands of an elite.

Yes, the elite.... wonder how the Wilsons are muddling along.

And all those Homes under the Hammer SAHM/twig arrangers.

Malcolm.

PasturesNew wrote: »

Yes, the elite.... wonder how the Wilsons are muddling along.

And all those Homes under the Hammer SAHM/twig arrangers.

AIUI the wilsons have made a lot of money out of, in part, others misery. Ideally the government would have a team of experts looking into, and fixing broken systems when they're discovered to iccur (e.g. instances where bad landlords can mistreat tennants), however we (the UK) often get clueless career politicians as ministers rather than experts in their field. Rant over (for now).

dktreesea

Malcolm. wrote: »

A risk with property investment is it relies on people and weath wanting to continue to stay here. While the governments pumping money into the wider economy I can see why this is the case. When it comes to continual fiscal tightening accompanied by higher taxes, creaking infrastructure, and an ageing population (to look after), this could potentially change?

I'm not sure there is much risk in Britain. We import far more people than we export each year. And we have land constraints. The commitment to the continuous countryside means the amount of land available to be built on is quite small compared to the States or places like Australia. Here in Edinburgh the council are building 1300 new homes, but they had to knock down part of their existing housing stock to do it, and they are planning to deliver these 1300 homes over a period of ten years. They originally intended to build on council land that is currently being farmed on. Only 8 miles from the city centre, but outside the urban area. The outcry was massive. How dare the council threaten a blade of grass with concrete, etc etc. That's Britain for you. We hate suburban sprawl and love the countryside (usually :-).

We probably need to build 100,000 new homes a year to support the growth in population each year (394k mid 2008 to mid 2009, source statistics.gov.uk). According to the National House Building Council in the last financial year 102,000 new homes were built. I don't see how property prices are going to fall if all we are doing is struggling to keep pace with demand. And that's just the demand from an increasing population. It doesn't address the needs of the existing population, e.g. children looking to move out of home.

chucky

julieq wrote: »

No, it's also possible for property ownership to shift upwards and be concentrated in the hands of those with more money or income. The rate of owner occupation doesn't have to stay constant.

That is in fact the historical norm: property in the hands of an elite.

maybe people have been 'spoilt' in the last 30 years and so many people owning property is not 'normal' and only the richer people will own property.

julieq

As we move into a period where rental returns, the most significant issue will be security of tenure. Hence a return to leasehold I suspect.

Swans1912

AD9898 wrote: »

Oh I understand that, just saying the probable multiples involved is way too high, 2.5x joint was the normal.

Unless they've a £170,000 deposit it sounds like another couple that will be shackled to the debt ball & chain, with little thought to accident, illness, separation, divorce etc..

I also guess that if they have children now or in the future, that those child/children get used to 10+ hours of nursery a day and out of school clubs.

Like Generali said, the UK population has a strange fixation of paying as much as is possible for a house.

I'm sorry for quoting such an old post but I think the bit it bold is 100% spot on. When I starting looking to move to something a little bigger I need to keep remembering this as the common mistake is to buy at the top end of your budget!

PasturesNew

iKennett wrote: »

When I starting looking to move to something a little bigger I need to keep remembering this as the common mistake is to buy at the top end of your budget!

I've discovered (HutH) that there are two types of people:
- people who buy a house to live in, at the max they can afford.
- people who have more money than them, so want to buy that same house and spend £30k on it to put it back on the market at a price £60k higher.

I know somebody who owned a house that they could not "improve" as they'd bought the best house they could and their income didn't increase. The buyer of their house is investing about £50k in it, and it'll go back on the market at £100k more. There'll be a buyer at £100k more because it's a 2nd home hotspot, so there'll always be the London market 2nd homers (allbeit in decreasing amounts). It was sold in Oct 2009, work has been going on (kitchen/diner extension with bifold doors; large loft extension with dormer windows to enjoy panoramic estuary views).... I'm keeping an eye out to see if it's kept and rented as a holiday let at £1000/week, or put back on the market.

I just checked houseprices - the neighbour's was bought in 2006 for £265k and sold in 2010 for £340k. This isn't true HPI, this is: Buy a standard house with its flock wallpaper.... extend up and out, make it all shiny and posh, advertise it in London.

ReadingTim

Well, here are a few reasons I can think of, some more tangible than others:

· increased demand caused by population growth (indigenous and immigration)
· decrease in supply of suitably sized, desirable ‘family houses’ caused by conversions into flats
· overconcentration on newbuild ‘executive apartment’ type flats of questionable quality in marginal locations
· green belt policies and NIMBY-ism. Dubious desirability of brownfield redevelopment
· general decrease in housebuilding relative to population growth and depletion of state owned stock
· finite space – we’re a small and densely packed island already
· decrease in provision of state alternative to private ownership (ie sale of council houses)
· shift in balance of power to favour the landlord rather than tenant, making landlordism a more economically attractive option
· shift in balance of power to favour the landlord rather than tenant, making renting a less favourable option to owner occupation
· increased availability of credit, including:
- lending greater multiples of salary
- lending based on ‘affordability’ criteria rather than strict multiples of salary
- increasing willingness to lend high LTVs – 90%, 100%, 125%
- self certification mortgages (aka ‘liar loans’)
- specific BTL mortgages
· increasing number or mortgages granted on the basis of twin incomes (married and unmarried couples – no longer is there a ‘sole breadwinner’),
· government policy including ‘property owning democracy’ to using rising house prices to create a false illusion of wealth and prosperity.
· Unrealistic expectations of entitlement – “I want it” “because I’m worth it”

Property ownership has always been a struggle, and always will be. There was never a golden age of stable low prices and easily available credit, and there never will be.

But the factors mentioned above have created a machine which kept on going up and up. More recently, a lack of credit means it has temporarily ground to a halt, but when the money starts to flow again (and it will), the machine will whirr into its ever upward action. However, it won’t crash, because easy money has only ever been a small part of the problem. Furthermore, it is very hard to imagine that the ‘blip’ of the last 20 years will ever revert to the previous long term trend, within our lifetimes at least – sadly, this blip is more like a step change than a blip by virtue of its sheer longevity. The property landscape in the UK has changed forever, and to deny it is somewhat akin to the handloomweaver claiming that the industrial revolution is but a temporary state of affairs, and the market will revert to its historical average soon.

Linton

ReadingTim wrote: »

Well, here are a few reasons I can think of, some more tangible than others:

· increased demand caused by population growth (indigenous and immigration)
· decrease in supply of suitably sized, desirable ‘family houses’ caused by conversions into flats
..........

I believe you missed out the biggest reason for increased demand:

the fall in household size, presumably due to marriage break-up, more 1 or 2 person pensioner households, young singles leaving home for work/education etc.

Looking at the census figures for 1991 and 2001, the decrease in average household size was about 6%, equivalent to about 3.5M extra people to house. I assume this drop has continued through the past decade.