Flamin' 'Eck, English House Prices Are Cheap.....

moggylover

ukcarper wrote: »

I bought my first house in 1972, mortgage interest rates average 13% for the next 10 years so I’m not sure it was more affordable then.

I bought my first house in 1976 and yes, I know well that the rates were high then.

However, I think PN made a very good point regarding "who" could afford to buy homes back then. Whilst upper salaries have increased greatly over the last few years, there has been almost stagnation in the lower levels. There are "bubbles" within those lower levels with the IT jobs being currently highly paid because there appears to still be shortage of people with the right skills. However I was also a secretary about the same time as PN's friend was but was earning rather more because I was in Slough. I paid £27,500.00 for my flat and this was possible with a threeish times multiple plus deposit: on my own!

2 bedroomed flats in the Slough area average £170K now: how many secretaries are going to be earning something in the region of £50-£56"K?

I realise that this will not be every area of the Country and that Slough is often a bubble of it's own both salary and house price wise, but it's for me an indication that things are not necessarily as clear cut as the "average house prices" in the listing suggest.

ukcarper

moggylover wrote: »

I bought my first house in 1976 and yes, I know well that the rates were high then.

However, I think PN made a very good point regarding "who" could afford to buy homes back then. Whilst upper salaries have increased greatly over the last few years, there has been almost stagnation in the lower levels. There are "bubbles" within those lower levels with the IT jobs being currently highly paid because there appears to still be shortage of people with the right skills. However I was also a secretary about the same time as PN's friend was but was earning rather more because I was in Slough. I paid £27,500.00 for my flat and this was possible with a threeish times multiple plus deposit: on my own!

2 bedroomed flats in the Slough area average £170K now: how many secretaries are going to be earning something in the region of £50-£56"K?

I realise that this will not be every area of the Country and that Slough is often a bubble of it's own both salary and house price wise, but it's for me an indication that things are not necessarily as clear cut as the "average house prices" in the listing suggest.

House prices are definitely more expensive in relation to wages; Where I am a 3-bed terrace would now cost you around £200k if it had just kept up with wage inflation from the 70s it would probably be about £140k.
But interest at 5% on £200k is about £850 a month whereas £140k at 13% is about £1500.

moggylover

ukcarper wrote: »

House prices are definitely more expensive in relation to wages; Where I am a 3-bed terrace would now cost you around £200k if it had just kept up with wage inflation from the 70s it would probably be about £140k.
But interest at 5% on £200k is about £850 a month whereas £140k at 13% is about £1500.

I suppose for me, the worry about the multiples needed now would be what on Earth one would do should the rates make that hike again:eek::eek:

Having lived with interest rates as high as 15% for a short while I know I wouldn't want to be looking at that with a multiple of 6 or 7 times salary.

PasturesNew

If you owe £100 at 1000% interest, at least there's a much bigger/better chance of paying off that £100 quicker than if you owed £1000 at 100% interest or £10000 at 10% interest.

When you set interest aside, the smaller amount you owe the greater chance you have of paying it off in chunks/early.

ukcarper

PasturesNew wrote: »

If you owe £100 at 1000% interest, at least there's a much bigger/better chance of paying off that £100 quicker than if you owed £1000 at 100% interest or £10000 at 10% interest.

When you set interest aside, the smaller amount you owe the greater chance you have of paying it off in chunks/early.

£200k on repayment at 5% over 25 years is £1169. £140k at 13% is £1578 over 25 years. If you paid £1578 on the £200k you would pay it off in 15 years.

Graham_Devon

ukcarper wrote: »

£200k on repayment at 5% over 25 years is £1169. £140k at 13% is £1578 over 25 years. If you paid £1578 on the £200k you would pay it off in 15 years.

Yer, and if you paid £1578 on the £140k, you'd pay it off even quicker.

Theres not really an argument which can support the "more debt is better" in terms of paying it off, or owing it.

ukcarper

Graham_Devon wrote: »

Yer, and if you paid £1578 on the £140k, you'd pay it off even quicker.

Theres not really an argument which can support the "more debt is better" in terms of paying it off, or owing it.

Not on the figures I gave which are comparing buying in 1972 with buying now.

Which show that in real terms although property was 30% cheaper in terms of salary multiplies your repayments were over 30% higher.

treliac

PasturesNew wrote: »

London's figures are skewed by those big gaffs the celebs live in. Outside of London you get £1million places, but not 20 in a road.... you get one every 10 miles or so.

Not so! You do get them clustered in the same road. They don't like living amongst plebs.

Graham_Devon

ukcarper wrote: »

Not on the figures I gave which are comparing buying in 1972 with buying now.

Which show that in real terms although property was 30% cheaper in terms of salary multiplies your repayments were over 30% higher.

If you are going to look back, and pick the best year for your purpose, at least include inflation, and wage inflation at the time.

It was hard, yes. But inflation helped.
We've had people talking about 25% payrises in around that year. So it's really quite an unfair comparison.

We have to also remember just how much houses were going up by at that point.

all the reasons that are being missed out are the very reasons houses are always compared to the 70's by the more bullish. (When did a more bullish person ever uses the 60's, or the 80s, or even the 90s? It's always the early 70;s) You can make it look extremely bad. But in reality, over the course of a few years, your debt was reducing with inflation pretty nicely.

And since when did houses cost 140k in 1972?

ukcarper

Graham_Devon wrote: »

If you are going to look back, and pick the best year for your purpose, at least include inflation, and wage inflation at the time.

It was hard, yes. But inflation helped.
We've had people talking about 25% payrises in around that year. So it's really quite an unfair comparison.

We have to also remember just how much houses were going up by at that point.

all the reasons that are being missed out are the very reasons houses are always compared to the 70's by the more bullish. (When did a more bullish person ever uses the 60's, or the 80s, or even the 90s? It's always the early 70;s) You can make it look extremely bad. But in reality, over the course of a few years, your debt was reducing with inflation pretty nicely.

And since when did houses cost 140k in 1972?

If you had read the thread you would realise that the £140k is what the house that is £200k would have been if it had only kept pace with wage inflation. 1972 is when I bought the house so I used that year because I knew what I paid for it. So wage inflation is accounted for.