Debate House Prices


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BTL, vile lowlife business, nobody wants to be living under their roofs

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  • StevieJ
    StevieJ Posts: 20,174 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Cleaver wrote: »
    I believe that there are some bear clubs in Manchester, but they have nothing to do with house prices.

    When I was a lad in Manchester I heard a rumour that the Rembrandt had coin stuck to the floor :) was it true? is it still there?
    'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher
  • StevieJ
    StevieJ Posts: 20,174 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    julieq wrote: »
    No, that's simplistic.

    My wages have increased well beyond inflation over my career. I participate in the housing market. Assuming I had a mortgage (I don't) I would still be paying far less as a proportion of my income than I did when I first entered the market, and by extension could borrow more and add in the equity from selling my house if I wanted a new one. Therefore from my perspective, I don't see HPI at all.

    I did mention the higher wage multiples are a response to lower interest rates and so obviously house prices would still be affordable at those higher multiples. My contention was with your statement that wage multiples had barely increased.
    'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher
  • julieq
    julieq Posts: 2,603 Forumite
    That's not what I'm saying. My wages have increased faster than general wage inflation because of promotion and increased seniority. I'd take a lower multiple now to buy the same home I first bought even after HPI, not need a higher one. You don't need to increase multiples over time to drive HPI if there are enough people who are in my situation to move demand over supply.

    That allows HPI over general wage inflation. We are only talking about a 2.9% compounded year on year increase over general inflation anyway. And we are creating many more households, of which a proportion will be in my situation, thus refreshing the demand.

    You're right of course that interest rate reductions will bias the multiples people are comfortable with, but even then not by as much as you might think. When we were around 8% on a mortgage rate (when I first bought), the standard multiple was 2.5x joint income. At around half that which was the case into the boom, we're de facto at 3.5x.
  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    julieq wrote: »
    That's not what I'm saying. My wages have increased faster than general wage inflation because of promotion and increased seniority. I'd take a lower multiple now to buy the same home I first bought even after HPI, not need a higher one. You don't need to increase multiples over time to drive HPI if there are enough people who are in my situation to move demand over supply.

    That allows HPI over general wage inflation.

    That's not what happens in general though.

    In general, you need the younger generation to come along and buy up the FTB houses, to let the older generation, with their time in jobs and seniority / promotions etc move up the ladder.

    Not everyone can have seniority payments and promotions. The job ladder is much the same as the housing ladder. Someones always behind you, and it always needs to be that way for it all to keep turning.
  • julieq
    julieq Posts: 2,603 Forumite
    Not everyone can buy a house Graham. All that's needed to sustain HPI is enough people who can enter the market at a level greater than supply. That specifically won't be everyone.

    We're increasing the number of households much faster than we're increasing the number of homes. That means by definition that we are decreasing the proportion of the population who can afford to buy one year on year. Mathematically inevitable.
  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    julieq wrote: »
    Not everyone can buy a house Graham. All that's needed to sustain HPI is enough people who can enter the market at a level greater than supply. That specifically won't be everyone.

    We're increasing the number of households much faster than we're increasing the number of homes. That means by definition that we are decreasing the proportion of the population who can afford to buy one year on year. Mathematically inevitable.

    Yes, I have heard this for the past 2 years.

    HPI simply isn't being sustained though.

    But then, what you have just said goes completely out of the window, and it's back to blaming the banks. Of course, blaming the banks has also gone out of the window on this thread, it's the populations fault. Which, of course, it won't be next time prices fall, will be the banks fault again.
  • kriss_boy
    kriss_boy Posts: 2,131 Forumite
    People arent being held at gun point and forced to rent.

    Surely we all make a decision at a young age as to whether we save a deposit for a house or go and finance a car and buy the latest iphone?
  • chucky
    chucky Posts: 15,170 Forumite
    10,000 Posts Combo Breaker
    edited 2 January 2011 at 5:55PM
    julieq wrote: »
    Not everyone can buy a house Graham. All that's needed to sustain HPI is enough people who can enter the market at a level greater than supply. That specifically won't be everyone.

    We're increasing the number of households much faster than we're increasing the number of homes. That means by definition that we are decreasing the proportion of the population who can afford to buy one year on year. Mathematically inevitable.
    people on this forum like Graham can't get their head around this.

    there will be people that can't afford property, those numbers are increasing mainly because they can't get finance or can't raise a deposit. they will indirectly fuel HPI because they are increasing rental demand for investors.

    more importantly, there will be a larger number of people who can and will be afford to buy property than those that can't.
    this will become more and more obvious.
  • Linton
    Linton Posts: 18,187 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Hung up my suit!
    Yes, I have heard this for the past 2 years.

    HPI simply isn't being sustained though.

    But then, what you have just said goes completely out of the window, and it's back to blaming the banks. Of course, blaming the banks has also gone out of the window on this thread, it's the populations fault. Which, of course, it won't be next time prices fall, will be the banks fault again.

    Oh dear, its always so difficult. Lets try...

    There are multiple factors driving house prices with a range of time scales. So we can get something like....

    Short term (1-2 yrs?) - A shortage of mortgages leading to lower buying and a stagnation/slight fall in house prices. This effect will be corrected as/when the world economy recovers and houses will then rise in price due to increased demand.

    Medium term (3-5 years?) - House building has almost stopped, both because the number of buyers is limited and also because builders need finance in order to pay for building the houses before they get paid when they sell them. Builders do however have a healthy land bank - ie land they own with planning permission. Once the short term situation recovers the builders will be able to start building houses. This will limit to some extent the rise in price but will take some time to have an effect.

    Long term (ongoing) - Demographics and shortage of land. The population is increasing. In addition changes in society is leading to lower occupancy and increased demand - eg break-up of families after divorce, longer life expectancy. But land supply is limited by planning restrictions. These factors lead to an increase in house prices.

    Ultimately "long term" wins, unless of course we have major changes in society, catastrophic collapse in the economy etc which change all the rules of the game.
  • The_Fox_3
    The_Fox_3 Posts: 299 Forumite
    Houes are affordable - the people who moan just need to work harder and not spend there money on xbox, cars and going out drinking. What this country needs is a good kick up the bum and to see house prices soar - get on the train before its to late.


    Don't you just love the smuggness of people who go through life not looking further then the ends of their noses, and more often than not caring about nobody but themselves.

    I am not going to go into all the details about my circumstances again, but i have already as good as paid for a house, but because i choose to take care of others i ended up losing the lot(it's in a previous thread somewhere). Far from feeling sorry for myself and "buying xboxes, cars and drinking"(and how patronising by the way), i have worked hard on my business and now bring in a decent wage. But even though i am doing ok(in my eyes anyway) getting back on the ladder is no easy task, and i would be happy to be able to buy that first house that i bought in my 20's but cannot afford as a more affluent older person.

    Because of my circumstances(and i feel blessed) i work for Crisis and have done over the Xmas period(Chucky will tell you all about it:)), my attitude is if i am finding it hard in todays world what hope have many of these people got. Actually it might do some posters on here good to pay rough sleepers centre a visit, apart from the obvious drug/alchohol and family breakdown problems some on here might be shocked at the types who are now going under, very articulate intelligent ex homeowner types.

    Todays generation have it much harder then the previous generations, the same ones who are now preaching about hard work today are the ones who used to strike all the time, had the 3 day week, and were able to buy good property on one wage.
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