£222,000 / £344,000 asking prices!!!

meanmachine_2

Stats from rightmove.

Just wondering what people made of the apparent renewed boom in prices.

Let's be very generous and assume the average wage outside London is 30K (which it isn't). Prices are now 7.5 x salary.

In London, assuming 40K salary (which is again v generous), prices are 8.6x salary.

I'm keen to hear from those who, last year, thought prices were sustainable and that a "soft landing" had been achived.

Sadly, that turned out to be as mythical as a price crash.

By the way, that's a 12% rise pa.

My own view is that we're in boom and bust. I don't really know how anyone can argue otherwise. Prices will rise until the boomers start to retire en masse in 2009-2011, and then prices will begin a slow and terminal slide.

Let's not turn this isn't a slanging match. I'm interested to hear from those who honestly thought a soft landing had been achieved last year but who are now worried that we're heading for a messy end.

CB1979_2

yes it's all well and good saying average wages are £40k, whereas all my friends earn over that.

2 in particular earn approx. £150k each (and this can be quite a low income for the city bankers!) so bang goes your argument of 8.6x

also average price is not average price at all, round my way "average price" for a 2 bed flat is £180k, 1 bed £150k and bedsit is £100k.

but only 5 mins up the road the average price is probably nearer to £200k for 2 bed, etc.

who really cares, if you can afford to buy in YOUR area what does it matter what the national average is.

meanmachine_2

CB1979 wrote:

who really cares, if you can afford to buy in YOUR area what does it matter what the national average is.

Please don't post again if you don't care.

This is for posters who do have a view.

Cheers.

xzibit

I'm on a good wage in my area, and house prices are 7.5x what I earn.

DavidHM

CB1979 - but if you and all your friends earn more than that, you're not average.

I'm about your age and only one or two of my friends earn £40k or anywhere close (in the regions). At the moment I am only working part time and earn £6k. Full time I would be on £15k and that's with a 2:1 degree from Cambridge and two postgraduate qualifications.

I'm never, ever going to afford to buy a house without a partner working full time unless there's a crash - although I personally feel that we will simply see lower levels of owner-occupancy than we have got used to.

Alan_M_2

Looking at London doesn't give a realistic feel for the market as a whole, London is almost a market in itself due the disproportionate level of extremely high earners in a relatively small geographical area.

Prices in the £1 million + region are booming like they never have before, in London and close surrounding areas due to the high volume of city bonuses.

Although nationally these sales only account for 0.1% of volume, again in London the figure is disproportionately higher.

Any averages posted by banks, Building societies, the government etc are nationwide averages and take all values and areas into account, these figures in their own right are really quite meaningless.

What does matter is prices in your own area relative to the average income in your area.

I live in Surrey, I make a comfortable living and could get a mortagage and buy a property right away, but I missed the boat getting on before all the price hikes. I don't see any property around my locality that I consider good value so chose to sit out at the moment. If this means I rent for longer then so be it, I don't see a house as my principal source of retirement/investment, I have my future in a business. I do see quite clearly a lot of property which I don't consider is worth anywhere near what is being asked. in the meantime, I'm not losing any sleep over it, what's the point of worrying about something that's completely out of your control?

cupid_s

I don't get this apparent renewed boom. In the city I live I have seen for myself house prices dropping. Apart from in one teeny tiny area where they are still going up. This applies to the value of houses in my road also, where they are worth less than they were 18 months ago.

Where my parents live (an another large city 130 miles away) the house prices are also dropping. In their area, houses have dropped loads in value also. I am always seeing reduced signs in the estate agents and online when I look at houses in the same city as my parents.

Maybe in london prices are still rising but in some they are falling already

Alan_M_2

Exactly, the average national price that's often quoted is an amalgum of some areas dropping with some increasing, The value and therefore rises in London is so disproportionately high compared to many other areas of the country that is makes the average misleading,

What would be more interesting is averages including and excluding London, then you get a better idea.

benood

Interesting post Meanmachine, are you using nineties Japan as your model - amongst other things that's what happened there as the population aged I think. In the UK the demographics aren't quite as bad, especially with relatively high levels of immigration from Poland etc. Surely baby boom pensioners will still live in houses? High levels of singletons may keep the pressure on housing even if pensioner couples downsize.

We'll probably see a slowdown early next year as increased mortgage payments bite, the same happened in late 2004-thru 2005 didn't it? The problem of a shortage of houses isn't going away soon and this will, I imagine, hold a floor under prices.

Buying a house isn't seen as an investment decision by many people, and this is probably why house prices defy rational analysis.

suffolkb

Isn`t this a bit like saying that the average car costs £25,000 (say) because some people have rollers etc.And ignores the fact that most people on their second plus house have a large deposit to put down. Further,how many first time buyers purchase the "average" house?. A better index would be mortgage to income ratio.

sarah_elton

benood wrote:

The problem of a shortage of houses isn't going away soon and this will, I imagine, hold a floor under prices.

Do you think so? My commute to work (Essex to London Liv St mainline train) takes me past at least 10 blocks of flats being built, and those near Stratford are vast, containing god knows how many units.

In other towns near where I live blocks of flats are still springing up everywhere you look...