House price rises

cupid_s

ukbondraider wrote:

As for the other argument with affordability, there are alot more people who can afford than you realise. Like I have pointed out, the reason why they dont think they can afford is because they want to live in the "nice" neighbourhood and the "nice" house. Grimsby has been mentioned alot in this thread. You tell me how many of the population couldnt afford a place in Grimsby.

There are plenty of affordable areas. The problem is that shop assistant number 1 wants to live with Ryan Giggs in the suburbs of manchester and shop assistant number 2 wants to live near Robbie Williams.

(OK a slight exaggeration here but I am just trying to get across a point)

I do agree. When we bought our house (2004) we did so with a mortgage based entirely on my husbands salary of £13500. I was a student so although I got a tax free grant that didn't count. We managed to buy a 3 bed terrace in leeds. Not a bad city by my reckoning and fairly popular.

There are still houses around here going for less than 100k and these would be affordable to most people. But they're not in the 'posh bit' (if there even is one!) and that's where everyone I know wants to live. Guess what? So do I. Eventually.

At present I live very near to a large council estate and I know there are much better areas. But I happen to think my area is amazing. It couldn't be better for commuting, the neighbours are lovely and since we moved here there hasn't been any crime in my little area and I love it here. Buying in a supposedly not amazing area means our mortgage is pretty low so we manage to save/overpay (we overpay by maximum then save the rest for when the mortgage becomes unfixed in august) by 135% each month. With increases in our wages this means that in 4 years we will be mortgage free. Even if our house hasn't risen in value we will still have 100k deposit for our next house and will still only be 28.

I try telling this to my friends who earn more than we do and complain they can't buy anywhere but all I hear is 'oh but I couldn't live where you live'. I just want to hit them cos not only is that awfully rude but I want to know why they think they're so much better than my OH and I that they can move into a perfect house in a perfect area for their first home whilst we have to work our way up from the bottom

mrsS_2

Ukbondraider-

I think a few pages ago you asked why we didnt all buy our houses outright when houses were so much cheaper?

One of the reasons as previously mentioned was that we did earn less then, but one of the reasons pre Thatcher was that income tax was actually higher than it is now-

I beleive that there was an investment income surcharge at some point under labour which actually meant you were paying 115% tax on unearned income.

we probably pay more tax now overall- but a lot of it is hidden in what we spend our money on-and if people are sensible like your sister-and keep spending lower then the percentage of tax paid is lower overall.

also as your wages double, you dont have to spend double on petrol or food etc so your percentage of tax paid goes down- and your disposable income is proportionately more.

From personal experience from being married to a city employee, 20 years ago the sort of bonuses being handed out were the exception rather than the norm. It is very easy to buy a house outright when you have a couple of million pound bonuses under your belt!

I completely agree with your comments on affordability as I did raise this query a few months ago-as I couldnt understand why a couple doing the same jobs as myself and my husband 20 years ago when we bought couldnt buy the same flat we did- based on what i knew we would be earning for the same job. I had some interesting comments- even told I was (shall i put it politely?) talking out of my bottom!


But I have had my eyes opened since reading this site for the last few months. Average salaries in the south east must be much much higher than the rest of the country-

If Alan Ms wife cant get a job as a chartered accountant now at those figures I am very worried about the accountancy profession-I qualified in 1990 as a chartered accountant in a small local firm and was on £25000 as soon as I came out of contract-I could have added 50% at least in London.

I think we get a blinkered view of the rest of the country and house prices etc by living in the south east

pigeonpie

London prices are completely insane. Salaries are higher, but not proportionate to the housing cost. Record no of buyers and a great shortage of property as, unless people are leaving London, they can't afford upscaling anymore so don't move.
For eg we are going through freeholder/vendor induced hell trying to buy a flat. We turned down a house (too expensive; huge mortgage) in September in a road where the highest previous sale was 9 months earlier and for £75 000 less. It's a nothing special road, nice area, bog standard Vic terrace with 3 beds and 1 bath.
3 months later, the same road has another house without downstairs loo or cellar on the market for £25 000 more than the one we rejected. They will get their price. In fact, houses tend to go for more than asking price as there are so few for sale. We feel now that we were prize mugs for not borrowing more that we were comfortable with as house prices seem to have risen 20%+ in SE London's nicer bits. Then again you think why should I pay THAT for this really ordinary house?!
Wish OH had not got a job in London but his salary isn't great and I do not know how people pay these prices, especially if they have kids as well - yes you do get a blinkered view if you live here. Should almost have a London version of this website as it's so revoltingly expensive for everything.

talksalot81

ukbondraider wrote:

I agree it will stop and I wouldnt be surprised if prices stayed relatively stagnent for the next 10 yrs including interest rates. What I dont believe is that a 50% fall is imminent because people on £15K cant currently buy.

Think about what is driving the market. People see the recent past and dont look or wait for the future. If stagnation occurs, the same is rather likely to be true. So after a couple of years, people will give up waiting and will want to move to a bigger/nicer house. So it seems seriously unlikely that stagnation would last such a time as 10 years.

ukbondraider wrote:

As for the other argument with affordability, there are alot more people who can afford than you realise. Like I have pointed out, the reason why they dont think they can afford is because they want to live in the "nice" neighbourhood and the "nice" house. Grimsby has been mentioned alot in this thread. You tell me how many of the population couldnt afford a place in Grimsby.

NO no no! You didnt read my post. My post should have told you that more than 50% of the population cannot afford. Furthermore it should have told you that a tiny percentage of those going through the uni system in the near future can afford.

Your 'nice' arguement is getting old. Why should a doctor be working his !!! off to live in a violent drug infested estate!? Yes some can afford to, but those in this boat 5 years ago didnt have to, nor 10 years, or 15 years - so why the hell should it be accepted now?!

lisyloo wrote:

On the fool board these people are described as "BTL muppets".

Some people (who invested at the right time) have made millions and don't have to work anymore so they are anything but "muppets".
It's kind of ironic that they are called that.

You dont read too carefully. BTL muppet is referring to those who are jumping in NOW. It has nothing to do with someone who bought 5 years ago and made millions. The comment is based on good financial sense that one should buy at the bottom and sell at the top. It also seems amusing to me that alot of those who have made millions are the ones who have already sold...

mrsS_2

I keep getting the impression that in the "good old days" people managed to easily buy the average house on one income and that people assume that it is the same now.

I could have misinterpreted what has been posted (if so sorry in advance) but I bought a grotty flat 20 years ago-it took a mortgage on 3 times joint incomes(bank manager lent us more than he should at the time because I was doing professional exams) in a really bad area- and then we saved like mad for 5 years to move on.

But it was all we could afford.

not a doctor admittedly, but qualified professional person and I had to do it then- so why should people not have to do it now?

Alan_M_2

Gorgeous_George wrote:

So, 182,000 people a year do not need homes.

Do you watch Bid-up on Sky?

If there are 5 gizmos and 6 buyers the price goes up. It's not rocking horse science



GG

Then feel free to enlighten me, as far as I see, any immigrant who earns enough to get a mortgage, couldn't get a mortgage until they are a resident here with a permanent job (unless you know different).

So this leaves the lower paid immigrants working on or around minimum wage.

How are these people effecting the housing market? Are they filling all the BTL's which account for 8% of the housing market? Even if they are, your suggesting that 8% of the market share is driving the rest?

Please if you have some evidence or even a theory (other than bid up TV - which actually I've no idea what that is) then feel free to share it, I can't for the life of me see how a predominantly low paid migrant workforce is driving inflation in house prices.

abaxas

Alan_M wrote:

Then feel free to enlighten me, as far as I see, any immigrant who earns enough to get a mortgage, couldn't get a mortgage until they are a resident here with a permanent job (unless you know different).

So this leaves the lower paid immigrants working on or around minimum wage.

How are these people effecting the housing market? Are they filling all the BTL's which account for 8% of the housing market? Even if they are, your suggesting that 8% of the market share is driving the rest?

Please if you have some evidence or even a theory (other than bid up TV - which actually I've no idea what that is) then feel free to share it, I can't for the life of me see how a predominantly low paid migrant workforce is driving inflation in house prices.

bid-up.tv is now bid.tv

also it has a sister channel pricedrop.tv

Basically prices go down until people buy all the goods (or the presenter has a nervous breakdown).

Watch it tonight if you have freeview, warning it has the ability to suck you in. It's pure mindless trash tv at it's best.

Alan_M_2

lisyloo wrote:

So what do you think it is that has supported house prices rising over the last 5 years while salaries haven't matched the increased.

I may not have nailed it but something definitely has.

The existing rise in prices is being driven by high multiple lending and the lack of requirement for any substantial deposit.

You used to be able to get one or the other, but combining the two then opened up property to a whole raft of new buyers. These new buyers flocked to the market place creating a supply and demand issue that many people cite as the reason for the price hikes, so prices continued to rise as it was a sellers market.

As the prices rose, the new buyers that had been enticed by high multiples zero deposit deals started to get priced out, so multiples were extended to joint salaries.....more increases.......then multiples of joint salaries were increased...even more price rises.

Why do you need wage inflation when there's a never ending stream of lenders willing to solve the problem by lending more multiples of your salary?

Alan_M_2

abaxas wrote:

bid-up.tv is now bid.tv

also it has a sister channel pricedrop.tv

Basically prices go down until people buy all the goods (or the presenter has a nervous breakdown).

Watch it tonight if you have freeview, warning it has the ability to suck you in. It's pure mindless trash tv at it's best.

So that'll be like a Dutch Auction thing then?

I have Sky TV but I generally find I get no further than the Documentary channels:embarasse

mrsS_2

according to The times yesterday, more than 750000 migrants came to Britain in 2005 causing net migration to "soar" by 400000, not the 185000 as quoted by the government.

the firm i work for pay our immigrant staff the same relative low rate as our "natives"- so if our British employees can afford to rent or buy somewhere, then so can the immigrants.

they have all managed to find somewhere to live fairly locally- I dont think any are living in caravans in laybys!!

but wether they are affecting house price inflation....who knows?