House price rises

Alan_M_2

empfun wrote:

What would be the likely outcome of property prices should every single immigrant over the last decade leave the country. One must also consider the social and economic impact from immigration.

Well, that's simply never going to happen is it, so it's irrelevant.

As far as the economic impact of immigration on the housing market, it's probably so small as also to be irrelevant.

talksalot81

Alan_M wrote:

Well, that's simply never going to happen is it, so it's irrelevant.

As far as the economic impact of immigration on the housing market, it's probably so small as also to be irrelevant.

Perhaps in its entirety, but it could happen to an extent.

If HPI continues, a growing number of people are going to be renting and this must impact rents. Thus cost of living for imigrants increases. If HPI is to continue, it probably requires pretty significant rises in wages. This MIGHT include the low end and negate some of the rental increases, but since it is the same for all, I imagine not. More importantly the increases mean that the cost of business within the UK increases and the profitability correspondingly decreases. This leads to fewer jobs and more difficulty for immigrants.

These are only two factors but it isnt an enormous stretch that the cost of living reaches a point where immigrants gain nothing over being at home. If they end up paying out every last penny to survive here, why not just go back home and do it?!

Definitely a stretch, but you never know!

ukbondraider

Is housing really that unaffordable? Sure you get less for your money but unaffordable? Isnt it a case that housing is still affordable but it is simply our social spending that should be watched.

The reason I ask this is due to the previously stupidly low mortgage salary multiples offered by mortgage companies.

For example most mortgage companies only previously allowed a 3x joint salary for a joint mortage. Why? Even at 5x joint salary it is still affordable. Lets take a 4 x joint salary as an example.

My sister earns £40K. Her boyfriend earns £35K. This is approx £2400 and £2100 net per month respectively. If they can get a 4x joint mortgage this will be £300K. A £300K mortgage over 25 yrs at 5.15% fixed for 5 yrs is approx £1750 in mortgage payments.

Tell me how this is unaffordable for this couple and why mortgage companies are reluctant to offer 4 x joint as standard or why in the past it was 3 x joint max.

My sister has just bought this £300K house and will pay the whole monthly mortgage payment of approx £1750 herself. Her boyfriend will contribute a similar amount of £1500 as a monthly overpayment (but reduce when necessary) meaning they will be mortage free in less than half the 25 yr term.

If they can do this then is housing really unaffordable? They are simply watching their social spending. I just wonder when house prices were low 20 yrs ago why people actually needed a mortgage and why they didnt buy one outright every other yr with their salary. I just find it so hard to imagine being able to buy a 5 bed detatched 20 yrs ago for something silly like £100K. It would be such a great position to be in. However because it was possible before doesnt mean it should be possible again.

The way we live is changing and as a result we need to be more tuned in with our mentality to buying houses. Like a Ferrari, no one would buy one of these unless they were in a position to comfortably afford one. Houses are the same. It makes me cringe when I repeatedly hear on the BBC news how first time buyers cant get on the "ladder" only to watch a couple of teenage shop assistants or check out girls on £12K being interviewed. These people wouldnt buy a Ferrari with their salary so why should they expect to be able to buy a house.

The calculation above in my eyes should be the norm for alot of working couples so I dont see where the unaffordable argument comes in. Sure alot of people earn less but they buy smaller houses of which there are plenty or they move to a different area. My guess is that we all still want to be able to have money left over to pay for that new Merc/BMW and to go on those fancy holidays every yr in addition to boozing every week after work.

Well you take your choices folks.

roswell

Ok and what if you take a joint income of 30 K now is that affordable at 4X joint salary ?? I would say your sister and partner are very lucky there is a whole new world called the rest of england where these figures are only seen in news papers about those who live down south.

roswell

""I just find it so hard to imagine being able to buy a 5 bed detatched 20 yrs ago for something silly like £100K. It would be such a great position to be in. However because it was possible before doesnt mean it should be possible again.""

Hold on 100 K 20 years ago .... you were lucky if average wage was 10 K ... what makes you think that todays wages are so much different to 5 years ago ?

ukbondraider

On a side note, why is that people dont factor in paying for decor when buying a house. The number of houses I have seen in the £500K+ price range with a crap £500 tv in the front room just amazes me. Surely people spending this much on a house know that 2x £5K plasmas/lcd TV's and 2 x £3K AV systems are mandatory?

Dont want to sound like a c**t but I hope you know what I mean.

roswell

becasue that house in the 500 K price range is owned by somoene who would not be able to afford it now most likely owned fror many years ... and most likely they are moving to reduce expendature for retirement ?

ukbondraider

roswell wrote:

Ok and what if you take a joint income of 30 K now is that affordable at 4X joint salary ?? I would say your sister and partner are very lucky there is a whole new world called the rest of england where these figures are only seen in news papers about those who live down south.

Of course I know people in the south earn more but then houses in the north or other parts are significantly much cheaper. I would therefore guess it balances itself out somewhat

ukbondraider

roswell wrote:

becasue that house in the 500 K price range is owned by somoene who would not be able to afford it now most likely owned fror many years ... and most likely they are moving to reduce expendature for retirement ?

Fair point

roswell

ukbondraider wrote:

Of course I know people in the south earn more but then houses in the north or other parts are significantly much cheaper. I would therefore guess it balances itself out somewhat

ok the cost of the house may be cheaper but the electric / gas / water / council tax bills / petrol / car tax / tv licence arent .... so how will you account for that ? thus less available monthly income for mortgage repayments.