House prices need to drop 40% to be affordable discussion

nearlynew

RenovationMan wrote: »

If you have a family home on interest only then it's quite feasible to downsize from that and use the released equity to buy a smaller retirement home. Indeed this forms part of my own retirement plan.

That sounds very risky.

Can you give some figures to illustrate how that might work?

IveSeenTheLight

crash123 wrote: »

There are always winners and losers in a recession.

So the losers are those presumably those that become unemployed and are forced to sell.

I'm not convinced that Jimmy31 and his mates will be the winners as I would expect property to be bought before the 40% nominal drop was achieved, especially as rents are rising and the Rental Yield improves.

Pimperne1

nearlynew wrote: »

That sounds very risky.

Can you give some figures to illustrate how that might work?

Well, if you bought the average house 25 years ago it would have cost you £38k, if you sold it now then it would bring in £166k (Nationwide).

Must admit thought that this is a worst case scenario, most people will have moved into better than the average home over the 25 years so they should be even more likely to be able to achieve this with some equity to spare (lets face it if they were canny enough to get into housing early they are going to have been canny enough to ramp up their equity in the meantime).

nearlynew

Pimperne1 wrote: »

Well, if you bought the average house 25 years ago it would have cost you £38k, if you sold it now then it would bring in £166k (Nationwide).

Must admit thought that this is a worst case scenario, most people will have moved into better than the average home over the 25 years so they should be even more likely to be able to achieve this with some equity to spare (lets face it if they were canny enough to get into housing early they are going to have been cannyenough to ramp up their equity in the meantime).

"canny" enough?

or old enough?

Pimperne1

nearlynew wrote: »

"canny" enough?

or old enough?

Are you suggesting that I might have meant "If they were old enough to get into housing early"?

nearlynew

Pimperne1 wrote: »

Are you suggesting that I might have meant "If they were old enough to get into housing early"?

You suggested that someone who bought a house 25 years ago was "canny" to get "into housing early"

Unfortunately, that option was not available to someone who is, say, 35 today.

So your statement is ... how shall I put this?.... ... pointless and stupid

Pimperne1

nearlynew wrote: »

You suggested that someone who bought a house 25 years ago was "canny" to get "into housing early"

Unfortunately, that option was not available to someone who is, say, 35 today.

So your statement is ... how shall I put this?.... ... pointless and stupid

You said RenovationMan's plan in having an IO mortgage with the intention of selling it later to fund another purchase on retirement was risky. I was simply pointing out that if someone bought a property 25 years ago on IO then it wouldn't have been "risky" it would have been quite a good idea and whose to say that the £166k house now won't be worth £725k in 25 years.

RenovationMan

nearlynew wrote: »

That sounds very risky.

Can you give some figures to illustrate how that might work?

A person could have bought a 2 bed starter home for £40k with a £2k deposit and £38k IO mortgage. Sold it 7 years later for £140k, leaving £102k in equity.

They could then have bought a 4 bed detached house for £180k, with the £102k deposit and an £78k IO mortgage. Sold it for £250k after living in it for 8 years, leaving £172k in equity.

They could then have bought a 5 bed farm house for £450k, with a £172k deposit and a £278k IO mortgage. They could then sell that house after 20 years for (say) £600k and release £322k.

They could then buy a 2 bed starter home for (say) £250k and have £72k of tax free cash.

nembot

Pimperne1 wrote: »

You said RenovationMan's plan in having an IO mortgage with the intention of selling it later to fund another purchase on retirement was risky. I was simply pointing out that if someone bought a property 25 years ago on IO then it wouldn't have been "risky" it would have been quite a good idea and whose to say that the £166k house now won't be worth £725k in 25 years.

What about affordable housing so people/families can afford a home?

The last 10 years took away the real reason for buying a house and turned many people into greedy selfish f'kers!!!

See this forum for evidence of the above...

Pimperne1

nembot wrote: »

What about affordable housing so people/families can afford a home?

The last 10 years took away the real reason for buying a house and turned many people into greedy selfish f'kers!!!

See this forum for evidence of the above...

Calm down, calm down. Some figures were asked for, I provided some.