Crash postponed?

Running_Horse

baby_boomer wrote: »

Today's Times suggests that house prices could grow from an unaffordable 7X earnings to an even more unaffordable 10x earnings.

This is what the Times leader said the day before:

Rising house prices give joy to those on the property ladder but there is a growing realisation that prices have peaked. More worrying is the way that inflating house prices thwart the homemaking wishes of younger buyers. This may not yet be as significant a problem as is popularly believed. Mortgage advances to first-time buyers are high, equating to 3.3 times their average income. But low interest rates mean they spend 18 per cent of income on interest. This is the same as in 1980 and nearly a third less than was spent in 1990.

It seems the figures can be made to say anything; even in the same newspaper.

kingkano

RHemmings wrote: »

It's not just the extra time that's important. I looked up how much it would cost to commute from Leicester to London by train. The monthly ticket would cost about £650 or something. Per person so that's £1300 per month for a working couple. Might have changed now. That's a lot of money, and prices need to be a lot cheaper before you're financially better off moving that far away. And then you don't only have to worry about interest rate rises, but train fare increases as well.

Add the additional commuting time into the equation, and moving so far out doesn't look to be such a good deal.

A long time ago I read an article about firefighters. They said that when they had a convention they could tell who lived in London and the South East and who lived further north (or elsewhere). The London/SE dwellers had old cheap cars, the firefighters in other areas had flash new ones.

Yep exactly, you still do get the ripple effect but there is diminishing returns as the house prices rise further out people have to consider 'is it worth the train fare + not much less mortgage cost'. Then again you are likely to get a slightly better house / better area for the money.

Funnily enough one of the articles from this topic I just clicked had a lovely nugget in it which I might retain to quote many times!! from - http://business.timesonline.co.uk/tol/business/money/mortgages/article1896210.ece

“Basically, borrowing is cheaper. So someone with a mortgage of 3.5 times salary in 1992 who has a 5 times salary today is now devoting roughly the same part of their income to their mortgage repayments.”

dannyboycey

Woby_Tide wrote: »

erm page 2 of the land registry latest release

The data for this month
continues to show one of the
highest annual increases in
almost two years. A year ago, in
April 2006, the annual price
change was 4.1 per cent, less
than half the 9.1 per cent annual
price change in April 2007

Maybe so. But the figures are severely skewed. Look at the stats for individual regions.

Including London or even Northern Ireland in housing stats is ridiculous. They need to bee looked at in isolation.

Addiscomber

BTman wrote: »

Do you think the generation that you have robbed from are going to pay for your care...

I have been puzzling over this. Please could you explain to this 50 something why I am deemed to have robbed another generation?

Generali

Addiscomber wrote: »

I have been puzzling over this. Please could you explain to this 50 something why I am deemed to have robbed another generation?

The idea is that the Baby Boomers had MIRAS and loose monetary policy to help pay their interest, planning laws that allowed houses to be built, inflation to pay off most of the principal sum and pension policies that meant that they didn't have to save for their own pension if employed as their kids would pay them.

The accusation is that they then became NIMBYs - refusing to have any more houses built near them to prop of the value of their own house. Also, the younger generations are looking at having to save for 2 pensions, that of their parents and their own.

People talk about the young whinging and wanting it all now but there's no way that a young professional couple will afford what my parents had in terms of housing and pension without big cuts in what the state does (and thus taxes) and most likely a house building program.

pamaris

Addiscomber wrote: »

I have been puzzling over this. Please could you explain to this 50 something why I am deemed to have robbed another generation?

Didn't baby boomers have their university fees paid as well? I could be wrong about this one but I've heard it a few times.

Generali

pamaris wrote: »

Didn't baby boomers have their university fees paid as well? I could be wrong about this one but I've heard it a few times.

They did, as well as getting a grant towards living costs (means tested).

Having said that only about 10% of Britons went to higher educatioon in the 1960s. The aim is for 50% to now.

RabbitMad

epz wrote: »

where did the £2,433 a month come from, i thought (500000*.06)/12 was £2500 a month and thats interest only :eek: cant see you putting by enough to pay it off or building up a pension on that little leftover so you aint going to be able to retire ever

Sorry I didn't reply yesterday - I have a home to go to.

£2,433 is the monthly amount of interest on a 500k loan at 6 %. You calc is too simplistic as I discovered myself about 2 weeks ago.

The calc I use in Excel is:
=500000*1.06^(1/12)-500000

amount * 1 + interest rate to the power of one twelth gives you the amount you owe after one month. As its interest only and you want to work out the monthly payment you minus off the original figure.

Simple really

Addiscomber

Oh I see. All baby boomers are blamed for the consequences of politician's policies that they may well not have voted for or agreed with, and for the actions of some of their age group.

Generali

Addiscomber wrote: »

Oh I see. All baby boomers are blamed for the consequences of politician's policies that they may well not have voted for or agreed with, and for the actions of some of their age group.

Yes. Steroetyping's a b1tch ain't it?