House prices and affordability

HAMISH_MCTAVISH

shortchanged wrote: »

Maybe Hamish, but household income in the UK is still being squeezed and this at a time when mortgage rates are at an all time low.

There's no "maybe" about it.

It's a fact that wages have grown faster than inflation over the last few decades.

And while nothing goes up in a straight line, the current tiny blip downwards is temporary in nature, and will pass as soon as unemployment falls a bit more.

chucky

grizzly1911 wrote: »

Past performance isn't necessarily true of the future.

That's exactly what's needs to be said to people who thought they were going to live off the interest on their savings.

fc123

Loughton_Monkey wrote: »

Of course your argument is (if not new) spot on. You've mentioned most of the key drivers and dispelled most of the myths.



Those of us paying a mortgage for 40 years, and monitoring our house equity have all "been there before." We have seen periods of time when half the net household income went to the Building Society. No. We didn't like it one bit. Those wanting to get onto the housing ladder at the time didn't like it either. But I don't recall anything like the whinging, newspaper articles, irrational doom & gloom predictions about house prices, or much sympathy from anyone else.

We just got on and bought our houses.

Whenever someone points this fact out they are called a 'Mean Boomer' who hasn't a clue how it is today but that's not true.

During the 90's when rates rose sky high I knew so many people who were squeezed in a way that nowadays people would find shocking.
The government at the time didn't really care how many people were repo'd or who couldn't heat their houses etc.

There was also no tax credits or wage top ups either and you were on your own. You had to work more hours and 'back to back' working was common with one partner doing night work and the other a day job and they would juggle it around the kids (as no childcare benefits paid then either).

I look at the younger family members today and yes, job security isn't great but it was pretty much zero 20 years ago.

HAMISH_MCTAVISH wrote: »

We know.

But wages have risen faster than general inflation since the bad old days of high interest rates.

We have significantly more disposable income now than we did a few decades ago, despite houses being more expensive.

Definitely true but there are now more things to see and buy nowadays so maybe that's why the younger generation don't feel it is 'better'.

Loughton_Monkey

shortchanged wrote: »

http://news.sky.com/story/1095972/british-families-feeling-spare-cash-strain

Maybe Hamish, but household income in the UK is still being squeezed and this at a time when mortgage rates are at an all time low.

I can only refer you to a relevant post on another thread, which I quote in full. If you cannot get your head around it, then I am very sorry for you.

Loughton_Monkey wrote: »

I can see why you say that, but short term problems should never be used as an excuse not to follow sensible long term strategies.

I don't think you can look back at any (say) 5 year period and find one in which every 'constituent' of the population is financially "happy". In other words, savers are nicely getting a real return on their savings, investors are getting even better returns for the risk. Mortgage payments are considered 'affordable', house prices are holding up well, renters believe their rent is 'reasonable', inflation is considered well controlled, wages and salaries are keeping good pace over inflation and everyone feels better off this month than they did last.....

Life is never like that. Life goes in cycles - some good, some bad. The well informed can turn the cycles to their advantage, the non-informed will survive on a swings & roundabouts basis. The ill-informed will [as I see so often nowadays] use every negative signal at any one time as an 'excuse' not to save, not to invest, not to buy, not to sell, not to work, not to move... you name it!

I don't know if it's education, social trends, or pure ignorance causing it, but I distinctly notice a bad dose of "short termism" that has crawled to the forefront of modern life. It takes many forms, the most dangerous of which surrounds a casual regard to education [what's the point of going to university? Won't get a job when I come out......]

We are becoming a nation of 'victims'. Hindsight will show that these are victims not of high house prices, low wages, high unemployment, high energy prices..... name what you like..... but they are victims of their own negativity and failure to think long term.

Slightly_Squiffy

HAMISH_MCTAVISH wrote: »

There's no "maybe" about it.

It's a fact that wages have grown faster than inflation over the last few decades.

And while nothing goes up in a straight line, the current tiny blip downwards is temporary in nature, and will pass as soon as unemployment falls a bit more.

Which is all well and good, except for the fact that a lot of major companies have had wage freeze since the recession and for people like myself and my fiance (and the majority of our friends) who are just only at the comparable beginning of our careers, how and when are we going to catch up? We have had to have the heart-breaking conversation of the fact that we will probably not be able to afford to have children until 2-3 years after when we would like to. I do absolutely see your point, but when doing your calculations on the majority being two-wage households, if they have children they will also have extortionate childcare costs. A family home SHOULD be affordable on only one wage, unless the government plan on overhauling their childcare schemes (which they don't look ever likely to do).

Graham_Devon

HAMISH_MCTAVISH wrote: »

We know.

But wages have risen faster than general inflation since the bad old days of high interest rates.

We have significantly more disposable income now than we did a few decades ago, despite houses being more expensive.

Well that's mainly due to the shift to two wages in a household.

Now, you may say thats a good thing. But for many, it's not, as they now NEED 2 incomes to survive.

So sure, you might see a rise in disposable income in percentage terms, but that does not mean people are better off.

The very fact that there are now so many support benefits is testament to this.

You can paint quite a few pictures when you take percentages and several decades. But then, I'm probably just being irrational.

Loughton_Monkey

Graham_Devon wrote: »

Well that's mainly due to the shift to two wages in a household.

Here you go muddling again. Hamish made two seperate points you are now choosing to muddle. Firstly, and nothing to do with houses, he makes the point that "over the last few decades" incomes have risen faster than prices. This is fact. If you want to confuse the post-crash problems with 'decades' then please do so in private.

His reference to two-wage households was to quote the 'male' position of 4.5 compared to the 4.0 long term average, and pointed out that women now earn more, and that dual income mortgages are now more prevalent, hence less pressure on average for affordability.

Graham_Devon wrote: »

Now, you may say thats a good thing. But for many, it's not, as they now NEED 2 incomes to survive.

Nobody needs two incomes to 'survive'. You do not need to buy a house to 'survive'. Having a second income helps to buy a house. This has always been the case.

Graham_Devon wrote: »

So sure, you might see a rise in disposable income in percentage terms, but that does not mean people are better off.

Another classic line that should be filed into your best quotes.:rotfl:It's like Hamish saying yes, house prices are going up in percentage terms but that doesn't mean they are more expensive.

Graham_Devon wrote: »

The very fact that there are now so many support benefits is testament to this.

I see no direct connection of benefits to average wages, inflation, or house prices.

Graham_Devon wrote: »

You can paint quite a few pictures when you take percentages and several decades. But then, I'm probably just being irrational.

There is, I would suggest, more than an ounce of possibility that you are being irrational. Should we talk, from now on, in proportions and periods of ten years instead of percentages and decades? I shall write to ONS immediately. "Please never say unemployment is down from 7.9% to 7.1%. You must say it reduced from 15/190ths to 27/380ths....."

Why can't you live with the facts that (a) everyone knows that incomes have come under severe pressure over the last few years and not fully kept pace with inflation. (b) house prices fell significantly, rose a bit, stagnated, and are now very much rising, predominantly due to more mortgage availability. (c) despite that, many people are able to afford a house, as evidenced by a big rise in activity and sales. (d) finances have been tough for virtually every segment of society over the last few years. It seems that it is at last slowly getting better?

cells

shortchanged wrote: »

This is the part I find difficult to grasp. Apart from actual mortgages being very cheap by historical standards, there certainly doesn't seem to be falling costs of living at the moment.

4% mortgages with 20% down were available in the 1930s in the UK so by historical standards 4% mortgages are normal and have been for 80 years

cells

House prices should get cheaper in real terms as all manufactured goods have and will continue to do so.

France built 420k homes in 2011 while the uk built ~130k the same year

Both nation have a similar population and similar population growth but one builds 3x as nuch as the other. As a result uk homes are smaller and more expensive

Its not rocket science


The real question is if this can be turned around? Can the uk start building 420k homes a year like the French? The answer is YES becuase of the common market we would lack no skills or material limits. Only if the dam councils would approve tje required number of stamps and bot over burden new builds. However the little council Hitlers are not going to go down without a fight

blinko

cost of living fell hhmmmm

transport costs up, energy costs up, food costs up