Renters at breaking point as house prices continue to rise

ruggedtoast

House prices to soar until 2020 as even middle-income earners are priced out of the market
Middle-income families will be frozen out of a frenzied property market
The average annual gain over the next five years will be around six per cent
Calls for British policy-makers to show vigilance over property prices

http://www.dailymail.co.uk/news/article-2601104/House-prices-soar-2020-Middle-income-earners-priced-warn-Chartered-Surveyors.html

http://www.theguardian.com/business/2014/apr/10/property-market-highest-sales-six-years-rics-warning-rising-prices

Britain's property market posts highest sales level in more than six years
But Royal Institution of Chartered Surveyors warns rising prices will put home ownership out of reach of many

For the vast majority of Briton's younger persons, housing now just means a rented flat or:










The UK's insane housing prices are an axe that is falling squarely on the neck of those disenfranchised by the generational divide. While the government falls over themselves to liberate pension funds for unprepared retirees, while relaxing BTL rules which further strangle the supply of available properties, many younger people find themselves in an impossible situation.

Caught between rising property prices and a rental market increasingly dominated by clueless, opportunistic landlords and an unregulated lettings sector, how long before renters buckle under the pressure, and like Seligman's dogs, just give up trying to ride the system altogether?

The shifting sands of renting is the new paradigm, and outrageous rental increases and shiftless landlords the talk of the water cooler. It was bad under Labour but this awful coalition government are truly going hell for leather to create a renter class of new serfs, beholden to their property owning masters.

chucky

I would have thought house prices would be the first to give before rentals but happy to be wrong.

marathonic

"Renters at breaking point as house prices continue to rise"

Why? I'd have thought rising rents would push renters to breaking point - not rising house prices?


I really do laugh at all the debt images above – as if debt is ALWAYS a bad thing.

At the end of the day, if I could buy a house for £115,000 that rents for £500 monthly (which I did in December 2012), my options would be to rent £115,000 from the bank at 2.88% for a 5-year fixed rate (which is what’s available in my bank) or pay £500 per month in rent.

The interest on the above terms would be £3,312 per year and you would want to be adding £1,000 per year for maintenance costs giving a total of £4,312. Let’s push that figure up to £4,500 to allow for the increased cost of insurance due to the fact that an owner needs buildings cover in addition to contents cover. This total cost of £4,500 is £1,500 less than renting the same house.

Now, in my position in December 2012, I could have continued to save waiting for prices to fall further or trying to increase my deposit to lower my mortgage requirement. However, by buying, I was saving £1,500 per year compared to renting. I could put this, together with what I could have saved whilst continuing to rent, towards paying down the capital portion of my mortgage.

We’re now in April 2014, the average rent for similar houses has gone up to £550 and the house is now worth £140,000. My savings over renting have increased from £1,500 to £2,100 due to increased rents and further again due to the fact that I’ve paid down a lot of capital in my mortgage, reducing my interest bill.

I was on this very forum on various occassions since buying where I was well-warned by the bears that I had made the wrong decision. Those arguing with me are being very quiet lately.

Whilst interest on mortgages is a barrier to increasing your savings and investments, until you own a house outright, you will always be paying it – either directly to the bank or indirectly to the landlords bank through your rent.

purch

I do like posts with pictures.

Stops the reader dying from boredom :eek:

mayonnaise

ruggedtoast wrote: »

While the government falls over themselves to liberate pension funds for unprepared retirees, while relaxing BTL rules which further strangle the supply of available properties, many younger people find themselves in an impossible situation.

Generali

http://www.ons.gov.uk/ons/dcp171776_358626.pdf

According to the Government there's been no increase in rents at all on average in the past year in nominal terms. Renters are getting richer.

MrRee_2

I do laugh at all this complete and utter tosh ....... why should debt be bad?

Debt is brilliant - without me getting myself into debt many decades ago I wouldn't be where I am now ..... sitting in a comfortable house, watching the sea lap the shore from the conservatory as the sun beams in and warms the cockles of the heart!

Debt brought me this ...... as debt will bring future riches to the young today - don't knock it, it's the best thing that can happen to you!

cells

More expensive homes would lead to more production in a market where supply was not dictated by little hitters in the council

the tories are shooting themselves in the foot. More renters less owners simply means more votes for labour and less for them.

if they lose the election in 2015 it could be the 2030s before they get a go at power again

ruggedtoast

On C4 news now. Housing fever spreading out of London to other hotspots. RICS predicting 30% HPI over the next five years.

Bad news for everyone already locked out of the housing market. Mostly younger renters locked out, ZIRPING and boomer pension free ups thought to go right into the housing market to further price out FTBs.

Even Wales seeing a house price boom.

moneyinmypocket

Why aren't renters taking advantage of low IR, HTB etc - there are bargins to be had out there.

BobQ

ruggedtoast wrote: »

On C4 news now. Housing fever spreading out of London to other hotspots. RICS predicting 30% HPI over the next five years.

Bad news for everyone already locked out of the housing market. Mostly younger renters locked out, ZIRPING and boomer pension free ups thought to go right into the housing market to further price out FTBs.

Even Wales seeing a house price boom.

Wait till interest rates rise, then these chancers will not be so content.