For babyboomers housing "has been free"

Running_Horse

And you have to factor in repairs, maintenance, decorating, furniture etc.

ukcarper

Running_Horse wrote: »

And you have to factor in repairs, maintenance, decorating, furniture etc.

Also that the majority of people do not stay in the same house all their life.

TickersPlaysPop

ukcarper wrote: »

if I had stayed in the same house I first bought in 1972 I suppose it would have cost me about £24k but it not as simple as that because you have to take into account inflation and wage inflation.

24k really? What was the house size, original cost, mortgage size and term if you stayed in the same house all that time? What was your mortgage payment relative to earnings when your purchased? How much was the house worth when your finished the mortgage, and how much would it be worth now?

Inflation and wage inflation isn't relevant, I was wondering how much the boomers have paid for their house over the yrs. there is a lot of talk about the double figure interest rate which if it happened for a long time would have an impact.

ukcarper

TickersPlaysPop wrote: »

24k really? What was the house size, original cost, mortgage size and term if you stayed in the same house all that time? What was your mortgage payment relative to earnings when your purchased? How much was the house worth when your finished the mortgage, and how much would it be worth now?

Inflation and wage inflation isn't relevant, I was wondering how much the boomers have paid for their house over the yrs. there is a lot of talk about the double figure interest rate which if it happened for a long time would have an impact.

It was a 3 bed terrace it was £8000 the mortgage term was 35 years mortgage £7200 initially payment was about 40% of my income probably about 30% of our joint income. 35 years would have been the peak 2007 so I suppose it would be worth about £200k then.


Inflation is relevant because every pound I spent in 1972 is equivalent about £18 now.


In the 80s there were times when mortgage payments were 60% of my take home pay.

onlyroz

ukcarper wrote: »

Also that the majority of people do not stay in the same house all their life.

My parents bought this house in 1978 for £21k and sold it for £237k in 2010. Any estimates for the "cost" of keeping the house for that long?

http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=16301016&sale=44066180&country=england

Perelandra

TickersPlaysPop wrote: »

24k really? What was the house size, original cost, mortgage size and term if you stayed in the same house all that time? What was your mortgage payment relative to earnings when your purchased? How much was the house worth when your finished the mortgage, and how much would it be worth now?

Inflation and wage inflation isn't relevant, I was wondering how much the boomers have paid for their house over the yrs. there is a lot of talk about the double figure interest rate which if it happened for a long time would have an impact.

Take a quick peak at my post on the 6th May at 1:44, I estimate, based on actual interest rates in those years and various other assumptions, how much interest would've been paid over a 30-year period, at constant prices.

HAMISH_MCTAVISH

TickersPlaysPop wrote: »

Inflation and wage inflation isn't relevant,.

I suppose that depends what you're trying to measure.

If a boomer was paying 30% or 40% or 50% of their income on a mortgage it's the same in practical terms as someone from a different generation paying 30% or 40% or 50% of their income on a mortgage.

Inflation over time tends to reduce that percentage.

It did for the boomers, it did for Gen-X, it will for those buying today.

As we live with a monetary system specifically designed to incorporate inflation.

The vast majority of people that bought 10 years ago would already have seen significant wage inflation reduce the cost of their mortgage payments as a percentage of income.

In another 10 years that process will have accelerated still further.

It's one of the many reasons it's so much cheaper to buy than rent over the long term, because rents tend to keep up with inflation, while mortgage amounts are locked in tat a point in time and then eroded by inflation.

TickersPlaysPop

ukcarper wrote: »

It was a 3 bed terrace it was £8000 the mortgage term was 35 years mortgage £7200 initially payment was about 40% of my income probably about 30% of our joint income. 35 years would have been the peak 2007 so I suppose it would be worth about £200k then.

Inflation is relevant because every pound I spent in 1972 is equivalent about £18 now.

In the 80s there were times when mortgage payments were 60% of my take home pay.

thanks! That is very useful info. So you paid approx 3.5 times the sum borrowed for the house.

Just one more question.... is this an atypical house i.e. is this value increase unrepresentative of the market in general for that county of the UK? I.e. Was it in a "hot spot"?

TickersPlaysPop

HAMISH_MCTAVISH wrote: »

I suppose that depends what you're trying to measure.
.

Thanks for making it clear.... I was trying to work out in real terms what poeple in the boomer generation have gained. And that example we have been looking at it is greater 170000 against somebody that rented for the same time.

I know that is equity locked in the property, but down sizing or moving north would release some equity, also selling up to pay for a retirement home is possible.... It also moves down to the family when the inevitable comes.

I really do not think I will see this happen in my life time, I'm 38 and own a 290k 4 bed. Do you really think my house might be worth over 2 million in 2044?

wotsthat

TickersPlaysPop wrote: »

I really do not think I will see this happen in my life time, I'm 38 and own a 290k 4 bed. Do you really think my house might be worth over 2 million in 2044?

A sniff under 7% per year for 30 years. Maybe?