Radio5 - houses to rise 40% in 4 years.

[Deleted User]

Lavendyr wrote: »

"In the 10 years since Labour came to power house prices have surged by 156% while wages have risen by just 35%, research for the NHF carried out by Oxford Economics found. If such trends continue..."

Key word = if.

And what is the speculation based on? Seemingly nothing more than trends up until now, with no consideration for rising interest rates, rising inflation, increase in reposessions, increase in debt...

As theyalways say on fund/endowment disclaimer, PAST PERFORMANCE IS NO GUARENTEE OF FUTURE PERFORMANCE :beer:

1992 will be here again, maybe not as bad but I know many many people have don stupid things to buy a house and these will be the ones that get burnt. Protect yourself, before going on holiday buyin a flash car etc GET YOUR MORTGAGE DOWN TO 3.5 times your salary, THEN have fun :j :j :j

Im gonna bust some rhymes..

Short term pain, long term gain, it all depends on where you are on the Banks food chain.

pinkshoes

It doesn't really matter what the average wage is, or what people want house prices to be, or whether people feel the prices are over inflated.

In reality, it's all down to demand, which is based on population increases and physical availability of houses to live in. With ridiculously high immigration and people living longer, our population is forever growing, and these people have to live somewhere...

We need to get this preconceived idea out of our heads that it's our god given right to buy a house. If you can't afford it, then you can't afford it! there's nothing wrong with renting!!

People aren't just buying houses for the whole BTL thing. They're buying because it's the only way to secure some money for retirement, given that pensions are no so poxy, they barely cover the council tax.

House prices maybe being pushed out of the reach of many, but there's still plenty of fat cats out there who can easily afford them, as the rich are still getting even richer.

Life changes, and rather than whinging and whining about it, you just have to change with it, rather than living in the past, and talking about what life used to be like!!

Who knows, maybe in 100 years time we'll be forced to live in houses with 4 generations of family, as it'll be the only affordable way to live, and a luxury will be having a bedroom more than 8ft x 8ft!!

boyse7en

>Who knows, maybe in 100 years time we'll be forced to live in houses with 4 generations of family, as it'll be the only affordable way to live, and a luxury will be having a bedroom more than 8ft x 8ft!!

Which is pretty much what it was like 100 years ago. It's only in the last 100 years or so that owning a house while earning an 'average' wage was even a possibility.

[Deleted User]

Bring back work houses for the doleites!

Orion_3

I don't see what immigration has to do with it. Most immigrants rent rather than buy, and often with large numbers in one property. Plus, we have many people migrating OUT of the country too.

Rising prices at the mo seems to be related to low interest rates and a subsequent circular situation of everyone trying to get on the market before they get priced out, leading to a self-fulfilling prophecy. When interest rates rise and people fear the rising might not last forever, the situation could easily reverse, creating a self-fulfilling prophecy of falling prices.

ossian

I had posted a separate thread on this but have moved my post here:

"Guys,

Just caught the end of an item on Radio 5 live about the housing market, no doubt inspired by the "news" that the average house in England will be worth £300,000 in the next five years http://news.bbc.co.uk/1/hi/business/6932304.stm.

I believe Martin Lewis was the voice I heard them talking to. He sounded very much like the voice of reason and I wished I heard more (I heard him say he only recently got a mortgage and don't get too hyped on the ladder thing).

I was surprised that the guy who phoned in and said something along the lines of "I've paid off my mortgage and have dipped into my retirement fund to get my kid started on the housing ladder coz it's bound to grow as an investment" wasn't challenged to consider:

1. Nobody knows what houses will be worth in 5 years time

2. Growth is now being funded by "daddy's" retirement savings as first time buyers can't afford to to buy a house in much of the country. This is not sustainable because (a) there is a limit to how much people have saved and (b) at some point people are going to needa to liquidate their investments.

3. Buy to Let is no longer about income, it isn't even about covering costs, it is predicated on the belief the underlying growth in property value which is funded by 2 and 3 and depends on the a low interest rate environment is "virtually guaranteed".

4. Interest rates can get a lot higher (although they will probably only get a little higher)

5. If your kids are buying houses/graduating/etc. this is a good time to look at your asset class exposure and ensure a good spread with low risk investments becoming increasingly important.

I missed most of the item so these points were bound to be covered but I am concerned that spiraling consumer debt fueled by house values in a low interest environment have created an attitude towards house buying that is predicated on the past and not on the spectrum of possible futures.

Am I crying wolf? No. I am saying that this may not be a house of cards but it is a house built on suspect foundations. There are a lot of risks in this factor and while we have pushed past one barrier (what first time buyers salaries will finance) by collectively funding the purchase (pension money and group mortgages) we are running into a new set (limits on how much pension money people have or are willing to tie up in property and the bad debt risk of the rising numbers of self-certified mortgages).

The worst thing about this madness is that by "helping out" parents are making the problem worse and helping to drive the growth further up the market where little Johnny will one day need to move when he too decides to have children.

Cheers,
Ossian :beer:"

Jennifer_Jane

House prices set to continue rising

By Nicholas Timmins, Public Policy Editor
Published: August 6 2007 04:36 | Last updated: August 6 2007 04:36

The average house price in England is set to jump by 40 per cent over the next five years to break the £300,000 barrier, research conducted by Oxford Economics for the National Housing Federation shows.
London’s housing market is set for even steeper increases – nearer 50 per cent – as City bonuses and speculative foreign investors see it become decoupled from the rest of the country.

The findings underlined the need for the government to deliver on housing promises, the federation said, warning that the current plans to build 240,000 homes a year by 2016 would still not cover the housing shortfall.
“Lack of sufficient supply is creating a bigger and bigger housing problem, year on year,” said the federation.
House prices are at a historic high compared to earnings – nearly an 11 times multiple – and are at present overvalued by around 10 per cent, according to Oxford Economics’ analysis.
But rising demand, increasing income, growing household wealth, relatively low interest rates and an undersupply of new homes made a crash unlikely, it said.
Instead the rate of increase in house prices was likely to slow to about 2 per cent this year and next before taking off again with increases reaching 10 per cent a year by 2012.
That was set to take the average price from £213,000 currently to just over £300,000, with London prices jumping further from £322,500 currently to £478,000 by 2012.
Record City and financial services sector bonuses, buy-to-let and foreign investment, not just from Russia and Arab countries but from Italy and France, were driving prices spectacularly upward in the capital, the report said.
House price inflation for £1m-plus houses was now running at over 30 per cent, the highest rate in nearly 30 years.
At the same time, the capital had about 70,000 people on waiting lists for social housing, David Orr, the federation’s chief executive said, as “swathes of the London housing market are becoming decoupled from the rest of the country”.
In only seven out of roughly 400 local authority areas across England do the cheapest homes cost less than four times average earnings. In London the multiple is 13 times for an average priced home. In the London borough of Kensington and Chelsea and in south Buckinghamshire house prices are now more than 20 times local average earnings.
The mismatch between house prices and income was causing despair for a generation of would-be homeowners, the federation said. But the roots of that lay in the equally important mismatch between supply and demand.

Copyright The Financial Times Limited 2007

The FT have published this too. I don't think that 8.8% p.a. is so very high. I would expect (well, hope!) that my unit trust ISAs would do as well as this.

As it happens, my house is NOT increasing by anything per annum!

Jen

Guy_Montag

Jennifer_Jane wrote: »

House prices set to continue rising

By Nicholas Timmins, Public Policy Editor
Published: August 6 2007 04:36 | Last updated: August 6 2007 04:36


*snipped for brevity*

The FT have published this too. I don't think that 8.8% p.a. is so very high. I would expect (well, hope!) that my unit trust ISAs would do as well as this.

As it happens, my house is NOT increasing by anything per annum!

Jen

8.8% is still c. twice what wages are rising at therefore 8.8% is not sustainable. & I think we've already covered that OE are just a lobbying organisation not a research group.

irnbru_2

Jennifer_Jane wrote: »

I don't think that 8.8% p.a. is so very high. I would expect (well, hope!) that my unit trust ISAs would do as well as this.

Did they treble in value in the previous 10 years?

[Deleted User]

Jennifer_Jane wrote: »

The FT have published this too. I don't think that 8.8% p.a. is so very high. I would expect (well, hope!) that my unit trust ISAs would do as well as this.

As it happens, my house is NOT increasing by anything per annum!

Jen

Financial speculators dont live in the real world, they cant see the percentages from the trees.

Forget those with money, forget by to letters, forget savings, forget investment funds, forget teh stockmarket, forget the value of the pound, forget inflation, forget teh price of Gold. This is all irrelevant to the housing market.

The majority of the majority of the housing market is owned by joe schmoe and its what mr schmoe can afford thats what matters. Mr schmoe earns 28K per year, 5% of Mr schmoes may be prepared to accept part ownership with his friend 5% may get assistance from their parents but on average Mr schmoe gets no help appart from Mr satan will lend him. This is the entry point and when this entry point stops so does the rest of the market as the rest of the market are inflating assets off mr schmoes earning s in a grand pyramid scheme. When this stops there is no more money to feed to pyramid scheme anymore, people wake up and then 5 years again quickly forget and teh pyramid scheme becomes a sure fire winner again.