Radio5 - houses to rise 40% in 4 years.

Turnbull2000

Just a couple of points pinkshoes;

1. New Zealand is experiencing a property price bubble of proportions just as great as the UK. However, they have no land-shortage (which is a myth over here), neither do they have a housing shortage and there is no high immigration. And unless the average life-span has jumped to 100 within the the last few years, then "living longer" isn't a reason either. Why do you suppose this is?

2. There is a lot wrong with our youth renting in the long term. If these BTLs are sweeping up every FTB property in sight to secure their retirement, how do you suppose the FTBs themselves will survive? They'll neither have a decent pension nor a BTL - let alone their own mortgage free home. They'll be forced to continue paying rent throughout retirement.

Renting works on the continent because it's cheap and highly secure. Not so over here. It's expensive and you have no security of tenure. Why the hell should FTBs fund the retirement of one generation at the expense of thier own, all whilst sacrificing a secure home for themselves and their children?

But I do agree that they shouldn't whinge. They should f*cking riot.

Let me ask you pinkshoes; Are you facing the same dire predicament?

Jennifer_Jane

irnbru wrote: »

Did they treble in value in the previous 10 years?

Not actually kept anything for 10 years so cannot comment, except that growth on, say, £5000 at 8.8% compound interest would be about £11000 wouldn't it? Not trebling. Is my maths correct here?

Things were going fine for the 2006 and 2007 ISAs until the US sub-prime problems have spoilt the party. Nevertheless, my pension AVC fund price information shows growth over the year (up to 6/8/07) of 24.12% (BGI - European equity fund (active)) and 40.16% (JPMF Life All-Emerging Mkts ).

[Deleted User]

Jennifer_Jane wrote: »

Not actually kept anything for 10 years so cannot comment, except that growth on, say, £5000 at 8.8% compound interest would be about £11000 wouldn't it? Not trebling. Is my maths correct here?

Things were going fine for the 2006 and 2007 ISAs until the US sub-prime problems have spoilt the party. Nevertheless, my pension AVC fund price information shows growth over the year (up to 6/8/07) of 24.12% (BGI - European equity fund (active)) and 40.16% (JPMF Life All-Emerging Mkts ).

The average person doesnt have a good pension, or porvide additional contributions or have ISA funds or anything else like this. The average person has a 2.36% AER savings account with natwest.

Property is the average person and its growing beyond them so it will stop. BTLers and property developers are irrelevant to the housing market, a drop in the ocean, the people with money dont do property development or BTLs as they dont make money, they lose money. Thus the only BTLers and develpoers arnt who you think they are, they are Joe smoes that have watched sarah beeny, they didnt know how to appraise the finances and they lose money, but they are so stupid that they didnt realise that they lost money. Sarah beeny doesnt take into account important things 1) the interest/deadmoney on the mortgage while doing the house up 2) the legal and other fees, 3) the loss of income due to not working. They lose money bad style but dont realise it.

Jennifer_Jane

Yant1 wrote: »

The average person doesnt have a good pension, or porvide additional contributions or have ISA funds or anything else like this. The average person has a 2.36% AER savings account with natwest.

Property is the average person and its growing beyond them so it will stop. BTLers and property developers are irrelevant to the housing market, a drop in the ocean, the people with money dont do property development or BTLs as they dont make money, they lose money. Thus the only BTLers and develpoers arnt who you think they are, they are Joe smoes that have watched sarah beeny, they didnt know how to appraise the finances and they lose money, but they are so stupid that they didnt realise that they lost money. Sarah beeny doesnt take into account important things 1) the interest/deadmoney on the mortgage while doing the house up 2) the legal and other fees, 3) the loss of income due to not working. They lose money bad style but dont realise it.

I have been back in the UK for 9 years, am aged 60 and I earn about £22,000 a year. Perhaps I sounded richer than I am! I do try to maximise any savings by higher risk investments, and all I was talking about was a comparison of 8.8% annual growth predicted by the Oxford people, versus other investments, eg Unit Trust ISAs. I just didn't think 8.8% sounded huge (of course, currently I would love to be getting 8.8% per annum on anything - house/unit trusts/premium bonds or whatever!).

I do agree that 8.8% is high, however, when compared with 3.5% salary increases which I've been getting over the past few years.

Jen

nelly_2

Yant1 wrote: »

Im gonna bust some rhymes.. <

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:rotfl: :rotfl: :T :rotfl: :rotfl:

RHemmings

Generali wrote: »

Prices are set at the margin in a market, not by the average. Comparing average house prices with average incomes is not correct.

The trick is to compare what is being bought with who is buying it. Something that is trickier to do (CML figures can help you here).

This way of measuring house prices would become highly inaccurate if affordability constrains buyers. In the extreme case, if houses got so expensive that only millionaires could buy them, then they wouldn't look expensive because the people buying them can afford them. I think the average versus average is a much better statistic. Median versus median even better.

RHemmings

pinkshoes wrote: »

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...

That's a vast oversimplification. We don't just have "demand" for houses. Demand for anything, including houses, depends on the prices. The only "demand" for a house on sale for a particular price is the people who want to buy that house, and are capable of buying it. That is the demand for any house is not just due to the number of people in the country versus the number of houses, but also the prices of those houses. Just put a house on the market for more than it's worth and see how much "demand" there is.

Rising interest rates, general inflation, and other factors can affect demand for houses at particular price points, including reducing demand even as the population rises.

And the population isn't rising in every part of the country. If house prices are only due to population pressure, why did they go up considerably in parts of the country where the population hasn't increased?

[Deleted User]

Agree Hemmings, we all demand a Rolls Royce, but what do we get, we get what we can afford (or what satan, the credit companies will lend us)

tomstickland

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.

Immigration is not significant, to my understanding.
Buying a house as a means of securing retirement money is taking a gamble.

Melissa177

Generali wrote: »

Prices are set at the margin in a market, not by the average. Comparing average house prices with average incomes is not correct.

The trick is to compare what is being bought with who is buying it. Something that is trickier to do (CML figures can help you here).

That is a really really good post and deserves another airing.