**Don't Buy A House** House Prices Set To Crash!!!

vishpatel

dougk wrote:

Having checked on the web the average salary for the City of London is £55k PA. Therefore in "London" terms you are poor (or below average) hence the inability to afford a bigger property within the city.

City of London??

I know the London average is about £31K...

dougk_2

This link here shows the average wage depending on where you live (not where you work) :
http://news.bbc.co.uk/1/hi/business/4319239.stm

Therefore it implies that if the average wage for a london worker is £31k, most of these "average" workers live outside of London itself. Don't forget people commute to london from over 100 miles away, where houses are cheaper, but pay is better in London.

dougk_2

Perhaps there should be a separate thread started for living in london?
We are a bit off topic!

So back to topic... House Prices Crash - not in my opinion (Crash means a HUGE fall). Small dip possibly but a static market or a small rise is more likely. House price increases are not just a thing of the UK - Property prices rose in France by 13.9% in 2003 and 16% in 2004. Spain saw prices rise 17% last year.
Perhaps moving abroad to Europe is not so much of a good deal as people think?
(and income tax in France is much higher too for an average earner)

Spendless

So does anyone think that yesterdays announcement about stamp duty will cause some house prices to fall?

If i was selling my 3 bed semi it would be on the market for about £130,000-£135,000.

You can buy a bit smaller 3 bed semis in my area for £120,000. You can also get 3 bed semis same size as mine in other areas of the town for £120,000.

If i was to put my house up for sale, wouldn't i have a disadvantage that you would have to pay stamp duty on my property? So wouldn't i need to drop my house to £120,000 or less to attract the buyers? If i did wouldn't the houses that are currently worth £120,000 be worth less too???

vishpatel

dougk wrote:

So back to topic... House Prices Crash - not in my opinion (Crash means a HUGE fall). Small dip possibly but a static market or a small rise is more likely.

Tha last 'Crash' lasted 6 years and was about 40% from peak to trough.
Would you call that a crash? Many didn't until near the very end... (see graphs below)
http://www.propertyfacts.co.uk/old/pricetrend/pricetrends.htm

dougk wrote:

House price increases are not just a thing of the UK - Property prices rose in France by 13.9% in 2003 and 16% in 2004. Spain saw prices rise 17% last year.

Yep - it's a global thing which is being driven from guess where?? The USA!!
See Andrew Farlow's papers on the subject - Economics fellow at Oxford.
(http://www.economics.ox.ac.uk/members/andrew.farlow/)

Direct link to the paper:
http://www.economics.ox.ac.uk/members/andrew.farlow/Farlow%20Housing%20and%20Consumption.pdf

Here are some facts about House price inflation across Europe...

France now tops Europe's house price inflation table, followed by Spain, and then the UK and Ireland. The Netherlands, Switzerland, Germany and Austria occupy the bottom of the table, with Greece in bottom place.

The report, now in its sixth year, includes data and analysis on the 10 accession countries in Eastern Europe as well as Portugal for the first time. The study points to a three speed Europe, with France (15.5%), Spain (15%), the UK (12%) and Ireland (12%) all occupying the fast lane with double-digit inflation figures. They are followed by a middle group of six countries - Belgium (9%), Sweden (8%), Finland (7%), Portugal (7%), Italy (6%) and Denmark (6%) with a house price inflation of around 5%.

The bottom group - Netherlands, Switzerland, Western Germany, Austria and Greece has a house price inflation figure between 0 and 2%.

dougk_2

No I can't see it causing houses to drop unless they are close to the £120k limit.... but then many sellers between the 60k and 120k limit may opt to increase their prices now. If I was selling a property above 120k I would just advertise it at that price and say will pay the buyers stamp duty! That way it sounds like they are saving mnoney anyway.

Is the 1% really a difference to FTB's? Ok if they struggle to get the deposit and save the xtra 1% then maybe otherwise I think not.

dougk_2

Many of those country at the bottom end are "rental countries" where people rent rather than buy - its partially a cultural thing. If memory serves me right the UK was like that in the not to distant past and home ownership was not an issue.
The change is now people want a house of their own (for good reasons)
Unfortunately you have to be able to afford to buy one. If you can't in some ways its a case of tough... you can't have everything you want. The main difference now and say 25 or 30 years ago is people understood this and worked extreamly hard (maybe 50 hour weeks) , saved , scrimped and suffered, things that fewer are prepared to do now.
The local paper had an interesting letter in it yesterday which summed up lots of things.... the gist was if a 20 year old stopped smoking today and put the money away they would have spent on fags, they would have £265k in a savings account at the age of 65. And if binge drinkers stopped there £50 to 100 a night "hobby" they would be able to afford a deposit on a house.

vishpatel

dougk wrote:

The change is now people want a house of their own (for good reasons)

You're suggesting their is now a sudden greater demand for home ownership, but you don't have anything to back that up with!! FTB'ers at their lowest levels for 20 yrs ?? Who are these 'people' you speak of??

There IS a greater demand for investment property however...

dougk wrote:

The main difference now and say 25 or 30 years ago is people understood this and worked extreamly hard (maybe 50 hour weeks) , saved , scrimped and suffered, things that fewer are prepared to do now.)

Again - you must've missed all the reports which show Britain is a nation of workaholics. 50 hour weeks?? Pretty standard in my industry (Investment Banking). Infact a good friend who graduated at the same time as me has been putting in 70-80 hour weeks before going to do an MBA.

dougk wrote:

The local paper had an interesting letter in it yesterday which summed up lots of things.... the gist was if a 20 year old stopped smoking today and put the money away they would have spent on fags, they would have £265k in a savings account at the age of 65. And if binge drinkers stopped there £50 to 100 a night "hobby" they would be able to afford a deposit on a house

Thats not a problem of the young!! People have always smoked and drank. It's just that 'back in the day' the tax on these items wasnt quite so high...

Jeez, old timers like you are really beginning to cheese me off...

nelly_2

Why should we cut back on the good stuff anyway?

Why not cut back on house prices, lets have an across the board 40% reduction in house prices, as of 7 o clock tonight!

It wouldnt harm anything, all the existing home owners wanting to upgrade will benefit from the reduction too. The bigger house will also be 40% less expensive.

Sounds like fun to me.

dougk_2

Firstly I am not an old timer (only about 5 years older than you!)
Secondly.. i can't remeber seeing or hearing about binge drinking - its a new thing. Yes there have always been alcholics, but binge drinkers are not are they?
Thirdly its more expensive not just for tax but because the places you go to drink - clubs are far more expensive than pubs or dinking/socialising at home. Ask your parents or friends parents how much they drunk, how often they went out etc.
Lastly, If you are doing a 50 hour week for £33k then you are not as well paid as you think.

FACT: Average working hours have dropped to a basic average of 37.3 hours in the UK
(overtime is not included)

FACT: There are 1.5 Million more homeowners than 1997 (see the budget report)

FACT: The average household consited of 3.01 people in 1961, 2.49 in 1990 and 2.36 in 2003.
This shows people are living on their own more frequently now fuelling demand for housing

FACT: in 1972 FTB's were buying houses at 82.5% of the cost of an average house (£6,086) average income was about £1,500. (4 x salary).
Note: mortgages of over 80% LTV were not common then so large (in relative terms) deposits were needed.

Statistics seem to indicate the difference is most FTB's were couples, so had joint salaries to pay for the house etc.

Vishpatel - if you were buying with a partner of equal standing then your combined salaries would be more than enough to comfortably afford a 2 bedroom house.