Debate House Prices


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It's as easy to buy a house now as it ever was!

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Comments

  • chucknorris
    chucknorris Posts: 10,793 Forumite
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    lisyloo wrote: »
    I bought a house in 1991 with a very small deposit (£750 I think) that I put on credit card (I didn't have any savings as I'd just come out of uni).

    It doesn't get any easier than that.

    That reminds me of when I said to a flatmate years ago when she said that she had bought something (probably shoes), 'but I thought that you were skint?' and she actually replied 'it's OK, I bought it with a credit card'!
    Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop
  • lisyloo
    lisyloo Posts: 30,003 Forumite
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    I don't buy things on credit card I couldn't otherwise afford :-)
    The point was it was small enough just to stick on a card.
  • cells
    cells Posts: 5,246 Forumite
    lisyloo wrote: »
    I don't buy things on credit card I couldn't otherwise afford :-)
    The point was it was small enough just to stick on a card.


    which tells us that prices then were unsustainable low

    Assuming that £750 is a 10% deposit it means you purchased a house in 1991 for £7,500? If so even in 1991 prices that is probably a lower price than the material costs of the house let alone land, internals, utilities, labor
  • lisyloo
    lisyloo Posts: 30,003 Forumite
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    edited 5 October 2016 am31 6:55AM
    cells wrote: »
    which tells us that prices then were unsustainable low

    Assuming that £750 is a 10% deposit it means you purchased a house in 1991 for £7,500? If so even in 1991 prices that is probably a lower price than the material costs of the house let alone land, internals, utilities, labor

    No i don't think you can draw that conclusion. We were 2 graduates at a time when only 20% of the population went to uni, so we were not average in terms of earnings (actually prices went down from there).

    No the house was £70k. We took a mortgage for 80% of the equity at 100% ltv I.e. £56k. The builders kept the other 20% for 5 years although I negotiated a 9% discount after 4 years.

    For us I think it was ok to have a 100% mortgage as we had 2 graduate salaries and could have afforded it on either salary.
    graduate jobs back then were pretty secure and our skills were in demand.
    Such arrangements may not be sensible now, but even looking back I think 100% ltv was fine in our situation. We both had no debts so we had done well managing our money at uni.

    it was definitely easier that's indisputable.
    Whether you think credit was too loose or their was more inequality for graduates compared to the other 80% are arguable points.
    There was not a lot of BTL back then (it wasn't easy for amateurs to get a mortgage) and 2nd homes were rare.
  • cells
    cells Posts: 5,246 Forumite
    lisyloo wrote: »
    No i don't think you can draw that conclusion. We were 2 graduates at a time when only 20% of the population went to uni, so we were not average in terms of earnings (actually prices went down from there).

    No the house was £70k. We took a mortgage for 80% of the equity at 100% ltv I.e. £56k. The builders kept the other 20% for 5 years although I negotiated a 9% discount after 4 years.

    For us I think it was ok to have a 100% mortgage as we had 2 graduate salaries and could have afforded it on either salary.
    graduate jobs back then were pretty secure and our skills were in demand.
    Such arrangements may not be sensible now, but even looking back I think 100% ltv was fine in our situation. We both had no debts so we had done well managing our money at uni.

    it was definitely easier that's indisputable.
    Whether you think credit was too loose or their was more inequality for graduates compared to the other 80% are arguable points.
    There was not a lot of BTL back then (it wasn't easy for amateurs to get a mortgage) and 2nd homes were rare.


    Can you explain the above a bit more?
    The house was £56k for which you took a 100% mortgage but you promised to give the builder another £14k at year 5 ?

    100% mortgages need to return what if the regulator had baned them during your time would you have had the £6k needed for the deposit?

    Also my point was that house prices were very cheap then. I think that still stands. Your £56k purchase would be about £110k in today's money. You can't build a house for that nowadays. It costs ~£2k per sqm to do a good refurb of an existing house (admittidly that is a full gut and rebuild inside but unlike a new build you get the outside walls the foundations the roof utilities and the Land for free).

    People who think house prices are expensive need to realise that building a new house in the UK or even doing a good refurbishment is expensive and runs at about £2k/sqm in London/SE. So as a minimum an 80sqm home will cost >£160k and that's if the land and utilities and s106/CIL were free which obviously they aren't. In most the country a house costs less than this £160k min figure
  • cells
    cells Posts: 5,246 Forumite
    Nominal GDP (a good proxy for nominal wages) is up ~3.3x since Q1 1990


    71x since 1960
    38x since 1970
    8.2x since 1980
    3.3x since 1990
    1.9x since 2000
  • lisyloo
    lisyloo Posts: 30,003 Forumite
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    edited 5 October 2016 pm31 8:08PM
    cells wrote: »
    Can you explain the above a bit more?
    The house was £56k for which you took a 100% mortgage but you promised to give the builder another £14k at year 5 ?

    The house was £70k.
    The mortgage lender gave us 80% of the money.
    The builder took a second charge on the property and we were contracted to pay them either £14k or 20% of the value of the house if greater after 5 years.
    I actually paid £12740 after 4 years by agreement.
    100% mortgages need to return what if the regulator had baned them during your time would you have had the £6k needed for the deposit?

    No. Id just come out of uni so had very limited funds.
    As two credit worthy grads with decent prospects I expect we could have got £6k from somewhere, but the builders made it easy for us albeit at a cost.
    Also my point was that house prices were very cheap then. I think that still stands.

    Prices went down over the next 5 years at least, so you migh be right, but for people who wanted or had to move it was an issue.
    I'd say they wer really cheap in 1996.
    I certainly knew people who had 4 kids in a 1-bed flat.
    An estate in Bristol called Bradley Stoke that was built at that time was re-named Sadly Broke.
    So you can decide they were cheap by whatever measure you are using, but falling prices were a serious issue for those whose circumstances changed including people whose job relocated or couples who split up.

    As you can see the builders were prepared to take 80% and risk some losses, so there could not have been great demand as they wouldn't have offered that.
  • lisyloo
    lisyloo Posts: 30,003 Forumite
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    edited 5 October 2016 pm31 8:09PM
    cells wrote: »
    Nominal GDP (a good proxy for nominal wages) is up ~3.3x since Q1 1990


    71x since 1960
    38x since 1970
    8.2x since 1980
    3.3x since 1990
    1.9x since 2000

    For that area (the shires, not London), 3.3 seems about right for both wages and the house - so I'd say it's about the same as now.
    £230k for a 3-bed semi on the less popular side of a small town seems about right to me and 3.3 is about right for our equivalent permanent salaries too.
    It was easier though becuase the builders helped us (for their own motives of course).
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