House prices

chucknorris

Crashy_Time wrote: »

No, many are now finding that there are no buyers, money in property you can`t sell is dead money, it doesn`t exist.

There are very few times when you can't sell, even in the middle of a huge crash you can probably sell at a certain price. I bought most of my properties in the middle of a huge crash, so if I am not correct, how did I manage to buy them? If there was a huge crash now, say 35%, this is what I could do:

The next flat that I intend to sell (when my tenants give me notice) is my lesser yielding flat (but still better than other assets). I bought it in 1999 for £68k, and spent £12k doing it up, so £80k. I sold a similar flat in the same block this year for £440k (I bought that one for £84k also in 1999, it didn't need doing up). So if values fell by 35%, I could sell it for around £286k, still showing a profit of around £200k (after ex's). That £200k does not include about £80k of total rental profit (and this is my lesser yielding property). So the disaster would be being lumbered with £280k profit. But! Why on earth would I do that? I would much rather simply wait another 5 years until the market picks up again, then sell it. If I was younger, I wouldn't just wait to sell, I would buy more property. Like I did in the last crash of 2008, back then we bought a 3 bed Victorian house for £243k (but spent about £17k doing it up), so about £260k, that one is worth about £500k now, but we are keeping that one for about another 12 years.

I know you'll come back with that you can't sell when in negative equity, my answer is, so don't sell, just wait. There were times shortly after I bought that I was near or in negative equity, so what? It doesn't matter if you aren't selling.

chucknorris

GreatApe wrote: »

The real intriguing question is not why are prices high today, they are not

The actual question should be why were House prices so so cheap in the 1999s.

During the mid 1990s in some London areas you could buy a house for just material cost which means you got the land and labor and utility connections and adjacent infrastructure for free. It was a period of amazingly undervalued housing prices in London.

That was a major part of why I moved to London in 1990, the other reason was faster career advancement. Of course London houses looked expensive compared to prices in Newcastle (where I come from), but not when you looked at yields. I reckoned that they would be a great 30 year investment, and they have performed far better than I had hoped for.

buglawton

GreatApe wrote: »

The biggest mistake the crash cheerleaders made was the absurd notion that a man on the average wage should be able to buy the average property. It sounds right but it's so wrong. Its made even more Wrong by the fact that most the crash cheerleaders are men and have this stupid idea that women in the past didn't work so they are entitled to be able to buy a 3 bedroom house all by their lonesome.

A much better model would be that the top 1/3rd of properties would be bought with capital wealth things like Inheritances and business sales etc

The middle 1/3rd is for second time buyers

The bottom 1/3r is for FTBs

And this would be at a national level. So a property in London even a small crappy one which is in the say 25th percentile in London is actually more like the 50th percentile nationally.


If you model the market like that things look absolutely fine.
Nationally the mid point of the bottom 1/3rd of properties I'd only around £100k which is easily affordable for even a couple on the min wage. Luckily most couples even young FTBs are on more and also have family help.

There is no housing problem there is no housing crisis just a rational functional market and irrational commentators and crazy crash cheerleaders who have been waiting 15 years

In the late 50s and early 60s people on ordinary wages WERE able to buy a mortgaged semi in a popular green belt suburb. My neighbours/family friends in them were a mobile greengrocer, milkman, carpenter, factory workers (albeit wife working), London commuter, etc. These were decent sized 3 bed semis with large gardens and enough space for a later extension.

The current market more resembles rationing with black market pricing.

ukcarper

buglawton wrote: »

In the late 50s and early 60s people on ordinary wages WERE able to buy a mortgaged semi in a popular green belt suburb. My neighbours/family friends in them were a mobile greengrocer, milkman, carpenter, factory workers (albeit wife working), London commuter, etc. These were decent sized 3 bed semis with large gardens and enough space for a later extension.

The current market more resembles rationing with black market pricing.

Wasn't the case in early 70s

Home ownership in 1950s was 25% so obviously fewer people did.

GreatApe

buglawton wrote: »

In the late 50s and early 60s people on ordinary wages WERE able to buy a mortgaged semi in a popular green belt suburb. My neighbours/family friends in them were a mobile greengrocer, milkman, carpenter, factory workers (albeit wife working), London commuter, etc. These were decent sized 3 bed semis with large gardens and enough space for a later extension.

The current market more resembles rationing with black market pricing.

Nonsense

Actual data is available from the census figures

What they show is that women have always worked. As I keep saying my mother worked my grand mother's worked my great grand mother's worked. Its just a silly myth that most women stayed at home.

Likewise actual data is available for home ownership.
1971 was 49.99% home owner and of course 1961 was even lower and 1951 even lower still

The most recent figures for the UK have it at about 63.5% ownership and if you exclude recent migrants (who overwhelmingly rent) the native population figures for ownership is even higher u believe about 68%

The figures are also distorted by students. A student renting a flat age 18-22 is counted as a renter. While his grand father age 18-22 would gave been working and likely living with his mother still and thus he was counted as in a homeowner home. Even though in both cases the 18-22 wasn't a homeowner.

There is nothing wrong with the UK housing market.
It functions logically and it functions well.

Homeownership is high for the locals and very affordable. Most locals get free housing via gifts and inheritences and are thus not even net house buyers

GreatApe

ukcarper wrote: »

Wasn't the case in early 70s

Home ownership in 1950s was 25% so obviously fewer people did.

But my mates over at hpc told me that one of their friends friends friend told them that fifty years ago everything was as easy pie. You left school age 15 and by age 16 you were buying a 3 bedroom semi with a 300ft garden. Life were easy

:rotfl:

They don't even stop for a minute and think if everyone was buying nice big homes who the hell were in the small !!!! homes?

ukcarper

GreatApe wrote: »

But my mates over at hpc told me that one of their friends friends friend told them that fifty years ago everything was as easy pie. You left school age 15 and by age 16 you were buying a 3 bedroom semi with a 300ft garden. Life were easy

:rotfl:

They don't even stop for a minute and think if everyone was buying nice big homes who the hell were in the small !!!! homes?

That is just what I find so ridiculous, I am told by people who were not born in 70s how easy I had and when I tell them my experience they just don't believe me.

I can only speak with any authority about the area I live in but in the 70s I could not afford to buy where I wanted and had to move further away from where I worked South West London. I was in a skilled job and earning more than average earnings, the house I bought was a small 3 bed terrace and I was only able to buy that because I managed to get a mortgage of 3.25x our joint income. if I had delayed by as much as a month I would not have been able to buy as prices increase 20% over the next few months.

I accept that prices are higher now and I would probably have to accept a 2 bed property but only for short periods of time has it been easy in the south east.

GreatApe

ukcarper wrote: »

That is just what I find so ridiculous, I am told by people who were not born in 70s how easy I had and when I tell them my experience they just don't believe me.

I can only speak with any authority about the area I live in but in the 70s I could not afford to buy where I wanted and had to move further away from where I worked South West London. I was in a skilled job and earning more than average earnings, the house I bought was a small 3 bed terrace and I was only able to buy that because I managed to get a mortgage of 3.25x our joint income. if I had delayed by as much as a month I would not have been able to buy as prices increase 20% over the next few months.

I accept that prices are higher now and I would probably have to accept a 2 bed property but only for short periods of time has it been easy in the south east.

Well yes the data clearly shows property wasn't more affordable in 1971 as far fewer people owned.

I think maybe London was the big anomaly in the 1990s
The councils built far too much social hones and inner London was very ghetto in the 1990s
I don't mean to be an !!!! but the migrants back then were truly 3rd world and crime was a good deal higher. I recall the house across the road was bordered up with steel and had a police car outside for weeks the resident has murdered someone and dumped the body in Epping forest. The local pub also has two murders (supposedly). Muggings were common and I had the displeasure if being mugged twice in hackney both times I was a child. For a long time I couldn't believe or accept that inner London could get better. But things did improve primarily because the thugs got old and the newer generation both local born and migrants are better behaved than those that came before then.

Anyway the combination of excess social builds and very ghetto nature of inner London meant inner London was very cheap. You could buy a flat for less than the cost of a decent car. Literally give away prices.

I think a lot of the analysis which is done by the media and political class is looking at inner London to figure out what has happened nationally. When £50k flats have gone to £500k they think something is wrong. What they don't seem to understand was that something was wrong what was wrong was that a flat in zone 2 London should never have been £50k

Of course most the rest of the country isn't just affordable but cheap. A starter home (the bottom 1/3rd of the stock) costs less to buy than it costs to rent a council property. Why don't the crash cheerleaders the media or the government see that? Its so clear there is no problem no crisis no shortage when it costs less in a place like Birmingham to buy a 3 bed terrace than it goes to rent from Birmingham council.

They are confusing the rate of homeowner falling with a housing crisis.
Homeownership fell because of mass migration its clear in the stats some 75% of new arrives have to rent privately and since we have imported a fee million migrants the housing sick changed to slightly more rentals.

As already discussed before we need about 14% private rental just to allow mobility and we have 19% private rental. If there is a problem at all its just within this 5% and most of that is explained too.

Things are bad on the housing front they are good
Generally the economy jobs wealth life expectancy happiness everything I'd hood in the UK.
We just have miserable media types and positions and lefties trying to convince the population that life is !!!! when it isn't

Curls2208

So after reading the discussion in here. Here's one for you..

Im a first time buyer....I have about £14000 saved up, I am looking to spend between £100-150K on a house.

Now....should I buy sooner rather than later? If I bought in the next two months I'd have around 10% deposit right?

But I'm going away with work for four months in January to May where I should be able to HOARD all cash. This will probably mean I'll have about 30-35K for a deposit next summer.

What are the chances of the market flunctuating so much, that it would be better for me to buy early?

Obviously if a house costs £120K now and it'll cost £150K next summer, then all my savings will be for nothing?

You may be able to tell but I am very new to this., and am just picking brains.

PS...that person posting further up has too many houses ;-)

ANDR£W

Curls2208 The only answer I can give to you're Buy/not buy question is,Which ever you decide don't do it with a lifetime of regret.The decision you make will be the right one for YOU at the time.Hope this helps.