Why are house prices still so high?

GreatApe

Zero_Sum wrote: »

I was told on here that the average was £40k (which was clearly nonsense, might be average in inner London)

The average lifetime 'income' for uk born brits is much higher than most people imagine

There is also lots of earnings outside of jobs too.
Business sales
Insurance payouts
Dividend payments
State benefits
BTL rents
Shop Rents/Land/Office/Other-Building Rents
Patent 'rents'
Interest payments on savings
Interest payments on government and corporate bonds
And much more

In short the UK is a £2 trillion a year value added economy.
That is over £30k for every man woman and child or over £60k for every working person in the UK and not everyone works full time


This does not even take into account that the UK has a net stock of wealth in excess of £10 trillion (and growing) which is passed mostly from old to young via gifts and inheritances of more than £200 billion annually

The UK is a very wealthy country.

Only the wealthy in the UK generally do not show it off
And they dont actually live lives that different from the typical person
They might just live in a more expensive house or drive a newer car but thats about it they eat the same food and mostly wear the same cloths so you cant really spot them but they exist

One of the richest people I know worth well in excess of £20 million is still rocking a 30 year old jacket and drives a 15 year old people carrier

GreatApe

Why are house prices still so high?

Once again, house prices can never be high or low whatever the price is is exactly right
It is like gold, why are gold prices still so high? It does not even make sense as a question

You could ask

Why are house prices high relative to rents? ( I would argue they are not high relative to rents in fact in most places they are low relative to rents)

Goldman2020

Anyone within inner and outer London have any comment re the cost of renting and house prices in relation to the topic?

System

GreatApe wrote: »

Most uk born brits with uk born parents and a uk born partner will inherit the capital equivalent to about 2 houses

With an average family with 2 children that's the equivalent of 4 inherited houses per family. And there's still a housing shortage?

SpiderLegs

It seems like the inheritence line is just a myth.

Some millennials have unrealistic expectations of inheritance and how it may unlock the door to buying a first home, a survey suggests.
One in seven young adults expect to inherit money before they are 35, although in reality the typical inheritance age is between 55 and 64.
The survey, by wealth manager Charles Stanley, suggested that young people expected to receive nearly £130,000.
However, the median average amount handed down was only £11,000.
Advisers said that relying on an inheritance to pay a deposit for a first home was often misguided, even if older family members intended to pass on money when they died.
"People are living longer than ever, so relying on an inheritance to get on the housing ladder is a risky strategy as you may get less, and much later than planned," said John Porteous, from Charles Stanley.
"In reality, most people save and invest to get on the housing ladder. Starting early and planning ahead is essential to achieving the deposit you need."

The research suggested that 22% of millennials expected to receive inheritance to use as a deposit, although official statistics suggest only 7% actually did so.
The average expectation of when that inheritance would be received was the age of 50, yet figures from the Office for National Statistics (ONS) show that they would have to wait for at least another five years.
Even when that money arrived, ONS data showed that inheritance was much less lucrative than many asked in the survey expected.

https://www.bbc.co.uk/news/business-48213333

Herzlos

No-one but GreatApe is convinced by the inheritance thing - it's hugely skewed towards the rich who I have no doubt will inherit property and vast wealth, whilst the average man in the street gets a large but not life changing amount. I'm fairly fortunate, relatively, and I'm expecting to inherit maybe £100k after I retire. That'll be enough to sort my kids out with homes but it'll be of no direct use to me.

GreatApe wrote: »

The average lifetime 'income' for uk born brits is much higher than most people imagine

There is also lots of earnings outside of jobs too.
Business sales
Insurance payouts
Dividend payments
State benefits
BTL rents
Shop Rents/Land/Office/Other-Building Rents
Patent 'rents'
Interest payments on savings
Interest payments on government and corporate bonds
And much more
...
That is over £30k for every man woman and child or over £60k for every working person in the UK and not everyone works full time

I'm not sure insurance payouts count as income - they are usually for less than the loss being covered.

How many of those things do you think the average person has? State payments and interest on savings/bonds/investments?


So I'd reckon that £60k/adult/year is hugely skewed towards the wealthy.

Zero_Sum

GreatApe wrote: »

The average lifetime 'income' for uk born brits is much higher than most people imagine

There is also lots of earnings outside of jobs too.
Business sales
Insurance payouts
Dividend payments
State benefits
BTL rents
Shop Rents/Land/Office/Other-Building Rents
Patent 'rents'
Interest payments on savings
Interest payments on government and corporate bonds
And much more

In short the UK is a £2 trillion a year value added economy.
That is over £30k for every man woman and child or over £60k for every working person in the UK and not everyone works full time


This does not even take into account that the UK has a net stock of wealth in excess of £10 trillion (and growing) which is passed mostly from old to young via gifts and inheritances of more than £200 billion annually

The UK is a very wealthy country.

Only the wealthy in the UK generally do not show it off
And they dont actually live lives that different from the typical person
They might just live in a more expensive house or drive a newer car but thats about it they eat the same food and mostly wear the same cloths so you cant really spot them but they exist

One of the richest people I know worth well in excess of £20 million is still rocking a 30 year old jacket and drives a 15 year old people carrier

Im not denying the country as a whole is wealthy. The problem is much of that wealth is concentrated amongst a small propotion of the population. The average man on the street has nowhere near the wealth or income that you believe. The BBC report i posted earlier shows that you're just spouting londoncentric nonesense.

Bitcoin

The reason why house prices are high in many places is due to the low interest rates. People tend to buy the largest house they can afford using self-payment + loans. So when interest rates on loans are low, people can afford to buy more expensive houses as their monthly payments are lower than otherwise.

In addition, there are a number of factors such as the location that probably also play a role in your example.

Higher interest rates will probably cause a drop in house prices...

Zero_Sum

Bitcoin wrote: »

The reason why house prices are high in many places is due to the low interest rates. People tend to buy the largest house they can afford using self-payment + loans. So when interest rates on loans are low, people can afford to buy more expensive houses as their monthly payments are lower than otherwise.

In addition, there are a number of factors such as the location that probably also play a role in your example.

Higher interest rates will probably cause a drop in house prices...

Where i live house prices still havent recovered after 2008. And in real terms are something like 40% cheaper.

Yes low rates are propping them up but the main driver is location of well paid jobs. Its a simple supply & demand. The fact is this country is too obsessed with London. There is no national housing crisis, its a London housing crisis because the government wont invest in the regions instead prefering to chuck billions at things like HS2 & crossrail & Heathrow expansion etc.

Mind its benefited me well, as despite being on an average wage in a low stress job (so great worl life balance) ive got a decent house which i'll be mortgage neutral in my early 40's.
I get to breath clean air, dont have to endure stupid levels of traffic congestion. I have great beaches & countryside on my doorstep.
And all these fools who think London is the place to be whilst bemoaning about living in a shoebox .......

Thrugelmir

Zero_Sum wrote: »

There is no national housing crisis,

Is around here. Rent a room abounds. Likewise people buying up what was a decent average family home and sub dividing into 2 flats. Or extending the property into a number of apartments. Currently there are 6.500 residents parking permits issued for some 5,000 odd official spaces.

The change is noticeable. Fly tipping abounds for example.

The natives are getting restless.