Why are house prices still so high?

AG47

Property markets are manipulated, this is why prices are still so high

The good news is that manipulations always end and prices always overshoot on the correction back down

ProDave

GreatApe wrote: »

There is no 'ladder' there never was a 'ladder'

The typical house buyer has only ever purchased 2 homes in their life with a gap of ~23 years between the first and second purchase. That is a housing 'step' not a ladder

In my world there has always been a "ladder"

first property, residential mobile home, then a 1 bedroom "starter home" then a tired old 2 bed semi that I did up and extended.

I then moved to the Highlands and built a house, and am now building house 2, my retirement house.

The OP talks of a typical £27K salary. That will give you a mortgage of just over £100K and even in Oxfordshire where I started, that plus a deposit would buy the very first 1 bedroom starter home that I bought, at todays value.

lisyloo

The OP talks of a typical £27K salary. That will give you a mortgage of just over £100K

If you buy on your own which is not the norm.
Double it and your getting much closer.

jay213

lisyloo wrote: »

If you buy on your own which is not the norm.
Double it and your getting much closer.

What happens when those who bought with a partner break up? There must be many who have bought with somebody they no longer want to be tied to.

phillw

Zero_Sum wrote: »

The problem is a London one.

If property was as cheap in London as it was in sunderland then you would still never be able to buy it. There is a limited amount of property available and the area is too desirable, so some other force would come into play. First come first served, it's easy to complain about high prices but less so to ask for people to be turfed out because it's your turn to live there..

Nobody would sell up in London and then buy in the country, if it wouldn't release some capital. They'd hold onto it because they knew their children wouldn't ever be able to buy in London, because nobody would just give up their place even though they had the money to buy there.

The problem is when you apply political correctness to financial matters, but you can't. You're worth what the market dictates, based on the choices you make. Which has an impact on what lifestyle you can live, what you can buy and who will want to be friends or romantically involved with you.

Using money as the arbiter is the only fair way to deal with this kind of problem. If money can't buy you what you want, then what is the point of money?

To answer the question, the price of property has nothing to do with what you can afford to pay because you're not competing with your workmates who live in the same street. You're competing with the highest earners who will look at properties based on what they think the return will be on their investment.

You could just as easily get upset that investors think sunderland is so unattractive that they don't want to drive the prices up by competing for it.

lisyloo

jay213 wrote: »

What happens when those who bought with a partner break up? There must be many who have bought with somebody they no longer want to be tied to.

Its One of the Ds - divorce, debt and death that forces people to sell.

If they been together a while and have paid down the mortgage and have equity it may be that one partner can buy the other out.

Another scenario is one takes a lodger ot two to pay the mortgage.

If theyve not been togther long then they may have to sell up and might even be in debt and even get repossessed or bankruptcy. A minority scenario but does happen.

Goldman2020

Housing crisis for the young in the UK or just in and around London and the South of England?

lisyloo

Goldman2020 wrote: »

Housing crisis for the young in the UK or just in and around London and the South of England?

Depends how you define crisis.
I don’t call a single person on an unspectacular income not being able to buy in london/se on their own as a crisis. That called a choice.

Your aren’t entitled to have the career/location and house you want straightaway.

There a crisis in expectation/entitlement that older generations never had.

Zxcv_Bnm

Goldman2020 wrote: »

When many people in the UK are on a low wage, working the Gig Economy or earning the basic UK salary (which I believe is in the region of £27,271) why are property prices (especially in London) still as high as they are?

Average salary is not a good guide to much.

First off it includes everyone including those who historically never bought back when 30% or so of houses were council houses, hence you need to look at the average salary among those who actually buy

Second most homeowners have something like 40 to 50% equity so if the asking price is 500k they are only borrowing ~half that

Third 3.5 x household income now means two salaries not one

Fourth mortgage rates have been cheap for 10 years and fixable for another 10 years so 5.5x costs less than 3.5x used to.

So the London house for £500k is not being bought by one person on 27k, it's being bought by 2 who are probably on 40k each and they're borrowing 250k to do so fixed for 5 years at 1.8%

By the time the 5 years are up they'll only need a 200k mortgage and will probably be earning more

Painful as it seems, the best time to buy is usually now, and then you just get on with paying it off

This doesn't mean that some nows aren't better than others, they are, but speculating / trying to time it are mugs games.

Zxcv_Bnm

AG47 wrote: »

Interest rates were kept too low for too long, this caused the unnatbubble in property.

Now they are slowly going back up to normal levels property will correct to normal levels related to berate earnings

Interest rates aren't too low. We have basically 0% inflation so rates are about right

Also base rates have decoupled from mortgage rates, the former have gone up but the latter are FALLING because banks are discounting money to sell it

1.8% for 5 years from the Halifax for example - that's a cheaper fix than when base rates were 0.25%

I reckon the next move in base rates will be down and so will the next moves in mortgage rates