Brexit is good for housing, it will bring about the correction sooner

ukcarper

Thrugelmir wrote: »

2 decades ago wage rises were also real. There's a generation that are going to have a ball and chain around their ankles. With mortgage terms often 30-40 years. Used to be capped at 25. A large debt against the prospect of rising interest rates is going to cause pain.

When were they capped at 25 years I had a 35 year mortgage in 70s.

chucknorris

ruperts wrote: »

£20k debt at 7.5% Vs £200k debt at 0.75%... hmm I wonder which I'd prefer.

The above comparison does not consider any salary increase during the last 20 years. There has been an average 70% increase in salaries during the last 20 years.
https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2018#measuring-this-data

Additionally of course, house prices have not risen (on average) 10 fold in the last 20 years.

EDIT: I must admit I was surprised that it was only 70%, I'm beginning to wonder if i used the correct data, because that is less than 3% per annum. But I can't be bothered to check it, I'm too busy marking at the moment, maybe someone else might spot something about that 70%.

lisyloo

chucknorris wrote: »

Additionally of course, house prices have not risen (on average) 10 fold in the last 20 years.

I bought a house for £70k in 1991.
It was worth £240k in 2018 (average house in average part of the country).

So 3.5 times in 27 years.

You’d of course need to look at inflation over that period.

There may be some parts of London (hackney?) that have done exceptionally well, but on the whole the 10 times statement is wildly inaccurate.

chucknorris

lisyloo wrote: »

I bought a house for £70k in 1991.
It was worth £240k in 2018 (average house in average part of the country).

So 3.5 times in 27 years.

You’d of course need to look at inflation over that period.

There may be some parts of London (hackney?) that have done exceptionally well, but on the whole the 10 times statement is wildly inaccurate.

I bought a flat in battersea (near the bottom of the market) in 1991 for £58.5k, it is currently worth about £450k, so 7.7 times in 28 years. BUT (and it is a very significant but) I am comparing near the top of the market to near the bottom of the market. That flat would have been worth about £88k 2-3 years earlier before the late 80's correction. Which would make it 5.1 times in about 30 years. Additionally that is in London which has outperformed the average UK HPI.

EDIT: On actual sold properties, I have 3 examples:

Dorking house from 2005 to 2018 = times 2.1 in 13 years
Battersea flat from 1999 to 2017 = times 5.2 in 18 years
Hackney house from 1997 to 2017 = about (needed to adjust for initial refurb) times 8 in 20 years (obviously Hackney preformed exceptionally well, this was my wife's house)

lisyloo

chucknorris wrote: »

I bought a flat in battersea (near the bottom of the market) in 1991 for £58.5k, it is currently worth about £450k, so 7.7 times in 28 years. BUT (and it is a very significant but) I am comparing near the top of the market to near the bottom of the market. That flat would have been worth about £88k 2-3 years earlier before the late 80's correction. Which would make it 5.1 times in about 30 years. Additionally that is in London which has outperformed the average UK HPI.

For those that don’t know the area I’d say that was a special case because there’s been a huge amount of development around that area with the nine elms development and proposed new transport links e.g. underground which is a fast way to get around and being near a tube station is highly sought after in London.
The area has undergone some gentrification which means it used to be a bit of a dump and now has classy restaurants, shops and bars turning it into a desirable and aspirational area.
Also some developments e.g. Battersea Power Station have been marketed to the Chinese/Malaysians so we have foreign money as well.

Even for an exceptional area we don’t get 10 times.

I would say my 3 bed semi/end terrace is far more representative of normal housing outside London for the south.

I see the industrious are up early again !!

AG47

It’s looking like whatever happens with brexit we are going to see the long overdue correction in property prices

westernpromise

lisyloo wrote: »

I bought a house for £70k in 1991.
It was worth £240k in 2018 (average house in average part of the country).

So 3.5 times in 27 years.

You’d of course need to look at inflation over that period.

There may be some parts of London (hackney?) that have done exceptionally well, but on the whole the 10 times statement is wildly inaccurate.

It's not inaccurate of base rates, of course. In fact.someone who took out a 30-year mortgage in 1990 would have been looking at a base rate 20x higher than today.

westernpromise

AG47 wrote: »

It’s looking like whatever happens with brexit we are going to see the long overdue correction in property prices

I love love love the way no matter what conversation is occurring, you always conclude from it that prices are about to fall.

chucknorris

AG47 wrote: »

It’s looking like whatever happens with brexit we are going to see the long overdue correction in property prices

It is good news that you think that, as I don't want property prices to correct (at the moment), and you seem to not be much good at predicting financial outcomes, so I see it as a good indicator for me.

I'm also beginning to wonder if Brexit will ever happen, I know betfair has the odds fairly heavily predicting that it will occur, which must be respected, but I am beginning to wonder how it will happen.

lisyloo

AG47 wrote: »

It’s looking like whatever happens with brexit we are going to see the long overdue correction in property prices

But when?
Saying the market will drop again is a certainty (perma prop bulls being as rare as unicorns), so a pointless statement.

Unless you can put a timing on it the statement is useless.