House price increases. Is everyone absolutely loaded?

DayDreamerandGeneralWaster

I suspect many of the people buying have a fair whack of equity in their current property and no no need to be as close to the office. We are not wealthy but we could have gone to a £450k property had we moved last summer. 

Northern_Line

More credit has a big role to play. 95% mortgages and lower interest rates make taking in hundreds of thousands of pounds of debt more attractive. Of course, the reality is it inflates prices further and requires further policy to keep the trend moving upwards. If that doesn’t happen, people risk losing money and the amount of capital tied up in the housing market would make a collapse catastrophic. 

Add to that a collective sense of hysteria and then you have the current housing market. 

I often think the same as OP. We earn more than the regional average where we live and even then house prices seem mad. 

Gentoo365

Also people would have spent time during lockdown doing DIY and stuff and pushed forward a vague plan to move.

As an example there are probably a load of people at any point in time that have the money (equity in current house or money in bank) to move, but don't feel any particular rush, and they need to 'sort out a few things' around the house. 

What I think may have happened is that a lot more of them all decided to do it now. Helped along by the stamp duty deadlines and the savings from lockdown.

..and that is a lot of savings, a couple who commute would have 2x saving from season tickets, plus the money spent on going out, eating out (and at work), holidays etc. Some families would have saved their childcare costs by doing it themselves.

Add to that the people moving from expensive areas (London) to cheaper areas, who may not really know the value of a property. To them an extra £50k is less of an issue when they already consider it 'cheap' compared to London.

Oh, and while there has been lots of economic issues, almost all of them were subject to some government intervention to avoid the worst. Furlough, Nationalisation of rail, asking banks to be lenient and give payment holidays, bounce back loans etc. 

The impact here is that while people.who needed support will not have benefited, businesses and people who are paid by people who needed support were also I directly supported..

What we don't know is if the next stage will be house price drops, or if inflation will occur (due to more money being in the system, and money being 'cheap'). Resulting in higher house prices.

theoretica

Also, in the middle of the market, as prices rise many people can still buy without spending more, but get a different property for the same money - semi-detached rather than detached, smaller garden etc

Drawingaline

Gentoo365 said:

Also people would have spent time during lockdown doing DIY and stuff and pushed forward a vague plan to move.

As an example there are probably a load of people at any point in time that have the money (equity in current house or money in bank) to move, but don't feel any particular rush, and they need to 'sort out a few things' around the house. 

What I think may have happened is that a lot more of them all decided to do it now. Helped along by the stamp duty deadlines and the savings from lockdown.

..and that is a lot of savings, a couple who commute would have 2x saving from season tickets, plus the money spent on going out, eating out (and at work), holidays etc. Some families would have saved their childcare costs by doing it themselves.

Add to that the people moving from expensive areas (London) to cheaper areas, who may not really know the value of a property. To them an extra £50k is less of an issue when they already consider it 'cheap' compared to London.

Oh, and while there has been lots of economic issues, almost all of them were subject to some government intervention to avoid the worst. Furlough, Nationalisation of rail, asking banks to be lenient and give payment holidays, bounce back loans etc. 

The impact here is that while people.who needed support will not have benefited, businesses and people who are paid by people who needed support were also I directly supported..

What we don't know is if the next stage will be house price drops, or if inflation will occur (due to more money being in the system, and money being 'cheap'). Resulting in higher house prices.

This was us. We went to a broker the week before the first lockdown, knew we had to wait until June (due to a new job) but started looking around and then doing the bits of decorating while I wasn't able to work in lockdown. 

Hubby works in an industry that did very well during the past year, and while we probably would have moved, him having to work in the conservatory while the kids were all off school really pushed our plans forward. It also changed what we were looking for, a room for an office was a must!

We booked the EA to come and value three days before the stamp duty announcement, and struck lucky with this. We also sold and found somewhere to buy very quickly. If we had waited 6months we would have probably struggled much more.

We have taken on a huge mortgage, but the six months it took to sell gave us time to save hard and we are in a good place financially even with a drop in my earnings. 

Grumpy_chap

Salemicus said:

some people can be on furlough and others can be thriving. 

And some can be on furlough and thriving.

I am also unsure what will happen when the people who choose to move out from large employment centres to the countryside because they can as they are now WFH subsequently find that employment returns to the office on a full or part time basis and can't then keep their jobs.

We had a case last week where, at around half four on Thursday afternoon, we were asked to be on site for 8 o'clock Friday morning.  A couple of people had relocated to Scotland and were excused from needing to attend - in the long term that level of flexibility is not likely to be sustained.

There is actually someone who put a thread about a similar thing - moved to 5 hours away and now wanting redundancy rather than return to the office:
https://forums.moneysavingexpert.com/discussion/6275556/working-from-home/p1

[Deleted User]

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NameUnavailable

Lots are in a little Covid bubble. Earnings unaffected, income increased as not going out spending money, working from home so thinking let's get more space, low interest rates so let's borrow more......

All of this will come to an end, sooner rather than later. People will get called back to the office, long commutes will become tiresome and expensive, interest rates will increase........

Scotbot

I downloaded my statements for the last 12 months and was shocked at how little I am spending. I knew it was less I didn't realise it was1k a month less. I live on my own imagine how much a family saves. 

smcqis

I think it’s a case of people are prepared to pay a bit more as for example in our case, we received a lot more than expected so it has its knock in effect. A big saving for us has been working from home where we have saved big amounts on childcare. Combination of this and low interest rates, our budget rose from about 50k. Will our new house be worth the same price in 5-10 years time…I’m not buying it to sell to make money so it’s not a concern