when will people start buying again?

dopester

!!!!!!? wrote: »

In the past few years, the buying public have been able to (unwisely) borrow huge sums to buy property.

Now that the lax, irresponsible lending has dried up, prices must fall back to an affordable amount relative to their wages.

3.5x single salary, 2.5x double is historically the standard for mortgage lending. Look for prices to adjust accordingly.

EdInvestor wrote: »

Unrealistically low - this was the norm in the days of double digit + interest rates, and was never applicable in London in any case.

a) History of the Building Society (Building Societies Association)

b) Differences between Victorian and Edwardian Period Houses

c) THE WORKING-CLASS OWNER-OCCUPIED HOUSE OF THE 1930s - Fascinating, but lengthy and heavy-going thesis in to speculative builders and the lending behind it during the explosive growth in building residential property.

In the United Kingdom, housing policy in the modern sense was born after 1919 when central government began a movement to involve itself actively in the provision of housing for working-class people.

Private mortgages from solicitors had been the usual way of financing the purchase of a house in Victorian times. For instance when George Cadbury developed Bournville in the 1890's he ' insisted that the undertaking should be made to pay a fair return on the capital invested' (11). In the offices of the Trust there are framed original posters which declare that Cadbury's solicitors would be willing to find up to �40,000 on mortgage at 2.5 per cent to those who would be prepared to build houses on the estate. On the smaller house Mr Cadbury would be prepared to erect the house and take a mortgage. The interest would be 3 per cent.

The schedule below illustrates how the building societies grew at the expense of the other lenders (12). Why they grew so quickly and decisively, needs to be explained.


In the 1930s building societies acted like 'housing banks' but were mainly owned on a mutual basis for the benefit of the investors and not the shareholders. They had severe restrictions on what security they could take and on which types of property could form the basis of security for a mortgage. For example, it was difficult for them to lend on leasehold properties unless there was a long lease in existence. The loan-to-value ratios to be adopted were also conservative, and even though there was no standard set of terms and conditions under which societies could make advances it was the custom to lend no more than 70 per cent of the valuation of the property.

carolt

EdInvestor wrote: »

Unrealistically low - this was the norm in the days of double digit + interest rates, and was never applicable in London in any case.

Nonsense - when my parents bought in the late 50's and also my brother in the mid 80's - both in London - these WERE the limits.

In fact, in my parents' case, although my mother was earning, her earnings were not allowed to be taken into account - only the male 'breadwinner's' earnings - on a max 3 times multiple - could be used.

Where are the sources for your extremely unlikely-looking claim, please?

challa_2

My partner and I can't wait to become first time buyers however a year ago mortgages were no problem to get, now lenders are not interested in the average working young couple and will not lend to those who have good credit ratings but don't have thousands and thousands for deposit! The lenders were giving money away last year, far more than people could afford and have got themselves into this mess! Now people are suffering for their mistakes! Once lenders are willing to help young people get onto the property ladder and prices fall to match todays wages is when the first time buyers will be back! Until then we have no choice but to rent and how can we ever save our thousands for the deposit then:mad::mad::mad::mad:!

LisbonLaura

skap7309 wrote: »

. People can very easily accept 300% increases without batting an eyelid but a 20% fall (sorry....it is likely to be more) is absurd and shockingly preposterous.

I'm sure there is a mentality out there that thinks their loon 2007 house value should be compulsory.

The folk that are comfortable & don't need to sell, wont sell. They will just remain amorally indignant. -- Although don't forget many of those took the boomtime equity out & did silly things with it, so time will catch up with them

For the rest I'm afraid it's a mess that is happening much sooner.

Out of all this & in a coming era of very high unemployment & real poverty -(quite what will happen to the increasingly unaffordable public sector is anyones guess, but much pruning & wage cuts are vital)- comes our patient FTB.

It wouldn't suprise me to see values (in real terms) return to those of ten+ years ago (give me a good reason why not?). Though no doubt MSEs resident VI, EdInvestor, will disagree

narced

EdInvestor wrote: »

Unrealistically low - this was the norm in the days of double digit + interest rates, and was never applicable in London in any case.

Not true. Those rules were in force when I bought our first flat in London in 1985.