First Time Buyers - Enough is Enough!

rchddap1 · 18 April 2005 at 12:07PM

There are high house prices, because people keep buying houses. It is a simple equation of supply and demand. If there were higher supply than demand, then prices fall. Higher demand than supply and prices rise. In a free market economy there is nothing that the government can do to decrease house prices. Short of forcing interest rates up to un-sustainable levels.

However, I do sympathise, as I currently only own 40% of my house. I want to own it outright, but I simply can't afford it at current house price levels. So instead of pusing myself to the limit and buying another house I am biding my time and waiting. This bubble will burst eventually...its just a matter of time.

Woby_Tide · 18 April 2005 at 12:36PM

deemy2004 wrote:

The best action an FTB can take is to NOT BUY !

Sit on your hands, with your deposit in the bank and watch the housing market tumble....

Lets do the sums...

Say starting with £100k cash ! yes thats cash !
And a current £200k value of the say target house type

1. 12% house price drop over 3 years =
House value= £176,000 = +£24,000 better off !

2. Interest earned on £100k @ 4% net = 112,500 = +12,500

In total you will be £36,500 better off in 3 years time !

Assuming you live in a cardboard box/under a pier/with very nice parents, if however you rent a property you won't be better of by that amount

and first time buyers with £100k deposit? can we all come and stay at your house whilst we wait deemy?

Spendless · 18 April 2005 at 12:52PM

deemy2004 wrote:

All bubbles are the same. They inflate much further than could have been imagined. Evenso to the point where people think that the rises are sustainable indefinetly.

And then they go POP !

Don't fret too much, cos the bubble has popped ! And the market will be in denial during the first year of falling prices.

Deemy - I thought you lived near me? Things must be different 20 miles down the road if so cos the 2 bed MTH that I sold in March last year for £40,000 was back up for sale last week at £61,950.

Now the current owners have done work on it. New bathroom suite. Double-glazing on the remaining 3 windows and decorated throughout but I doubt very much that they've spent £22,000 in a year!

deemy2004 · 18 April 2005 at 5:50PM

I have to fess.... being a serial money saving maniac and ultra tight fisted, being married and with two kids.... cough, cough splutter, splutter still live with my parents...

So yeh, my cash mountain grows on a monthly basis whilst house prices drift...

Yeh the houses are cheap in the area, but I'm not looking for the terraced. I want a detached 4 bed ! and 200k is about the price they are going for.

Afterall thats what my parents have !

deemy2004 · 18 April 2005 at 6:06PM

rchddap1 wrote:

There are high house prices, because people keep buying houses. It is a simple equation of supply and demand. If there were higher supply than demand, then prices fall. Higher demand than supply and prices rise. In a free market economy there is nothing that the government can do to decrease house prices. Short of forcing interest rates up to un-sustainable levels.

You forget about the effect of conniving scheme estate agents......

As all market manipulators they will tend to support the market through pricing unrealstically for as long as they can... but at some point the elastic band snaps and the move will be quite sharp !

VH · 18 April 2005 at 6:52PM

MrBurns wrote:

Fellow would-be FTB's, it's time to stop our quiet resignation at the current state of the housing market and start fighting back. We're graduating with record student debt, working full time (there wont even be a pension waiting for us at the end of it, but thats another matter) - all we want is to be able to put our own roof over our heads, its not too much to ask!
I suggest we bring the country to a stand-still in a similar way to the petrol crisis of a few years ago (protests, demonstrations - anything we can think of!) until people start to notice.
Whose up for it?
(Ok I'm not really suggesting this, but I can't be the only one whose starting to get really angry now?)

It's a nice idea in principle, but what effect would it have on housing prices? Probably none, the same effect as the fuel protests had on petrol prices.

Also, the fuel protests happened because people were sick of paying high fuel prices, mostly caused by the Government tax rates on fuel. High fuel costs hurt all drivers, including businesses with vehicles.

In the case of housing, existing homeowners aren't very likely to join any such protest, as you are asking them to take a drop in value for what is for most people, their biggest asset.

Save your money and hang on. There is light at the end of the tunnel, you may not see it yet but it's there. The price increases won't continue forever, much like the stock markets over the past few days.

Spendless · 18 April 2005 at 7:51PM

deemy2004 wrote:

Yeh the houses are cheap in the area, but I'm not looking for the terraced. I want a detached 4 bed ! and 200k is about the price they are going for.

Afterall thats what my parents have !

And out of curiousity what did your parents start off with?

I accept that at some time the bubble will burst, but not every property and area will do this at the same time.

I have previously posted about my 2 bed MTH being in negative equity within the first year. At the same time Mr Spendless bought a 2 bed flat in a different count. When we met and decided to get married we sold his place and made £4,000 on it. He had had it just short of 5 years. At this point my own place was between £8,000-£12,000 in negative equity!!!

gustav · 18 April 2005 at 9:12PM

catkins wrote:

They certainly don't in France where you have to pay capital gains tax on profits on houses.

So, you'd be quite happy for the govt to impose CGT on house sales so you, and other ftbs could "get on the housing ladder".
You won't be so smug when you try to cash in on you bricks and mortar investment, and have to cough up your own share of CGT, or discover your "investment" hasnt delivered the returns you anticipated, because of the effects of cgt.

The bottom line is this - people only want to "get on the housing ladder" so they can make money. Why else does this country have an obsession with home ownership. If housing prices levelled off for several years, people wouldnt be so keen on investing, and renting property would suddenly become atractive.

Spendless · 18 April 2005 at 9:33PM

gustav wrote:

The bottom line is this - people only want to "get on the housing ladder" so they can make money. Why else does this country have an obsession with home ownership. If housing prices levelled off for several years, people wouldnt be so keen on investing, and renting property would suddenly become atractive.

Is that right?

I wanted somewhere to live and a mortgage was cheaper than renting. It didn't even bother me being in negative equity until I married and had a child and the house was no longer big enough.

Likewise the £80,000 equity I have in this house only becomes available to me in whole or part if I downsize or come off the ladder altogether.

MoneyMonkey · 18 April 2005 at 9:35PM

I would love to see the government put some kind of incrementing tax on owning multiple houses for the purposes of income. The more houses you own, the higher percentage you pay. This should prevent the costs being passed on to tennants.

Perhaps this would persuade investors into moving their money where it belongs (in the markets) and stop them from stealling our houses!!

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First Time Buyers - Enough is Enough!

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