Making the news today....

[eggsarascal]

17 minutes ago, Commando said:

Why will it crash? There’s still plenty people with money wanting to buy, whether it’s 1st or second homes or properties to invest in. I think your maybe falling into that trap of predicting the future to fit ur own agenda.
I know plenty young lads in agriculture that have knuckled down and saved hard, laid off the booze and done the graft and have brought property.

IMHO too many seem to think it’s a right to own a house….It ain’t, you gotta work for it.
Also people forget the 80s when the interest rate was averaging over 10%. Massive chunk of monthly wage just in interest.

Correct it is doable for youngsters, my nephew and his partner moved into their first home yesterday. Only his wage due to his partner going back to uni to do a masters, as you say he stopped going out with his mates every night, missed holidays abroad with the lads and kept hold of his old car. He's got there mind.

 

I also remember the interest rates in the 80's, virtually everyone I knew was just hanging on.

 

The other thing these days is, everyone thinks they should have a 5 bed pitch with a yard, or a shiny new gaff on the new development, no way do they want to start with a terraced house in the back streets of town.

[Vedhoggar]

As there is a housing shortage in the UK the probability is that house prices will continue to rise although there may be ups and downs however returns on stocks and shares has in the past been greater when the two options are compared over the long term as an investment. Buying a house is not the best option for everyone as you have a lot of capital tied up in one asset which you might want for other things furthermore you reach a point in life when you might be better selling up renting a house and buying a motorhome and/or traveling with the proceeds from the house sale or something unless you want something to pass on as inheritance. If young, settled and raising a family it might make sense to buy a house if you can afford it. Sometimes a leased or rented property might be better in terms of location, size and opportunity for operating a business than you would ever be able to afford if you buy for the same monthly payment. 

[doobin]

38 minutes ago, eggsarascal said:

Correct it is doable for youngsters, my nephew and his partner moved into their first home yesterday. Only his wage due to his partner going back to uni to do a masters, as you say he stopped going out with his mates every night, missed holidays abroad with the lads and kept hold of his old car. He's got there mind.

 

I also remember the interest rates in the 80's, virtually everyone I knew was just hanging on.

 

The other thing these days is, everyone thinks they should have a 5 bed pitch with a yard, or a shiny new gaff on the new development, no way do they want to start with a terraced house in the back streets of town.

Any idea how many times the local wage a terraced house in the back streets of town goes for round here mate? 🙄

[eggsarascal]

30 minutes ago, doobin said:

Any idea how many times the local wage a terraced house in the back streets of town goes for round here mate? 🙄

If it's in or around London it's going to be many hundreds of thousands, a lot less in Barnsley. If people can't afford a house down south, like me, move north like I'll have to if I want to buy another house.

[doobin]

20 minutes ago, eggsarascal said:

If it's in or around London it's going to be many hundreds of thousands, a lot less in Barnsley. If people can't afford a house down south, like me, move north like I'll have to if I want to buy another house.

And where is every youngster from down south going to find jobs up North?

 

There's a big problem with housing in this country that the generation before didn't have to worry about. That's the issue here.

[eggsarascal]

2 minutes ago, doobin said:

And where is every youngster from down south going to find jobs up North?

 

There's a big problem with housing in this country that the generation before didn't have to worry about. That's the issue here.

There isn't a shortage of work up North.

 

Yes there is a problem, selling off the housing stock and not replacing it was the start of it IMO.

 

 

[openspaceman]

1 hour ago, eggsarascal said:

There isn't a shortage of work up North.

 

Yes there is a problem, selling off the housing stock and not replacing it was the start of it IMO.

 

 

Yes  but house prices were already rising from 1970 onwards. probably because the austerity of post depression and post war Britain was giving way to new wealth creation, mostly from selling financial services abroad. Though the cake was getting bigger the non managerial, non financial and non share owners were getting smaller and smaller shares of the whole. The ethos of pulling together and share alike which had spawned the NHS and national insurance was giving way to loadsamoney.

 

Simultaneously the wealthier were looking to have their needs serviced and wage pressure from this made our industrial workers move as manufacturing became less competitive with imports.

 

Council housing post war had reached about 30% of the whole and many people saw it as a home for life rather than a stepping stone until the right to buy meant it was unwise not to cash in. This had a twofold effect, need for mortgages increased with grew the financial sector again but many of the buyers were older with bigger families than we have now. These children when they came to inherit often had the balance of a mortgage to pay off and while they too had aspirations of house ownership and often were renting, by the time the equity was realised and shared there was not enough even for a deposit for each child.

 

In the meanwhile UK housing had become a safe investment for the wealthy financiers, business owners and foreigners. Such that 70% of that  sold off council housing is reckoned to be in the hands of private landlords. I see this also in my street which would traditionally have been owner occupiers, over half the houses are privately rented near me.

 

In contrast to the british siblings who sold off their parents housing we have a very large asian immigrant population locally who pool their money for the eldest son to buy a house, they also tend to live in them with extended families which  helps distribute the costs of ownership.

 

Of course this all comes down to not enough houses to satisfy the 2.1 people that want one to themselves but also reflect on what money is; at any one moment the economy supports itself with current production, money is only the means by which we agree to co-operate it is not a "hard" asset.

[Big J]

3 hours ago, Commando said:

Why will it crash? There’s still plenty people with money wanting to buy, whether it’s 1st or second homes or properties to invest in. I think your maybe falling into that trap of predicting the future to fit ur own agenda.
I know plenty young lads in agriculture that have knuckled down and saved hard, laid off the booze and done the graft and have brought property.

IMHO too many seem to think it’s a right to own a house….It ain’t, you gotta work for it.
Also people forget the 80s when the interest rate was averaging over 10%. Massive chunk of monthly wage just in interest.

 

3 hours ago, eggsarascal said:

Correct it is doable for youngsters, my nephew and his partner moved into their first home yesterday. Only his wage due to his partner going back to uni to do a masters, as you say he stopped going out with his mates every night, missed holidays abroad with the lads and kept hold of his old car. He's got there mind.

 

I also remember the interest rates in the 80's, virtually everyone I knew was just hanging on.

 

The other thing these days is, everyone thinks they should have a 5 bed pitch with a yard, or a shiny new gaff on the new development, no way do they want to start with a terraced house in the back streets of town.

 

The interest rates were obviously an issue in the 80s and I'd argue that the happy medium is probably somewhere in between (as it was around 2008, with 5.5% base rate).

 

My mum and dad's first house was £8k in 1981, when the average wage was £6k. That same 2 up, 2 down is now £170k on an average wage of £31,400. So the house cost 1.33 times average annual earnings in 1981 and 5.9 times in 2020.

 

Another way to look at it is mortgage payments. Assume that you're willing to pay out half of your pre-tax income per month on a mortgage. Using my parents house as an example, in 1981, your mortgage (at 15% interest, on 80% of the total) would have taken less than three years to pay off the £6400, with only about £1200 in interest. In 2020, the same house would take just under 10 years to pay off, but you've got to find a £34k deposit (as opposed to £1600 in 1981, which would be worth £5500 now). And Derby is really very affordable in the scheme of things - it's about 30-40% cheaper than here. 

 

The issue is of course that if the interest rates increase (which they have to, in order to curtail inflation and stabilise the economy), then our current house price structure cannot stand. The government is in the unenviable position of having contributed to a crisis that it cannot fix. Don't increase the base rate, house prices continue to spiral out of control along with inflation. Increase the base rate and millions will find themselves unable to meet the payments, or in negative equity as the market sinks.

 

2 hours ago, Vedhoggar said:

As there is a housing shortage in the UK the probability is that house prices will continue to rise although there may be ups and downs however returns on stocks and shares has in the past been greater when the two options are compared over the long term as an investment. Buying a house is not the best option for everyone as you have a lot of capital tied up in one asset which you might want for other things furthermore you reach a point in life when you might be better selling up renting a house and buying a motorhome and/or traveling with the proceeds from the house sale or something unless you want something to pass on as inheritance. If young, settled and raising a family it might make sense to buy a house if you can afford it. Sometimes a leased or rented property might be better in terms of location, size and opportunity for operating a business than you would ever be able to afford if you buy for the same monthly payment. 

 

There is a serious housing shortage. The government has not built social housing in any meaningful quantity in decades, the right to buy wiped out the existing social housing stock and the housing market is controlled by ill-educated planners and volume house builders, who've seen their profits skyrocket in recent years.

 

1 hour ago, doobin said:

And where is every youngster from down south going to find jobs up North?

 

There's a big problem with housing in this country that the generation before didn't have to worry about. That's the issue here.

 

Agreed. As the video I linked explains, equity in the country is very much in the hands of the older generation, who've seen modest property investment put them up to previously unforeseen levels of wealth. I'm not begrudging them at all - I'd be happy if I was in that position, but something really does need to be done at a governmental level to bring affordable housing to the masses. As the video states, housing becomes proportionally less affordable, the lower the wage bracket you find yourself in. 

 

 

[Big J]

Interesting point to note:

 

2008 (just before the crash): UK average house price 6.8 times average salary

 

2021: UK average house price 8 times average salary

[Commando]

Interesting point to note:
 
2008 (just before the crash): UK average house price 6.8 times average salary
 
2021: UK average house price 8 times average salary

Was there actually a crash in 2008? Or was it more a slowing down….