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Mick Dempsey

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1 hour ago, Big J said:

Once the base rate goes up, the UK house of cards property market crashes.

History tells us otherwise J. 
 

It’s only been low for the past 10 yrs. Thats a sneeze in real terms. 
 

There are plenty of people that would welcome an interest rate rise. 

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Whilst I don’t favour “economic growth” / GDP as a measure of a nation’s well being, and whilst I do share your forecast of an inflationary rise, I’m not entirely sure your assessment of shitshow is shared by all of the economic analysts. 
 
But.....  If it turns out that there ISN’T an economic shitshow post Brexit / Covid, is there any possibility you might stop moaning about f*cking Brexit.....?


I see it’s his birthday today. So it’s either the reason he’s extra grumpy or he might perk up later. 🤣
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7 hours ago, kevinjohnsonmbe said:

Whilst I don’t favour “economic growth” / GDP as a measure of a nation’s well being, and whilst I do share your forecast of an inflationary rise, I’m not entirely sure your assessment of shitshow is shared by all of the economic analysts. 
 

But.....  If it turns out that there ISN’T an economic shitshow post Brexit / Covid, is there any possibility you might stop moaning about f*cking Brexit.....?

 

Haha 🤣 With the exception of the monstrous export tariff on forwarders, I've not moaned about Brexit for ages.

7 hours ago, kevinjohnsonmbe said:

History tells us otherwise J. 
 

It’s only been low for the past 10 yrs. Thats a sneeze in real terms. 
 

There are plenty of people that would welcome an interest rate rise. 

 

The whole market is just completely unaffordable now though. As an example:

 

The average salary in Devon is £27.5k. Assume a typical family on an average wage with one parent full time, one parent 50% pro rata. That's a gross household income before tax of £41,250. 

 

The qualifies them for a maximum mortgage of 4.5 times their combined income (as stipulated by the FCA - 5.5 times is sometimes awarded but only to high earning first time buyers earning in excess of £40k), so £185k.

 

So assuming they've got a 10% deposit and they've got a mortgage for the rest, that gives them a housing budget of £205k. 

 

This is the closest house I could find to £205k in Cullompton (which isn't a great area to be honest) - it's £230k, is in the middle of a housing estate, has almost no garden, isn't even 75 square metres and it's £25k overbudget. This house isn't a home. It's a rabbit hutch. It accommodates you but doesn't allow you to live.

 


3 bedroom semi-detached house for sale in Longwool Run, Cullompton, EX15 for £230,000. Marketed by Purplebricks, covering Exeter

 

Assuming they've managed to find the extra £3k deposit and persuade the bank to lend them an additional £21k, they've then got a mortgage payment of £976/month at 2.95% (which is amongst the best 5 year fixed term rates I could see - I'd be looking to tie my mortgage rate up for as long as possible at the moment). 

 

In 5 years time, I'd be very interested and concerned to see where the base rate is. Before the 2008 crash it was over 5%. That's probably a worst case scenario, but that might push the mortgage up to 7.5%. And then it's £1530/month. Assume a middle position (most likely scenario, I feel) at 2.5% base rate. Then, at a mortgage rate of about 5.25%, the monthly payment is £1240.

 

And that's on a combined household income after tax of (not including tax credits or child benefits) of £34k. 

 

Current interest rate: 34% of total household income

Worst case: 54%

Middling case: 44%

 

In summary, the accommodation that the average family on an average wage is entirely inadequate to actually accommodate them, and only just affordable at our presently (historically) low interest rates. If those rates rise, the property becomes unaffordable and they default, which crashes the market. It needs to crash to be honest. The prices attained don't reflect the construction cost - not even close.

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7 minutes ago, Big J said:

 

Haha 🤣 With the exception of the monstrous export tariff on forwarders, I've not moaned about Brexit for ages.

 

The whole market is just completely unaffordable now though. As an example:

 

The average salary in Devon is £27.5k. Assume a typical family on an average wage with one parent full time, one parent 50% pro rata. That's a gross household income before tax of £41,250. 

 

The qualifies them for a maximum mortgage of 4.5 times their combined income (as stipulated by the FCA - 5.5 times is sometimes awarded but only to high earning first time buyers earning in excess of £40k), so £185k.

 

So assuming they've got a 10% deposit and they've got a mortgage for the rest, that gives them a housing budget of £205k. 

 

This is the closest house I could find to £205k in Cullompton (which isn't a great area to be honest) - it's £230k, is in the middle of a housing estate, has almost no garden, isn't even 75 square metres and it's £25k overbudget. This house isn't a home. It's a rabbit hutch. It accommodates you but doesn't allow you to live.

 


3 bedroom semi-detached house for sale in Longwool Run, Cullompton, EX15 for £230,000. Marketed by Purplebricks, covering Exeter

 

Assuming they've managed to find the extra £3k deposit and persuade the bank to lend them an additional £21k, they've then got a mortgage payment of £976/month at 2.95% (which is amongst the best 5 year fixed term rates I could see - I'd be looking to tie my mortgage rate up for as long as possible at the moment). 

 

In 5 years time, I'd be very interested and concerned to see where the base rate is. Before the 2008 crash it was over 5%. That's probably a worst case scenario, but that might push the mortgage up to 7.5%. And then it's £1530/month. Assume a middle position (most likely scenario, I feel) at 2.5% base rate. Then, at a mortgage rate of about 5.25%, the monthly payment is £1240.

 

And that's on a combined household income after tax of (not including tax credits or child benefits) of £34k. 

 

Current interest rate: 34% of total household income

Worst case: 54%

Middling case: 44%

 

In summary, the accommodation that the average family on an average wage is entirely inadequate to actually accommodate them, and only just affordable at our presently (historically) low interest rates. If those rates rise, the property becomes unaffordable and they default, which crashes the market. It needs to crash to be honest. The prices attained don't reflect the construction cost - not even close.

But is not the cause of this, as you already admit, over crowding? Over crowding caused in the main part by a massive influx of cheap Labour from the EU. Couple this with the significant drop in wages again due to the mass influx of cheap Labour from the EU. Everything you describe above can be placed firmly at the feet of the EU. 

Edited by trigger_andy
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Just now, trigger_andy said:

But I’d not the cause of this, as you already admit, over crowding? Over cruising caused in the main part by a massive influx of cheap Labour from the EU. Couple this with the significant drop in wages again due to the mass influx of cheap Labour from the EU. Everything you describe above can be placed firmly at the feet of the EU. 

 

I disagree. 

 

There is far more pressure on the housing market from the dissolution of the traditional family unit and the Brit's obsession with property investment. And in the south west, lots and lots of second homes.

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Just now, Big J said:

 

I disagree. 

 

There is far more pressure on the housing market from the dissolution of the traditional family unit and the Brit's obsession with property investment. And in the south west, lots and lots of second homes.

There is that as well. But both are seen here in Norway as well. Marriage, if there is any does not seem to last any longer here than it does in the U.K. very few partners seem to stay together for long. Property investment is no different either. 
 

Second homes! Come to Norway, you’ll soon learn about second home ownership. 🤣🤣🤣🤣

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2 minutes ago, trigger_andy said:

There is that as well. But both are seen here in Norway as well. Marriage, if there is any does not seem to last any longer here than it does in the U.K. very few partners seem to stay together for long. Property investment is no different either. 
 

Second homes! Come to Norway, you’ll soon learn about second home ownership. 🤣🤣🤣🤣

 

The difference with the Scandinavian second home market is that they are mainly just cabins by lakes. They aren't buying all the houses in the villages and scenic towns. That's the issue down here. 

 

And they also permit far more new building, which is more affordable than here. Our restrictive planning laws mean that getting permission to build your own home is difficult and extremely expensive.

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16 minutes ago, Big J said:

 

The difference with the Scandinavian second home market is that they are mainly just cabins by lakes. They aren't buying all the houses in the villages and scenic towns. That's the issue down here. 

 

And they also permit far more new building, which is more affordable than here. Our restrictive planning laws mean that getting permission to build your own home is difficult and extremely expensive.

People want to buy second homes in the U.K., people want to buy second homes in Norway. But far more people in Norway but second homes and I can sssure you it’s not just cabins by lakes, not even remotely close. 
 

Far more affordable? You have to be kidding me! House prices here are extortionate. It’s inconceivable for one parent to work here and make ends meet. Even for the second parent to work part time is a stretch. Kids never see their parents it’s a crying shame. Dropped off at pre-school, school then either walk home themselves and make their own dinner or it’s after school club then wait to be picked up. All from the age of 1. The state raise the children here, not the parents.

 

They might well be building more, but then Norway is virtually empty. The U.K. is not. Again, ending unfettered migration from 3rd world countries in the EU unquestionably had to end to slow down the over population boom we’re experiencing. 

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4 minutes ago, trigger_andy said:

People want to buy second homes in the U.K., people want to buy second homes in Norway. But far more people in Norway but second homes and I can sssure you it’s not just cabins by lakes, not even remotely close. 
 

Far more affordable? You have to be kidding me! House prices here are extortionate. It’s inconceivable for one parent to work here and make ends meet. Even for the second parent to work part time is a stretch. Kids never see their parents it’s a crying shame. Dropped off at pre-school, school then either walk home themselves and make their own dinner or it’s after school club then wait to be picked up. All from the age of 1. The state raise the children here, not the parents.

 

They might well be building more, but then Norway is virtually empty. The U.K. is not. Again, ending unfettered migration from 3rd world countries in the EU unquestionably had to end to slow down the over population boom we’re experiencing. 

 

We're looking at the same situation, but through different lenses. I don't regard migration into a depopulating country (which is pretty much any western, developed nation) as a negative, provided it's sensible, proportional and controlled. 

 

Norway is fantastically expensive, yes, but wages are far higher than here. Quality of life is much, much better.

 

It struck me when I was in Sweden this year that if you value the outdoors and value personal freedom, that you have a quality of life there that is simply unattainable in England, irrespective of income. It just doesn't exist here. Yes you can earn a packet, but you still spend your life stuck in traffic jams, visiting crowded seaside towns or National Trust properties, restricted to walking on public footpaths or national parks with no right to roam. You're completely stuffed if you want to swim - I have as close to zero as makes no difference swimming options within 30 minutes of my house. After a bit of rain, it is zero due to agricultural pollution and discharged human waste. 

 

I don't think that Norway is the best example of the Scandinavian ideal. In all likelihood, it's probably Finland, which is usually deemed to be the best place in the world to live. 

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35 minutes ago, Big J said:

 

Norway is fantastically expensive, yes, but wages are far higher than here. Quality of life is much, much better.

 

 

Hang on! A few post back you were saying how terrible rising wages and inflation were and how they were going to destroy the UK? Surely that's taking us nearer to the utopian Swedish model?

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