My advice- never invest in the stockmarket.
To be fair, long term investments in the stock market have shown steady growth for more than 20 years.
The median starting salary for graduates in 2014-2015 was £28,000 - up from £27,000 in 2013-14 and a continuation of the steady increase from £25,000 in 2010-2011, £26,000 in 2011-2012 and £26,500 in 2012-2013.Sep 9, 2015
Nice. In that time my pay has been below the lowest year quoted on there, and I've never received the full 1% public sector pay rise in that time.
Oh, to be young again!
one of them daft rs rx ones that ken block is so keen on.
About quarter of a million quid by all accounts.
Given that a regular WRC Fiesta is in the region of £400,000 it's safe to bet the RS RX would be a bit more expensive.
Makes no difference to me as instead of like a lot of people, buying the biggest F-off pad I could stretch to, I bought well within my means and even with a big hike in interest rates, could easily afford the repayments.
Depends, circumstances change, I've just lost my job, makes **** all difference having a mortgage X multiples of your salary when your salary drops to 0.
High house prices encourage speculation in property, lack of investment in industry/exports and drains peoples incomes to the extent the economy and housing market becomes stagnant. The sooner people realise this then the better we will do as a nation.
Whilst I agree entirely, there's a [s]fine line[/s] [b]yawning chasm[/b] between 'speculation' and 'buying the house you want/need'. If you've got a wife and 2 kids, they you're going to buy a 3 bed house. This isn't the monty python Yorkshireman sketch, it's reality, a 1 bed flat isn't going to work for you however affordable.
Cripping everyone in their 30's with negative equity won't in any way punish the baby boomers as you seem to want to do, and isn't going to help the economy because for every buyer of a cheap house there would be a 20 or 30 something with negative equity, not able to move around for work, not able to invest in their companies etc.
The best all round solution for everyone is price stagnation, if prices remain stable and we inflate our way out of it over time then no one loses out
North Kent here, just within M25 and prices are still rising. People are saying it is because of the Oyster card being introduced last year on public transport.
Bought a house 5 years ago for 215, added a 65 extension and it is probably worth around 400 now.
I work in a special needs school and it is a nightmare to find staff.
If it brings down a few BTL'ers who profit from rental trap families I won't say it's too bad. In the UK we think nothing of profit/make money from people trapped in high living costs. Karma. There should be responsible Capitalism (if that is even possible nowadays)
Bought a house 5 years ago for 215, added a 65 extension and it is probably worth around 400 now.I work in a special needs school and it is a nightmare to find staff
What would you rather have, a house worth £270k and a surfeit of well qualified job applicants who live locally or a 400k house?
Bought a house 5 years ago for 215, added a 65 extension and it is probably worth around 400 now.
Unless you are selling today it's irrelevant. If there is a crash tomorrow and you need to sell on Monday what does the 400 mean?
"My advice- never invest in the stockmarket.
To be fair, long term investments in the stock market have shown steady growth for more than 20 years."
Woosh ! Straight over your head. The little downward 1% (or more)blips you experianced along the way woul have te op in blind panic sell sellsell mode
The best all round solution for everyone is price stagnation, if prices remain stable and we inflate our way out of it over time then no one loses out
Exactly. Lots of people, myself included have only just got on the property ladder. Any drop in prices would mean a massive loss and trap me in this house. When a house price drops the banks do lot loose its the owners deposit the gets eaten up so the 10% drop.
The best all round solution for everyone is price stagnation, if prices remain stable and we inflate our way out of it over time then no one loses out
Not so exactly... take a read through the pension am I screwed thread, plenty of people relying/needing a decent house growth and a cheap retirement location to move to in order to fund retirement.
I'd have to say it's gone too far for an everyones a winner/nobody looses scenario to happen.
Threads like this explain the high proportion of English accents on Mull and Skye. Who wouldn't escape the SE if they could?
Living in the economically depressed W of Scotland and working in the public sector, my wife and I can afford a car each and a detached house with a 25 year mortgage that will be cleared on time. We're not rich but massively cheaper housing leaves us with enough disposable income to actually live a comfortable life, go on holiday, eat out and buy nice things for the kids. The house will be theirs, debt free, when we die.
If I lived in the SE and was only paid slightly more in 'London Weighting', had transferable skills and was being financially crippled by my mortgage, I'd seriously consider moving north if there was a similar job available and family circumstances allowed. The fresh air, natural trails and endless scenery are just a bonus.
Exactly. Lots of people, myself included have only just got on the property ladder. Any drop in prices would mean a massive loss and trap me in this house.
Trapped? Why, do you not like the place? Are you planning to sell in the next year or two? If you're not then it's just a loss on paper and shouldn't really bother you. If you decide to move to a bigger place then you'd be a winner too since this would have fallen in value larger than the loss on your place.
There's several mortgage companies now who have negative equity solutions, effectively offering a negative equity mortgage that will allow you to move house and take the money you owe on your old mortgage with you. If there was a crash, most other lenders would probably follow suit to take account of market conditions.
If I lived in the SE and was only paid slightly more in 'London Weighting', had transferable skills and was being financially crippled by my mortgage, I'd seriously consider moving north if there was a similar job available and family circumstances allowed. The fresh air, natural trails and endless scenery are just a bonus.
I'm very jealous of a good friend, whose wife inherited a house in Scotland, where they now live with their two young kids.
The whole of the South East is rapidly turning into Greater London. It's depressing.
The government want to promote the Northern Powerhouse idea to take some of the pressure off the South East, but in reality as long as 200k immigrants are moving to London each year (net), the problem of overpopulation is just going to get worse.
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[i]"... and this is back in the dim and distant past, son, when people used to think of houses as something you lived in, and not part of an investment portfolio, and didn't endlessly drone on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on and on about property price increases, as if it was a religion. It was a simpler and happier time..."[/i]
I'd seriously consider moving north if there was a similar job available and family circumstances allowed. The fresh air, natural trails and endless scenery are just a bonus.
Weather is a genuine factor though, I reckon. It really is quite a lot drier in the SE than it is here in the west. Plus sandy soils make for drier trails too.
Don't move north. Its rubbish! No decent trails. No nice scenery. The people are horrible. No good pubs, or owt
Its grim!
Stay put in London. It looks great!
downshep - Member
...If I lived in the SE and was only paid slightly more in 'London Weighting', had transferable skills and was being financially crippled by my mortgage, I'd seriously consider moving north ...
London is a black hole, with the M25 as the event horizon.
no-one ever leaves.
Not so exactly... take a read through the pension am I screwed thread, plenty of people relying/needing a decent house growth and a cheap retirement location to move to in order to fund retirement.
True, but handing out free money in the form of unsustainable house price inflation isn't the solution to that, it's telling them not to buy another Audi and put some money into a pension.
Trapped? Why, do you not like the place? Are you planning to sell in the next year or two? If you're not then it's just a loss on paper and shouldn't really bother you. If you decide to move to a bigger place then you'd be a winner too since this would have fallen in value larger than the loss on your place.
Say I own a £500,000 house (actually reading back the price is irrelevant, it could be a £50,000 3 bed in the nastier parts of Glasgow), a nice 3bed in the suburbs of Reading, on an 80% LTV mortgage. And it's value drops by 20%, not an unreasonable 'crash'. I would then have no equity and not be able to move even if I wanted/had to. Few people probably want to move, but sometimes they;
-have more kids
-have kids at all
-meet their soulmate and need to move on from the batchelor pad.
-need to downsize due to losing/changing jobs
-divorce
-get injured and need a bungalow
-have a 5 year plan that involved moving anyway (see the number of "i did London for 5/10/15 years" comments).
There's several mortgage companies now who have negative equity solutions, effectively offering a negative equity mortgage that will allow you to move house and take the money you owe on your old mortgage with you. If there was a crash, most other lenders would probably follow suit to take account of market conditions.
So your solution to the housing crisis is to advocate 100%+ mortgages again to people with zero deposits this time? And you'd do that in a falling market? If you're over the age of 9 you might remember what prompted the last 'bubble' in 2007. At least last time there was the reasonable assumption that 5% equity this year was going to mean 10% next year so the banks only risk was that you would fail on repayments within the first few months/years.
I've not looked into it, but frankly if any banks are offering those terms again they deserve to fail!
Threads like this explain the high proportion of English accents on Mull and Skye. Who wouldn't escape the SE if they could?Living in the economically depressed W of Scotland and working in the public sector
Not me, i dont fancy " the economically depressed W of Scotland and working in the public sector” if that was everyones utopia then those areas of the country would be overrun with people.
me and 20million others seem to like it down here.
So your solution to the housing crisis is to advocate 100%+ mortgages again to people with zero deposits this time? And you'd do that in a falling market? If you're over the age of 9 you might remember what prompted the last 'bubble' in 2007.
No, I just said it was an option and if the OP has borrowed sufficient sums of money that he's going to struggle if prices drop 10, 15, 20% then he really hasn't done his financial homework very well.
And there stems the whole problem, people wouldn't need 100% mortgages if prices were affordable would they? Something a good correction in prices would address.
Sorry but if you've bought a house in the last few years (me included) and expect the prices to keep getting ever higher, and don't expect things to crash from time to time then you're living in the land of make belief.
The best all round solution for everyone is price stagnation, if prices remain stable and we inflate our way out of it over time then no one loses out
I wouldn't be hoping for inflation any time soon if I were you - Central Banks across UK, US and EU and Japan have thrown billions and billions of Pounds, Dollars, Euros and Yen into the system in the form of QE and held interest rates at emergency levels for nearly a decade to try and get consumers spending and get some inflationary pressure going and we're still barely out of deflation... The house price boom in London and SE was also an attempt at encouraging consumers to spend... but as you can see from The Economist article above, it's reducing consumer spending and incomes - the opposite from the desired effect.
As house prices continue to rise and interest rates stay low I'm cutting my spending more and more to try and get a decent deposit together + I've taken a pay cut when I left London and have a lower disposable income as a result - my parents are living off a fixed income and are spending less as the interest on their investments is so much lower than expected, and friends can't find work at all - meaning no income, meaning spending less...
So many people believe that house prices will only ever go up that they're sticking everything they have into mortgages, and none of it into actually buying the stuff which produces economic growth (and inflation)
Basically, high house prices and policies aimed to get us spending have incentivised exactly the opposite effect to thaT intended...
Any first-time buyers getting into the current market will have very little left at the end of the month so for long as prices stay as high as they are (or continue to increase) then we can expect lower inflationary pressure, not more...
It's all a bit silly...
Our mortgage is not huge as we have received some help from family and been lucky with previous purchases.
I know current value is irrelevant and we have no intention of selling.
Only planned move is back to France next year.
Where I live, Hertfordshire, everyone is getting extensions done. That was a sign of a housing bubble last time round, although this time around, it might be motivated by the need to build an annex for the 30 year old kids.
Given I've just had an offer accepted on a bigger flat in London I'm hoping the bubble doesn't burst anytime soon - especially as I need to sell my current flat!
Any first-time buyers getting into the current market will have very little left at the end of the month so for long as prices stay as high as they are (or continue to increase) then we can expect lower inflationary pressure, not more...It's all a bit silly.
I agree entirely, but the horse has bolted, closing the stable door now doesn't help. All those 1st time buyers (me included), with 80% mortgages have already spent the money*, it's gone and it's not coming back short of mass defaulting (then it's the banks, and therefore everyone else problem with higher interest rates).
Whilst inflation isn't guaranteed, it's still a long term solution to the problem. Combined with addressing the actual issue (we've not built enough houses) to put supply and demand back in balance and keep things stable. If there were enough houses, prices won't rise, and economic stimuli like low rates and QE wouldn't push up prices.
House prices at 5x incomes isn't a good thing and obviously is an even worse thing the younger you are. But f****** over 25-30something to help 20-25's isn't going to help.
*you can keep saying it in a variety of derogatory ways all you like Agent007, home ownership isn't speculative, it's a necessity, if I want to live near where I work it's £300k for a 2 bed terrace or sleep under a bridge. And I'd like to keep living in it without getting caught in a trap between rising interest rates, negative equity and low inflation, which seems to be your suggestion?
*you can keep saying it in a variety of derogatory ways all you like Agent007, home ownership isn't speculative, it's a necessity, if I want to live near where I work it's £300k for a 2 bed terrace or sleep under a bridge.
and completely bonkers... I was looking at houses with my bother near Bishop Stortford, prices were mental for what he was looking at (IMHO) he was talking about work off shoring to save some costs in some area's. Asked if they would consider moving back to the North, as it would be a massive pay rise for most of them if they got out of the SE. Couldn't comprehend that people would not live near London.
Whilst inflation isn't guaranteed, it's still a long term solution to the problem.
Central Banks have made a heroic effort to stave off deflation and get some inflation going and pretty much failed. I wouldn't say inflation isn't guaranteed, I'd say it's actually highly unlikely. Japan have been having a go for 20 years and failed... If we were going to have some inflation, surely we'd have seen it by now?
Ageing population, peak stuff, stagnant real and disposable incomes, excessive housing costs (mortgage or rent), rising awareness of the need to save for our pensions... I'm not sure what the drivers of inflation over the long-term are going to be.
Saudis are pumping like crazy to get the oil out of the ground and turn it into a sovereign wealth fund before the oil becomes worthless black sticky stuff - so can't see oil prices going back up anytime soon, which would likely provide inflationary pressure.
More of a theoretical solution than a likely one...
From recent moving experience (rental), for an economy that "requires" a mobile labour force ("Get on your bike", longest commutes in Europe), we're stuffed.
Unless your total income is well north of the average, there is seems to be a large amount of f-all possibility of mobility of labour.
Mix cack transport, a small affordable housing pool and what seems to be increasing difference between contracted and "actually required to keep your job" hours and you've got a perfect storm to prevent a mobile workforce.
To me, the housing market is being run as a twisted ponzi scheme and at some point, if the material cost of building your house is much > that the market value, it will get corrected downward.
"As long as I'm alright, everyone else can f-'em selves". British through and through.
"As long as I'm alright, everyone else can f-'em selves"
Some of this sentiment is, I reckon, just naked fear. It's not that people are 'alright', more that they're screwed if prices fall or even just stop increasing.
So many people are eyeballs deep in a massive mortgage and have planned their whole finances around the assumption they can use their house as some kind of store of value/source of future income (spending all their disposable and saving nothing, maxing out on credit cards on the assumption of equity withdrawal, downsizing to pay for retirement, BTL for retirement), that a fall in house prices will mean really serious financial trouble for them - won't be able to sustain current lifestyle and impoverished retirement.
It's rather scary how dependent people and the overall economy are on maintenance of such high house prices... and this I think is one of the main reasons why BoE and Osborne appear so damn desperate to keep prices inflating... they'll be looking at hard data and seeing the underlying debt levels and probably feeling somewhat concerned...
"As long as I'm alright, everyone else can f-'em selves". British through and through.
bitter much?
there are property bubbles all over the world, it’s not peculiar to the UK.
68% of Brits own their own home, so falling house prices are very far from a good thing. The negative impacts on the broader economy far outweigh the "positives" for those looking to buy/upgrade.
Central London prices have been falling since the big hike in stamp duty, we could rent for 7 years before equalling the stamp duty.
As for average incomes there are so many stats - £25k or £40k (depending on whether you include only full time positions) or £65k for average family with kids
House prices are supported by significant immigration - you can't have 300,000+ net migration every year and not expect it to push up/sustain house prices - even if these people aren't buying they need to rent so feeling BTL market
Anyone sold up yet?
Y'know, took the money and ran off to Croatia to buy a kibutz in the mountains?
No?
Ok, whose first then?
🙄
What's going to happen once we leave the EU and you get the holy grail of being able to boot all the immigrants out then Jammers?
Free house for every British citizen!!!! Hurrah for the Empire!!!
Free house for every British citizen!!!! Hurrah for the Empire!!!
'Oh shit, the housing market's collapsed!'
68% of Brits own their own home
Of whom how many are really renting their house from their bank while assuming all of the downside risk in the hope of some upside?
I'd be very interested to know what percentage of that 68% is borrowed money.
68% of Brits own their own home, so falling house prices are very far from a good thing. The negative impacts on the broader economy far outweigh the "positives" for those looking to buy/upgrade.
as at 2013/14 this was down to 63% and falling. And the majority of owned them outright, having paid off a mortgage - so it makes little odds to them either way.
So only 30ish% of households are at any risk of negative equity, and I'd venture that most of those are well into their mortgage anyway.
EDIT -
for Edukator, above - a couple of articles from those stats:
http://www.theguardian.com/money/2015/feb/25/owners-outstrip-mortgage-holders
jambalaya - MemberCentral London prices have been falling since the big hike in stamp duty
Or, not, average price up 3.4% last year, according to the FT. The rate of growth has fallen.
68% of Brits own their own home, so falling house prices are very far from a good thing. The negative impacts on the broader economy far outweigh the "positives" for those looking to buy/upgrade.
Falling house prices are a good thing generally. The banks should be sufficiently capitalised and stress tested now to weather this storm. Lower house pieces = less debt required, more spare money in the economy generally to invest in roads, exporting businesses, NHS, schools etc, etc. Lower prices allow the young to rent, buy at a cost that doesn’t cripple them. If you're looking to upsize then the gap between your place and a bigger place is less steep. Plenty more up sides too.
If you’ve mortgaged yourself up to the hilt and overstretched yourself financially to buy and as a result are in danger of being in negative equity, then really it’s your problem, no one else's. No one forced you to borrow that money, and the fact you borrowed so much has just contributed to pushing prices up generally for the rest of us.
If you’ve mortgaged yourself up to the hilt and overstretched yourself financially to buy and as a result are in danger of being in negative equity, then really it’s your problem, no one else's. No one forced you to borrow that money, and the fact you borrowed so much has just contributed to pushing prices up generally for the rest of us.
Being in negative equity has no bearing on whether you have overstretched yourself or not. We have recently bought a house well within our means but if the price dramatically crashed then we would be in negative equity and therefore would not be able to recover the deposit from the house sale if we then want to move on.
As such you would end up with people who want to move up into bigger houses not being able to thus not relinquishing the starter home to those first time buyers you think should have a right to buy them.
jonm81 - Member
...you would end up with people who... etc.
not many people, and only for a few years while they paid off the equity...
or, who are all these people who buy with high LTV, and then wish to move to a different house more or less immediately?
Being in negative equity has no bearing on whether you have overstretched yourself or not. We have recently bought a house well within our means but if the price dramatically crashed then we would be in negative equity and therefore would not be able to recover the deposit from the house sale if we then want to move on.As such you would end up with people who want to move up into bigger houses not being able to thus not relinquishing the starter home to those first time buyers you think should have a right to buy them.
i'm not sure this is as serious as people make out. Taking some generic figures -
a FTBer who bought a 200K house with a 10% deposit and 90% mortgage.
After 5 years, they'll owe about 152K on the mortgage. So even with a market collapse of 25%, they're basically in the clear, although obviously it's not a desirable scenario.
So the only people at serious risk are those who have only just bought, at high LTVs, and really desperately have to move almost immediately. Unless i'm missing something?
hmm. said quicker and more succinctly by ahwiles!
Well, that's assuming 25 year mortgage and some fairly low interest by the look of it...? And that's the simple case.
25% drop isn't that much if it's new houses. We bought a house advertised at nominally £250k in mid 2007, we paid £237k and got a free deposit and some stuff (now you might say it wasn't free, and you'd probably be right) but it allowed us to get on the ladder without having to save up a massive sum of cash*.
We adjusted our mortgage a bit for various reasons, so we didn't pay as much capital as we'd have liked. Loads of the houses in our street were bought BTL, and when the crash came they were repossessed. So loads of them went for £160k, that's a 36% drop. They were undervalued, clearly, and mine was overvalued, but that's how it happened. Only now are we in a position where we might be able to move. So we were locked in for 8-9 years.
* reckless - maybe. But it got us on the ladder. I didn't know the crash was around the corner.... And we had no savings so had we not been able to save up the deposit whilst prices were low and required LTVs were high we might've missed that boat, and we'd still be renting now in a crazy market. It's complex.
Well, that's assuming 25 year mortgage and some fairly low interest by the look of it...? And that's the simple case.
It assumes a 2.5% interest rate. But there are plenty of cheaper mortgages than that around, even with a 10% deposit.
