[Closed] Looks like the housing market is off again...

How do you do it? How do people afford to live in these places? Did you all just have the foresight to buy property in the 80s when they were giving houses away with Green Shield stamps?

Low interest rates and buying & selling 3 times. Threw all our money at the house, drive 10 year old cars, no foreign holidays etc. House is now worth probably 8-10 times my take home depending on which estate agent you believe and where you market it (commutable to several urban centers in under an hour which seems to be the benchmark these days).

It might sound like I was being canny or knew something but the truth is it was the only way I could live somewhere I wanted to live and own it - having been kicked out by a landlord at the start of the mid 90s bubble, wanted to be sure it was in our hands going forward.

I can afford my current home on 6% as I was on a fixed at that when I moved there. But it wasn't pleasant to do so, and still live any sort of a life.

Sadly there appears to be no end. A crash won't help, most people will suffer now. No idea how my children will buy somewhere. Maybe it''l return to a rental market with those already owning property getting richer and those who don't making them so.

No idea how my children will buy somewhere.

My kids buying houses might co-incide with my parents inheritance. Provided it's not all spent on care. My grandparents however lived in either council houses or a heavily mortgaged property so I got nothing.

Did you all just have the foresight to buy property in the 80s when they were giving houses away with Green Shield stamps?

Sums it up. Most folk in decent sized houses have been there a while now.

TBH I wish I'd gone for a massive (at the time) mortgage as soon as I left college in 99. I didn't, I rented, saved for a few years, ended up buying our first place in late 2009. Waste of time, got me nowhere, in fact, got me far less far than just overextending and waiting for few pay rises to catch up with the cost of a 110% mortgage from inventasalaryforselfcertifiedmortgages.com.

I reckon that the buying frenzy is also brought about by a lot of people having stayed put during recession because they couldn't sell for what they reckoned they should be able to get (or what they paid) but now with the recession 'over' that pent up demand to move has burst out and people are getting silly again.

We had six offers at or over asking price when we put our house on the market last June. We've finally found somewhere now (having not been willing to play the 'pay silly money over asking price to secure a house' game and got a good bit of extra money for our house without any question from our buyer to reflect what's happened to prices since June.

Stagnation rather than crash seems more likely to me at the moment given the amount of pent up demand that's still there and is likely to be for some time.

I'm not expecting a crash, just a cooling off of the hysteria and outright greed which puts me in a very weak negotiating position...

Although, the bubble has gone up so fast this time, it's clearly being manipulated rather than a properly functioning price rise based on demand.

Interestingly though, Land Registry data (for Bromley at least) shows prices not going up at anything like the headlines and estate agents' evaluations would have you think... maybe a few % but certainly not 10+.

100% agree, not right, but then when their agent is telling them they can sell for £££ then can you blame them?

I forgot that new pension thing, its a classic [whispers] thatcherite [/whispers] brainwave that releases money locked away in pensions and gets them on the chancellors books
mr pension holiday must be proud
[img] [/img]

How do you do it? How do people afford to live in these places? Did you all just have the foresight to buy property in the 80s when they were giving houses away with Green Shield stamps?

Not me - like mrmonkfinger, I made the mistake of not buying straight out of uni when it was cheap.

Research has paid off for us - bought twice in places that were ok to live in but not really desirable at the time but seemed very likely to go up in value well over the norm over a few years. Did the places up without spending silly money and that seems to have worked well.

They need some hefty tax disincentives for people buying multiple properties and those buying from abroad. Then hopefully there will be less speculative investment (my parents are talking about cashing in pensions and buying a three bed investment property...) so the housing stock is there for people trying to buy their home. We want to sell but I'm really worried about interest rates and negative equity. Meanwhile all our friends are trading up to even bigger mortgages....

Am overpaying our (to us!) large mortgage while watching friends get caught up in the property 'race'. In the last 6 months I've seen 4 families we know move up to larger / more expensive houses with eye watering mortgages which are really squeezing them.

Round our way there has been a real flurry of housing market activity. With the current low interest rates you can't help but think a lot of people will be exposed when interest rates start to climb again.

I made a decision a while ago that our mortgage would never be bigger than it is today and am on track to get it payed off by the time I'm 45. This means falling behind 'The Jonses' today but hopefully a more comfortable life later. (Unless I get knocked down by an Antelope or something 🙂 )

There is an inevitable crisis brewing with housing. Governments of any persuasion will need to continue the policy of financial repression to erode UK debt. This will keep interest rates below their correct level (some free market?) for an very extended period. This will distort the housing market even more and problem exacerbated by specific gov support for housing.

If and when interest rates normalise, the pain will be severe except for those early birds who benefit from asset inflation.

. Yes, I can. You know full well you're screwing over some young couple who've stretched to pay a price way more than you paid. That's a conscious decision to enrich yourself at someone else's expense

I agree 100% with you, I think its morally wrong, however were I in the same situation then I'd probably need all the money I could lay my hands on for my place to buy the next over inflated place further up the ladder.

The pensions thing is crazy (puts down his Lamborghini catalogue to reply) but I agree that there have been a lot of people staying put in the SE for the last five years who now think know that they can get more money from their houses and so are looking to move. Of course unless you move outside the SE your next move costs you even more.

TBH I wish I'd gone for a massive (at the time) mortgage as soon as I left college in 99

Feel like maybe I've lost out a bit not moving up when my wages went up but I definitely made the right decision when stepping onto the market and the experience (and horror stories of potential double digit interest and negative equity) have made me cautious.

When we were looking to buy our first home in 1985 we viewed a three bed semi £17500, we went to the building society and they wouldn't lend us the money, they said we needed to look for a more expensive house. That house however fell through and we found something else for £25000, our joint income was £12000. A mid terrace in those days was about £11000.
The average wage in 85 was £9000.

^ 3.5x main income or thereabouts, I guess.

If only that'd been stuck to.

My kids buying houses might co-incide with my parents inheritance.

What inheritance 😥

Or without the self pity:

[img] https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcTF7UTl67PFQdYUxEyACc1iAvA6fZ7M0PtG_GbRZdhwTS4gVbfeeQ [/img]

Inheritance, you say ???

You're not wrong, houses in our street have risen by nearly £80k/25% in a year.

Another factor in all this rank stupidity is that the mortgage market is sucking any investment out of the real economy. All those billions that were pumped into the economy were meant to be to aid the development of real business. Unfashionable things like making stuff, providing services, etc

But instead of lending to business, the banks just took the money, saw that it was miles easier to just put it into mortgage lending, and fuel a nice little housing bubble instead. Again: safe in the knowledge that when it goes tits up - as it surely will - that it won't matter, because the same poor sods who'll get clobbered with repossessions, negative equity etc, will be the same ones who's taxes will be used to bail them out! Again!

That the government not only failed to put any guarantees in place to stop them doing this, but then actively encouraged them is absolutely criminal! Especially after all Gideons flannel about the 'March of the Makers' and re-balancing the economy. Once again the interests of the financial sector are being put at the top of the agenda, and **** everyone else!

Binners, the other silliness also means people have higher mortgage repayments or have to put more of a deposit down. That means lower consumer spending and pension saving.

So the additional tens of thousands I'm going to have to put down into a deposit because I didn't buy a year ago is just disappearing - into no-one's pocket anywhere. Instead of spending it on bikes, new car, home improvements, eating out, trips to the Lakes, saving it, investing it etc etc

It really is utterly moronic. Especially as even those people in silly expensive houses are no better off in any way at all, they just have an illusion that they're richer - it's 100% illiquid.

That house however fell through and we found something else for £25000, our joint income was £12000. A mid terrace in those days was about £11000.
The average wage in 85 was £9000.

That makes me sick!

Out of interest... what is 'crippled' by mortgage payments? Ours are c30% of our net income, which to me is high, but not ridiculous.

Yes, I can. You know full well you're screwing over some young couple who've stretched to pay a price way more than you paid. That's a conscious decision to enrich yourself at someone else's expense

Hmmm would have to be pretty altruistic to sell a house for less than what is obtainable. It's the gazumpers and gazunderers who are the real g!ts but we've had them defending themselves on here before.

25% here nick which considering rents round here for a 2 bed flat can easily be more than my mortgage - assuming you don't want to live in Northfield or mastrick,I consider that not bad.

Hmmm would have to be pretty altruistic to sell a house for less than what is obtainable. It's the gazumpers and gazunderers who are the real g!ts

+1 on that.

There was something on the beeb a few weeks ago - might have been the religious reflection bit on Evans' show - about a new block of flats in Chelski going for planning permission.

It was accepted, and the outcry among the locals was huge with lots of questions about parking - and the church goers were also asking how they would be able to park near the church on Sunday, etc etc.

The council replied that there would be no parking issues, as they expected none of the flats would be occupied.

I find this utterly fascinating!

25% here nick which considering rents round here for a 2 bed flat can easily be more than my mortgage - assuming you don't want to live in Northfield or mastrick,I consider that not bad.

That was the thing we were gutted with, rent wasn't all that much less (not when trying to save too) and you had absolutely nothing to show for it! Yeah ok we're basically paying interest unless we over pay, but at least we're getting something. Fairly sure we own a door knob or something by now!

Had our house valued this morning, asked the estate agent about potential value of adding an extension. (leaving aside other motivations she may have had) the answer was not to try to improve the value to keep it "affordable" for a young couple.
Proposed value was 60% more than we paid in 2006 - West London.

Happy and conflicted at the same time - obviously its just silly, but we want more space and if prices are going up, the price gap to a bigger house is only going to get worse, but proportion of your money do you want tied up in an asset that might devalue?
Not complaining - nice problem to have.

Points for Concern:

The media has many people convinced that their house is primarily an investment, and secondly a place to live.

Planning process is slow, antiquated and unfit for purpose - too much red tape, too many NIMBY's objecting to new housing anywhere near them.

Not enough investment in social housing.

Renting viewed as dead money and a second class option because they is no long term protection for tenants.

No restrictions on the amounts people can borrow to secure a mortgage, or the percentage deposit they have to save.

No real disincentive or prohibitive tax on second home ownership meaning that young people are being priced out of their own communities.

Out of touch politicians coming on telly to support hair brained scheme after hair brained scheme to prop up house prices (thinly veiled as a help to buy scheme for young families).

I could go on, but I've lost the will. It's no wonder prices are going through the roof. Our national housing situation is dire!

Renting viewed as dead money and a second class option because they is no long term protection for tenants.

Renting [b]is [/b]dead money... I know it's how large chunks of the world do it, but because we don't, the stock for renting is small, so they command a serious price (as I said, comparable to our mortgage payments, which will invariably come down when we can remortgage on a lower rate, plus the potential equity benefit) and leave you with nothing to show for it at the end, not to mention the constant risk of being shafted by a landlord.

We rented two places, both were abruptly sold from under us, luckily the second time we'd already bought somewhere, but could do without that stress. Not to mention the fact it's never really 'yours' to do as you want, although that obviously has its benefits too.

Not so sure about the "second class citizen" part.

As has been proved time and again, you can buy a house and it could be paid for in 25 years or so - so if you buy at 30, you own it at 55. Rent at 30 and you will still be paying rent until you die – which could be another 30+ years

And when you die, you have nothing left to pass on to someone else either (of course this isn't important to everyone, but it is to many).

Renting is dead money

Only in the same way that paying interest on a mortgage is. It's the fact that when you buy a property most people are heavily geared so the price increases we usually get result in significant wealth increases. When house prices do fall people can get wiped out pretty quickly.

Another approach is to invest in equities and you could end up with greater rises than an equivalent property owner - but no gearing here so safer but less of an upside.

[i]At 42 and with 10 years of savings and help from my parents and well above average salary and I can't afford to buy in London except in undesireable areas and even then it's something small - unless, of course, I borrow to uncomfortable levels. [/i]

I bought my first flat at 20. At the maximum of the earnings multiplier as it was then, paid £21k. Sold 6 months later for £30k. Went from there onward, upwards/sidewards. But, sometimes the mortgage cost was more than I earnt a month (went to 16% at one time, but for a long time it was +10%) - so it wasn't always the easy world people think.

Been mortgage free for the last few years.

[i]Renting is dead money[/i]

and so are interest payments.

It's not a housing bubble, it's a lending bubble. As ngee20 says people are less economically stressed by their mortgages than in many other periods.

Current green belt policy in inconsistent with a predicted rise in population (though population growth is almost impossible to predict IMO)

There has been excess demand for decades in many parts of the country with prices reflecting people's ability to borrow rather than any changes in demand which remains consistently above supply.

The lending bubble developed a leak in 2007 but the hole was taped over with monetary easing and low interest rates. The bubble is now safe until someone decides growth is strong enough to admit inflation is as high as it really is and do something about it. Something they may never do preferring to live with the ills of inflation. After all:

Inflation ills:
redistribution of wealth from poor to rich
no incentive to save
no incentive to invest (but only if interest rates are used to combat inflation)

Inflation benefits:
depreciation of borrowed capital, including government debt
while interest rates and salaries remain below inflation anyone who can raise the price of their goods or services at inflation will make more profit and invest.

I can't see Cameron doing anything about inflation, money supply, lending criteria or anything else that might burst the lending bubble just yet. A market has never gone far enough until it's gone to far.

Renting really is dead money, not only are you still paying rent well after you could have owned it, the rent will keep going up

I can't see Cameron doing anything about inflation, money supply, lending criteria or anything else that might burst the lending bubble just yet.

But whoever ends up winning the next election will have to do something about it pretty sharpish. I reckon you can put your (ridiculously over-valued) house on Carney raising interest rates about 3 seconds after the election result is announced. Then the real fun and games is going to start.

Look out for the stories in the outraged middle market tabloids - due to appear by about May next year, I reckon - about poor Jemima and Tim, with their 2 kids, who live in a nice London suburb, with a very good school close by, but due to the increase in their mortgage payments are having stop poppy's riding lessons, and are only weeks away from relying on food banks, who don't even provide organic vegetables from Waitrose.

Only in the same way that paying interest on a mortgage is. It's the fact that when you buy a property most people are heavily geared so the price increases we usually get result in significant wealth increases. When house prices do fall people can get wiped out pretty quickly.

Another approach is to invest in equities and you could end up with greater rises than an equivalent property owner - but no gearing here so safer but less of an upside.

Yes house prices can fall, but so long as you are borrowing comfortable amounts, then you should be safe from having to sell - which is the only time you will lose money.

And if you rent instead of mortgage, how do you afford to invest in equities? Unless of course you can afford to do both, but then why don't you just mortgage and invest?

Renting is dead money

Depends how you look at it. For people intending to stay in one location for most of their lives then it makes complete sense to buy.

If you intend to move around to further your career, perhaps to travel and see the world and experience living in several different places then it makes perfect financial sense to rent whilst you're younger, save and buy a property with a much bigger deposit when you're ready to settle down (avoiding mortgage interest which is also dead money).

Long term though you're not going to want to be renting, or paying a mortgage by the time you're retired.

With the way house prices are going, and the increase of 30, 35, 40 year mortgages to enable people to afford property at it current prices, people buying houses at today's prices may well up never paying them off. So all the pitfalls of renting (from the bank) but none of the benefits.

The only way comparing rents to mortgage payments is valid is if you have an interest only mortgage and assume that you sell the second you've made your final payment for exactly what you bought.

These are not likely scenarios, ergo interest on mortgage payments is not dead money in the same way as renting.

If rents were far lower than mortgage payments it would be a closer comparison, but they're not (at least round here). Even at 5% our mortgage payments are less than rent on the same property would be.

If I put my cynical hat on then a property led boom is perfect for Osborne and a win win situation.

Scenario 1. People belive the guff and think the economy is better and George and co get another 5 years in office

Scenario 2. People dont belive the guff and we have a different govt. The MP's who dont get relected then get to sell their tax payer funded London home in the middle of a property bubble and walk away with a huge profit.

25% of income approx and up for a remortgage next April - current rates 3% fixed but will go to 5.6% variable.

I'm frantically paying as much off as possible to ensure the re-mortgaged amount is as low as can be - anything I need to worry about? I'm not concerned about bubbles as we are here for the long term, just the repayments...?

How do you do it? How do people afford to live in these places? Did you all just have the foresight to buy property in the 80s when they were giving houses away with Green Shield stamps?

Meanwhile, all around us are asking why we haven't bought one of the new developer houses, or the one up the road that is £300k etc etc. I am not sure what planet half the UK lives in today, but financially it is not the same one I occupy. 😐

The help to buy here is fueling new houses and prices - but it cannot be sustainable. The people we are buying off are committed to a new house under HTB Scotland, and the neighbouring (new development) house where they are buying has just been put on the market for £35k less than it was bought for 8 months ago. Crazy, but people are queuing to do it.

And if you rent instead of mortgage, how do you afford to invest in equities? Unless of course you can afford to do both, but then why don't you just mortgage and invest?

Well usually rent is less than mortgage payments for the same place so invest the difference. There is also a difference between the cost of an interest only mortgage and a capital repayment one - you can/should invest the difference and if you get a better return than the mortgage rate you win. There are of course other costs associated with property ownership than renters don't get - purchase costs, on going maintenance.

But yeah I geared heavily when buying property starting in '96 and obviously have done very well. A number of people got out of property (sold their house) around 10 years ago to invest in equities, they were doing well for a few years but unless they got back into property at the right time they may have lost out. I think a Motley Fool writer did that so will try to find out how he got on.

If rents were far lower than mortgage payments it would be a closer comparison, but they're not (at least round here). Even at 5% our mortgage payments are less than rent on the same property would be.

Nail - head. I've never seen a rentable property that I couldn't buy for the same or less, interest included.

Mobility is one good reason to rent I can think of as mentioned.

I'm frantically paying as much off as possible to ensure the re-mortgaged amount is as low as can be - anything I need to worry about? I'm not concerned about bubbles as we are here for the long term, just the repayments...?

Get some valuations done and pick the highest so you have a high LTV - should secure you the best deals. Start looking now - if you stay with your current provider they may provide a clean switch so you never pay that 5%, other vendors may line soemthing up for you.. worst case you'll be wel informed if you follow it now. I do, and I've no intention of selling or remortgaging (on Nationwide BMR now, 2.5% variable)

so you have a high LTV

The company providing the mortgage will get its own valuation (which you'll usually pay for IIRC) to avoid people trying this.

(and to be pedantic, I assume you mean low LTV)

Current green belt policy in inconsistent with a predicted rise in population (though population growth is almost impossible to predict IMO)

Green belt policy would be fine if New Labour hadn't let in over 4 million people. Population growth can be predicted fairly accurately if you control your borders.

BINGO!!!

It's all the fault of those damn immigrants!

You are Nigel Farage and I claim my 5 Euros

[img] [/img]
Herr and Frau Farage