I’ve just put in for planning for two semi detached bungalows in my garden, estimated build cost £90k each.
Poor lamb. Time for some crowdfunding darling?
The economy is goosed and a direct consequence will be…
…more people renting, and a greater proportion of their income being spent on rent.
Why do people want house prices to plummet?
So they can afford to not be homeless?
Why do people want house prices to plummet? If they do the economy is proper goosed.
Because they want the possibility of buying a house and not paying ridiculous amounts of rent. You don't need to go back that far to a time when a nice flat in a nice area could be had for around £200 mortgage. Now a very shitty bedsit in a shitty part of town is £400 a month rent.
The impact on those who have purchased a house at the very high current prices won't be happy but the answer for them is not to move. If you don't move then it doesn't really matter what the price of your house is doing.
Yes it does quite a lot - as you will be paying way over for your mortgage and in negative equity. Paying say £500 a month for a house when you could be renting same for £200 for example, or buying same for £200 a month, and in a very precarious position if there is any sudden drop in income such as redundancy, illness, death of a partner etc.
Negative equity only matters if you are selling the house. The house was purchased based on the fact the owner could afford it. Stay in house for 30 years and they will be fine.
Some people will face redundancy, illness, death etc,. but those would hand the keys back and go and rent one of the cheaper properties.
Not saying any of that would be great but it would reset the prices. The thing then would be controlling them so they don't just all go back up again and be in same situation in 20 years times.
Building enough houses would steadily lower relative prices. It's not in the interests of anyone involved though. Particularly not developers, and while it's not reasonable to expect them to be charities, it would be nice if they weren't ****s. The state needs to get involved again and build decent quality social housing that is affordable. Not going to happen in this lifetime.
Negative equity only matters if you are selling the house. The house was purchased based on the fact the owner could afford it. Stay in house for 30 years and they will be fine.
All well and good..... Then your job is made redundant and to get a comparable job in your skill set you need to move across the country.....
Negative equity only matters if you are selling the house.
Not quite. When it comes to your next mortgage deal, the loan to value ratio will become dire, and your mortgage payments will increase, at a time when your income is likely to have been reduced (if house prices have taken a dive, you’ll be lucky if you avoid what is likely to be happening in the job market).
Anyway, there won’t be a big drop in prices, just a slump… and more people will be trapped in the rented sector, not fewer. An economic downturn doesn’t help people buy their first homes, that’s just a fantasy. It does help some people buy extra houses though.
That makes sense kryton.
Few months of no sales bubbling over
Those in flats wanting gardens .
Those who were thinking about moving wanting to do it while there's a stamp duty relief and they have a job ..... It's much easier to keep a mortgage with a lesser paying job than it is to get one..... There are mechanisms you can trigger to help you keep the house. Where as you'd never get lent to with out or with a low paying job....even if the cost is less than rent
Because they want the possibility of buying a house and not paying ridiculous amounts of rent. You don’t need to go back that far to a time when a nice flat in a nice area could be had for around £200 mortgage. Now a very shitty bedsit in a shitty part of town is £400 a month rent.
What is the obsession with 'having' to buy a house?
In a world where buying an average car costs more than £200 a month, and a mobile phone line rental can easily be half that a month, it's exceptionally unlikely, unless you can go back in time 40 years.
I'm sure everyone who has a house & a mortgage isn't quite so motivated to see house prices drop to a level where they cost as much as a mobile phone each month.
@twinw4ll has found the only surefire method of wrecking property prices - build a couple of cheap houses in your own garden 😂
And as much as more cheap/affordable housing is great for those looking to get onto the property ladder, it isn’t going to affect the value of existing, desirable houses in the slightest.
really? Have you seen the difference between paying a mortgage & renting? (Not to mention the stability aspect... I know renters who’ve been “moved on” almost yearly!)What is the obsession with ‘having’ to buy a house?
The answer to the OPs question is as simple as supply and demand.
If the availability of housing were to match (or even exceed) the demand you'd be on your way to arresting house price inflation. Unfortunately we've engineered a situation over several decades where supply is throttled to ensure housing is a profitable investment...
So I don't know about actually driving house prices down, it sounds like a great idea to those not (yet) on the "property ladder" but then so much of people's finances are tied up in their homes once they buy one, especially the boomers. People are now counting on their house increasing in value year on year.
Boomers who TBF were told to buy a house both as a home and as an investment over and over throughout the last 50 odd years. Maggie made it even easier by bumping the supply side briefly during the 80s with 'right to buy' (but subsequently everyone sort of forgot to replenish social housing stock)...
So yes "Derek and Jeanette" cleared the mortgage on their lovely four bed twenty odd years ago, and have just sat on (in) what is now an appreciating asset, and their pensions (part funded by property investments) more than cover their living costs so there's no real need to sell up and downsize. They'll just let the kids squabble over the house as part of the estate when they pop their clogs (or let them flog it to fund their end of life care)...
People like to tell you that interest rates spiking in the early 90s stalled House prices, but it didn't stall them for that long, same goes for the 2008 crisis (that was even caused by a US housing bubble) but again we've seen a pretty steady increase in house prices since. The general trend has been up and up for most of the last 40 years...
The housing market in the UK is vexatious, held up by old people, and used by the finance industry to drive profits. It is ultimately just another example of the intergenerational wealth gap...
A pandemic (a 'proper one' that wiped out a few million old people) might have an effect on the housing market, but then all the surviving Gen-Xers and early Millenials (ahem) would swoop in and repeat the patterns of their parents by buying up housing stock, not downsizing when their kids leave home, and throwing money into pension and investment funds, who in turn will buy up and convert old office blocks for their children and grandchildrens generation to pay excessive rents on while aspiring to be able to buy a house one day...
The trick is to break that pattern without bankrupting huge swathes of the population. Let us know when you figure out how to do it...
I've no idea of the answer.
If you look back at the cause of the current situation, it was the banks allowing bigger mortgages.
When we bought in mid 90s,it was only something like 2x or max 3x your income.
Early 2000s that was relaxed and prices doubled in a very short time. Then a crash. But prices remained stuck up there due to the terror of negative equity.
The solution is for all of us comfortable home owners to support a government policy to provide good quality affordable social housing.
What is the obsession with ‘having’ to buy a house?
If rent was very, very cheap then guess there wouldn't be.
But would I rather pay £1000 a month in rent for 60 years or would I rather pay £1000 for a mortgage for 25 years (and own the house at the end)
Can you guess which I would go for and why?
The solution is for all of us comfortable home owners to support a government policy to provide good quality affordable social housing.
Where have you been for the last 40 years. That is never going to happen.
Not in this country now, no.
Cougar
Subscriber
Why do people want house prices to plummet?So they can afford to not be homeless?
Aye but if house prices plummet, means the economy is properly goosed, so they won't be able to afford the cheaper prices either...
What is the obsession with ‘having’ to buy a house?
It's not an obsession. It's just good sense if you can afford it. Why give money away to some other well-off person you can keep it to yourself? I don't see why wanting to do this is such a bad thing?
Houses prices are driven by the availability of credit. Not by supply and demand, there are plenty of houses for sale.
So for house prices to fall the amount people are allowed to borrow would need to fall.
Inflated house prices benefit no one other than mortgage provider and they have driven it by allowing people to borrow vast amounts of money.
In a low interest economy it was the only way to maintain their profits.
There’s a post lockdown mini boom just now.
This ^ , my bro put in his maximum bid of £118k for a 2bed house in our wee Galloway town, sold to a developer from Yorkshire for £140k
The other half of my Mum's semi det just sold for 25% over the asking price
Have you seen the difference between paying a mortgage & renting?
The difference between the mortgage I've just taken out and the rent my girlfriend is paying is about six quid a month.
Why give money away to some other well-off person you can keep it to yourself? I don’t see why wanting to do this is such a bad thing?
Because, this. It's not like car rental where you get a brand new house every three years. You can pay an amount of money off your mortgage or you can pay pretty much the same amount off someone else's. Why would you buy a complete stranger a house?
The only compelling reason I can see to rent is if you don't have the deposit, it's why my OH is renting. I'm told by my mortgage advisor that in the current climate (as of a couple of months ago anyway) all mortgage lenders are asking for a 20% deposit apart from HSBC who he says are so obtuse to deal with that it's not worth the hassle. This may (will) change once things calm down again but if you're looking to buy say a £200k property tomorrow you're going to need forty grand in your back pocket.
A friend of mine has a house in the Fens. He's tracked down the deeds to all the purchases over the years, and has them on the wall in the hallway. House was built in 1790 as part of a 160 acre farm estate. and was bought with a mortgage for £110, and then remained in the family for 5 generations until it was sold in the 1930's for £400...(at this point it was still a working farm) Sold again (as just the house) in early 1970's for £20,000, he bought the house in the early 1990's for £250,000 ish....It's an extended 4 bed farmhouse with a couple of acres of garden/paddock (all the farmland and outbuildings have been sold off, or knocked down in between the war and the 1970s)
TBH I don't really know what that says about the value of houses, but the rate of House price inflation that happened post war is astonishing...
TBH I don’t really know what that says about the value of houses, but the rate of House price inflation that happened post war is astonishing…
So I had a play with the BoE's inflation calculator.
was built in 1790 as part of a 160 acre farm. and was bought with a mortgage for £110
£16,700 today.
sold in the 1930’s for £400
Assuming 1935, £28,662.
early 1970’s for £20,000
Assuming 1972, £265,881.
early 1990’s for £250,000 ish
Assuming 1992, £521,276.
Anyone any good with graphs? (-:
Houses prices are driven by the availability of credit. Not by supply and demand, there are plenty of houses for sale.
+1 . It's much more nuanced than lack of supply. Plus the houses being built aren't necessarily usually the ones in demand.
So I had a play with the BoE’s inflation calculator.
Those inflation calculators don't really work for giving a feel for historical prices, becasue people didn't live in the same way, buy the same things, or expect the same levels of material wealth as we do now.
A better way of looking at it might be that in the 1790s a farm labourers yearly wage might be £18 a year. So the cost of the farm was 6 times a skilled labourers annual income. Probably still a much lower ratio than today. But it would have been much harder for a labourer to borrow any money at all, unlike today.
At the same time £1000 a year would put you firmly into the ranks of the lower gentry, but most of those would have been leaseholders rather than freeholders.
A huge wedge of our economy is based on the value of property, as others state it's nigh on impossible to see a plummet in house prices that doesn't decimate the the economy, as stated before, the economy is based on debt, both from people taking loans to buy stuff, and the companies who manage the loans and so on, you start the domino effect and it'll be a disaster.
I've been thinking about how you'd get house prices to £30,000.
a) turn Britain into the equivalent of 1980's Beirut or 1990's Mogadishu. Cheap house if you can except a high chance of a horrific death.
b) Re-run the black death, and wipe out a significant portion of the population. Cheap house if you are happy to loose all you neighbours.
c) Government and local council financed and run house building and leasing scheme (ie council housing 1950's/1960's style, plus buying existing houses and renting them out at below cost). This would take decades to plan build enough good housing stock do push down the cost. Cheap house for you children.
d) remove planning and building regs, allow rapid development of overpriced cost cutting designed/built on the outskirts of towns, who's design life will be less than the mortgage used to buy them. Cheap house now until you get the heating bill and the roof starts to leak.
I would like c) but I think d) is closer to the reality
"oooo! You youngsters have it easy! When Albert and I bought our first house we had to work 14 hours a day to pay for it!"
Now, to afford the same style/size of house, the "youngsters" would have to work about 28 hours a day. But the quality would be worse-you know the sort of thing "skilled" "craftsmen" "lovingly" forgetting to put any cement in the mix or meeting basic fire regulations.
There really is * all left in this doss hole worth shouting about if you have no bank of mom and dad to lean on.
(Squeak! Clunk! Squeak! Clunk!)- Oh look! Here comes the edge case to prove the other 5.5 million people wrong: "I had nothing and saved up all my sand and I bought a * hole in a * hole and had nothing and did all the work etc, bollocks, etc....
From internet land somewhere-if the price of a factory made, Sunday chicken from Tescos had matched house price inflation, it would now cost you about £53 for a Sunday cluck, based on a 1970's "average" house.
Noticed how many trailer parks there were in the UK, say in 1980. Probably not, 'cos there was hardly any.
Noticed how many there are now? Unlikely to be that many in STW Acorn code areas but there are now **** 'undreds. That's the only "home" most people will be able to "own", post covid, post brexit.
The thing is, if a price crash happens, who will end up paying for the home owners landlords and people with 2nd homes?
The renters-because they haven't lost anything.
Winner! Winner! £53 chicken dinner!
The renters-because they haven’t lost anything.
Yes, but as a Landlord my mortgage just rocketed in cost due to the huge financial crisis, so I am upping your rent. A lot.
people are willing to bid a proportion of their income on a given house. Lets say its a mortgage payment of half of everything that's left over after you've paid for other essentials (food, clothes, fuel).
in the last 50 years, 3 very significant things have happened
interest rates dropped, so the amount you can borrow whilst meeting that criteria has increased
wives work a lot more, probably increasing the spend by 50%
everything else essential - food, clothes, fuel - has got cheaper compared to the average salary.
longer mortgages are also commom place.
ignoring the impacts of inflation (and based on todays prices, to take that out of the equasion), a family willing to spend £500 a month @7% interest over 25 years (out of a £1500 single income) in 1970, and so offered £75k for a house might find that they're pulling in £2500 now (wife works part time), they spend less on food clothes etc (£300 instead of £500), so they're willing to spend £1100 on the mortgage, which is now 2% over 35 years, so they're now willing to offer £330,000
thats a price rise of 4.4x, which is more than the 3.6x change which has actually happened in the last 50 years
if any of those things change, house prices will change, but so, probably, will an average individual's attitude to how much their willing to spend. every generation complains that houses were pric
in the last 50 years, 3 very significant things have happened
Also don't forget that access to debt has increased. Its a lot easier to borrow a lot more money now than it was in the 1970s. Even in the late 80s mortgages were strictly 2.5 x joint income (even if you didn't need an interview with the bank manager). Now you can borrow more, people are willing to pay more.
To really plummet, to some of the figures in this thread, where the land is worthless, there is no vlaue to the location and you are merely paying for the build cost... nothing that I (as a 29 year old non-homeowner) would want to live through.
To stabilise, to become less of "an investment" to the BTL crowd, and become a practical means of having a roof over your head; without screwing over millions of other people in the country who currently own, or worse, are mortgaging their homes:
-Re-vamp the buying and selling process to make is simpler, and cheaper; Scotland is way ahead of England here but still far from perfect. People paying 5 figures on surveys, stamp duty and so on feel the need to get that money into their property value somehow.
-Stop the population growth, this could be happening already
-Stop the requirement for both halves of a divorced couple to maintain a full sized family house if they wish to share custody (or a reduction in people splitting up while having dependent kids, some sort of societal cange?)
It's now becoming less easy to borrow money, despite rock bottom interest rates, and that will continue.
After a flurry of announcements by Rishi Sunak he's now resorted to stating the obvious - in summary, this is going to get much worse.
Banks have increased provisions for bad debts.
Job losses will increase over the next few months - and, possibly, for much longer.
Estate agents continue trying to boost the market through over-optimistic asking prices but property consultants - Jones Lang LaSalle and others - are forecasting average reduction, excluding London, of c7.5% by year end; that's after factoring in the temporary stamp duty adjustment.
As for '...REALLY plummet', I can easily see 10% reduction; as for anything more than that, certainly possible and it wouldn't surprise me.
A big drop in house prices would be really bad for the economy - distress sales, banks having to write-off billions in bad debts. It's going to be bad enough by the time the adjustment in commercial property values flows through to things like pensions (mine's dropped 15% this year). There does need to be a big growth in social housing - money's cheap - as it will drive down private rents and make it less attractive to short-term investors. Release of this stock could help moderate house prices. In some places, there's already a massive over supply of flats to rent - speculative developments sitting empty.
banks having to write-off billions in bad debts.
Anyone would have thought they might have learned from 2008 that lending more isn't always good for them or the customer.
“I had nothing and saved up all my sand and I bought a * hole in a * hole and had nothing and did all the work etc, bollocks, etc….
I do rather think that a lot of this "entitled youth of today / bloody millennials*" narrative is simply jealousy. People of previous generations had nowt because there was nowt to be had.
(* - some of whom are now grandparents)
wives work a lot more, probably increasing the spend by 50%
Back in my grandparents day you had the 'family unit,' the bloke was the breadwinner and the wife stayed at home looking after a house and squeezing out children in the hope that they lived past childhood. That single head-of-the-household's income had to provide for the entire family.
Come the revolution, women more commonly entered the workplace, we had the explosion of DINKYs in the 80s. This is great, we can double the household income (assuming equal pay, which we're still working on today)! Cost of living vs absolute wages shot up and because dual salaries was commonplace no-one noticed.
Fast-forward to today, both partners now have to work in order to keep afloat. I can't help wonder whether we'd be in the same position today if women in a family had gone to work instead of the men rather than as well as.
Agreed. Almost all these threads are shot through with some kind of blame for older people and the suggestion that it was easy in those days.
I almost feel guilty about bringing it up, but one day all you lot will be old too, listening to the latest generation of know-it-all ingrates slag you off...
Less people or more land. Those are literally the only ways house prices can fall in real terms.
I’ve been thinking about how you’d get house prices to £30,000.
You forgot option e) Move to [url= https://www.rightmove.co.uk/property-for-sale/property-72256740.html ]Cumbernauld[/url].
If any government wanted to keep prices down they could simply tax capital gains on primary residences as well as secondary. Say 50% tax on all profits over 2% per annum? Would keep prices nice and flat
Fast-forward to today, both partners now have to work in order to keep afloat.
This is a great illustration of why Toryism and laissez-faire economics are shit. Governments need to control housing markets one way or the other, otherwise our lives end up worse and the rich just get richer.
Those are literally the only ways house prices can fall in real terms.
Or denser housing. Or changing land use. Or less empty housing. Or…
But the truth of the matter is the housing ‘market’ is constantly ‘interfered’ with by governments to prevent large drops in pricing when it would otherwise be likely. And they’ll keep doing so.
