How far will house prices fall [volume 4]
Discussion
p1stonhead said:
You cant say how much a mortgage is based on a value alone unless you know the LTV and what deal they got.
The example used was a mortgage of 285k, 300k value, 5% deposit. Pay attention.p1stonhead said:
A £500k house with a £350k mortgage over 30 years is £1223 from Nationwide.
What kind of buffoon gets a 30 year mortgage? That's a very low LTV and hence rate because you've magic'd a 150k deposit.hornetrider said:
What kind of buffoon gets a 30 year mortgage?
Well if you're suggesting that you may as well have a 25 year mortgage as it isn't much more to pay monthly, then I agree. In reality though, if your a young FTB you may want to keep your outgoings as low as possible, plenty of time down the line to remortgage, move, and all the rest of it.
Edited by XJ40 on Friday 29th April 16:16
hornetrider said:
Seeing as you used Nationwide:
300k value
285k deposit
25yr mortgage
Repayment on a 2 year fixed (cheapest deal) £1456 + £999 fee. No fee goes up to £1520.
QED.
So lets say £1.5k then. If your a couple that's the equivalent of £750 each, not that much really if your taking home over £2k each.300k value
285k deposit
25yr mortgage
Repayment on a 2 year fixed (cheapest deal) £1456 + £999 fee. No fee goes up to £1520.
QED.
Edited by XJ40 on Friday 29th April 16:22
t one given the prices of everything outside of mortgage...hornetrider said:
XJ40 said:
So lets say £1.5k then. If your a couple that's the equivalent of £750 each, not that much really.
I beg to differ. Historically, it's never been a greater burden to afford even a normal house.I'd say that there's many consumer goods that can be bought very cheaply these days, so I'd argue that while houses have become more expensive, other things like household items have become cheaper so offset that somewhat.
XJ40 said:
hornetrider said:
Seeing as you used Nationwide:
300k value
285k deposit
25yr mortgage
Repayment on a 2 year fixed (cheapest deal) £1456 + £999 fee. No fee goes up to £1520.
QED.
So lets say £1.5k then. If your a couple that's the equivalent of £750 each, not that much really if your taking home over £2k each.300k value
285k deposit
25yr mortgage
Repayment on a 2 year fixed (cheapest deal) £1456 + £999 fee. No fee goes up to £1520.
QED.
I suppose it depends where you are in job/family stages of your life.
But I'd say making that commitment wouldn't be something young/FTB people should be doing because it'll stop them doing things young people should be doing, having families and feeling free to do things like go on holidays or save for weddings etc.
This is another reason that those young people who do bother to venture out in to the world and move from parents are just becoming debt slaves rather than proper family units having the next generation of children to prop up the pyramid scheme.
Mr Whippy said:
XJ40 said:
hornetrider said:
Seeing as you used Nationwide:
300k value
285k deposit
25yr mortgage
Repayment on a 2 year fixed (cheapest deal) £1456 + £999 fee. No fee goes up to £1520.
QED.
So lets say £1.5k then. If your a couple that's the equivalent of £750 each, not that much really if your taking home over £2k each.300k value
285k deposit
25yr mortgage
Repayment on a 2 year fixed (cheapest deal) £1456 + £999 fee. No fee goes up to £1520.
QED.
I suppose it depends where you are in job/family stages of your life.
But I'd say making that commitment wouldn't be something young/FTB people should be doing because it'll stop them doing things young people should be doing, having families and feeling free to do things like go on holidays or save for weddings etc.
This is another reason that those young people who do bother to venture out in to the world and move from parents are just becoming debt slaves rather than proper family units having the next generation of children to prop up the pyramid scheme.
XJ40 said:
I just had a quick squint, it looks to be circa £27,500PA, so just over £1.8k take home monthly (excluding other deductions)...
I would suggest the relevant figure is median pay adjusted for age.On average people reach their peak earnings by age 38 (for men it is now 50). Median earnings for men in full time employment at their "peak" are just above the £27,500 figure you mentioned, at £28K. But I would suggest there will not be many FTB aged 50.
http://www.telegraph.co.uk/finance/personalfinance...
XJ40 said:
hornetrider said:
XJ40 said:
So lets say £1.5k then. If your a couple that's the equivalent of £750 each, not that much really.
I beg to differ. Historically, it's never been a greater burden to afford even a normal house.I'd say that there's many consumer goods that can be bought very cheaply these days, so I'd argue that while houses have become more expensive, other things like household items have become cheaper so offset that somewhat.
Dress it up what ever way you want, if you buy a 300k house then you will be paying 300k plus interest. For a 30 year mortgage you need to be paying an average of 10k per year in capital (plus interest of course). Stretching two peoples salary to do that is not sensible. How are they going to cope if/when interest rates rise, or they have kids?
To earn a decent salary these days you need a degree, and that means debt for the majority before you even think about taking on a mortgage.
When I was a FTB a reasonable in the south east house could be bought for about 4-4.5 an average salary. You typically saved 25% deposit, then got 3-3.5 salary on a mortgage. I managed that in my early 20's when I was single.
To buy that same house today you would need 180-190k. Madness
People have different priorities. It's quite possible for a mortgage of that size to consume 40% of partner 1s take home which under stress test conditions may go up to 60%. Add in the disposable income from partner 2 however and it all becomes much more comfortable.
Not everyone prioritises going on lots of holidays, entertainment or other monthly outgoings. They may well be looking to the future, planning the family and looking at what their salaries can get them now on the market as they know they can still afford the repayments on one salary.
You can spend years procrastinating as they do on HPC about the risks of historically crippling interest rates or you can take the pragmatic approach, buy sensibly and just get on with paying down the mortgage. It's always wise to question the affordability of any sizeable debt in case you lose your ability to repay in the future etc but running scared from what may be a perfectly serviceable mortgage is just daft.
Not everyone prioritises going on lots of holidays, entertainment or other monthly outgoings. They may well be looking to the future, planning the family and looking at what their salaries can get them now on the market as they know they can still afford the repayments on one salary.
You can spend years procrastinating as they do on HPC about the risks of historically crippling interest rates or you can take the pragmatic approach, buy sensibly and just get on with paying down the mortgage. It's always wise to question the affordability of any sizeable debt in case you lose your ability to repay in the future etc but running scared from what may be a perfectly serviceable mortgage is just daft.
These are my personal circumstances to prove I've put my money where my mouth is:
2006: Bought 187k house in Hertfordshire, salaries of £30k + £25k.
Mortgage of 178k @ 5% equating to 1049 a month, comfortably less than 1/3 combined take home
2010: Sold for 195k, bought 290k house near Milton Keynes, salaries of £44k + £20k
Mortgage of 260k @ ~3.5% equating to 1500 a month, just over 1/3 combined take home
Now on a 10 year fixed of 3% with 210k remaining over a 15 year term. We could overpay and clear earlier but we've got eyes on some building work instead.
Between the first two moves, our largest outgoings were the mortgage, train fares and household bills. Being sensible with everything else whilst still getting married in between allowed us to fund the house move in 2010.
The surplus at the moment is funding kids, safety net buffers for the future and the aforementioned building work. If we both lost our jobs then we'd be relying on the savings but the same would apply if we were renting.
The house we bought in 2006 for 187k now sells for around 240k. The equivalent salary now has jumped from 30k to 45k if I were in the same job so the affordability is all relative.
2006: Bought 187k house in Hertfordshire, salaries of £30k + £25k.
Mortgage of 178k @ 5% equating to 1049 a month, comfortably less than 1/3 combined take home
2010: Sold for 195k, bought 290k house near Milton Keynes, salaries of £44k + £20k
Mortgage of 260k @ ~3.5% equating to 1500 a month, just over 1/3 combined take home
Now on a 10 year fixed of 3% with 210k remaining over a 15 year term. We could overpay and clear earlier but we've got eyes on some building work instead.
Between the first two moves, our largest outgoings were the mortgage, train fares and household bills. Being sensible with everything else whilst still getting married in between allowed us to fund the house move in 2010.
The surplus at the moment is funding kids, safety net buffers for the future and the aforementioned building work. If we both lost our jobs then we'd be relying on the savings but the same would apply if we were renting.
The house we bought in 2006 for 187k now sells for around 240k. The equivalent salary now has jumped from 30k to 45k if I were in the same job so the affordability is all relative.
Edited by eltawater on Sunday 1st May 10:46
This remains one of the most interesting threads on PH.
I've kept an eye on my old 1 bed flat in bow which I sold in q4 2014 for 435. I don't think it's shifted in value all that much, from the comparables on the market. I don't think it's gone down in value, but if it's gone up it's not by much. Lots of aspirational asking prices in e3 and not a great deal shifting from what I can see. What is selling is priced correctly and when it is priced right then it sells quite quickly.
In my new manor (e11) asking prices indicate plenty of chancers are still out there. But latest land registry prices indicate most properties apart from the really crap flats are selling for over asking. It's now about 450 for a 900 sq ft house with 2 bed that's needs modernisation or about 500 -525 for houses that are modernised. Decent 3 beds are going for 550-650 ish.
Those values are double what they were 5 years ago.
As a result I don't want to take on anymore mortgage debt so we will be extending this house in the next year or so with a 2 bed 1 ensuite dormer. That'll probably cost me 45-50k to do but the house should be worth about 575-600 when I,m done with it with a 100k mortgage on it. We are the lucky ones. Plenty of people have moved in the roads around us buying some really crap houses for 450/460 recently and are going to have to spend quite a bit of money getting them straight. It's not just the money of doing that work, it's your evenings and weekends, it must be pretty depressing coming back from work to a bomb site, but loads of people are doing it. The streets are stuffed with skips and builders rubble bags.
I suspect that if things continue everyone will end up extending into their lofts and side returns. That's one reason why I want to get my building work done sooner rather than later. If things get busy I can see that standard dormer price of 45-50k leaping quite a bit for the decent builders as they simply won't need the work..
I've kept an eye on my old 1 bed flat in bow which I sold in q4 2014 for 435. I don't think it's shifted in value all that much, from the comparables on the market. I don't think it's gone down in value, but if it's gone up it's not by much. Lots of aspirational asking prices in e3 and not a great deal shifting from what I can see. What is selling is priced correctly and when it is priced right then it sells quite quickly.
In my new manor (e11) asking prices indicate plenty of chancers are still out there. But latest land registry prices indicate most properties apart from the really crap flats are selling for over asking. It's now about 450 for a 900 sq ft house with 2 bed that's needs modernisation or about 500 -525 for houses that are modernised. Decent 3 beds are going for 550-650 ish.
Those values are double what they were 5 years ago.
As a result I don't want to take on anymore mortgage debt so we will be extending this house in the next year or so with a 2 bed 1 ensuite dormer. That'll probably cost me 45-50k to do but the house should be worth about 575-600 when I,m done with it with a 100k mortgage on it. We are the lucky ones. Plenty of people have moved in the roads around us buying some really crap houses for 450/460 recently and are going to have to spend quite a bit of money getting them straight. It's not just the money of doing that work, it's your evenings and weekends, it must be pretty depressing coming back from work to a bomb site, but loads of people are doing it. The streets are stuffed with skips and builders rubble bags.
I suspect that if things continue everyone will end up extending into their lofts and side returns. That's one reason why I want to get my building work done sooner rather than later. If things get busy I can see that standard dormer price of 45-50k leaping quite a bit for the decent builders as they simply won't need the work..
Just been on hpc where someone has linked to a new site where a more upto date landregistry has been copied to, it's a bit basic but if it is accurate then searching for the number of transactions in most postcodes month after month is showing a big drop in sales volumes.
www.houseprices.siteb
Sw8
2015
Jan 46
Feb 61
Mar 31
Apr 64
May 69
June 117
July 134
Aug 119
Sep 96
Oct 112
Nov 70
Dec 81
2016
Jan 56
Feb 42
Mar 18
www.houseprices.siteb
Sw8
2015
Jan 46
Feb 61
Mar 31
Apr 64
May 69
June 117
July 134
Aug 119
Sep 96
Oct 112
Nov 70
Dec 81
2016
Jan 56
Feb 42
Mar 18
Edited by Yabu on Monday 2nd May 23:19
eltawater said:
The house we bought in 2006 for 187k now sells for around 240k.
Many of us in the North would think of Herts as being included in the area affected by bonkers house price inflation. So the increase you've suggested seems surprisingly low over 10yrs - is there a reason for that?In comparison, the house next door to me in West Cheshire sold for £260K in 2006 but would struggle to break £250K today.
There's a few reasons for it:
1) the 187 we paid was full asking price and broke the ceiling price for the road at the time.
2) it was a small development of only 20 houses with roughly 50/50 owner occupiers and landlords, so it would tend to be the same houses being resold a few years later.
3) they were all the same style of house, 2 bed terraced with a few end terraced.
4) the land registry have updated with recent sales of 280k and 260k in the past six months, the two previous sales were 215 and 224 in 2013 so it tends to very much depend on catching the right moment to sell. I'd say the 280k is a bit exceptional as they had a downstairs extension which cut the already small courtyard garden to a few metres but provided a much more useable living space downstairs.
5) the financial instability in 2008 dragged down the prices a bit for a few years until they recovered back after we sold in 2010
6) there were several large developments of flats close by which stalled building at the same time so likely a glut of supply
7) this gives you an idea of the progression in prices for one of the recently sold:
£260,000 07 Jan 2016
£130,000 10 Feb 2003
£124,000 17 Aug 2001
£88,500 15 Nov 1999
1) the 187 we paid was full asking price and broke the ceiling price for the road at the time.
2) it was a small development of only 20 houses with roughly 50/50 owner occupiers and landlords, so it would tend to be the same houses being resold a few years later.
3) they were all the same style of house, 2 bed terraced with a few end terraced.
4) the land registry have updated with recent sales of 280k and 260k in the past six months, the two previous sales were 215 and 224 in 2013 so it tends to very much depend on catching the right moment to sell. I'd say the 280k is a bit exceptional as they had a downstairs extension which cut the already small courtyard garden to a few metres but provided a much more useable living space downstairs.
5) the financial instability in 2008 dragged down the prices a bit for a few years until they recovered back after we sold in 2010
6) there were several large developments of flats close by which stalled building at the same time so likely a glut of supply
7) this gives you an idea of the progression in prices for one of the recently sold:
£260,000 07 Jan 2016
£130,000 10 Feb 2003
£124,000 17 Aug 2001
£88,500 15 Nov 1999
Edited by eltawater on Tuesday 3rd May 00:53
At the level where 'most' people can still afford something, things round my way continue to surprise with the rises. Sure some have had bits and pieces done but nothing major like big extensions I dont believe.
This one particular I remember coming up for sale in 2014. Someone has thrown in a kitchen and given the place a lick of paint since then - £60k on the kitchen and £60k on painting probably spent....
This one particular I remember coming up for sale in 2014. Someone has thrown in a kitchen and given the place a lick of paint since then - £60k on the kitchen and £60k on painting probably spent....
Edited by p1stonhead on Tuesday 3rd May 07:23
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