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Author Discussion

Ozzie Osmond

17,027 posts

143 months

[news] 
Friday 5th October 2012 quote quote all
groak said:
Credit availability (largely, though not exclusively) fuels demand for property.
Not so. POopulation growth drives the demand. All credit availability does is finesse the price of the plot. Bricks, wires and pipes cost whatever they cost.

Or to put it another way, people will always be willing to spend a large proportion of their income on food and housing.

groak

3,254 posts

76 months

[news] 
Friday 5th October 2012 quote quote all
Ozzie Osmond said:
groak said:
Credit availability (largely, though not exclusively) fuels demand for property.
Not so. Population growth drives the demand. All credit availability does is finesse the price of the plot. Bricks, wires and pipes cost whatever they cost.
Or to put it another way, people will always be willing to spend a large proportion of their income on food and housing.
See pork's post above. The essentiality of 'having a place to live' drives a demand for property which can be satisfied by rental which doesn't require credit availability. But the demand for property for sale is (almost) entirely driven by credit availability.

Put it this way, I would buy twice as many properties if I could get 50% funding. And I could sell TEN times as many if others could get credit.



rover 623gsi

2,648 posts

58 months

[news] 
Friday 5th October 2012 quote quote all
Pork said:
No it isn't. You can rent somewhere to live. Prices are driven by the avaliablity of people to pay, which in house terms, is driven hugely by available credit.
the latent demand exists even if people can't get credit

RYH64E

6,146 posts

141 months

[news] 
Friday 5th October 2012 quote quote all
rover 623gsi said:
the latent demand exists even if people can't get credit
There's a huge latent demand for Ferraris, but if most potential buyers can't afford the asking price the demand is meaningless and sales volumes low.

With houses, the price will largely depend on what people can pay, which is hugely affected by availability and cost of credit.

rover 623gsi

2,648 posts

58 months

[news] 
Friday 5th October 2012 quote quote all
but the demand for Ferraris is based on wants, whereas the demand for houses is based (largley) on needs
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RYH64E

6,146 posts

141 months

[news] 
Friday 5th October 2012 quote quote all
rover 623gsi said:
but the demand for Ferraris is based on wants, whereas the demand for houses is based (largely) on needs
Unless you're part of the benefits brigade, if you can't afford it you can't have it no matter how much you think you need it. People don't 'need' a four bed detached in the countryside, they need somewhere to live.

Derek Chevalier

981 posts

70 months

[news] 
Saturday 6th October 2012 quote quote all
rover 623gsi said:
but the demand for Ferraris is based on wants, whereas the demand for houses is based (largley) on needs
Why did rents stay boradly in line with inflation during the bubble if there was such a need - surely they would've increased in line with prices?

Road Pest

3,115 posts

95 months

[news] 
Saturday 6th October 2012 quote quote all
Well finally got a firm offer on my flat and I believe the wait was largely due to credit not being available. Even at 105k I only got 2 offers, one that fell through and the other luckily was still there. So at 102k the flat is now under offer and in the process of selling. Fingers crossed for no hiccups on the way.

Derek Chevalier

981 posts

70 months

[news] 
Saturday 6th October 2012 quote quote all
Road Pest said:
I believe the wait was largely due to credit not being available.
Are you saying that not one person in the UK was able to get a mortgage last month?

Randy Winkman

3,385 posts

86 months

[news] 
Saturday 6th October 2012 quote quote all
rover 623gsi said:
but the demand for Ferraris is based on wants, whereas the demand for houses is based (largley) on needs
People don't need houses. People need a bed for the night. And there are spare bedrooms in the homes of most people I know.

Trommel

12,832 posts

156 months

[news] 
Saturday 6th October 2012 quote quote all
Derek Chevalier said:
Are you saying that not one person in the UK was able to get a mortgage last month?
It is the reason why the bottom end of the market has stalled - most people at that level can't find a 10-15% deposit overnight.

Derek Chevalier

981 posts

70 months

[news] 
Saturday 6th October 2012 quote quote all
Trommel said:
Derek Chevalier said:
Are you saying that not one person in the UK was able to get a mortgage last month?
It is the reason why the bottom end of the market has stalled - most people at that level can't find a 10-15% deposit overnight.
But the market has been like this for a couple of years?

Trommel

12,832 posts

156 months

[news] 
Saturday 6th October 2012 quote quote all
Derek Chevalier said:
But the market has been like this for a couple of years?
Not sure what your point is.

Derek Chevalier

981 posts

70 months

[news] 
Saturday 6th October 2012 quote quote all
Trommel said:
Derek Chevalier said:
But the market has been like this for a couple of years?
Not sure what your point is.
They have had a few years to save that 10p-15% deposit.

Deva Link

26,934 posts

142 months

[news] 
Saturday 6th October 2012 quote quote all
Derek Chevalier said:
Trommel said:
Derek Chevalier said:
Are you saying that not one person in the UK was able to get a mortgage last month?
It is the reason why the bottom end of the market has stalled - most people at that level can't find a 10-15% deposit overnight.
But the market has been like this for a couple of years?
We've been through this a million times now, but some PHer' just can't relate to the average person.

Even if they've got the deposit and the income multiple works, lenders are relectant to lend to borrowers where they think the affordability might be an issue, and that's particularly a problem for people at the bottom end as a lot of life's costs are pretty fixed - ie it costs the same to get the train to work however much you earn etc.

Derek Chevalier

981 posts

70 months

[news] 
Saturday 6th October 2012 quote quote all
Deva Link said:
Derek Chevalier said:
Trommel said:
Derek Chevalier said:
Are you saying that not one person in the UK was able to get a mortgage last month?
It is the reason why the bottom end of the market has stalled - most people at that level can't find a 10-15% deposit overnight.
But the market has been like this for a couple of years?
We've been through this a million times now, but some PHer' just can't relate to the average person.

Even if they've got the deposit and the income multiple works, lenders are relectant to lend to borrowers where they think the affordability might be an issue, and that's particularly a problem for people at the bottom end as a lot of life's costs are pretty fixed - ie it costs the same to get the train to work however much you earn etc.
They are lending to people on a 3.5x single income multiple basis? Or are the multiples involved greater than this?

Deva Link

26,934 posts

142 months

[news] 
Saturday 6th October 2012 quote quote all
Derek Chevalier said:
They are lending to people on a 3.5x single income multiple basis? Or are the multiples involved greater than this?
Are they? Apparently, in practice, not to people at the lower end of the income scale.

I'm not saying they should, by the way. Average income (say £25K ish) people don't have the slack in their nett income that your typical PHer on £100K+ has.

spikeyhead

9,497 posts

94 months

[news] 
Saturday 6th October 2012 quote quote all
Derek Chevalier said:
Deva Link said:
Derek Chevalier said:
Trommel said:
Derek Chevalier said:
Are you saying that not one person in the UK was able to get a mortgage last month?
It is the reason why the bottom end of the market has stalled - most people at that level can't find a 10-15% deposit overnight.
But the market has been like this for a couple of years?
We've been through this a million times now, but some PHer' just can't relate to the average person.

Even if they've got the deposit and the income multiple works, lenders are relectant to lend to borrowers where they think the affordability might be an issue, and that's particularly a problem for people at the bottom end as a lot of life's costs are pretty fixed - ie it costs the same to get the train to work however much you earn etc.
They are lending to people on a 3.5x single income multiple basis? Or are the multiples involved greater than this?
I nearly bought a few months ago, pulled out due to some dodgy home improvements, but it took a couple of months to sort out a mortgage, repeated to and fro from me to broker to mortgage provider. LTV 50%, a single multiple of joint incomes and it still took forever. Even though I'd got enough spare cash to buy the place outright it still took forever. Whilst it may be that most have a more regular income stream than I do we were asking for so little it should have been easy but wasn't, so we are renting for another year, providing someone stuck with a slowly decaying £200k house with about 4% yield.

porridge

1,109 posts

41 months

[news] 
Saturday 6th October 2012 quote quote all

spikeyhead said:
I nearly bought a few months ago, pulled out due to some dodgy home improvements, but it took a couple of months to sort out a mortgage, repeated to and fro from me to broker to mortgage provider. LTV 50%, a single multiple of joint incomes and it still took forever. Even though I'd got enough spare cash to buy the place outright it still took forever. Whilst it may be that most have a more regular income stream than I do we were asking for so little it should have been easy but wasn't, so we are renting for another year, providing someone stuck with a slowly decaying £200k house with about 4% yield.
Curious, did the place you were looking to buy sell? And at same as your offer etc

Or are you renting the house in question

Edited by porridge on Saturday 6th October 18:59

DukeDickson

3,734 posts

110 months

[news] 
Sunday 7th October 2012 quote quote all
Derek Chevalier said:
Deva Link said:
Derek Chevalier said:
Trommel said:
Derek Chevalier said:
Are you saying that not one person in the UK was able to get a mortgage last month?
It is the reason why the bottom end of the market has stalled - most people at that level can't find a 10-15% deposit overnight.
But the market has been like this for a couple of years?
We've been through this a million times now, but some PHer' just can't relate to the average person.

Even if they've got the deposit and the income multiple works, lenders are relectant to lend to borrowers where they think the affordability might be an issue, and that's particularly a problem for people at the bottom end as a lot of life's costs are pretty fixed - ie it costs the same to get the train to work however much you earn etc.
They are lending to people on a 3.5x single income multiple basis? Or are the multiples involved greater than this?
The multiples have to be hefty for any singleton, unless the salary is good (or pitiful in this place, it would seem), the deposit is sizeable (likewise), or the debt doesn't exist (and again).
Of course you're average person/couple on average income (or more likely 1.5 average as a couple in the real world) with the usual financial circumstances (rights or wrongs of that ignored for the moment), saving anywhere between 15k and 30k+ is a bit of a challenge. The general rule of thumb is that they'd be doing well to save more than a couple of bags a year each, which leaves them slightly short of the required figure any time soon.
Of course this may not apply to pockets of the UK, but in large slabs it is the reality. Then of course there is the spectre of Seller 2007 still being the default choice.

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