How far will house prices fall [volume 4]

[menousername]

spaximus said:

When my wife and I wanted our first home to get together the deposit we had no luxuries at all. I worked as a mechanic she worked in a council office. Everyone else we knew was in the same boat, doing without holidays fancy meals out using public transport to work for her.

Even then my wife had a conversation with some women who were saying how awful it was for the young with house prices the way they were.

We saved for two years and moved in with a bed and a sofa. It was the norm. Our honeymoon was two nights in Carlisle as the money was not there.

My niece got married, they had a new house all furnished on credit and honeymoon was the States, they still moan.

People can still get on the property ladder and do so every day, but many cannot budget, cannot do without anything and want a fully furnished show home form day one. Unless you have wealthy parents many will never have that so chose to rent

Sorry but unless you bought your first house within the last 12-18 months your experience is no longer valid

Sacraficing for the same house today at what, 50 / 60 / 100+ % what you paid for it is a whole different ball game

I know plenty of people in houses they admit they could not afford to get close to if they were starting out today

[Sheepshanks]

spaximus said:

When my wife and I wanted our first home to get together the deposit we had no luxuries at all. I worked as a mechanic she worked in a council office. Everyone else we knew was in the same boat, doing without holidays fancy meals out using public transport to work for her.

When was that? My wife & I are of a similar background, got married in 1980 and I don't recall any such hardship. We had a new house, both had cars, had a foreign holiday every year etc. That continued when she gave up work to have kids, although I had changed jobs by then.

And we were dealing with interest rates in the mid-teens.

[okgo]

menousername said:

Sorry but unless you bought your first house within the last 12-18 months your experience is no longer valid

Sacraficing for the same house today at what, 50 / 60 / 100+ % what you paid for it is a whole different ball game

I know plenty of people in houses they admit they could not afford to get close to if they were starting out today

I bought a little outside of your timescales and what he said stacks up for me.

Apart from the moving in with nothing thing as I'd been renting for years prior so had all that.

[scenario8]

ClaphamGT3 said:

Venturist said:

Interesting perspective and I think your very last sentence is where I am now personally - even with the maximum mortgage I can get my hands on I still couldn't afford a property I would be excited to buy, and ownership has no particular value of its own to me, so if I'm going to be living somewhere I don't care about either way then I'd rather pay £1k deposit and circa £500pm for rent than £20k deposit plus £380pm in interest on the promise that it'll be worth more when I sell - assuming you haven't timed it badly or chosen the property poorly or been messed around by buyers for so long you get desperate etc...

I take it you're making sure that your pension will cover the cost of renting when you retire?

And therein lies another problem, huge numbers, perhaps a large majority of the under 40s will have grossly lower pensions savings than their property owning predecessors. Millions upon millions will have none at all or pots so small as to be considered barely significant.

[Sheepshanks]

98elise said:

So take one student house, change the tenants for a family, have you now housed the students and the family? Of course you haven't, both need housing yet one is in a house and one is looking for a house.

The landlord hasn't created the student demand.

It's probably different in London, but elsewhere universities are aggressively adding their own accommodation.

[Murph7355]

hyphen said:

98elise said:

So take one student house, change the tenants for a family, have you now housed the students and the family? Of course you haven't, both need housing yet one is in a house and one is looking for a house.

A family is much less flexible than those who rent by the room, for obvious reasons. The number of new house being created is also dwarfed by the number of flats being built.

There is a reason that many councils including most of Greater London have banned the splitting of houses into flats.

You know that you're agreeing with him? The issue is the demand/supply ratio for houses of a given type. It doesn't matter one bit whether it's a bunch of students in the house or a family. And it certainly doesn't matter who owns it (unless they keep it purposefully empty)

menousername said:

...
I know plenty of people in houses they admit they could not afford to get close to if they were starting out today

I'll freely admit that too. But then isn't that the way of things? I'm older now. Happily my situation has progressed that I wouldn't want to be buying the same sort of place I started with 18yrs ago.

(When I first moved to London I rented a room in a flat. I effectively did this for the first 7yrs I was in London and only bought somewhere when I had someone I could share that cost with, and when I did I had a hefty commute on my hands. I'm not convinced the situation is radically different 25yrs on?).

[Rovinghawk]

FN2TypeR said:

Rovinghawk said:

if anything, we improve housing stock.

How, do you build additional houses and then rent them out?

I didn't say we increase stock, I said we improve it. For me it's things like proper electrics, windows & insulation.

[Rovinghawk]

Venturist said:

Rovinghawk said:

I remember struggling with my first deposit. I had to economise & do without many little luxuries. I see many youngsters unwilling to do this.

Maybe that's because they're less driven to buy in the first place & the goal it is much further away?

If that's your choice then I respect it. You're don't seem to be blaming others for 'condemning' you to that choice.

[Rovinghawk]

TheLordJohn said:

I've never read so much anti-LL guff on PH!
God knows how you lot have the patience to keep replying to such tripe.
I take my hat off to you all.

Thank you.

I might get a doll so they can show us where the nasty LL touched them.

[Venturist]

ClaphamGT3 said:

Venturist said:

Interesting perspective and I think your very last sentence is where I am now personally - even with the maximum mortgage I can get my hands on I still couldn't afford a property I would be excited to buy, and ownership has no particular value of its own to me, so if I'm going to be living somewhere I don't care about either way then I'd rather pay £1k deposit and circa £500pm for rent than £20k deposit plus £380pm in interest on the promise that it'll be worth more when I sell - assuming you haven't timed it badly or chosen the property poorly or been messed around by buyers for so long you get desperate etc...

I take it you're making sure that your pension will cover the cost of renting when you retire?

A fair point. Personally when I think about retirement I expect it to be at 70+, certainly not 50-odd, and include paying for accommodation for that time. I suppose you could say I simply choose to invest my money literally, aiming to have returns by retirement sufficient to cover living costs; whereas most people choose to invest in equity in their property so they don't have accommodation costs at all.

[TheLordJohn]

Venturist said:

A fair point. Personally when I think about retirement I expect it to be at 70+, certainly not 50-odd

That's absolutely ridiculous.
Do you genuinely have no ambition to retire from work until you're over 70...!?
I won't be working for anyone once i'm in my 50's, never mind 70.

[Venturist]

TheLordJohn said:

Venturist said:

A fair point. Personally when I think about retirement I expect it to be at 70+, certainly not 50-odd

That's absolutely ridiculous.
Do you genuinely have no ambition to retire from work until you're over 70...!?
I won't be working for anyone once i'm in my 50's, never mind 70.

I'd love to and hope to, but I'm being conservative and realistic. State pension for me doesn't kick in until 68 for example.

[kingston12]

spaximus said:

hyphen said:

Do without many little luxuries did you? well they now have to do without any luxuries

You have to also bear in mind that society has sold a lifestyle to the elements of youngsters you talk about and they have swallowed it hook line and sinker. Those who don't know better/have a lack of good parenting genuinely don't know better, and the penny only starts to drop when they get to the its time to have kids stage.

Edited by hyphen on Monday 26th June 07:13

When my wife and I wanted our first home to get together the deposit we had no luxuries at all. I worked as a mechanic she worked in a council office. Everyone else we knew was in the same boat, doing without holidays fancy meals out using public transport to work for her.

Even then my wife had a conversation with some women who were saying how awful it was for the young with house prices the way they were.

We saved for two years and moved in with a bed and a sofa. It was the norm. Our honeymoon was two nights in Carlisle as the money was not there.

My niece got married, they had a new house all furnished on credit and honeymoon was the States, they still moan.

People can still get on the property ladder and do so every day, but many cannot budget, cannot do without anything and want a fully furnished show home form day one. Unless you have wealthy parents many will never have that so chose to rent

What I see is an increasing division between those able to get on the property ladder, either because of exceptional income or parental help, and those who will just never be able to do it.

35 years ago, if you had two people in average jobs earning £10k each saving to buy a £30k house, it has to be a lot easier than today's equivalent - two £30k earners trying to buy the same house at £400k+.

There is a very different attitude towards spending money now on what would be considered complete luxuries back then, but I am not sure it affects as many people's ability to buy a house as you'd think.

(BTW, the figures above are based on an actual example I am familiar with rather than assuming that you bought at that time!)

[Gerradi]

That's his choice & if he is happy with it why be so pompous?
If you want to retire @50yrs fine, hope you will be happy, I retired @50 10yrs ago & TBH I do more work now for my son's than I did in my last few years of my own work.

Its very difficult for youngsters , 1 of my boys has been fortunate & managed to own a business & owns a few homes, the other 3 are struggling & its hard to see. I'll be honest, I am glad my younger years of house buying( mid eighties) was not as it is now, yes we had inflation that used to make you panic a bit ,but today's Kid's of 20-30yrs have it tough IMO.

I had a few lettings & I decided to let them go a few years back, the sad stories of hardship we heard made me feel miserable & part of the problem so I sold & got into commercial letting & land (trees).

[gibbon]

kingston12 said:

What I see is an increasing division between those able to get on the property ladder, either because of exceptional income or parental help, and those who will just never be able to do it.

35 years ago, if you had two people in average jobs earning £10k each saving to buy a £30k house, it has to be a lot easier than today's equivalent - two £30k earners trying to buy the same house at £400k+.

There is a very different attitude towards spending money now on what would be considered complete luxuries back then, but I am not sure it affects as many people's ability to buy a house as you'd think.

(BTW, the figures above are based on an actual example I am familiar with rather than assuming that you bought at that time!)

£400k house on two 30k a year jobs? Adjust your expectations. £250-300k should be achievable, and absolutely fine.

[Thankyou4calling]

gibbon said:

£400k house on two 30k a year jobs? Adjust your expectations. £250-300k should be achievable, and absolutely fine.

And of course in the majority of the country a FTB can get what I'd call a reasonable home for well under 150k.

Take a city like Nottingham, Sheffield, Manchester and look for places up to 150k there are hundreds, yes some horrors but plenty of nice houses as well as flats.

[mike74]

Thankyou4calling said:

And of course in the majority of the country a FTB can get what I'd call a reasonable home for well under 150k.

Take a city like Nottingham, Sheffield, Manchester and look for places up to 150k there are hundreds, yes some horrors but plenty of nice houses as well as flats.

And £150k probably still represents close to 10x local, single, average FTBer wages in the areas you've mentioned.

[Thankyou4calling]

mike74 said:

And £150k probably still represents close to 10x local, single, average FTBer wages in the areas you've mentioned.

I agree but I would think most are bought by two people so :

Save for a deposit of 10% that leaves £135k mortgage with a combined income of 30/35k. Thats affordable.

I think the main issues are ;

1. Young people don't want to save, that means going without.
2. Young people expect a much better house than previously so the entry level accom is priced higher.
3. There are a lot who are quite happy renting as it gives flexibility.

[Sheepshanks]

mike74 said:

And £150k probably still represents close to 10x local, single, average FTBer wages in the areas you've mentioned.

Did single people in jobs paying £15K/yr (adjusted for time) ever buy their own properties?

[mike74]

Sheepshanks said:

Did single people in jobs paying £15K/yr (adjusted for time) ever buy their own properties?

Yep, I did in 2001, single, part time, unskilled wage, 20% deposit and paid the mortgage off in less than 10 years.

The housing market has only actually been subject to rampant inflation for a relatively short time period... fed by a combination of irresponsible and fraudulent lending, then a government/BoE mentality of 'support/inflate house prices at all cost'.

But some people only have a relatively short memory or knowledge base.