When/Will house prices cool down?
Discussion
havoc said:
wormus said:
What about all the people who end up with loads of negative equity?
It only affects them if they want/need to move. Until that point, it's irrelevant - their cost to live hasn't changed. Want a cheap house? Move to France.
Edited by anonymous-user on Thursday 29th February 19:09
havoc said:
Portia - you pick GLASGOW as your example? Couldn't find anything in the bottom half of England (where 50% of the UK live, and where >50% of the jobs are), presumably? 
Actually Kirkintilloch's in North Lanarkshire. Tons of cheap property available. No 'house price crash' needed. Stupid idea. havoc said:
wormus said:
What about all the people who end up with loads of negative equity?
It only affects them if they want/need to move. Until that point, it's irrelevant - their cost to live hasn't changed. So let's fast-forward 5 years (say) - they've paid off at least 10% of the capital on the mortgage (assuming a 25-year mortgage which was nearly-new, as otherwise negative-equity isn't that likely even after a crash) and the property has probably started appreciating again slightly (say +10%). So in 5 years time there would be a >20% swing in LTV back upwards.
...so the only people affected would be those who HAVE to move in <<5 years time and who had only recently bought a place with a 95% LTV mortgage (or worse, an interest-only mortgage, but that arguably should only be BTL investors, who don't count here). Nothing to stop the government putting in a very specific help scheme to gap-loan to such people on sensible terms...arguably be more valuable to society than the 'Help to Buy' nonsense.
Like I said, it's fixable. And would provide far more benefit to society and to the economy than the current ever-increasing-cost s
t-show that we appear to be stuck in.Portia - you pick GLASGOW as your example? Couldn't find anything in the bottom half of England (where 50% of the UK live, and where >50% of the jobs are), presumably?
(And the biggest affordability gap is young families - those e.g. <30 with young kids so the income/expense ratio suddenly goes right out of kilter for a few years, but they NEED at least 2 bedrooms and a decent kitchen. Round here you'll pay >£1,000pcm for such a place in rent, FFS.)
NomduJour said:
If you want cheaper houses, you need to limit access to credit - no dual-income borrowing, restricted multiples, higher rates.
That horse bolted a long time ago, but I agree in principle. Although playing devil's advocate, won't that just play into the hands of BTL landlords, who'll be the only ones able to afford "affordable housing"?Neg equity is fixable, or easy to support those who get caught out.
Or possibly not ever an issue if they don’t move and/or have a long fix.
But ALL the other issues resolved by a price correction are somehow a taboo idea if, shock horror, a few billion quids worth of borrowing gets into neg equity.
I’m glad others share the view that this medicine (neg equity risks) is worth the exorcising of the terrible disease destroying the fabric of society itself (house inflation 5%+ above inflation rate for well over a decade)
wormus said:
LowTread said:
Sorry for the rant. I'm not age-ist. But we should be asking how we can better use our resources
You’re implying somebody’s personal property, including the land it’s built on is shared resource? It’s not. Perhaps Lowtread should provide an inventory of their belongings/assets and let us decide what he should be allowed to own and what should be shared among others.
number2 said:
wormus said:
LowTread said:
Sorry for the rant. I'm not age-ist. But we should be asking how we can better use our resources
You’re implying somebody’s personal property, including the land it’s built on is shared resource? It’s not. Perhaps Lowtread should provide an inventory of their belongings/assets and let us decide what he should be allowed to own and what should be shared among others.
You're right, but if you think about the availability of land and the appetite for building on it, then housing is a precious resource.
SunsetZed said:
If you want people to downsize there needs to be decent smaller housing in that case but it's not necessarily good for the country to provide it.
I'd love to downsize in the future but I'd still want a good amount of living space. There aren't many properties that have significantly more living space than bedrooms and those that do are often bungalows which take up more land than the equivalent 4 bed house would.
I suppose it depends where you’re starting from but we looked around after the kids left home and there really isn’t much between little old peoples’ bungalows and great big places with similarly big price tags.I'd love to downsize in the future but I'd still want a good amount of living space. There aren't many properties that have significantly more living space than bedrooms and those that do are often bungalows which take up more land than the equivalent 4 bed house would.
Our road is mainly good sized 3 bed detached house, many of which have been extended to 4 and even 5 bedrooms.. When we moved in it was all young families. Village school is in the same road. It’s become ridiculous that there’s just old people here now, and even as they’ve popped off, the last two sales have been to downsizing / moving to be near grandchildren old couples as they can’t find anything else more suitable.
LowTread said:
Ha! You got me there!
You're right, but if you think about the availability of land and the appetite for building on it, then housing is a precious resource.
It is and Labour made a catastrophic decision in 1997 to rip away the lending regulation to create the excessive housing boom. It was an a ti of evil given we all knew exactly why those credit criteria existed. Further errors were made in not locking out excess speculative and investment capital in the 2000s. You're right, but if you think about the availability of land and the appetite for building on it, then housing is a precious resource.
We were always going to have good house price growth because of the massive global wealth expansion that began in the 90s and the huge domestic expansion in higher salaries. There was never a viable news or reason to rip away so much financial regulation other than to deliberately create a wholly artificial wealth for many which was going to have to be paid back later by either themselves or everyone else.
But it is important for anyone who steps up to shout that all Millenials are financially ruined and all Boomers are unfair millionaires that this is obviously a battlecry of the child constructed around the traditional 'it's unfair' outburst. But the Millenial generation aren't children any more but adults and not just young adults but entering their middle age. It's now the time for them to be asking why are so many higher income Millenials absolutely fine and others are not.
And the weird argument that it was somehow Boomers who made housing all about money is another childish accusation from people who aren't children any more. Millions, regardless of age, have been flogging and buying the property speculation game. Arguably, it is the Millenial generation who have been speculating the most not just in punting homes about like Gordon Gekko but gambling on everything from cannabis stocks to crypto to AI to gambling on solitaire games and almost any pub grift that was once meant to lift the giro from the thickest kids on the housing estate.
The true question to be asking is who used 12 years of high and rising income, zero cost debt and benign house price inflation to pay down their property debt quicker than the lender's mandatory minimum repayment schedule and who used that 12 years to have a brief moment of shopping fun while guaranteeing to be beholden to 'adults' forever?
An awful lot of this has nothing to do with generations but just higher income adults opting for non jobs, opting to spend everything, opting to gamble rather than invest and now being resentful of their peers who didn't buy just did that ghastly, old fashioned middle class thing of being an adult, living within their means and focussing on paying down debt and paying up pensions.
among higher income earners that's the true divide and it traverses all generations and is simply people with middle class incomes who chose to live 'council' and spend it all while holding out a begging bowl and degrading themselves in public and those who chose the other option which was that dull, middle class and old fashioned working class path of money in the bank and not being owned by anyone.
There's no shortage of skint Boomers who have pissed it all away living beyond their higher income means. Absolutely no shortage of GenX losers who have had the easiest journey of any but have spent everything living the council princess dream and whose only escape from their debt trap now is to go to bed every night hoping their parents die soon. And the higher income Millenials split clearly in two where one group is absolutely rocking, taking over all the senior employment roles, buying homes, putting children into private education and the others who bizarrely seem to think they're still in their 20s and don't have to do any of those fuddy duddy old people things. But they have silenced the adults who once would have told them to shut up and grow up so there is now a high income petulant toddler army getting more and more upset everytime they're very obviously overlooked for promotion.
The Millenial generation are now hitting their mid 40s which is when higher incomes start to stall for most. You're in that triangle and fewer and fewer will now proceed to the higher slots. The 30s were all about setting up the career and positioning to get as far as possible. It's one of the hardest times as you are taking on a huge block of debt for a family home, starting to raise children but you also have to be investing hard in industry networking, taking further education and working long hours as you're setting up for that essential next step in your 40s where you're typically going to reach your highest salary potential and where how your 50s are to be spent tends to be defined. And obviously no employers want people beyond about 55, that much is blatantly obvious to even the most blind or stupid higher income earner from a very young age. Once over 50 it's sniper's alley for higher income earners.
So, if one isn't investing in one's career in their 30s bit choosing the 9-5 and personal leisure time approach of the factory labourer one can't really have a right to be resentful of their peers or those older who didn't opt to follow that path.
There are structural and social issues that impact every 'generation' and we can see the ones that have hit the Millenial group but we can also see the truly enormous benefits that group has been handed. The social negatives impact those of lower income but among higher incomes it is, as it has always been since the dawn of time, more down to the lifestyle choices made by adults.
LowTread said:
number2 said:
wormus said:
LowTread said:
Sorry for the rant. I'm not age-ist. But we should be asking how we can better use our resources
You’re implying somebody’s personal property, including the land it’s built on is shared resource? It’s not. Perhaps Lowtread should provide an inventory of their belongings/assets and let us decide what he should be allowed to own and what should be shared among others.
You're right, but if you think about the availability of land and the appetite for building on it, then housing is a precious resource.
.Downsizing is an odd thing. Location is the driver for property prices really and who wants to move from a nice area to a s
tty area. A generalisation but outside of the moving from Holland Park/country estate trope it's about right. And the British obsession with bedroom doesn't help. If one wants a decent amount of living space it generally comes with a few rooms upstairs which are generally bedrooms.
We've turned two of our bedrooms into studies. That should please people - only got three bedrooms now
.DonkeyApple said:
A load of libertarian / capitalist nonsense
I could go into a load of detail refuting nearly everything you said, but I've not got the time. So, a few quick headlines1) The average age for buying your first house has increased by >10 years in the last two generations. That says a lot about affordability.
2) As does the avg house price to avg income ratio trend - google that, THEN come back and tell me that all these feckless youngsters only have themselves to blame!
This feeds on to the amount of income spent on housing, which has gone up consistently for decades. So in real (disposable) income terms MOST people in the UK are now significantly poorer. Were so even before the last 2 years worth of inflation.3) Boomers (& some Gen-X) enjoyed far more job security and there were more 'career paths' open in the 70s and 80s (especially) than there are now - now people are expected to be flexible, to hop careers when one industry flounders, to be part of 'the gig economy' (try getting a mortgage when that's your main employment), etc. And for a lot of people that flexibility, that retraining, is a tough ask, especially without help*. Especially in their 40s or 50s when they've only known one trade.
4) Only in the last few years has any legislation been passed reining the worst of private-sector landlords in, and yet the playing field is still weighted towards them**, in a rental market which has far too much demand and far too little supply. And because (unlike 40 years ago) renting is massively private-sector led, a family with kids at school has ZERO location-security...what sort of impact does moving school every few years because "your landlord has [asked for a massive rent rise / kicked your parents out again] and you can't afford to stay in the same area do to a kid? There are a myriad social issues behind this, and yet people like you keep bringing it back to money and working harder, as if that was the panacea for the world's ills.
PS - if I'm sounding left wing or hard done by, go look at my job. I'm pragmatic, that's all.
* Because there is none. Most employers don't train (properly train, apprenticeship-style) anymore - you're expected to learn it on the job from your peers (with all the associated risk), government retraining schemes are an underfunded joke, and employees in the main are treated as disposable.
** I acknowledge the risk of a (rare) a
hole tenant trashing the place, but that gets trotted out time and time again as if it happens all the time.Hustle_ said:
I’m wondering where this “12 years of high and rising income” came from. I had a Google to see if I was imagining it again. The charts all flatline after 2008. Articles speak of a “lost decade of wage growth”.
It comes from not using Google to look at the wrong data set in order to curve fit. Absolutely everything above is relating to higher incomes not generavo worker wages. And do you not suspect that a higher earner's income tends to increase somewhat robustly from the point of graduation to when they reach their 40s and have booked multiple pay rises and promotions regardless of even the salary boom and employment opportunity spike of the 21st century?Wage growth has indeed been stagnant. From '97 lower income workers were released to be free to borrow endlessly from their future income to give themselves pay rises whenever they wanted. An insidious practice executed by those in power who knew there was only one place that could lead to. But for white collar professionals it has been a hugely different scenario.
And in addition to rising salaries and super cheap and easy debt there is the fact that the blue chip equity investments that would have been being made from the early 20s have delivered superb returns, increasing investment wealth considerably.
What you actually see in truth, is a split among professional 40 years olds based on who chose to shop and who chose to do that really boring, loser thing of paying down the mortgage quicker than the base contractual minimum, putting more into the pension than the base minimum and not going max in cars, holidays, furniture, refurbs and paying an army of minimum wage labourers to prepare every meal and do everything for them.
It's is, as it is for every generation of higher income earners a tale of the two YOLOs. This who believe you only live once ao invest in the security that ensures the long life is happy and comfortable and those who believe you only live once so large it every day and expect to die before 50.
Sheepshanks said:
SunsetZed said:
If you want people to downsize there needs to be decent smaller housing in that case but it's not necessarily good for the country to provide it.
I'd love to downsize in the future but I'd still want a good amount of living space. There aren't many properties that have significantly more living space than bedrooms and those that do are often bungalows which take up more land than the equivalent 4 bed house would.
I suppose it depends where you’re starting from but we looked around after the kids left home and there really isn’t much between little old peoples’ bungalows and great big places with similarly big price tags.I'd love to downsize in the future but I'd still want a good amount of living space. There aren't many properties that have significantly more living space than bedrooms and those that do are often bungalows which take up more land than the equivalent 4 bed house would.
Our road is mainly good sized 3 bed detached house, many of which have been extended to 4 and even 5 bedrooms.. When we moved in it was all young families. Village school is in the same road. It’s become ridiculous that there’s just old people here now, and even as they’ve popped off, the last two sales have been to downsizing / moving to be near grandchildren old couples as they can’t find anything else more suitable.
SunsetZed said:
It's the same here except there are very few bungalows. If you want a 3 bed you're likely looking at a terrace without parking in a significantly worse area or a cramped new build estate. IMO this shortage of desirable smaller properties is why many people don't downsize.
One would need quite a substantial family home in order to downsize to somewhere appropriate. If someone is in a modest family home in an area that caters for retirement as well as it did for working and raising a family then there is often no logic to moving, especially given the equity release industry now offers the potential to stay put if money is required. Moving to the pleasant parts of the English countryside or seaside where amenities are sufficient for the final stages of one's life isn't going to release any money unless the suburban home happens to be in the particularly large side. And remaining local bit going smaller inevitably means losing the important space that keeps neighbours at a tolerable distance of money is to be released.
It's not logical to blame old people for not downsizing en masse when in reality the issue has only arisen as a short term problem due to an over sized demographic also suddenly not all dying off between 65 and 75. Once that blip works it way through over the next decade the problem self solves so there is no logic in building a load of 200 year properties for a problem that will be gone inside of 20 years.
In reality, the next looming issue is going to be that we have too many large family homes at too high a price and running cost. In addition, the rising probate numbers that drive that will also be releasing a lot of BTL/holiday lets and homes which those areas will have to contend with and risk a potential social decline back to lower economic levels.
havoc said:
As does the avg house price to avg income ratio trend - google that, THEN come back and tell me that all these feckless youngsters only have themselves to blame! This feeds on to the amount of income spent on housing, which has gone up consistently for decades. So in real (disposable) income terms MOST people in the UK are now significantly poorer
There’s no magic or conspiracy to it - if everyone could borrow 4-5x joint salary at 2%, that’s what happened. This feeds on to the amount of income spent on housing, which has gone up consistently for decades. So in real (disposable) income terms MOST people in the UK are now significantly poorerNomduJour said:
havoc said:
As does the avg house price to avg income ratio trend - google that, THEN come back and tell me that all these feckless youngsters only have themselves to blame! This feeds on to the amount of income spent on housing, which has gone up consistently for decades. So in real (disposable) income terms MOST people in the UK are now significantly poorer
There’s no magic or conspiracy to it - if everyone could borrow 4-5x joint salary at 2%, that’s what happened. This feeds on to the amount of income spent on housing, which has gone up consistently for decades. So in real (disposable) income terms MOST people in the UK are now significantly poorerThat's a genuine hurdle for individuals who chose either a parent with low earning power or one with none as dual income professional households have the upper hand now rather than being more of a minority.
The ones who have really picked in on that front are some GenXers who have suddenly found their wives getting massive promotions to fill diversity needs of employers at senior management level and the bloke can now take the foot off the gas and let the other half bring home the bacon.
NomduJour said:
There’s no magic or conspiracy to it - if everyone could borrow 4-5x joint salary at 2%, that’s what happened.
Oh I dunno...the (Blair) government gave the banks the means to give all ordinary folk enough rope to hang themselves, while the government pushed the ambition on everyone that they SHOULD own their own home, which inflated the desire to buy the rope.So not a conspiracy, but definitely some collusion to allow the banks to line their own pockets even more.
...and even a GCSE Economics student could tell you what the long-term outcome would be...so to suggest that all those big minds in the Treasury and Government didn't know what it would lead to is disingenous.
...and I don't know why DA keeps talking about the richer end of society - they can look after themselves, even with current house prices. The real issue is the one facing the bottom 60-70% of society. (and yes, I think that % is about right, maybe slightly low)
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