When/Will house prices cool down?
Discussion
havoc said:
...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)
Just because there seem to be those in the higher tax bracket attempting to claim they are suffering in the same way as those earning less. It's not about the richer end of society, just those in professional jobs and decent wages trying to claim life is hard when it isn't, they just want more than they can have and are trying to blame others while rather disgustingly making out they're in the same boat as those who have genuinely been screwed over by the 'Big Lend'. Seventyseven7 said:
I’ll be listing my house for sale in February. It’s a 3 bed semi detached in Surrey, that was valued at £690,000-£695,000 by 3 different estate agents back in summer 2022, so near the peak of the market.
What do we predict the new valuation/recommended listing price will be. I think 630-650 at a push.
It's going up for £675,000. Suprised that was the recommendation, but a few houses have gone up in the past couple of weeks around that mark. What do we predict the new valuation/recommended listing price will be. I think 630-650 at a push.
650 and above I will be very happy with!
Tim Cognito said:
The less dramatic option is where the house price Vs. interest rates side of the affordability equation trickles along at below average wage increases for say 10 years?
No negative equity and affordability is brought back to be more sensible.
What if we don’t get wage increases?No negative equity and affordability is brought back to be more sensible.
You’d need 5% a year wage increases as a baseline, for a decade, never mind increases due to performance/experience etc, to catch up, to just bring things back to normal.
That’s a lot of wishful thinking.
But while most people in our society are so greedy, and will throw their own offspring under the bus to satiate that personal greed, should we expect any different?
Only when these older generations realise they’ve been played by government, and the wealthy, and choose to sacrifice for their kids and grand kids, and we all jointly throw the government under the bus instead, will anything change
DonkeyApple said:
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.
For people entering the job market in 2008/9 as I did, starting income was not 'high'. Income for a worker with 3 years' experience was not 'high'. Income for a worker with 5 years' experience was not 'high'. Incomes for people in these categories and others practically flatlined for 10 years and did not increase until recently, when the phenomenon of inflation, which was constant throughout this period by the way, went completely bonkers.
If we briefly consider the world outside the narrow professional view, the story was the same for public sector, retail and services. This is how a generation of people have gotten worse off in terms of early career earning and spending power.
Edited by Hustle_ on Friday 1st March 11:56
Hustle_ said:
I'm not talking about spending I'm talking about earning. You said “12 years of high and rising income”. Your case for this seems to be that pay increases over the years as a professional gets more experienced and senior- but this isn't what is being discussed and you know it. "Wage growth has indeed been stagnant".
For people entering the job market in 2008/9 as I did, starting income was not 'high'. Income for a worker with 3 years' experience was not 'high'. Income for a worker with 5 years' experience was not 'high'. Incomes for people in these categories and others practically flatlined for 10 years and did not increase until recently, when the phenomenon of inflation, which was constant throughout this period by the way, went completely bonkers.
If we briefly consider the world outside the narrow professional view, the story was the same for public sector, retail and services. This is how a generation of people have gotten worse off in terms of early career earning and spending power.
I must be a similar age to you given when you entered the job market. We've also left out of the conversation that following the financial crash in those years, anyone entering the job market 2008-2012 also wouldn't be considered for the most entry of roles without a full university degree - so add in another 3 years or non-earning for that generation just for the luxury of getting a £23k starting job. So combining pointless university degrees delaying entry to market, crap salaries, low interest rates (so whatever we did save earned f*ck all, plus house price growth from the previous generation), oh and everything we did learn at uni is now completely out of date anyway because of new tech and complete overhauls of syllabuses for all main industry sectors. I'd say anyone aged 30-38 is probably pretty disillusioned by the 'pull your socks up' Conservative brigade. For people entering the job market in 2008/9 as I did, starting income was not 'high'. Income for a worker with 3 years' experience was not 'high'. Income for a worker with 5 years' experience was not 'high'. Incomes for people in these categories and others practically flatlined for 10 years and did not increase until recently, when the phenomenon of inflation, which was constant throughout this period by the way, went completely bonkers.
If we briefly consider the world outside the narrow professional view, the story was the same for public sector, retail and services. This is how a generation of people have gotten worse off in terms of early career earning and spending power.
Edited by Hustle_ on Friday 1st March 11:56
I didn't go to uni, I went to college on an apprenticeship with a trainee job at the end. I completed full time college in 2009 and went to work. On my first day in the office I was told that I, and the entire trainee intake for that year, were being made redundant 
ETA: A couple of us immediately secured employment with a second employer. My first salary was £15,250
ETA: A couple of us immediately secured employment with a second employer. My first salary was £15,250
Edited by Hustle_ on Friday 1st March 13:13
DonkeyApple said:
havoc said:
...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)
Just because there seem to be those in the higher tax bracket attempting to claim they are suffering in the same way as those earning less. It's not about the richer end of society, just those in professional jobs and decent wages trying to claim life is hard when it isn't, they just want more than they can have and are trying to blame others while rather disgustingly making out they're in the same boat as those who have genuinely been screwed over by the 'Big Lend'. 
Yep, no sympathy for all the 'upwardly mobile' types who've stretched themselves thin as rice paper expecting the bubble to keep going, and even less for landlords who geared themselves to the hilt and now expect others to pay for their bad financial decisions.
We really do need to teach financial awareness in schools. And challenge why it's still considered acceptable in society to be crap at maths...
Emphasising the need to be aware of regional variation in house price 'problems' :
https://www.heraldscotland.com/news/24157107.glasg...
Very much NOT a one-size-fits-all issue and therefore very much NOT in need of a one-size-fits-all solution (if indeed it's a problem at all).
https://www.heraldscotland.com/news/24157107.glasg...
Very much NOT a one-size-fits-all issue and therefore very much NOT in need of a one-size-fits-all solution (if indeed it's a problem at all).
Portia5 said:
Emphasising the need to be aware of regional variation in house price 'problems' :
https://www.heraldscotland.com/news/24157107.glasg...
Very much NOT a one-size-fits-all issue and therefore very much NOT in need of a one-size-fits-all solution (if indeed it's a problem at all).
Looking at the cities on that list, none seem particularly attractive as a place to live (Glasgow probably being the best of them), and all have an employment problem.https://www.heraldscotland.com/news/24157107.glasg...
Very much NOT a one-size-fits-all issue and therefore very much NOT in need of a one-size-fits-all solution (if indeed it's a problem at all).
...i.e. you can afford to buy a house but can you then afford the commute to wherever your job is?
So whilst I agree it's not a one-size-fits-all problem, it is driven by a few key ongoing variables:-
- Insufficient houses being built
- ...anywhere near where jobs actually are and where people want to live
- ...alongside a huge under-investment in all infrastructure (roads, trains, healthcare, schools etc.) to support those houses that are being built
Behind that you have taxation problems, notably
- SDLT thresholds actively dissuading people higher up from moving, and acting as an inflationary pressure on more expensive houses because supply is choked.
- CGT on second homes/BTL. Now I'm torn here, because people who've done this SHOULD be paying CGT, same as anyone who bought shares or gold or any other commodity to invest in and has made a gain. But it's acting as a disincentive to exit the BTL market, further reducing supply.
PS - that 'affordable housing' in Glasgow has still risen well above the rate of inflation over e.g. the last 25 years (which itself has noticeably outpaced wage growth).
.....and we NEED a 'house price crash' to address some/all of this?
Well, sorry, but from where I'm sitting a house price crash is going to amplify and not reduce those problems, especially by disincentivising investment in property per se whether btl, building or commercial.
eta: the only btl people disincentivised to sell by CGT are the same ones who refuse to increase their profits/earnings because it'll cost them more tax (ie silly people).
Well, sorry, but from where I'm sitting a house price crash is going to amplify and not reduce those problems, especially by disincentivising investment in property per se whether btl, building or commercial.
eta: the only btl people disincentivised to sell by CGT are the same ones who refuse to increase their profits/earnings because it'll cost them more tax (ie silly people).
Edited by Portia5 on Saturday 2nd March 13:47
There’s been a bit of a correction in affordability as house prices have stood still for a year and a half and a period of rampant inflation seems to have broken the wage stagnation. That house prices are going to start going up again tells us that it’ probably enough of a correction for the market to get going again. Hopefully 2021/22 will be the low point in terms of affordability.
This thread maybe indicates that people in the early years of their career now might have a window of opportunity, assuming that we’ve avoided a ‘proper’ recession, unemployments etc.
This thread maybe indicates that people in the early years of their career now might have a window of opportunity, assuming that we’ve avoided a ‘proper’ recession, unemployments etc.
Edited by Hustle_ on Saturday 2nd March 14:17
Hustle_ said:
There’s been a bit of a correction in affordability as house prices have stood still for a year and a half and a period of rampant inflation seems to have broken the wage stagnation. That house prices are going to start going up again tells us that it’ probably enough of a correction for the market to get going again. Hopefully 2021/22 will be the low point in terms of affordability.
This thread maybe indicates that people in the early years of their career now might have a window of opportunity, assuming that we’ve avoided a ‘proper’ recession, unemployments etc.
This is sort of where the moderate view on this thread was a year ago - that so long as the job market held up, inflation would do a lot of the work. This thread maybe indicates that people in the early years of their career now might have a window of opportunity, assuming that we’ve avoided a ‘proper’ recession, unemployments etc.
Edited by Hustle_ on Saturday 2nd March 14:17
Average house prices down (say) 10% peak to trough but cumulative wage inflation of c.15% over the same period, and the house price to income ratio will fall c25% - from 8ish to 6 (or 5-point-something).
Portia5 said:
.....and we NEED a 'house price crash' to address some/all of this?
Well, sorry, but from where I'm sitting a house price crash is going to amplify and not reduce those problems, especially by disincentivising investment in property per se whether btl, building or commercial.
Only in the (very) short term. A short crash (which is what they tend to be) followed by a more gradual growth again would help give some stability* to both the retail and the build market, and let's be honest, house price inflation has far outstripped that of the cost to build them since 1997...there's a lot of very wealthy builders out there who can testify to that. You'll get a few hold-outs pushing for the money they've always had, but most people when faced with a new normal just roll up their sleeves and get on with things.Well, sorry, but from where I'm sitting a house price crash is going to amplify and not reduce those problems, especially by disincentivising investment in property per se whether btl, building or commercial.
This web page makes for interesting reading. Not least the first chart (reproduced underneath):-
https://www.schroders.com/en-gb/uk/individual/insi...
(The 20th Century, with a few outlying spikes/dips, largely sat at a multiple of 4-5x earnings. 18 months ago we were at 8-9x average earnings (depending on where you got your data)
* If you think land with planning permission is going to appreciate quicker than most other investments, why would you sell it / build on it now? Only if growth returns drop to the point that other investments feel better would that land be sold or developed.
bogie said:
See below for the nationwide average house price sold data adjusted for inflation, looks like current avg prices are back where they were in 2012
It’s an irrelevant picture without salaries somehow represented.Houses are cheap vs long term trend adjusted for inflation, but salaries are even further behind adjusted for inflation.
havoc said:
* If you think land with planning permission is going to appreciate quicker than most other investments, why would you sell it / build on it now? Only if growth returns drop to the point that other investments feel better would that land be sold or developed.
I’d be selling it and running for the hills.All it’s take is a loon like Corbyn getting in and farmland being nationalised or land for development being fixed price for the national interest or something.
And the worse these long term plots look (basically more poor, fewer very rich) the more likely that scenario plays out.
Of course they’d be after your cash too, or investments, or taxing your big house… but imo development land is the thing they’d be after one way or another over a lot else as it drives the entire house price chain.
Mr Whippy said:
I’d be selling it and running for the hills.
All it’s take is a loon like Corbyn getting in and farmland being nationalised or land for development being fixed price for the national interest or something.
And the worse these long term plots look (basically more poor, fewer very rich) the more likely that scenario plays out.
Of course they’d be after your cash too, or investments, or taxing your big house… but imo development land is the thing they’d be after one way or another over a lot else as it drives the entire house price chain.
Corbyn will not be making decisions of national consequence after the next election. All it’s take is a loon like Corbyn getting in and farmland being nationalised or land for development being fixed price for the national interest or something.
And the worse these long term plots look (basically more poor, fewer very rich) the more likely that scenario plays out.
Of course they’d be after your cash too, or investments, or taxing your big house… but imo development land is the thing they’d be after one way or another over a lot else as it drives the entire house price chain.
Mr Whippy said:
It’s an irrelevant picture without salaries somehow represented.
Houses are cheap vs long term trend adjusted for inflation, but salaries are even further behind adjusted for inflation.
Yep ....a quick run through the BoE inflation calculator and my salary is unchanged from 2004, although Ive had a couple of "promotions" along the way, staying with the same company for long stints tends to not to help, with the yearly "inflationary" rises that are rarely are inline with true inflation.Houses are cheap vs long term trend adjusted for inflation, but salaries are even further behind adjusted for inflation.
Same calculator shows avg pay in 2012 £28700 should be £39284 but in 2023 was £34963 so yes so we all need some good pay rises for a few years for it to re-align and/or another year or two of housing market stagnation
Edited by bogie on Saturday 2nd March 19:37
brickwall said:
Hustle_ said:
There’s been a bit of a correction in affordability as house prices have stood still for a year and a half and a period of rampant inflation seems to have broken the wage stagnation. That house prices are going to start going up again tells us that it’ probably enough of a correction for the market to get going again. Hopefully 2021/22 will be the low point in terms of affordability.
This thread maybe indicates that people in the early years of their career now might have a window of opportunity, assuming that we’ve avoided a ‘proper’ recession, unemployments etc.
This is sort of where the moderate view on this thread was a year ago - that so long as the job market held up, inflation would do a lot of the work. This thread maybe indicates that people in the early years of their career now might have a window of opportunity, assuming that we’ve avoided a ‘proper’ recession, unemployments etc.
Average house prices down (say) 10% peak to trough but cumulative wage inflation of c.15% over the same period, and the house price to income ratio will fall c25% - from 8ish to 6 (or 5-point-something).
pb8g09 said:
I must be a similar age to you given when you entered the job market. We've also left out of the conversation that following the financial crash in those years, anyone entering the job market 2008-2012 also wouldn't be considered for the most entry of roles without a full university degree - so add in another 3 years or non-earning for that generation just for the luxury of getting a £23k starting job. So combining pointless university degrees delaying entry to market, crap salaries, low interest rates (so whatever we did save earned f*ck all, plus house price growth from the previous generation), oh and everything we did learn at uni is now completely out of date anyway because of new tech and complete overhauls of syllabuses for all main industry sectors. I'd say anyone aged 30-38 is probably pretty disillusioned by the 'pull your socks up' Conservative brigade.
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