How far will house prices fall [volume 4]
Discussion
RYH64E said:
Justayellowbadge said:
RYH64E said:
£100k/annum nets down to less than £5.5k/month, I don't understand how people afford >£1m houses on that kind of money.
Start with a 150k flat 10/15 years ago.The 150k flat is now 350-400, and though still a few quid, that's more doable.
If the market does as it traditionally has done, trading up from there a couple of times gets you to the 1m house. Although by then it will be 2-2.5.
It was always thus. A little more extreme now, but the same thing was going on the. 60s, 70s, 80s and 90s.
It's just now people seem to think they should be able to walk in to the end of the chain.
Justayellowbadge said:
It's just now people seem to think they should be able to walk in to the end of the chain.
I think there are people who compare to the UK they grew up in and expect the same today. Whatever your mates parents owned, the Bobby and the nurse, surely the lawyer and the accountant should be able to afford the same sort of home today, surely?The reality is, property prices have moved so quickly, unless you earn mega bucks or are on the ladder and have been for a decade or more, you're unlikely to get to the comparable home without a sizeable deposit and an enormous mortgage.
It also makes a difference at what stage of life people can now afford to buy. People are FTBs later in life so, rightly or wrongly, have higher aspirations than those who were able to buy at a much younger age 10-15 years ago. Unfortunately, although people are buying later, it's because prices are higher. As such, the 1 or maybe 2 bed flat that would suit a singleton, won't do for the mid-30s lawyer and accountant expecting their first child but that's all they can afford.
I sympathise with them but that's one of the many challenges the current market offers to buyers.
You also have to factor in the massive population growth in London, particularly amongst the reasonably affluent professional classes.
I have given this example before but this has been going on since the end of the 1st World War. In the late twenties, my Grandmother was priced out of Belgravia and bought her first property in Chelsea. In the early sixties, my parents were priced out of Kensington and bought their first family home in Holland Park. In the early nineties, I was priced out of Fulham and bought my first place in Clapham. I confidently expect that, in the 2020s my children will buy in Crodon because they can't afford Streatham.
I have given this example before but this has been going on since the end of the 1st World War. In the late twenties, my Grandmother was priced out of Belgravia and bought her first property in Chelsea. In the early sixties, my parents were priced out of Kensington and bought their first family home in Holland Park. In the early nineties, I was priced out of Fulham and bought my first place in Clapham. I confidently expect that, in the 2020s my children will buy in Crodon because they can't afford Streatham.
Justayellowbadge said:
Surely you would expect to be in it a while to be at that level?
The 150k flat is now 350-400, and though still a few quid, that's more doable.
If the market does as it traditionally has done, trading up from there a couple of times gets you to the 1m house. Although by then it will be 2-2.5.
It was always thus. A little more extreme now, but the same thing was going on the. 60s, 70s, 80s and 90s.
It's just now people seem to think they should be able to walk in to the end of the chain.
£350-400k for a starter home may be doable if you've got two decent incomes and buy at a time when interest rates are at an all time low, but factor in children, long term average interest rates and periods of unemployment and it looks decidedly risky to me.The 150k flat is now 350-400, and though still a few quid, that's more doable.
If the market does as it traditionally has done, trading up from there a couple of times gets you to the 1m house. Although by then it will be 2-2.5.
It was always thus. A little more extreme now, but the same thing was going on the. 60s, 70s, 80s and 90s.
It's just now people seem to think they should be able to walk in to the end of the chain.
There's hardly anything modestly priced in London, I understand people paying a premium to live in Chelsea but when you can pay nearly £1m for a terraced house in Tottenham you've got to conclude that the world's gone mad. Where do people earning £30k/annum live?
RYH64E said:
Justayellowbadge said:
Surely you would expect to be in it a while to be at that level?
The 150k flat is now 350-400, and though still a few quid, that's more doable.
If the market does as it traditionally has done, trading up from there a couple of times gets you to the 1m house. Although by then it will be 2-2.5.
It was always thus. A little more extreme now, but the same thing was going on the. 60s, 70s, 80s and 90s.
It's just now people seem to think they should be able to walk in to the end of the chain.
£350-400k for a starter home may be doable if you've got two decent incomes and buy at a time when interest rates are at an all time low, but factor in children, long term average interest rates and periods of unemployment and it looks decidedly risky to me.The 150k flat is now 350-400, and though still a few quid, that's more doable.
If the market does as it traditionally has done, trading up from there a couple of times gets you to the 1m house. Although by then it will be 2-2.5.
It was always thus. A little more extreme now, but the same thing was going on the. 60s, 70s, 80s and 90s.
It's just now people seem to think they should be able to walk in to the end of the chain.
There's hardly anything modestly priced in London, I understand people paying a premium to live in Chelsea but when you can pay nearly £1m for a terraced house in Tottenham you've got to conclude that the world's gone mad. Where do people earning £30k/annum live?
RYH64E said:
£350-400k for a starter home may be doable if you've got two decent incomes and buy at a time when interest rates are at an all time low, but factor in children, long term average interest rates and periods of unemployment and it looks decidedly risky to me.
There's hardly anything modestly priced in London, I understand people paying a premium to live in Chelsea but when you can pay nearly £1m for a terraced house in Tottenham you've got to conclude that the world's gone mad. Where do people earning £30k/annum live?
but its not a single person earning £30k pa., its 2....There's hardly anything modestly priced in London, I understand people paying a premium to live in Chelsea but when you can pay nearly £1m for a terraced house in Tottenham you've got to conclude that the world's gone mad. Where do people earning £30k/annum live?
So that's getting on for £300k borrowing capacity on a salary you'd get onto straight after uni
If they're anything like my home-owning mates (mid-20's) they'll then rent the spare room to a friend covering ~60% of the mortgage, more for the social aspect than cost.
kiethton said:
but its not a single person earning £30k pa., its 2....
So that's getting on for £300k borrowing capacity on a salary you'd get onto straight after uni
5x joint mortgage for a couple in their first year of a graduate job? What about the deposit?So that's getting on for £300k borrowing capacity on a salary you'd get onto straight after uni
The only way a London FTB gets anywhere at the moment (outside of Zone 3/4) is via a hefty contribution from elsewhere, and second or third time buyers via a hefty lump of equity and some creativity for the SDLT.
There are an awful lot of twenty-something people in flats approaching £1m, and they don't all earn quarter of a bar.
NomduJour said:
kiethton said:
but its not a single person earning £30k pa., its 2....
So that's getting on for £300k borrowing capacity on a salary you'd get onto straight after uni
5x joint mortgage for a couple in their first year of a graduate job? What about the deposit?So that's getting on for £300k borrowing capacity on a salary you'd get onto straight after uni
The only way a London FTB gets anywhere at the moment (outside of Zone 3/4) is via a hefty contribution from elsewhere, and second or third time buyers via a hefty lump of equity and some creativity for the SDLT.
There are an awful lot of twenty-something people in flats approaching £1m, and they don't all earn quarter of a bar.
Hell, when I bout my first place 2 years ago I put the lions share of the deposit on a credit card....
NomduJour said:
Live in London, earn £30k, put ~£9k p.a. into savings. Not very likely.
2 people on £30k = take home of £3900pm, less a little for student loan payments = £3750pmFlat = £890pm e.g. in the current fashion spot - http://www.rightmove.co.uk/property-to-rent/proper... cheaper can be had in a flat share
less bills of ~£210pm
Leaves £2,650pm
Allowing a travel pass each (£1,300 per annum per person or £210pm) leaves £2,430, allowing £750pm disposable/having fun money each leaves £930pm to save, or £1,230 if you restrict your disposable to £600pp per month.
The latter would give you the required deposit in ~24 months, my point is that its easier if you live with your parents (if you're lucky enough to be in London) and easily possible if you're not spunking disposable saving money on fags/booze/nightlife. Owning a property is meant to be hard, its not all easy and does require a little sustained sacrifice.
Edited by kiethton on Wednesday 10th February 13:00
thelittleegg said:
kiethton said:
a little sustained sacrifice.
How awful.Short term pain/lack of social life for a long-term benefit, or moderated and you'll be in that position for longer/forever if you don't...
kiethton said:
RYH64E said:
£350-400k for a starter home may be doable if you've got two decent incomes and buy at a time when interest rates are at an all time low, but factor in children, long term average interest rates and periods of unemployment and it looks decidedly risky to me.
There's hardly anything modestly priced in London, I understand people paying a premium to live in Chelsea but when you can pay nearly £1m for a terraced house in Tottenham you've got to conclude that the world's gone mad. Where do people earning £30k/annum live?
but its not a single person earning £30k pa., its 2....There's hardly anything modestly priced in London, I understand people paying a premium to live in Chelsea but when you can pay nearly £1m for a terraced house in Tottenham you've got to conclude that the world's gone mad. Where do people earning £30k/annum live?
So that's getting on for £300k borrowing capacity on a salary you'd get onto straight after uni
If they're anything like my home-owning mates (mid-20's) they'll then rent the spare room to a friend covering ~60% of the mortgage, more for the social aspect than cost.
Edit to add see that comment already made re student loan. Still pleased I'm not starting out.
House price falls? Not any time soon with the Pacific Basin major areas in investment difficulties, Europe likewise it leaves rock solid London property attracting money from these areas as relatively safe investments. This confidence in the property market from overseas will sure as heck prop up the market as those City prices continue to ripple out.
crankedup said:
House price falls? Not any time soon with the Pacific Basin major areas in investment difficulties, Europe likewise it leaves rock solid London property attracting money from these areas as relatively safe investments. This confidence in the property market from overseas will sure as heck prop up the market as those City prices continue to ripple out.
What do you consider to be 'rock solid London property'? How about this fantastic opportunity in Stratford? A veritable bargain at just £750k I'm sure, overseas investors must be queuing up.RYH64E said:
crankedup said:
House price falls? Not any time soon with the Pacific Basin major areas in investment difficulties, Europe likewise it leaves rock solid London property attracting money from these areas as relatively safe investments. This confidence in the property market from overseas will sure as heck prop up the market as those City prices continue to ripple out.
What do you consider to be 'rock solid London property'? How about this fantastic opportunity in Stratford? A veritable bargain at just £750k I'm sure, overseas investors must be queuing up.crankedup said:
House price falls? Not any time soon with the Pacific Basin major areas in investment difficulties, Europe likewise it leaves rock solid London property attracting money from these areas as relatively safe investments. This confidence in the property market from overseas will sure as heck prop up the market as those City prices continue to ripple out.
lol. overseas investors are long gone. the market has already crashed.
That would actually be £75k here in many parts of Leeds where I am, and I wouldn't want it either!Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff