How far will house prices fall [volume 4]
Discussion
turbobloke said:
kingston12 said:
It could be said that this is rather simplistic - house prices have risen 84% between 2000 and 2015, so let's just assume that they will do the same again...
Perhaps they will, perhaps they will even accelerate more quickly if confidence gets higher still, but surely we must need some wage growth, interest rate falls and/or further credit loosening to get there even if foreign investment stays strong?
Indeed, I pointed out my misgivings, but how wrong will it be? There's room for plenty of error with plenty of house price rises!Perhaps they will, perhaps they will even accelerate more quickly if confidence gets higher still, but surely we must need some wage growth, interest rate falls and/or further credit loosening to get there even if foreign investment stays strong?
Not everyone will be earning £100k+ so its going to get nigh on impossible for anyone to buy.
p1stonhead said:
turbobloke said:
kingston12 said:
It could be said that this is rather simplistic - house prices have risen 84% between 2000 and 2015, so let's just assume that they will do the same again...
Perhaps they will, perhaps they will even accelerate more quickly if confidence gets higher still, but surely we must need some wage growth, interest rate falls and/or further credit loosening to get there even if foreign investment stays strong?
Indeed, I pointed out my misgivings, but how wrong will it be? There's room for plenty of error with plenty of house price rises!Perhaps they will, perhaps they will even accelerate more quickly if confidence gets higher still, but surely we must need some wage growth, interest rate falls and/or further credit loosening to get there even if foreign investment stays strong?
Not everyone will be earning £100k+ so its going to get nigh on impossible for anyone to buy.
Movement into London and the SE is barely manageable now, it's going to get worse. Mobility (directional) will be severely impacted, far more than now, if those numbers are anywhere near.
turbobloke said:
kingston12 said:
It could be said that this is rather simplistic - house prices have risen 84% between 2000 and 2015, so let's just assume that they will do the same again...
Perhaps they will, perhaps they will even accelerate more quickly if confidence gets higher still, but surely we must need some wage growth, interest rate falls and/or further credit loosening to get there even if foreign investment stays strong?
Indeed, I pointed out my misgivings, but how wrong will it be? There's room for plenty of error with plenty of house price rises!Perhaps they will, perhaps they will even accelerate more quickly if confidence gets higher still, but surely we must need some wage growth, interest rate falls and/or further credit loosening to get there even if foreign investment stays strong?
I do think that the government are going to have to be very clever if they want to see the boom in prices continue. That 84% growth has largely been driven by low interest rates, fractional ownership, buy to let, 35 year mortgages and all of the other tricks put in place to take the market away from it's traditional base.
These will undoubtedly continue, but more will be required unless they are suddenly release the brake on wage growth.
scenario8 said:
Well, Surrey does cover a fair spread from the likes of the Wentworths through tonker's deluded chums in the Hills down to (dare I say it) Merstham.
I suggest one part might be pulling the average up from another. With tonker, and most other observers, shaking their heads at the optimistic pricing and lack of transactions.
I suggest one part might be pulling the average up from another. With tonker, and most other observers, shaking their heads at the optimistic pricing and lack of transactions.
It is like the reports you see saying that the average City Wage is £60k when most are paper pushers on £30k.p1stonhead said:
Even if its half of that, it still means staggering prices in not that long in the grand scheme of things.
Not everyone will be earning £100k+ so its going to get nigh on impossible for anyone to buy.
I remember being told (by an accountant) that, on average, prices have doubled every 8 years. I laughed at him, but I think the figures do show that rate of increase - if you start 100 years ago.Not everyone will be earning £100k+ so its going to get nigh on impossible for anyone to buy.
This conversation occurred when buying a £260K house in Cheshire in 2006. Today that house would struggle to break £250K.
It's just nonsense to think average houses can keep increasing for exactly the reason above - average families aren't earning (and aren't likely to earn) £100K+.
The inheritance angle is pretty limited too - most people I know are near retirement themselves when their final parent pops their clogs. Sometimes grandparents are leaving money but then that's generally going to a bigger number of recipients so it's not a game-changing amount that people end up with.
hyphen said:
scenario8 said:
Well, Surrey does cover a fair spread from the likes of the Wentworths through tonker's deluded chums in the Hills down to (dare I say it) Merstham.
I suggest one part might be pulling the average up from another. With tonker, and most other observers, shaking their heads at the optimistic pricing and lack of transactions.
I suggest one part might be pulling the average up from another. With tonker, and most other observers, shaking their heads at the optimistic pricing and lack of transactions.
It is like the reports you see saying that the average City Wage is £60k when most are paper pushers on £30k.Edited by kingston12 on Thursday 11th May 12:01
Sheepshanks said:
The inheritance angle is pretty limited too - most people I know are near retirement themselves when their final parent pops their clogs. Sometimes grandparents are leaving money but then that's generally going to a bigger number of recipients so it's not a game-changing amount that people end up with.
Early inheritance is often done if they can afford to. Parents give money for a deposit/guarantor which allows higher borrowing. Or parent buying a BTL and renting to the kid who will eventually inherit it anyway.Often the parents will be living in a nicer part of the county, and lending to the kids buy in the cheaper part so they don't have to move too far- wanting to see your grandkids regularly is a pretty big pull.
hyphen said:
Early inheritance is often done. Parents give money for a deposit/guarantor which allows higher borrowing. Speaking of Surrey area, often the parents will be living in a nicer part, and lending to the kids buy in the cheaper part so they don't have to move to far- wanting to your grandkids is a pretty big pull.
I wonder how many of those Surrey residents have significant spare cash - having bought many years ago they may well be asset rich but (relatively) cash poor?Sheepshanks said:
The inheritance angle is pretty limited too - most people I know are near retirement themselves when their final parent pops their clogs. Sometimes grandparents are leaving money but then that's generally going to a bigger number of recipients so it's not a game-changing amount that people end up with.
I agree. The problem with inheritance is that is increasingly coming from property rather than cash. That means less inheritance tax planning options, so more goes to the government and the inheritees get less. It is all very well inheriting £3-400k but if that is only half a 1 bed flat it might not help that much.Sheepshanks said:
hyphen said:
Early inheritance is often done. Parents give money for a deposit/guarantor which allows higher borrowing. Speaking of Surrey area, often the parents will be living in a nicer part, and lending to the kids buy in the cheaper part so they don't have to move to far- wanting to your grandkids is a pretty big pull.
I wonder how many of those Surrey residents have significant spare cash - having bought many years ago they may well be asset rich but (relatively) cash poor?https://webcache.googleusercontent.com/search?q=ca...
Edited by hyphen on Thursday 11th May 12:06
hyphen said:
Sheepshanks said:
hyphen said:
Early inheritance is often done. Parents give money for a deposit/guarantor which allows higher borrowing. Speaking of Surrey area, often the parents will be living in a nicer part, and lending to the kids buy in the cheaper part so they don't have to move to far- wanting to your grandkids is a pretty big pull.
I wonder how many of those Surrey residents have significant spare cash - having bought many years ago they may well be asset rich but (relatively) cash poor?The government really need to find a way to make house price growth self-perpetuating, but I am not sure they have got that far yet!
kingston12 said:
hyphen said:
Sheepshanks said:
hyphen said:
Early inheritance is often done. Parents give money for a deposit/guarantor which allows higher borrowing. Speaking of Surrey area, often the parents will be living in a nicer part, and lending to the kids buy in the cheaper part so they don't have to move to far- wanting to your grandkids is a pretty big pull.
I wonder how many of those Surrey residents have significant spare cash - having bought many years ago they may well be asset rich but (relatively) cash poor?The government really need to find a way to make house price growth self-perpetuating, but I am not sure they have got that far yet!
The alternative is rent, and maybe inherit say £500k when you are say 60 or something (or whenever your parents go). But by then, you have already lived dare say it a lot of your life possibly renting if you are in an expensive area. Personally I am hoping I live long enough so that my grandkids inherit what I have and my kids wont need it. Same with my parents probably going to my kids as I (hopefully) wont need it.
Inheritance seems like it may skip a generation now that people are living longer.
Not saying renting is totally a bad thing, but over the long term there are a lot less benefits than paying off an asset.
hyphen said:
Sheepshanks said:
The inheritance angle is pretty limited too - most people I know are near retirement themselves when their final parent pops their clogs. Sometimes grandparents are leaving money but then that's generally going to a bigger number of recipients so it's not a game-changing amount that people end up with.
Early inheritance is often done if they can afford to. Parents give money for a deposit/guarantor which allows higher borrowing. Or parent buying a BTL and renting to the kid who will eventually inherit it anyway.Often the parents will be living in a nicer part of the county, and lending to the kids buy in the cheaper part so they don't have to move too far- wanting to see your grandkids regularly is a pretty big pull.
Patterns are changing but house prices, based on evidence over time, are increasing.
p1stonhead said:
But having less to inherit isnt as much of a problem as renting for your whole life and not havign a property of your own. I would rather get a leg up early then try to grow that equity etc or even just pay off the ouse.
The alternative is rent, and maybe inherit say £500k when you are say 60 or something (or whenever your parents go). But by then, you have already lived dare say it a lot of your life possibly renting if you are in an expensive area. Personally I am hoping I live long enough so that my grandkids inherit what I have and my kids wont need it. Same with my parents probably going to my kids as I (hopefully) wont need it.
Inheritance seems like it may skip a generation now that people are living longer.
That's a good point and that would definitely improve things if it did skip a generation.The alternative is rent, and maybe inherit say £500k when you are say 60 or something (or whenever your parents go). But by then, you have already lived dare say it a lot of your life possibly renting if you are in an expensive area. Personally I am hoping I live long enough so that my grandkids inherit what I have and my kids wont need it. Same with my parents probably going to my kids as I (hopefully) wont need it.
Inheritance seems like it may skip a generation now that people are living longer.
Of course the number of people inheriting would be larger, but the money would be more useful inherited slightly earlier in life.
p1stonhead said:
Not saying renting is totally a bad thing, but over the long term there are a lot less benefits than paying off an asset.
I think that long term renting is a bad thing. It is sensible to do whilst checking out a new area or spending a couple of years in an area you'd never be able to realistically be able to afford to buy, but I can't think of any reason to want to do it apart from that.I saw a flat advertised for sale at £600k or to rent at £1,700 a month recently. At today's mortgage rates, the interest payable on the mortgage would be less than half the rent, so the only reasons to rent it long term in my mind would be:
-Can't afford the deposit
-Don't earn enough to get the mortgage
-Thinking that there is a very real chance of an imminent crash in house prices
A lot of people are already caught out by the first two factors, and more will be if prices increase and wages don't.
hyphen said:
With an expected large majority, Theresa has the ability to really change things, but will she? New Garden towns and villages from scratch seem preferable to overbuilding in towns with overstretched infrastructures.
I don't think she will. The current administration seem content with high prices, why would a slightly higher majority change their view?Increased supply would slow price inflation in the long term, but not in the short term.
I'd definitely prefer new areas to be developed rather than over-populating existing towns, but developers have got used to very high profits from the doing the latter, so will have to be stopped from doing that first.
In terms of pricing, I'll be interested to see how much the new flats being built in the middle of Kingston at the moment go on the market for. Hideous location (right on one way system, no parking, pollution, poor infrastructure), but I still expect the prices to be right up there with the highest in the area.
This is being replicated everywhere as far as I can see.
Might be for another thread but genuinely how large could we expect the Conservative majority to be? I suspect it may not be quite as large as others may expect. It's about 17 now isn't it? Not particularly large for sweeping changes to property law or inheritance law when those possibly affected the most will be in expensive parts of the SE who typically vote blue.
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