How far will house prices fall [volume 4]
Discussion
p1stonhead said:
Justayellowbadge said:
oyster said:
So even though you're in the top 29%, you can only afford a top 50% house.
Yes, but house ownership is not a right. You could equally argue the same income limits your Bugatti or Sunseeker purchase options.
Is it somehow unfair that an average salary can't buy an average Learjet?
Was it ever supposed to be affordable on your own?
Justayellowbadge said:
oyster said:
Ownership isn't a basic need.
But the cost of buying a house has a huge impact on the rent charged to tenants to live in it. If that cost to buy forces the rent so high that tenants can't afford it, then that would act as form of affordability limit to buying.
Except it genuinely doesn't. But the cost of buying a house has a huge impact on the rent charged to tenants to live in it. If that cost to buy forces the rent so high that tenants can't afford it, then that would act as form of affordability limit to buying.
Rents in London have barely moved for years, despite the house price increases.
Yields are low single figures.
Justayellowbadge said:
oyster said:
Ownership isn't a basic need.
But the cost of buying a house has a huge impact on the rent charged to tenants to live in it. If that cost to buy forces the rent so high that tenants can't afford it, then that would act as form of affordability limit to buying.
Except it genuinely doesn't. But the cost of buying a house has a huge impact on the rent charged to tenants to live in it. If that cost to buy forces the rent so high that tenants can't afford it, then that would act as form of affordability limit to buying.
Rents in London have barely moved for years, despite the house price increases.
Yields are low single figures.
This is why landlords can't pass on additional costs (even though they claim they will)
Also why big rises in NMW would likely be swallowed up by landlords...
Friends rented out their old house to friends. In the 6months that their friends were there they trashed it. Fast forward and circumstances changed so friends put house up for sale and it sold within a week for 50k more than 6months ago.
The market around us is going crazy as cash buyers etc are getting properties first. First time buyers are left with nearly made it, maybe next time and increasingly downgrading their dream home plans.
The market around us is going crazy as cash buyers etc are getting properties first. First time buyers are left with nearly made it, maybe next time and increasingly downgrading their dream home plans.
okgo said:
Nothing shifting where I am. Just reductions.
London? All parts of the market? I remember when I looked in on my old road in West Hampstead a 'deluxe studio flat' was on the market for £410,000. It wasn't a deluxe flag it was a bedsit with a toilet/shower in a cupboard and nice fittings.p1stonhead said:
Was it ever supposed to be affordable on your own?
As recently as the late 90s, mortgages were generally limited to 3.5x a single income or only 2.75 joint. Prior to that, it was even more biased towards mortgages based on a single salary.I'd be interested to see actual stats, but in the traditional housing market of the 70s/80s, I'd be surprised if it was more than a small proportion of houses that were secured on a joint income.
We will never go back to that, not that I think that we should. This thread neatly demonstrates one of the reasons why - a large number of people now in the market don't even know how it worked for the last generation. Why should they, what we have now has become the new normal and people have learned to live with it.
superkartracer said:
I'd put money on the more vocal posters having had BOMAD or inheritance funds thrown at them , as they seem to value £ little.
Perhaps, but it is really the Government making debt so cheap to service that has changed things in younger people's eyes. Edited by superkartracer on Tuesday 27th June 18:50
A lot of people think nothing of borrowing huge sums of money because the monthly payment is so low at sub 2%. Paying the capital back is another matter, but that has become a lot less fashionable.
Justayellowbadge said:
oyster said:
Ownership isn't a basic need.
But the cost of buying a house has a huge impact on the rent charged to tenants to live in it. If that cost to buy forces the rent so high that tenants can't afford it, then that would act as form of affordability limit to buying.
Except it genuinely doesn't. But the cost of buying a house has a huge impact on the rent charged to tenants to live in it. If that cost to buy forces the rent so high that tenants can't afford it, then that would act as form of affordability limit to buying.
Rents in London have barely moved for years, despite the house price increases.
Yields are low single figures.
In my area property has risen 50% in the time I've owned my BTL's, and rents have gone up by about 40%.
oyster said:
This puts that particular household in the top 29% of households by income. So even though you're in the top 29%, you can only afford a top 50% house.
That's as a first-time buyer though. And I reckon buying an "average" house as your first time buy is actually a pretty decent situation to be in - you're going straight into a 2 or 3 bedroom freehold house in a nice bit of town, which immediately cuts out 1 or 2 additional sets of moving fees and rounds of stamp duty compared to those who have to start with a studio or 1 bed flat in a cheap road.If the hypothetical couple are smart and buy somewhere that needs a bit of DIY-level doing up and overpay their mortgage early and often, there's every possibility that a few years down the line they'll have enough equity to consider one of those top 29% houses, or at least close to it.
98elise said:
London is different due to capital growth. London has lots of empty investment property which is very rare elsewhere.
In my area property has risen 50% in the time I've owned my BTL's, and rents have gone up by about 40%.
Medway average 130k/150k for 2/3 bed family type place historically In my area property has risen 50% in the time I've owned my BTL's, and rents have gone up by about 40%.
Cheeker buggers trying to flip those shoeboxes for 220k, 280k etc after 2 years ownership with no upgrades. Thing is they are now stagnating.
Saw one for offers in excess of 300k. It was bought in 2011 ish for 140k back on market in 2014 or 15 for 315k. Didnt sell and back on in Feb this year for offers over 300k still has not sold.
Saw another today bought about 2012 for 190k. On now for offers over 290k. No upgrades no parking.
Silly prices and things are starting to slow dramatically
anonymous said:
[redacted]
What do these tenants do?I can imagine non-parents who are doing the crap manual jobs saving and leaving with or without Brexit, washing cars for example isn't a long term career, but if you have a decent job and a promotion or two/kids in school then I expect they would stay.
Quick question on the issue of property owners (owner occupiers and BTL owners) paying interest-only;
Ive read it mentioned often in the last few pages, but does this happen quite a lot? I find it hard to believe that many people would do this. You're not paying down any of the capital so you never actually pay off the mortgage. It must be a huge risk? I suppose that the most financially savvy people could do this and then put the capital part of the repayment into a long-term investment, and pay off the lump sum at the end of the term with some more to spare? I get that (like an endowment mortgage?), but wouldn't this also end up with many more people coming to the end of their term having paid all the interest but without having anything to pay off the original borrowed amount?
Sorry if this has been done before on this thread but I couldn't read through the whole thing!
Ive read it mentioned often in the last few pages, but does this happen quite a lot? I find it hard to believe that many people would do this. You're not paying down any of the capital so you never actually pay off the mortgage. It must be a huge risk? I suppose that the most financially savvy people could do this and then put the capital part of the repayment into a long-term investment, and pay off the lump sum at the end of the term with some more to spare? I get that (like an endowment mortgage?), but wouldn't this also end up with many more people coming to the end of their term having paid all the interest but without having anything to pay off the original borrowed amount?
Sorry if this has been done before on this thread but I couldn't read through the whole thing!
TeaNoSugar said:
Quick question on the issue of property owners (owner occupiers and BTL owners) paying interest-only;
Ive read it mentioned often in the last few pages, but does this happen quite a lot? I find it hard to believe that many people would do this. You're not paying down any of the capital so you never actually pay off the mortgage. It must be a huge risk? I suppose that the most financially savvy people could do this and then put the capital part of the repayment into a long-term investment, and pay off the lump sum at the end of the term with some more to spare? I get that (like an endowment mortgage?), but wouldn't this also end up with many more people coming to the end of their term having paid all the interest but without having anything to pay off the original borrowed amount?
Sorry if this has been done before on this thread but I couldn't read through the whole thing!
My BTL mortgage is interest-only; it specifically states that the method of repayment is expected to be sale of the property. Since it's not my home, that's perfectly feasible. Since I can offset all the mortgage interest against rental income for tax purposes, it's also sensible; you can't offset any capital repayment element.Ive read it mentioned often in the last few pages, but does this happen quite a lot? I find it hard to believe that many people would do this. You're not paying down any of the capital so you never actually pay off the mortgage. It must be a huge risk? I suppose that the most financially savvy people could do this and then put the capital part of the repayment into a long-term investment, and pay off the lump sum at the end of the term with some more to spare? I get that (like an endowment mortgage?), but wouldn't this also end up with many more people coming to the end of their term having paid all the interest but without having anything to pay off the original borrowed amount?
Sorry if this has been done before on this thread but I couldn't read through the whole thing!
For your own residential property it's almost impossible these days to get an interest-only mortgage; the only way a lender would accept that is if you have a viable alternative plan for repayment. Having said that, I have seen one ported interest-only mortgage on a main residence which stated repayment was by sale of the property. But the expectation is that you have to live somewhere, so selling to pay it off isn't normally acceptable.
Jobbo said:
My BTL mortgage is interest-only; it specifically states that the method of repayment is expected to be sale of the property. Since it's not my home, that's perfectly feasible.
For your own residential property it's almost impossible these days to get an interest-only mortgage; the only way a lender would accept that is if you have a viable alternative plan for repayment. Having said that, I have seen one ported interest-only mortgage on a main residence which stated repayment was by sale of the property. But the expectation is that you have to live somewhere, so selling to pay it off isn't normally acceptable.
Right, that makes a lot of sense. In fact it's obvious when pointed out!! Thanks.For your own residential property it's almost impossible these days to get an interest-only mortgage; the only way a lender would accept that is if you have a viable alternative plan for repayment. Having said that, I have seen one ported interest-only mortgage on a main residence which stated repayment was by sale of the property. But the expectation is that you have to live somewhere, so selling to pay it off isn't normally acceptable.
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