How far will house prices fall [volume 5]
Discussion
Flooble said:
This is the thing that confuses me completely. 62K is a really good whack - into the top 10% of earners. But you can "only" borrow £280K.
So how are you (sorry, not being personal, just using "you" as the example!) going to move up to the the £950K places? It won't be by your house price growing as if your 280K place goes up to 950K, the 950K place will be £4 million. In theory you could move up a couple more percentile points on the income scale, but there's not that much room up there. Staying at the 92nd percentile and waiting for a regular pay rise won't work; wages aren't rising very fast - even teachers only got 3.1% this year.
So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?
By building equity via capital growth and repayment, then ploughing all your increased equity back into a property at high LTV, rinse and repeat a few times.So how are you (sorry, not being personal, just using "you" as the example!) going to move up to the the £950K places? It won't be by your house price growing as if your 280K place goes up to 950K, the 950K place will be £4 million. In theory you could move up a couple more percentile points on the income scale, but there's not that much room up there. Staying at the 92nd percentile and waiting for a regular pay rise won't work; wages aren't rising very fast - even teachers only got 3.1% this year.
So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?
Only works if you capital grows i.e house prices keep climbing!
matrignano said:
By building equity via capital growth and repayment, then ploughing all your increased equity back into a property at high LTV, rinse and repeat a few times.
Only works if you capital grows i.e house prices keep climbing!
But in my example above, if the house prices climb and the current place goes up from 280K to 950K, but the next rung goes up by the same percentage, how do you bridge the £million gap to the next property, if the max mortgage you can achieve is still around £280K? Having even the full 950K of your current place in equity won't help you get to the next rung, a £1.7 million house (the one that was £500K when you bought your place for £280K). I can only see it working if you are in the large wage-growth part of your career. Only works if you capital grows i.e house prices keep climbing!
Maybe Sam is right and everything above 2-bed terraces is being bought for cash. Although then I wonder where that is coming from!
Flooble said:
So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?
As someone else mentioned, in a lot of places they've been static since 2006/7. Even so, due to price rises up to then, many people who have been in their house for a long time couldn't buy it today if they were starting again.Flooble said:
>snip<
Maybe Sam is right and everything above 2-bed terraces is being bought for cash. Although then I wonder where that is coming from!
I paid for my current place cash but that was more by luck than judgement.Maybe Sam is right and everything above 2-bed terraces is being bought for cash. Although then I wonder where that is coming from!
I bought my first place in 2000 and by 2003~4 it was earning more in a month than I was. When I sold it in 2018 it had nearly tripled in value whilst the low interest rates over the previous decade had allowed me to over pay the mortgage to the point that it was little more than a bank loan. Moving from Hertfordshire to Lincolnshire meant I could buy a larger property and be mortgage free.
I did contemplate renting and waiting for the arse to fall out of the property market but I've always looked at property as a home not an investment.
Flooble said:
Bullet-Proof_Biscuit said:
Another statistic; My broker just told me he is convinced I can borrow £280k if I put 10% down (62k basic paye).
Beans on toast until Autumn it is! Hopefully a probate/period project becomes available in the area where I'm shopping (Hampshire).
Just wondering how far they'll fall in the meantime!
This is the thing that confuses me completely. 62K is a really good whack - into the top 10% of earners. But you can "only" borrow £280K.Beans on toast until Autumn it is! Hopefully a probate/period project becomes available in the area where I'm shopping (Hampshire).
Just wondering how far they'll fall in the meantime!
So how are you (sorry, not being personal, just using "you" as the example!) going to move up to the the £950K places? It won't be by your house price growing as if your 280K place goes up to 950K, the 950K place will be £4 million. In theory you could move up a couple more percentile points on the income scale, but there's not that much room up there. Staying at the 92nd percentile and waiting for a regular pay rise won't work; wages aren't rising very fast - even teachers only got 3.1% this year.
So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?
My wife and I have a good PAYE household income and with a 10% deposit would be able to borrow about £650k.
In a town with a buoyant market (Harrogate) it means that to truly upgrade from the house we are in we have almost no chance. Even if we could move our existing house in an average postcode to a desirable postcode it would require us spending at least £500k.
It feels crazy that with such a strong income we have very little chance of moving up the ladder unless we really, really stretch ourselves.
It is something of a mystery to me how prices in some parts of the country (namely London, the surrounding areas and certain other hot spots) are quite so high.
It does still surprise me at times quite how much money some people make to be fair, but on the face of it, it doesn't seem to account for some of the sky high prices, at least in my mind. It does seems that the large inheritance is now priced in, such that it is hard to get particularly far on the ladder without it, for most people.
Plus there must be an element of people who have large equity, due to having bought a significant time ago, selling houses to each other whilst those on the sidelines of things look on.
All I can really conclude is that, since houses are being bought and sold at todays prices, there is a lot of money out there doing the rounds/sloshing about, more than you would perhaps think.
The game for me is to look for value in cheaper locations/areas. I know the old saying "location, location..." is still important, but some areas that seem to be perceived as very desireable just don't justify the strong premium for me. They've inflated beyond what seems to be a reasonable premium, but the market decides so must be right I guess...
I drive 20 miles to work (south towards London) to a town where an equalivent house to mine is getting on for about twice the price. There is nothing to do with London in my life, but it's just sitting there pushing up prices in surrounding areas to the point where locals can't really justify living in said area. At least I get to do extra driving
It does still surprise me at times quite how much money some people make to be fair, but on the face of it, it doesn't seem to account for some of the sky high prices, at least in my mind. It does seems that the large inheritance is now priced in, such that it is hard to get particularly far on the ladder without it, for most people.
Plus there must be an element of people who have large equity, due to having bought a significant time ago, selling houses to each other whilst those on the sidelines of things look on.
All I can really conclude is that, since houses are being bought and sold at todays prices, there is a lot of money out there doing the rounds/sloshing about, more than you would perhaps think.
The game for me is to look for value in cheaper locations/areas. I know the old saying "location, location..." is still important, but some areas that seem to be perceived as very desireable just don't justify the strong premium for me. They've inflated beyond what seems to be a reasonable premium, but the market decides so must be right I guess...
I drive 20 miles to work (south towards London) to a town where an equalivent house to mine is getting on for about twice the price. There is nothing to do with London in my life, but it's just sitting there pushing up prices in surrounding areas to the point where locals can't really justify living in said area. At least I get to do extra driving
Edited by SteadyAsSheGoes on Wednesday 22 July 15:24
Sheepshanks said:
Flooble said:
So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?
As someone else mentioned, in a lot of places they've been static since 2006/7. Even so, due to price rises up to then, many people who have been in their house for a long time couldn't buy it today if they were starting again.We sold it in 2019 for about 80k more that we paid for it 15 years previously, which was very similar or maybe only a little bit more than we had bought it for, if you adjusted it for inflation
But we’d been paying down the mortgage for 15 years so we’re in a good place equity wise
TheFungle said:
Flooble said:
Bullet-Proof_Biscuit said:
Another statistic; My broker just told me he is convinced I can borrow £280k if I put 10% down (62k basic paye).
Beans on toast until Autumn it is! Hopefully a probate/period project becomes available in the area where I'm shopping (Hampshire).
Just wondering how far they'll fall in the meantime!
This is the thing that confuses me completely. 62K is a really good whack - into the top 10% of earners. But you can "only" borrow £280K.Beans on toast until Autumn it is! Hopefully a probate/period project becomes available in the area where I'm shopping (Hampshire).
Just wondering how far they'll fall in the meantime!
So how are you (sorry, not being personal, just using "you" as the example!) going to move up to the the £950K places? It won't be by your house price growing as if your 280K place goes up to 950K, the 950K place will be £4 million. In theory you could move up a couple more percentile points on the income scale, but there's not that much room up there. Staying at the 92nd percentile and waiting for a regular pay rise won't work; wages aren't rising very fast - even teachers only got 3.1% this year.
So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?
My wife and I have a good PAYE household income and with a 10% deposit would be able to borrow about £650k.
In a town with a buoyant market (Harrogate) it means that to truly upgrade from the house we are in we have almost no chance. Even if we could move our existing house in an average postcode to a desirable postcode it would require us spending at least £500k.
It feels crazy that with such a strong income we have very little chance of moving up the ladder unless we really, really stretch ourselves.
Maybe I am driving this incorrectly, £60,000 only get you £230,000 with the Halifax (as a new home)
Edited by the-photographer on Wednesday 22 July 07:42
Flooble said:
This is the thing that confuses me completely. 62K is a really good whack - into the top 10% of earners. But you can "only" borrow £280K.
So how are you (sorry, not being personal, just using "you" as the example!) going to move up to the the £950K places? It won't be by your house price growing as if your 280K place goes up to 950K, the 950K place will be £4 million. In theory you could move up a couple more percentile points on the income scale, but there's not that much room up there. Staying at the 92nd percentile and waiting for a regular pay rise won't work; wages aren't rising very fast - even teachers only got 3.1% this year.
So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?
It’s a really interesting question, and I think most of the main factors have been covered.So how are you (sorry, not being personal, just using "you" as the example!) going to move up to the the £950K places? It won't be by your house price growing as if your 280K place goes up to 950K, the 950K place will be £4 million. In theory you could move up a couple more percentile points on the income scale, but there's not that much room up there. Staying at the 92nd percentile and waiting for a regular pay rise won't work; wages aren't rising very fast - even teachers only got 3.1% this year.
So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?
The main factor is BOMAD/inheritance, this is where the majority of the money for a lot of big purchases seems to come from.
Secondly, although £62k is a good income there are a reasonable amount of people earning considerably more, dual-high income households and non-PAYE people earning a relative fortune.
People on average wages are effectively locked out of the housing market in a lot of areas, so these high earners make up a higher proportion of the house buying population than most would expect.
the-photographer said:
https://www.halifax.co.uk/mortgages/mortgage-calcu...
Maybe I am driving this incorrectly, £60,000 only get you £230,000 with the Halifax (as a new home)
I'd imagine the broker has access to different mortgages, values and rates than the standard ones on the website? I'd hope so anyway!Maybe I am driving this incorrectly, £60,000 only get you £230,000 with the Halifax (as a new home)
Edited by the-photographer on Wednesday 22 July 07:42
kingston12 said:
Flooble said:
This is the thing that confuses me completely. 62K is a really good whack - into the top 10% of earners. But you can "only" borrow £280K.
So how are you (sorry, not being personal, just using "you" as the example!) going to move up to the the £950K places? It won't be by your house price growing as if your 280K place goes up to 950K, the 950K place will be £4 million. In theory you could move up a couple more percentile points on the income scale, but there's not that much room up there. Staying at the 92nd percentile and waiting for a regular pay rise won't work; wages aren't rising very fast - even teachers only got 3.1% this year.
So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?
It’s a really interesting question, and I think most of the main factors have been covered.So how are you (sorry, not being personal, just using "you" as the example!) going to move up to the the £950K places? It won't be by your house price growing as if your 280K place goes up to 950K, the 950K place will be £4 million. In theory you could move up a couple more percentile points on the income scale, but there's not that much room up there. Staying at the 92nd percentile and waiting for a regular pay rise won't work; wages aren't rising very fast - even teachers only got 3.1% this year.
So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?
The main factor is BOMAD/inheritance, this is where the majority of the money for a lot of big purchases seems to come from.
Secondly, although £62k is a good income there are a reasonable amount of people earning considerably more, dual-high income households and non-PAYE people earning a relative fortune.
People on average wages are effectively locked out of the housing market in a lot of areas, so these high earners make up a higher proportion of the house buying population than most would expect.
So we'll be moving from a £300k to a £600k house now maybe. I guess the next jump up, around here at least, to get something better is about £800k. To get there we'll need to wait until we've paid off £200k from the mortgage, my salary goes up, or my partner goes back to work as our daughter goes to school.
That's how I'm thinking about it anyway! Alternatively we might get there in a few years and decide to spend less, live in a different place and choose a different job...
kingston12 said:
Flooble said:
This is the thing that confuses me completely. 62K is a really good whack - into the top 10% of earners. But you can "only" borrow £280K.
So how are you (sorry, not being personal, just using "you" as the example!) going to move up to the the £950K places? It won't be by your house price growing as if your 280K place goes up to 950K, the 950K place will be £4 million. In theory you could move up a couple more percentile points on the income scale, but there's not that much room up there. Staying at the 92nd percentile and waiting for a regular pay rise won't work; wages aren't rising very fast - even teachers only got 3.1% this year.
So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?
It’s a really interesting question, and I think most of the main factors have been covered.So how are you (sorry, not being personal, just using "you" as the example!) going to move up to the the £950K places? It won't be by your house price growing as if your 280K place goes up to 950K, the 950K place will be £4 million. In theory you could move up a couple more percentile points on the income scale, but there's not that much room up there. Staying at the 92nd percentile and waiting for a regular pay rise won't work; wages aren't rising very fast - even teachers only got 3.1% this year.
So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?
The main factor is BOMAD/inheritance, this is where the majority of the money for a lot of big purchases seems to come from.
Secondly, although £62k is a good income there are a reasonable amount of people earning considerably more, dual-high income households and non-PAYE people earning a relative fortune.
People on average wages are effectively locked out of the housing market in a lot of areas, so these high earners make up a higher proportion of the house buying population than most would expect.
There will be a gradual correction on these properties when compared with the wider market - there has to be. Either that, or the'll all eventually be broken up into flats!
DaveCWK said:
kingston12 said:
Flooble said:
This is the thing that confuses me completely. 62K is a really good whack - into the top 10% of earners. But you can "only" borrow £280K.
So how are you (sorry, not being personal, just using "you" as the example!) going to move up to the the £950K places? It won't be by your house price growing as if your 280K place goes up to 950K, the 950K place will be £4 million. In theory you could move up a couple more percentile points on the income scale, but there's not that much room up there. Staying at the 92nd percentile and waiting for a regular pay rise won't work; wages aren't rising very fast - even teachers only got 3.1% this year.
So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?
It’s a really interesting question, and I think most of the main factors have been covered.So how are you (sorry, not being personal, just using "you" as the example!) going to move up to the the £950K places? It won't be by your house price growing as if your 280K place goes up to 950K, the 950K place will be £4 million. In theory you could move up a couple more percentile points on the income scale, but there's not that much room up there. Staying at the 92nd percentile and waiting for a regular pay rise won't work; wages aren't rising very fast - even teachers only got 3.1% this year.
So how will house prices keep going up? Or if they stay static, how will people like Bullet-proof biscuit climb the ladder? What am I missing?
The main factor is BOMAD/inheritance, this is where the majority of the money for a lot of big purchases seems to come from.
Secondly, although £62k is a good income there are a reasonable amount of people earning considerably more, dual-high income households and non-PAYE people earning a relative fortune.
People on average wages are effectively locked out of the housing market in a lot of areas, so these high earners make up a higher proportion of the house buying population than most would expect.
There will be a gradual correction on these properties when compared with the wider market - there has to be. Either that, or the'll all eventually be broken up into flats!
We are looking in a very specific area at the moment and a lot of the property has been lived in for the last 30-40 years. The bathrooms and kitchens are often from the 80s.
Occasionally there is old sale data and you might see property change hands in the 90s for 50-60k and now its £400-£600k.
The last few weeks have been insane, property has been selling so fast. We arranged a viewing for next weekend and the house we wanted to view already sold for above asking price. Thats <48hrs on the market. And it needed a good bit of work.
cml24 said:
We are looking at buying our next house now. My wage has gone up but my partner no longer works, so we can borrow roughly the same amount as we did when we bought our first house six years ago. But our deposit has gone from £35k to perhaps £300k as we have paid off the mortgage on our first house (fortunate to be one of those high earners for three years as I worked abroad).
So we'll be moving from a £300k to a £600k house now maybe. I guess the next jump up, around here at least, to get something better is about £800k. To get there we'll need to wait until we've paid off £200k from the mortgage, my salary goes up, or my partner goes back to work as our daughter goes to school.
That's how I'm thinking about it anyway! Alternatively we might get there in a few years and decide to spend less, live in a different place and choose a different job...
That’s exactly how (I think) the property market should work, but unfortunately does so for an increasingly small number of people.So we'll be moving from a £300k to a £600k house now maybe. I guess the next jump up, around here at least, to get something better is about £800k. To get there we'll need to wait until we've paid off £200k from the mortgage, my salary goes up, or my partner goes back to work as our daughter goes to school.
That's how I'm thinking about it anyway! Alternatively we might get there in a few years and decide to spend less, live in a different place and choose a different job...
As the workarounds like BOMAD and HTB proliferate, it makes it much harder for people to buy in the traditional way.
cml24 said:
So we'll be moving from a £300k to a £600k house now maybe. I guess the next jump up, around here at least, to get something better is about £800k. To get there we'll need to wait until we've paid off £200k from the mortgage, my salary goes up, or my partner goes back to work as our daughter goes to school.
Interesting to read that roadmap. We just bought a house and lived in it. 34 years so far. DaveCWK said:
Also worth mentioning that there are a huge number of people who live in large houses they have owned for 20+ years, who absolutely couldn't afford to purchase them again today - in many cases they are many multiples of their salary away from being able to afford it.
There will be a gradual correction on these properties when compared with the wider market - there has to be. Either that, or the'll all eventually be broken up into flats!
It’s an interesting one. If that happens it will have to have an impact on the wider market as well, because that is where a lot of the BOMAD money comes from to drive the lower end.There will be a gradual correction on these properties when compared with the wider market - there has to be. Either that, or the'll all eventually be broken up into flats!
Not everyone is into BOMAD though. I know of a few people who would ideally like to downsize from big houses but won’t, because it makes no financial sense - they’ll get a big stamp duty bill, other fees and end up with a stack of cash earning nothing in the bank. The alternative to keep it in the perceived miracle property market is much more attractive.
If those prices go down, the inheritees will also get less to plough back into the property market, and still have an IHT bill to pay.
dan98 said:
AyBee said:
Except you have to live somewhere, so in those 15 years, you would have paid £180k in rent...now take that into your calculations...
I'm not a financial expert but I remember most of my monthly outgoings were being thrown away in mortgage interest. Not quite as much as rent would have, but adding all the fees around the purchase I suspect it was similar.Therefore your argument about rent is moot, in my case and I suspect many others.
Also don't forget the interest which the deposit could have been earning over the years had it not been stuck uselessly in the property.
Sheepshanks said:
cml24 said:
So we'll be moving from a £300k to a £600k house now maybe. I guess the next jump up, around here at least, to get something better is about £800k. To get there we'll need to wait until we've paid off £200k from the mortgage, my salary goes up, or my partner goes back to work as our daughter goes to school.
Interesting to read that roadmap. We just bought a house and lived in it. 34 years so far. Presumably your house would not be now affordable if you were in the position you were 34 years ago? If that makes sense.
cml24 said:
Presumably your house would not be now affordable if you were in the position you were 34 years ago? If that makes sense.
It wouldn't be possible if my job was the same so salary just adjusted up to today's level - especially if it was the same position for my wife, who didn't work when the kids were small and then only ever had a part-time Civil Service admin job.That same effect means few of the houses - reasonable size 3 & 4 bed detached - in the road sell to young couples these days. The last two that sold went to an older couple and a single old bloke - both downsizing and moving to be near to family.
menousername said:
Confused by this- I’m in the SE - decent enough commute into London - for daily commuting it can be a bit of a slog but if you were predicting a 2 or 3 day working week it would be the perfect place to relocate to.
Plugged the same filters into RM - Usual 3/4 bedders, drive, garage etc - nothing is selling. Same houses advertised, with a few modest reductions, and with barely any new listings and hardly any that have recently gone STC.
Expanded my filters to include new builds and anything up to 500k in light of recent SD news, and to include SSTCPlugged the same filters into RM - Usual 3/4 bedders, drive, garage etc - nothing is selling. Same houses advertised, with a few modest reductions, and with barely any new listings and hardly any that have recently gone STC.
Got about 25 hits of which about 12 had been SSTC - most of those were new builds and listed from earlier this year so not recent / quick sales. One non-new build which was reduced in Feb. Seems very low for area. Couple that I recognised as having gone SSTC that were being relisted. So SE does not appear to be seeing the same activity.
Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff