How far will house prices fall [volume 5]
Discussion
Yes, one of the best things about living in Europe is renting. I loved it. Lived in some amazing architect designed places, with security and no stigma. Could move to a different district every couple of years no hassle.
Compare with UK and all the crappy landlords, low quality rental stock , being forced into legal fees, stamp duty and hassle.... rubbish.
Compare with UK and all the crappy landlords, low quality rental stock , being forced into legal fees, stamp duty and hassle.... rubbish.
sambucket said:
Compare with UK and all the crappy landlords, low quality rental stock, being forced into legal fees, stamp duty and hassle.... rubbish.
Without wishing to sound snobbish, good rental property does exist in the UK and it gets easier to find as your price bracket moves up, as landlords are selling to a customer base that, frankly, has more options and isn't trying to find the cheapest acceptable property.It's worth remembering that in higher priced areas of the UK the landlord is lending you the flat for <3% of its market value, which seems like a good deal to me.
NickCQ said:
Without wishing to sound snobbish, good rental property does exist in the UK and it gets easier to find as your price bracket moves up, as landlords are selling to a customer base that, frankly, has more options and isn't trying to find the cheapest acceptable property.
It's worth remembering that in higher priced areas of the UK the landlord is lending you the flat for <3% of its market value, which seems like a good deal to me.
Yes true. Also value improves as you go up, for the renter. I worked out my last rental was earning the landlord about 2% yield. But talking in more general terms, rental market in UK is dire, and this drives the whole culture.It's worth remembering that in higher priced areas of the UK the landlord is lending you the flat for <3% of its market value, which seems like a good deal to me.
dan98 said:
711 said:
This is what worries me about taking the “new view “ on attitude to mega debt.
I completely see and agree that it’s been a good strategy to lever up over the last ten years or more, and that rates and debt levels probably aren’t changing in the near future.
There is also the problem though that if there is a dip of say 20% during the next couple of years, that’s likely to coincide with circumstances that cap wage growth and increase unemployment.
If you’re unlucky enough to be on the losing side of that you could end up being a rate prisoner sitting on a massive pile of debt.
Having experienced both sides of the coin, I blame the appalling state of the rental market for much of this attitude.I completely see and agree that it’s been a good strategy to lever up over the last ten years or more, and that rates and debt levels probably aren’t changing in the near future.
There is also the problem though that if there is a dip of say 20% during the next couple of years, that’s likely to coincide with circumstances that cap wage growth and increase unemployment.
If you’re unlucky enough to be on the losing side of that you could end up being a rate prisoner sitting on a massive pile of debt.
In Germany it's possible to rent an excellent home for relatively little, and the laws being what they are, you can usually stay there as long as you like without any fear of being thrown out or the rent bumping up. Indeed my neighbours have rented their apartment since 1949.
Excess earnings actually go where they should IMO, into long term investments or pensions.
It's so liberating to be free of life-long debt slavery, the lottery of the housing market, or the burden of responsibility for some knackered pile of Victoriana masquerading itself as a house.
It's become an alien concept to most Brits now, to the point where it's almost a social stigma not to have a mortgage and be tied up in the life-long palava.
A lot of people seem to feel that the low interest rate landscape must be here to stay for the foreseeable future, I'm in that camp. It not only that the mortgage payment each month is significantly cheaper than the rental equivalent (in my area at least), it's that if you remove the debt repayment aspect and just look specifically at the interest per month (I look at it as like the rent to the bank) then it looks even more like a no-brainer. Providing you have the sufficient deposit/equity and income to get it done. The thing with rates on the deck is that is does still make sence to borrow to the max as the repayments are affordable.
As an owner I'd like prices to stagnate somewhat in the medium term, so that on the one hand I don't lose equity, but on the other I don't want the next house up the ladder to get away from my affordability.
dan98 said:
711 said:
This is what worries me about taking the “new view “ on attitude to mega debt.
I completely see and agree that it’s been a good strategy to lever up over the last ten years or more, and that rates and debt levels probably aren’t changing in the near future.
There is also the problem though that if there is a dip of say 20% during the next couple of years, that’s likely to coincide with circumstances that cap wage growth and increase unemployment.
If you’re unlucky enough to be on the losing side of that you could end up being a rate prisoner sitting on a massive pile of debt.
Having experienced both sides of the coin, I blame the appalling state of the rental market for much of this attitude.I completely see and agree that it’s been a good strategy to lever up over the last ten years or more, and that rates and debt levels probably aren’t changing in the near future.
There is also the problem though that if there is a dip of say 20% during the next couple of years, that’s likely to coincide with circumstances that cap wage growth and increase unemployment.
If you’re unlucky enough to be on the losing side of that you could end up being a rate prisoner sitting on a massive pile of debt.
In Germany it's possible to rent an excellent home for relatively little, and the laws being what they are, you can usually stay there as long as you like without any fear of being thrown out or the rent bumping up. Indeed my neighbours have rented their apartment since 1949.
Excess earnings actually go where they should IMO, into long term investments or pensions.
It's so liberating to be free of life-long debt slavery, the lottery of the housing market, or the burden of responsibility for some knackered pile of Victoriana masquerading itself as a house.
It's become an alien concept to most Brits now, to the point where it's almost a social stigma not to have a mortgage and be tied up in the life-long palava.
At least if you buy a house, once you hgave paid for it, its yours. No payments necessary.
monkfish1 said:
What i have never understood about germany, isif you rent, what happens when you retire and your income drops dramatically. And lets say you live to 90. How do you find the money for rent for 30 years?
At least if you buy a house, once you hgave paid for it, its yours. No payments necessary.
Savings are savings, you can put all the money you saved on mortgage repayments in a pension / investments.At least if you buy a house, once you hgave paid for it, its yours. No payments necessary.
AyBee said:
TheFungle said:
AyBee said:
TheFungle said:
This.
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.
This doesn't make sense - your household income is somewhere in the region of £150k p.a. and you a) can't raise more than 10% deposit in North Yorks (where's all your money going?) and b) don't want to "stretch" to a c.£1,500 per month mortgage (£500k)?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.
Even if we used equity from our house to effectively make it a £0 deposit that would still represent an extra £1700pm in extra payments per month.
It's nice to be in a situation in a house that we like with a sensible income multiplier but it's also a bit of a head scratcher as to what level of income people must have to be able to afford houses in the £650K+ category which in Harrogate, is many.
I should add that my wife and I have never had any family money or profit from property to benefit from.
My wife and I haven't had family money either, but we've saved hard and are happy spending a quarter of our takehome on somewhere nice to live.
I would much rather as we get older aim to reduce our mortgage payments or clear it off earlier in order that we can put money aside for the future or spunk it on rapidly depreciating cars
NickCQ said:
It's worth remembering that in higher priced areas of the UK the landlord is lending you the flat for <3% of its market value, which seems like a good deal to me.
That sounds too much like the landlord is doing you a favour and its “market” value is not hugely relevant to the renter - cost and condition yes not hypothetical (until it is marketed and sold its not firm) value.I feel the more accurate way of phrasing it is the landlord is selling you a fixed term rental in return for deposit and monthly payments that will likely increase should you wish to take a further fixed term.
NickCQ said:
Savings are savings, you can put all the money you saved on mortgage repayments in a pension / investments.
https://theconversation.com/germanys-deep-rooted-obsession-with-saving-a-brief-history-95016Perhaps as well as the cultural aspect, they are able to save more because they’re not throwing all their money at hard to afford mortgage repayments?
menousername said:
That sounds too much like the landlord is doing you a favour and its “market” value is not hugely relevant to the renter - cost and condition yes not hypothetical (until it is marketed and sold its not firm) value.
I feel the more accurate way of phrasing it is the landlord is selling you a fixed term rental in return for deposit and monthly payments that will likely increase should you wish to take a further fixed term.
The market value is quite relevant as the alternative to renting is of course buying, so the market value is effectively the cash I have in my pocket as a result of renting not buying.I feel the more accurate way of phrasing it is the landlord is selling you a fixed term rental in return for deposit and monthly payments that will likely increase should you wish to take a further fixed term.
As you point out, the difference is that if I rent the property I don't take the risk / reward on the change in capital value of the property over the year.
SteadyAsSheGoes said:
dan98 said:
711 said:
This is what worries me about taking the “new view “ on attitude to mega debt.
I completely see and agree that it’s been a good strategy to lever up over the last ten years or more, and that rates and debt levels probably aren’t changing in the near future.
There is also the problem though that if there is a dip of say 20% during the next couple of years, that’s likely to coincide with circumstances that cap wage growth and increase unemployment.
If you’re unlucky enough to be on the losing side of that you could end up being a rate prisoner sitting on a massive pile of debt.
Having experienced both sides of the coin, I blame the appalling state of the rental market for much of this attitude.I completely see and agree that it’s been a good strategy to lever up over the last ten years or more, and that rates and debt levels probably aren’t changing in the near future.
There is also the problem though that if there is a dip of say 20% during the next couple of years, that’s likely to coincide with circumstances that cap wage growth and increase unemployment.
If you’re unlucky enough to be on the losing side of that you could end up being a rate prisoner sitting on a massive pile of debt.
In Germany it's possible to rent an excellent home for relatively little, and the laws being what they are, you can usually stay there as long as you like without any fear of being thrown out or the rent bumping up. Indeed my neighbours have rented their apartment since 1949.
Excess earnings actually go where they should IMO, into long term investments or pensions.
It's so liberating to be free of life-long debt slavery, the lottery of the housing market, or the burden of responsibility for some knackered pile of Victoriana masquerading itself as a house.
It's become an alien concept to most Brits now, to the point where it's almost a social stigma not to have a mortgage and be tied up in the life-long palava.
A lot of people seem to feel that the low interest rate landscape must be here to stay for the foreseeable future, I'm in that camp. It not only that the mortgage payment each month is significantly cheaper than the rental equivalent (in my area at least), it's that if you remove the debt repayment aspect and just look specifically at the interest per month (I look at it as like the rent to the bank) then it looks even more like a no-brainer. Providing you have the sufficient deposit/equity and income to get it done. The thing with rates on the deck is that is does still make sence to borrow to the max as the repayments are affordable.
As an owner I'd like prices to stagnate somewhat in the medium term, so that on the one hand I don't lose equity, but on the other I don't want the next house up the ladder to get away from my affordability.
Lots of factors have kept inflation in check of late, but with Brexit uncertainty, supply chain uncertainty etc I can see inflation starting to climb next year. There are other means of counteracting that, but increasing interest rates is the normal tool to use. Maybe not, but the % variance for a 5 year lock is currently minimal so looked like good value to me.
Carl_Manchester said:
some have short memories though, 2009 was a great year financially, for many, even though the crash was in 2008. It wasn’t until 2010 that the rot had firmly set in.
The reason for this is that money printers cushioned the initial shock. Same will happen this time imho.
I share your 'IMHO' due to it being impossible to predict. What concerns me is the lack of headroom for cushioning the blow due to how much money has been printed since the last time. And interest rates were also higher.The reason for this is that money printers cushioned the initial shock. Same will happen this time imho.
I also share your view that it could be a couple of years before the ripples reach the shore - but again - hard to predict.
For those who are reading this thread and are depressed about what your money get your money gets you, but have half decent capital.
May I suggest you consider mining wrecks.
You can get some absolutely epic properties for a good price if you get the right advice.
Anything that frightens lenders usually frightens normal people.
May I suggest you consider mining wrecks.
You can get some absolutely epic properties for a good price if you get the right advice.
Anything that frightens lenders usually frightens normal people.
711 said:
https://theconversation.com/germanys-deep-rooted-o...
Perhaps as well as the cultural aspect, they are able to save more because they’re not throwing all their money at hard to afford mortgage repayments?
In general terms, debt is looked down on - people prefer to buy something only once they can afford it. Perhaps as well as the cultural aspect, they are able to save more because they’re not throwing all their money at hard to afford mortgage repayments?
A mortgage is basically seen in the same light - a weight around the shoulders rather than some kind of badge-of-honour in financial terms.
Over a lifetime, I imagine people are much better off simply because they don't throw large amounts away on interest as you say.
NickCQ said:
monkfish1 said:
What i have never understood about germany, isif you rent, what happens when you retire and your income drops dramatically. And lets say you live to 90. How do you find the money for rent for 30 years?
At least if you buy a house, once you hgave paid for it, its yours. No payments necessary.
Savings are savings, you can put all the money you saved on mortgage repayments in a pension / investments.At least if you buy a house, once you hgave paid for it, its yours. No payments necessary.
Pension / investments pretty much make nothing useful these days. Might have been good in the past, but not anymore.
I know you pay interest on a mortgage, but if you buy a house at 25, take 25 years to pay, you own it outright for the next 25 till you die. The rent would have to be very cheap to "be ahead" over 50 years. is it really that cheap?
monkfish1 said:
I still dont understand.
Pension / investments pretty much make nothing useful these days. Might have been good in the past, but not anymore.
I know you pay interest on a mortgage, but if you buy a house at 25, take 25 years to pay, you own it outright for the next 25 till you die. The rent would have to be very cheap to "be ahead" over 50 years. is it really that cheap?
Investments have done well since 2009 for surePension / investments pretty much make nothing useful these days. Might have been good in the past, but not anymore.
I know you pay interest on a mortgage, but if you buy a house at 25, take 25 years to pay, you own it outright for the next 25 till you die. The rent would have to be very cheap to "be ahead" over 50 years. is it really that cheap?
Also remember that a long term tenancy saves you maintenance etc. Due to my career, I rented for 20 odd years, and when a tap drips, or washing machine packs up, then it is the owner’s issue to fix. (though for small repairs easier to reimburse)
We would also negotiate redecoration, had dogs.
What I would say is that it is much better to rent from ‘professionals’ - especially large firms as then it is a business with proper management who understand they are in the service industry. Renting from an individual who sees the place as their pension is a PITA as they will regard a dollar spent as a dollar out of their pocket and either not know their obligations or try and get out of them. Avoid! One occasion the washing machine broke, and the landlord came up with excuse after excuse. After a few days I just went and bought a Miele, had it installed and took it out of the rent until paid back.
TheFungle said:
AyBee said:
TheFungle said:
AyBee said:
TheFungle said:
This.
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.
This doesn't make sense - your household income is somewhere in the region of £150k p.a. and you a) can't raise more than 10% deposit in North Yorks (where's all your money going?) and b) don't want to "stretch" to a c.£1,500 per month mortgage (£500k)?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.
Even if we used equity from our house to effectively make it a £0 deposit that would still represent an extra £1700pm in extra payments per month.
It's nice to be in a situation in a house that we like with a sensible income multiplier but it's also a bit of a head scratcher as to what level of income people must have to be able to afford houses in the £650K+ category which in Harrogate, is many.
I should add that my wife and I have never had any family money or profit from property to benefit from.
My wife and I haven't had family money either, but we've saved hard and are happy spending a quarter of our takehome on somewhere nice to live.
I would much rather as we get older aim to reduce our mortgage payments or clear it off earlier in order that we can put money aside for the future or spunk it on rapidly depreciating cars
I don't want to be paying a big mortgage till I'm 65 either. Dread the thought. I guess it comes down to what you want the most.
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