How far will house prices fall [volume 5]

[V6Alfisti]

number2 said:

You have to get lucky that the property you want, is available to buy, and at the price you want.

It's pretty specific.

If one is after a property of homogeneous type, and is currently bidding, say £1m, but the sellers of all these similar properties all want £1.2m, then in 12 months time a seller of one of said properties accepts £1m then it would be worth hanging on for, and one can demonstrate that they have indeed benefited from a change in sentiment/fall in market. Or if these properties have sold very recently for £1.2m and then you pick the one you want for £1.0m in the next year or so.

Otherwise, it's all just a bit too theoretical, comparing apples and oranges.

Yes that is the benefit but equally the risk.

Benefit as you say, that even a £100k, let alone £200k drop on that property makes a significant difference on LTV/interest paid over the period and vastly outweigh the cost of rent if seen singularly (let alone investments e.t.c that most people in this category will likely have and offset the rent, and later used for the house purchase)

Risk - Is high if you are after a very specific property/on a specific street - you will likely be dissapointed/waiting. A wider range will certainly help if supply drops. Also no-one will ever be able to know when the bottom is.

[number2]

NickCQ said:

MX-6 said:

This maybe something of a separate issue, but I'm a bit against a complete security of tenure with social housing. You see quite a number of instances where you've a singe older person on their own (perhaps because their family moved out for example) in a good size 3 bedroom local authority property. Meanwhile there are young families squashed into flats or smaller houses. I think people should be moved around more to better allocate the publicly owned housing resources.

Interesting - I agree but only to the extent that there is a shortage (which needn't be the case).
Ironically, the 'bedroom tax' was on paper a good policy to promote efficient usage of limited stock, but was destroyed in the press by sob story anecdotes.

Not sure if it's changed but a council house used to be for life, so there could be on/two people in a much larger property than necessary. The bedroom tax was good in theory, to manage and match the demand/supply of suitable property.

I remember a colleague from Poland was living in his mum's central London council flat after she moved back to Poland. This was almost 20 years ago, but I don't imagine it was an isolated occurrence.

[MX-6]

PrinceRupert said:

MX-6 said:

This maybe something of a separate issue, but I'm a bit against a complete security of tenure with social housing. You see quite a number of instances where you've a singe older person on their own (perhaps because their family moved out for example) in a good size 3 bedroom local authority property. Meanwhile there are young families squashed into flats or smaller houses. I think people should be moved around more to better allocate the publicly owned housing resources.

I think the problem is looking at in light of today's council housing stock, which is severely limited and oversubscribed. If we hadn't had Right to Buy and had kept building sufficient council housing over the last thirty years, then it would be less of a problem. Security of tenure is important to ensure council housing estates have a sense of community and permanence - much of the problems that council housing estates have today, I feel, is down to their transient nature and the fact that many who live on council housing estates today are there because the private rented sector won't have them.

Good points. It's certainly the case that it's the old school council estate that have the bad imagine of a place where the inhabitants aren't very invested in the area. There seems to be a move these days to mix social housing with privately owned in order to improve on the sense of community, most of these new build developments having to include a given number of housing association properties. It's a good idea in theory, though having bough two off plan new builds in the past (one shared ownership, one HTB) in these sorts of developments, I prefer living in a more established area of privately owned houses.

[MX-6]

red_slr said:

MX-6 said:

I very much agree with that assessment.

I've said it previously here, I don't think house prices are too high as such, it's more an issue of wages for working class/unskilled/semi-skilled type jobs have lagged real inflation.

And thats the issue, most of these jobs are in the goods / retail sector. You want 39p loaf of bread then production cost savings come from somewhere.

For wages to rise then the cost of basic goods and services needs to rise - by a lot. I always raise a bit of an eyebrow at people who say they went to Minsk and a full 3 course meal with drinks was £3. Yeah, it is but the person making the food is probably earning about £40 a week.

Its pretty simple in my mind, you make the minimum wage £25k a year (or whatever) but accept goods costs go up by 20,30% etc. The thing is working in retail myself, people will almost always search out the cheapest deal they dont care if the employees of that company are earning the bare minimum wage so long as they save 10 quid on their order.

This is it, todays consumer are very shrewd at minimising their spending so retailers try to keep their costs at a minimum. People have gotten used to very cheap food and consumer goods, but things of real permanent value like houses are more expensive than ever.

The divide between rich and poor has undoubtedly grown. It's a tricky thing to address, if you think that it is something that should be addressed, because it's effectively the market that determines value and in a round about way what peoples renumeration is. The market has pretty much decided that the work of PL footballers is of the highest value in society. Personally, I would like to see some further government intervention with an increased minmum wage, but I think this can become inflationary - businesses, landlords, etc. realise that they can then charge people more...

[princeperch]

MX-6 said:

PrinceRupert said:

MX-6 said:

This maybe something of a separate issue, but I'm a bit against a complete security of tenure with social housing. You see quite a number of instances where you've a singe older person on their own (perhaps because their family moved out for example) in a good size 3 bedroom local authority property. Meanwhile there are young families squashed into flats or smaller houses. I think people should be moved around more to better allocate the publicly owned housing resources.

I think the problem is looking at in light of today's council housing stock, which is severely limited and oversubscribed. If we hadn't had Right to Buy and had kept building sufficient council housing over the last thirty years, then it would be less of a problem. Security of tenure is important to ensure council housing estates have a sense of community and permanence - much of the problems that council housing estates have today, I feel, is down to their transient nature and the fact that many who live on council housing estates today are there because the private rented sector won't have them.

Good points. It's certainly the case that it's the old school council estate that have the bad imagine of a place where the inhabitants aren't very invested in the area. There seems to be a move these days to mix social housing with privately owned in order to improve on the sense of community, most of these new build developments having to include a given number of housing association properties. It's a good idea in theory, though having bough two off plan new builds in the past (one shared ownership, one HTB) in these sorts of developments, I prefer living in a more established area of privately owned houses.

a friend of mine owns a flat in the pooles park development in finsbury park. they were very cheap to buy new in 2012 (I think he paid 195k for a one bedder, they are now about 400 for a 1 bedder). they have a mix of owner occupier and social housing in the block.

the social housing element appears to mostly be for the somalian community of which there are a fair few in finsbury park. its now rented out but when he was living there he used to get frequently woken up by the young kids who live there playing outside on petrol mini motos driving up and down at all hours, music blaring all the time, and rubbish bags being lobbed from the balconies onto the pavement so it lands outside the bin store door.

sounds like a grim old place and an experiment i would not wish to take part in.

[PrinceRupert]

princeperch said:

a friend of mine owns a flat in the pooles park development in finsbury park. they were very cheap to buy new in 2012 (I think he paid 195k for a one bedder, they are now about 400 for a 1 bedder). they have a mix of owner occupier and social housing in the block.

the social housing element appears to mostly be for the somalian community of which there are a fair few in finsbury park. its now rented out but when he was living there he used to get frequently woken up by the young kids who live there playing outside on petrol mini motos driving up and down at all hours, music blaring all the time, and rubbish bags being lobbed from the balconies onto the pavement so it lands outside the bin store door.

sounds like a grim old place and an experiment i would not wish to take part in.

Our house is ex housing association, and my understanding is that around 50% of the estate is still housing association - though I understand they are in high demand due to the nature of the properties and tend to be longer term tenants than some. We don't really seem to have those problems (at least no more than anywhere else in this part of London).

[MX-6]

princeperch said:

MX-6 said:

PrinceRupert said:

MX-6 said:

This maybe something of a separate issue, but I'm a bit against a complete security of tenure with social housing. You see quite a number of instances where you've a singe older person on their own (perhaps because their family moved out for example) in a good size 3 bedroom local authority property. Meanwhile there are young families squashed into flats or smaller houses. I think people should be moved around more to better allocate the publicly owned housing resources.

I think the problem is looking at in light of today's council housing stock, which is severely limited and oversubscribed. If we hadn't had Right to Buy and had kept building sufficient council housing over the last thirty years, then it would be less of a problem. Security of tenure is important to ensure council housing estates have a sense of community and permanence - much of the problems that council housing estates have today, I feel, is down to their transient nature and the fact that many who live on council housing estates today are there because the private rented sector won't have them.

Good points. It's certainly the case that it's the old school council estate that have the bad imagine of a place where the inhabitants aren't very invested in the area. There seems to be a move these days to mix social housing with privately owned in order to improve on the sense of community, most of these new build developments having to include a given number of housing association properties. It's a good idea in theory, though having bough two off plan new builds in the past (one shared ownership, one HTB) in these sorts of developments, I prefer living in a more established area of privately owned houses.

a friend of mine owns a flat in the pooles park development in finsbury park. they were very cheap to buy new in 2012 (I think he paid 195k for a one bedder, they are now about 400 for a 1 bedder). they have a mix of owner occupier and social housing in the block.

the social housing element appears to mostly be for the somalian community of which there are a fair few in finsbury park. its now rented out but when he was living there he used to get frequently woken up by the young kids who live there playing outside on petrol mini motos driving up and down at all hours, music blaring all the time, and rubbish bags being lobbed from the balconies onto the pavement so it lands outside the bin store door.

sounds like a grim old place and an experiment i would not wish to take part in.

That does sound quite unpleasant. I guess the problem with social engineering projects in realtion to housing is that people coming into that setting already have a set pattern of behaviour that is quite ingrained. In some case people are aspitational but in others it could take a generation for social mobility to kick in. Living away from London, I had more of an issue with the regular locals being mildly anti-social in the development I was in.

[gibbon]

number2 said:

You have to get lucky that the property you want, is available to buy, and at the price you want.

It's pretty specific.

If one is after a property of homogeneous type, and is currently bidding, say £1m, but the sellers of all these similar properties all want £1.2m, then in 12 months time a seller of one of said properties accepts £1m then it would be worth hanging on for, and one can demonstrate that they have indeed benefited from a change in sentiment/fall in market. Or if these properties have sold very recently for £1.2m and then you pick the one you want for £1.0m in the next year or so.

Otherwise, it's all just a bit too theoretical, comparing apples and oranges.

I've tried to make that point several times, unless you are buying a 'commoditised' flat, then its all a bit of a nonsense.

If you can borrow at below inflation, have found a home you love, at a price you can afford, and plan to live in it medium to long term, why would you possibly waste your life waiting for a 10% dip that statistically is unlikely to happen in a suitable time frame for your needs.

I suspect most bemoaning prices are more frustrated that they cannot buy what they feel they should be able to afford, quite understandable, but a logic that is not not overly helpful to their own situation.

[caymanbill]

red_slr said:

Its pretty simple in my mind, you make the minimum wage £25k a year (or whatever) but accept goods costs go up by 20,30% etc. The thing is working in retail myself, people will almost always search out the cheapest deal they dont care if the employees of that company are earning the bare minimum wage so long as they save 10 quid on their order.

Isn't the problem here human greed though? It seems like the gap between the fat cats/chief execs and the labouring classes is higher than ever before. If there was a fair redistribution of profits, then you wouldn't need a minimum wage in the first place.

[PrinceRupert]

caymanbill said:

red_slr said:

Its pretty simple in my mind, you make the minimum wage £25k a year (or whatever) but accept goods costs go up by 20,30% etc. The thing is working in retail myself, people will almost always search out the cheapest deal they dont care if the employees of that company are earning the bare minimum wage so long as they save 10 quid on their order.

Isn't the problem here human greed though? It seems like the gap between the fat cats/chief execs and the labouring classes is higher than ever before. If there was a fair redistribution of profits, then you wouldn't need a minimum wage in the first place.

Yes, and the growing disconnect between reward and risk/hard work.

[Algarve]

caymanbill said:

red_slr said:

Its pretty simple in my mind, you make the minimum wage £25k a year (or whatever) but accept goods costs go up by 20,30% etc. The thing is working in retail myself, people will almost always search out the cheapest deal they dont care if the employees of that company are earning the bare minimum wage so long as they save 10 quid on their order.

Isn't the problem here human greed though? It seems like the gap between the fat cats/chief execs and the labouring classes is higher than ever before. If there was a fair redistribution of profits, then you wouldn't need a minimum wage in the first place.

Min wage is £18k now if you're over 25 and working 40 hours a week.

If you gave all shop workers a 40% pay rise I hope they'd enjoy it as it won't be with them for long. Price rises to cover it will wreck the viability of the businesses employing them, forcing even more money to flow out of the country untaxed via Amazon and the likes.

[caymanbill]

Algarve said:

Min wage is £18k now if you're over 25 and working 40 hours a week.

If you gave all shop workers a 40% pay rise I hope they'd enjoy it as it won't be with them for long. Price rises to cover it will wreck the viability of the businesses employing them, forcing even more money to flow out of the country untaxed via Amazon and the likes.

Why would prices need to rise to cover it? Could the company owners/shareholders take a bit less profit instead?

[MX-6]

caymanbill said:

Algarve said:

Min wage is £18k now if you're over 25 and working 40 hours a week.

If you gave all shop workers a 40% pay rise I hope they'd enjoy it as it won't be with them for long. Price rises to cover it will wreck the viability of the businesses employing them, forcing even more money to flow out of the country untaxed via Amazon and the likes.

Why would prices need to rise to cover it? Could the company owners/shareholders take a bit less profit instead?

It would be nice to think that they could just pay themselves less in wages, bonuses, dividends, etc. but what is the incentive for them to do so when they can increase prices instead? It's capitalism rightly or wrongly.

I used to be more of the free market liberal persuasion but I think we need at least a degree of government regulation. I imagine there will inevitably always be a pyramid hierarchy to society, but I think it's important to ensure that it doesn't become too stretched and the wealth distribution too disproportionate. We need at least some people lower down the pecking order to be able to get onto the housing ladder and generally be able to buy the output of the economic system to keep the whole show on the road and sustain growth.

[red_slr]

caymanbill said:

Algarve said:

Min wage is £18k now if you're over 25 and working 40 hours a week.

If you gave all shop workers a 40% pay rise I hope they'd enjoy it as it won't be with them for long. Price rises to cover it will wreck the viability of the businesses employing them, forcing even more money to flow out of the country untaxed via Amazon and the likes.

Why would prices need to rise to cover it? Could the company owners/shareholders take a bit less profit instead?

And there is the big issue. Not everyone works for a massive PLC thats making millions / billions in profits.

If something effects employment cost we have to put prices up. We dont have a choice in that as we are already on bare bones when it comes to profit margins.

Its a race to the bottom in that regard.

When the work place pensions and increase div tax came in we put prices up by about 10%. Many customers complained, some regulars moved on and went elsewhere. Strangely we came out the other end about where we started.....

I have now seen this happen a few times since we have been in business. 20 days leave to 28 days leave, we put prices up and a similar thing happened.

We also had a similar situation when fuel costs went through the roof a few years ago. Then when fuel prices came down we managed to give the employees a bit of a raise.

So it very much works both ways.... but the price to the end customer has gone up, its never going to go down!

[Algarve]

caymanbill said:

Algarve said:

Min wage is £18k now if you're over 25 and working 40 hours a week.

If you gave all shop workers a 40% pay rise I hope they'd enjoy it as it won't be with them for long. Price rises to cover it will wreck the viability of the businesses employing them, forcing even more money to flow out of the country untaxed via Amazon and the likes.

Why would prices need to rise to cover it? Could the company owners/shareholders take a bit less profit instead?

I own a bar, if I had to increase the staff wages by 40% I'd need to permanently close and none of them would have a job at all. There isn't enough profit for me to take their wages out of and I can't increase the price I'm charging customers either.

[MaxFromage]

caymanbill said:

Why would prices need to rise to cover it? Could the company owners/shareholders take a bit less profit instead?

Wow. Apologies, but I've never read something so out of step with reality as this.

[Sheepshanks]

Algarve said:

..... and I can't increase the price I'm charging customers either.

Why not? All your competitors would be in the same position too.


Other countries do this - stuff costs a fortune but ordinary workers get paid more.

[number2]

Sheepshanks said:

Algarve said:

..... and I can't increase the price I'm charging customers either.

Why not? All your competitors would be in the same position too.


Other countries do this - stuff costs a fortune but ordinary workers get paid more.

Cost increases can be passed on if there's little competition and few substitutes for the consumer to choose. In the short term at least.

Stuff costs more because people get paid more .

[rm163603]

red_slr said:

The thing is working in retail myself, people will almost always search out the cheapest deal they dont care if the employees of that company are earning the bare minimum wage so long as they save 10 quid on their order.

Very true. There also a steady stream of 'entrepreneurs' new to things that will initiate a race to the bottom and drive the margins out for everyone.

[Rob_125]

Surely wages and cost of products/services is relative. Therefore the bottom earning jobs will always be at the bottom. If the salaries at the bottom increases, the product price increases and the employees are not better off. That is capitalism. If you want to be wealthier the crux of it is to work more, increase skills and better job. (As harsh as that sounds).