How Far Will House Prices Fall? [Volume 6]
Discussion
Joey Deacon said:
Yes, having just done this myself it took us three years of saving £1500 to £1800 each per month. The house we bought went up £75K in this time, so in reality we could barely save quickly enough to keep up with price rises. However, we needed 20% to be able to get a decent mortgage.
One shed car between us, PAYG mobile phones, no Gym memberships, no debt, very rarely drink and rarely eat out. I am not sure how many people would be happy to live a life like that to save a deposit.
That was to buy a 2 bedroom mid terrace in zone 6, crazy when you think about it.
If you'd done it before on a flat and stayed there a while it would have been a piece of piss. One shed car between us, PAYG mobile phones, no Gym memberships, no debt, very rarely drink and rarely eat out. I am not sure how many people would be happy to live a life like that to save a deposit.
That was to buy a 2 bedroom mid terrace in zone 6, crazy when you think about it.
z4RRSchris said:
the london salary thing isnt the whole story, the deposits are still eye watering.
you maybe able to very quickly borrow half a million quid, but do you have the 100k + deposit you need, how can you save that without BOMD
It's not that difficult, I managed it and I only had a 140k salary for 3 years - saving just 3k a month over 3 years is 108k, and that leaves you with c.4k a month left! So it can be done.you maybe able to very quickly borrow half a million quid, but do you have the 100k + deposit you need, how can you save that without BOMD
servantleader said:
z4RRSchris said:
the london salary thing isnt the whole story, the deposits are still eye watering.
you maybe able to very quickly borrow half a million quid, but do you have the 100k + deposit you need, how can you save that without BOMD
It's not that difficult, I managed it and I only had a 140k salary for 3 years - saving just 3k a month over 3 years is 108k, and that leaves you with c.4k a month left! So it can be done.you maybe able to very quickly borrow half a million quid, but do you have the 100k + deposit you need, how can you save that without BOMD
okgo said:
If you'd done it before on a flat and stayed there a while it would have been a piece of piss.
We didn't even have a deposit to buy a flat three years ago, and prices have actually fallen in that time. Plus it is virtually impossible to sell a flat here now unless you are virtually giving it away.Joey Deacon said:
We didn't even have a deposit to buy a flat three years ago, and prices have actually fallen in that time. Plus it is virtually impossible to sell a flat here now unless you are virtually giving it away.
I mean, had you bought a flat first, lived in it a while, then done the house, you probably wouldn't have had to save a penny. I sold a flat in KT6 and made an alright return, a mate of mine also did and make a couple of hundred grand (though he timed it to perfection) and then onto the next place without any hardship. Is always going to be difficult jumping straight into the second property vs use the first as a springboard, no?
okgo said:
MX-6 said:
Interesting talk of salaries in this thread, some of those grad level incomes mentioned are an eye opener though I guess I shouldn't be surprised any more, London is a completely different game to elsewhere as well. It makes me feel like I didn't make the best career choices in terms of renumeration (senior design engineer), but work and live outside London and the city commuter blast radius and you can have a decent family house and life without the mega-bucks. A quick google search suggests that the average London salary is £38-40k, so that would suggest there are quite a lot of people in London with "a pretty horrible standard of life", though a couple could obviously have double that as a household income.
You have to remember a huge number of people in London live in rooms and work in shops/bars/etc. Or are people from abroad doing the same etc. And of course the average also covers graduates/young people (hundreds of thousands of them) that will be living in rooms with mates etc. Some of those people will make enough one day to look into buying, lots won't, lots have no intention and are here for a laugh/sending money home etc etc.The average salary of a London home-owner would be quite an interesting stat.
okgo said:
I mean, had you bought a flat first, lived in it a while, then done the house, you probably wouldn't have had to save a penny. I sold a flat in KT6 and made an alright return, a mate of mine also did and make a couple of hundred grand (though he timed it to perfection) and then onto the next place without any hardship.
Is always going to be difficult jumping straight into the second property vs use the first as a springboard, no?
Sorry didn't understand what you meant, yes we deliberately wanted to avoid the flat first step on the ladder. We do actually live in KT6 and I did actually look at buying a flat behind the station in KT5 in 2016 as a Rental but ended up buying a 3 bedroom house in Hampshire for less. I am very pleased I did as flat prices seem to be the same or less than they were five years ago.Is always going to be difficult jumping straight into the second property vs use the first as a springboard, no?
The days of flats in KT6 going up £30K a year are long gone.
Edited by anonymous-user on Tuesday 23 February 13:09
WindyMills said:
Me and the mrs were chatting about this the other day. We're in a 70s close of vaguely identical housetypes.
We bought in '13, and paid less than they did in '06
Our neighbour just sold for +80% of our '13 price.
I don't understand it.
I find it very easy to underestimate the sheer amount of money that is out there doing the rounds these days. The average UK salary for someone working full time is nearly £40k now, plus there is family money, inheritance, etc. As mentioned above the average house buyer salary is likely significantly more. There are borrowing multiples of up to 5.5 times joint income, rock bottom interest rates, etc. Plus sentiment is pretty rock solid.We bought in '13, and paid less than they did in '06
Our neighbour just sold for +80% of our '13 price.
I don't understand it.
Haha yes, sorry, I didn't mean it was 'only' 140k, I appreciate that is a very decent salary. I meant I was only on that for 3 years, I'm not earning anywhere near that now (unfortunately!). And I was only giving my example as people were discussing investment banking salaries etc, I assume they earn a lot more than I do!
okgo said:
Is always going to be difficult jumping straight into the second property vs use the first as a springboard, no?
It is generally , but in that situation it might not have helped at all if a flat purchased three years ago had gone down in value slightly compared to a house that had gone up 10-15% in the same period.okgo said:
The average salary of a London home-owner would be quite an interesting stat.
It would be really interesting, not least to see how that average has moved over the years.There are plenty of houses around here that have been lived in by the same family for years, and probably often supported by a single earner who has never earned above the national average wage, and never had to in order buy a house like that all of those years ago.
When those house finally change hands, they usually go to people with a household income well into six figures.
It would also show the extent of inheritance and BOMAD, which must be huge in London.
Edited by kingston12 on Tuesday 23 February 15:44
servantleader said:
z4RRSchris said:
the london salary thing isnt the whole story, the deposits are still eye watering.
you maybe able to very quickly borrow half a million quid, but do you have the 100k + deposit you need, how can you save that without BOMD
It's not that difficult, I managed it and I only had a 140k salary for 3 years - saving just 3k a month over 3 years is 108k, and that leaves you with c.4k a month left! So it can be done.you maybe able to very quickly borrow half a million quid, but do you have the 100k + deposit you need, how can you save that without BOMD
kingston12 said:
okgo said:
Is always going to be difficult jumping straight into the second property vs use the first as a springboard, no?
It is generally , but in that situation it might not have helped at all if a flat purchased three years ago had gone down in value slightly compared to a house that had gone up 10-15% in the same period.Personally I am very glad we avoided that whole situation, it was definitely worth another year or saving not to have to deal with it.
Joey Deacon said:
kingston12 said:
okgo said:
Is always going to be difficult jumping straight into the second property vs use the first as a springboard, no?
It is generally , but in that situation it might not have helped at all if a flat purchased three years ago had gone down in value slightly compared to a house that had gone up 10-15% in the same period.Personally I am very glad we avoided that whole situation, it was definitely worth another year or saving not to have to deal with it.
Joey Deacon said:
I know of a couple in KT6 with a small child who have been trying to sell their flat for over six months now. It was initially listed at £475K and they have dropped the price twice now to £430K. They are absolutely desperate to get out of the flat, and I suspect house prices have risen 5% in that time.
Personally I am very glad we avoided that whole situation, it was definitely worth another year or saving not to have to deal with it.
The jump is definitely getting bigger. There have always been a lot of people who sell a flat here and can only afford a house if they move much further out but I think that will become the norm for a larger majority of people, more in line with more central areas.Personally I am very glad we avoided that whole situation, it was definitely worth another year or saving not to have to deal with it.
In the case you are highlighting, £475k to, say, £750k is quite a jump as it is, but if that has now changed to £430k/£800k that's almost another £100k mortgage to find which isn't possible for everyone (quite apart from the distress caused by losing that much money in such a short time!).
WindyMills said:
Me and the mrs were chatting about this the other day. We're in a 70s close of vaguely identical housetypes.
We bought in '13, and paid less than they did in '06
Our neighbour just sold for +80% of our '13 price.
I don't understand it.
2006 was almost the peak of the madness, pre credit crunch (HBOS and all that)We bought in '13, and paid less than they did in '06
Our neighbour just sold for +80% of our '13 price.
I don't understand it.
People were taking out mortgages for 110%, begging, borrowing and stealing to buy property
My friend bought a grubby two bed flat in Clapham needing a complete overhaul for 450k
I remember he was looking on Zoopla and panicking as things seem to be going up 10k, 20k per week.
richardxjr said:
Joey Deacon said:
kingston12 said:
okgo said:
Is always going to be difficult jumping straight into the second property vs use the first as a springboard, no?
It is generally , but in that situation it might not have helped at all if a flat purchased three years ago had gone down in value slightly compared to a house that had gone up 10-15% in the same period.Personally I am very glad we avoided that whole situation, it was definitely worth another year or saving not to have to deal with it.
BTL yield is also quite low because the extra value created by those 'extras' doesn't seem to be fully reflected in the rent e.g. a £350k flat in a block in a relatively poor position might rent for £1,400 a month where as a much more expensive one with garden/parking in a better area might get £1,600. I'd expect the latter to be much easier to rent out though, even if it doesn't get much of a premium.
There's just a huge over-supply, caused at least in part by the fact that people aren't commuting into London every day now. If/when that comes back then the market for flats probably will do as well.
Edited by kingston12 on Tuesday 23 February 13:45
kingston12 said:
The jump is definitely getting bigger. There have always been a lot of people who sell a flat here and can only afford a house if they move much further out but I think that will become the norm for a larger majority of people, more in line with more central areas.
In the case you are highlighting, £475k to, say, £750k is quite a jump as it is, but if that has now changed to £430k/£800k that's almost another £100k mortgage to find which isn't possible for everyone (quite apart from the distress caused by losing that much money in such a short time!).
Not having anything to sell was also a massive advantage when buying our house as the sellers wanted a quick sale. We initially offered under the asking price and were told there were 3 offers so they wanted our best and final offer. I offered the asking price, sent over our deposit and mortgage offer proof and explained that we were in rented accommodation and were ready to go. In the case you are highlighting, £475k to, say, £750k is quite a jump as it is, but if that has now changed to £430k/£800k that's almost another £100k mortgage to find which isn't possible for everyone (quite apart from the distress caused by losing that much money in such a short time!).
They accepted our offer an hour later, there was no chain and we got the keys 2 months later. If we had a flat to sell we would 100% of missed out. 6 months later the house opposite has just gone under offer after being listed for £70K more than we paid.
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