Average house price now 8.7 times average income
Discussion
It’s hard but there are definitely both sides to the story
I’m 21 and was looking at purchasing a small flat in a sleepy home counties town but putting it on the back burner while I continue to settle into life and a career.
1) People shouldn’t be looking at £500,000 houses for their first house, it’s nonsensical. My cousin’s first house was a £700,000 4 bed home but she immediately moved back out and remortgaged as a BTL because she didn’t need the space. (High earner, 30yrs old and single).
2) on the other hand, just “moving to somewhere cheaper” doesn’t always work. What about jobs? Facilities? I am studying to become a scientist and looking to transfer into an important data analytic role in a niche area, not everyone can just get up and leave when all the jobs are in London, Manchester, Birmingham etc. okay remote working is a thing now but we are going back on it after COVID in a lot of industries and transitioning back to hybrid..
We are definitely a white collar oriented country, things have moved on a lot since Thatcher. I don’t see a future for myself if I moved to Barrow, Cleethorpes, Yeovil etc…
3) compromises should be made but people shouldn’t be expected just to abandon all their enjoyments. No more netflix? Really? Also, monthly payments and shiny new things aren’t always the devil, they can make sense financially.
4) there is definitely a lack of financial understanding in this country. In the above point i mentioned monthly payments arent always bad. But they are you if you are a numpty and financing yourself to death on a 60 month PCP plan on a shiny shiny Vauxhall which will be worth zilch in 2 years. Over on the Lease Cars thread we have been posting deals like a new Honda for £149 a month with a £300 deposit. That’s a bargain and definitely cheaper than running a used car. No one seems to know how to save properly or use their savings wisely!
5) Lack of education, unfortunately these days if you are terminally stupid, you can’t get away from it unless you marry a successful partner. In the good old days a complete melon could still buy a house. But now you need to have a proper trade, either be a successful tradesman, start your own business, or get a proper degree/Msc and get a good white collar job. If you have no skills like the poster’s niece who works at Screwfix, well then you’re f
ked and you’re never buying a £500k house.
Have you guys seen the GCSE pass rates for Maths and english? It’s absolutely abysmal and shocked me!
I’m 21 and was looking at purchasing a small flat in a sleepy home counties town but putting it on the back burner while I continue to settle into life and a career.
1) People shouldn’t be looking at £500,000 houses for their first house, it’s nonsensical. My cousin’s first house was a £700,000 4 bed home but she immediately moved back out and remortgaged as a BTL because she didn’t need the space. (High earner, 30yrs old and single).
2) on the other hand, just “moving to somewhere cheaper” doesn’t always work. What about jobs? Facilities? I am studying to become a scientist and looking to transfer into an important data analytic role in a niche area, not everyone can just get up and leave when all the jobs are in London, Manchester, Birmingham etc. okay remote working is a thing now but we are going back on it after COVID in a lot of industries and transitioning back to hybrid..
We are definitely a white collar oriented country, things have moved on a lot since Thatcher. I don’t see a future for myself if I moved to Barrow, Cleethorpes, Yeovil etc…
3) compromises should be made but people shouldn’t be expected just to abandon all their enjoyments. No more netflix? Really? Also, monthly payments and shiny new things aren’t always the devil, they can make sense financially.
4) there is definitely a lack of financial understanding in this country. In the above point i mentioned monthly payments arent always bad. But they are you if you are a numpty and financing yourself to death on a 60 month PCP plan on a shiny shiny Vauxhall which will be worth zilch in 2 years. Over on the Lease Cars thread we have been posting deals like a new Honda for £149 a month with a £300 deposit. That’s a bargain and definitely cheaper than running a used car. No one seems to know how to save properly or use their savings wisely!
5) Lack of education, unfortunately these days if you are terminally stupid, you can’t get away from it unless you marry a successful partner. In the good old days a complete melon could still buy a house. But now you need to have a proper trade, either be a successful tradesman, start your own business, or get a proper degree/Msc and get a good white collar job. If you have no skills like the poster’s niece who works at Screwfix, well then you’re f
ked and you’re never buying a £500k house.Have you guys seen the GCSE pass rates for Maths and english? It’s absolutely abysmal and shocked me!
It would be easy to solve the problem of house prices. Stop lending 5 times the household income and go back to 3 x the main income. Add to this no borrowing for buy to lets.
Some won't like it, and there are probably very valid reasons why it won't work, but it would end up with prices at affordable levels. No government would dare to devalue houses though.
Some won't like it, and there are probably very valid reasons why it won't work, but it would end up with prices at affordable levels. No government would dare to devalue houses though.
ARHarh said:
It would be easy to solve the problem of house prices. Stop lending 5 times the household income and go back to 3 x the main income. Add to this no borrowing for buy to lets.
Some won't like it, and there are probably very valid reasons why it won't work, but it would end up with prices at affordable levels. No government would dare to devalue houses though.
Unless we allow councils to build several million council houses, which IMO is absolutely necessary then private landlords are required. Some won't like it, and there are probably very valid reasons why it won't work, but it would end up with prices at affordable levels. No government would dare to devalue houses though.
Limiting borrowing will just have the impact of stopping from people moving so they won't be able to take that new job in a different area because the buyer pool will shrink.
The knock on could be very negative for the economy in general. Mobility is an essential part of our economy.
Nomme de Plum said:
I actually believe it is a great life experience for a growing family as well. They see effort is required to improve one's surroundings. It also teaches that even though DIY or building may not be what their parents do for their respective careers that those parents can manage trades and actually learn to do some of those trade type jobs.
Because spare time is limited in encourages doing stuff like hobbies and sports. It helps engender a can do attitude.
I agree. I learned loads of skills around project management, resilience, judging suppliers, finding out the basics of how things work (even if I can't actually do them myself). All very useful and most can be applied to other things.Because spare time is limited in encourages doing stuff like hobbies and sports. It helps engender a can do attitude.
Mr Penguin said:
I agree. I learned loads of skills around project management, resilience, judging suppliers, finding out the basics of how things work (even if I can't actually do them myself). All very useful and most can be applied to other things.
I like the idea of this approach, but often find myself crippled by anxiety about it going wrong. Unless you get it right first time, it often feels like anything to do with significant works on houses is so expensive that I simply couldn't afford to get it wrong.Trying your hand at project management but not being very effective, misjudging suppliers, trades people and what you actually want / need out of works could easily cost thousands (or tens of thousands if you're talking about complete refit or rebuild of the fabled semi derelict fixer upper), and that's a bit scary when you already feel a bit unsettled by the sheer cost of houses generally.
Ironically I expect the above would feel a lot more daunting to the fiscally responsible types who are less likely to be spending hundreds per month on Sky / Avocados / new Audi S-Line / [insert cliche here]; be savvy with money but too scared by the risks of running your own renovation or be willing to take those risks but have empty coffers to begin with
Dynion Araf Uchaf said:
it's a problem that is very difficult to solve.
Assuming you had a government that was determined to solve this problem and make houses more affordable with respect to the average wage, what could they actually do?
Increase wages will just cause inflation, so how about, capping the price of property to 2027 values ( within a banding ) (giving enough time for those who have just moved, some equity). And then adding in processes to stop sales of housing being determined by how much of a bung the buyer is prepared to give, on top of the fixed selling price. Every 10 years perhaps the prices are realigned with some form of regulation.
Challenges
Wages might catch up or at least reduce the multiplier required
A lot of people will be pissed off their asset is not growing.
How do you stop people 'bunging' the owner an incentive to sell on top of the fixed asking (jail, use of a solicitor, auditor?)
Owners might be less likely to undertake home improvements, but that could mean more availability of tradesmen
People relocating for work will be reduced, but maybe businesses can support new recruits somehow
Selling a house due to inheritance, if you are 2 years away from a re-evaluation you'd be more likely to wait before you sell.
Reduce or stop house price de-flation
How would you handle new builds and their pricing?
Land values would also be indirectly capped?
plus lots of other things I haven't thought of. I suspect they cold be legislated for, but you've got to have the desire and I can't see the voters wanting to have their main asset capped.
You've completely missed all the doable economic factors that will stall / devalue house prices.Assuming you had a government that was determined to solve this problem and make houses more affordable with respect to the average wage, what could they actually do?
Increase wages will just cause inflation, so how about, capping the price of property to 2027 values ( within a banding ) (giving enough time for those who have just moved, some equity). And then adding in processes to stop sales of housing being determined by how much of a bung the buyer is prepared to give, on top of the fixed selling price. Every 10 years perhaps the prices are realigned with some form of regulation.
Challenges
Wages might catch up or at least reduce the multiplier required
A lot of people will be pissed off their asset is not growing.
How do you stop people 'bunging' the owner an incentive to sell on top of the fixed asking (jail, use of a solicitor, auditor?)
Owners might be less likely to undertake home improvements, but that could mean more availability of tradesmen
People relocating for work will be reduced, but maybe businesses can support new recruits somehow
Selling a house due to inheritance, if you are 2 years away from a re-evaluation you'd be more likely to wait before you sell.
Reduce or stop house price de-flation
How would you handle new builds and their pricing?
Land values would also be indirectly capped?
plus lots of other things I haven't thought of. I suspect they cold be legislated for, but you've got to have the desire and I can't see the voters wanting to have their main asset capped.
1) Caps on mortgage multiples, and limits on LTV. Instantly cut demand, but will also cut-out a lot of those just starting out. So leeway for FTBs, and the opposite for BTL, e.g. max LTV on a BTL of 50/60%...stop speculator-investors gearing up across multiple homes.
2) As above, a swathe of council-house building. Contractors brought in on strict contracts (none of this cost-plus s
t that they did with HS2!). 3) Add in a time limit on residential planning permission, or tax on land with planning permission e.g. 2 years after the permission was granted, to encourage permitted development / force homes to be built AND sold.
4) Change the law around second homes or holiday homes, make it less attractive to own a second home (again, taxation and/or council tax hits for owners not occupying). That'll get a chunk of property on the market, and again supply/demand will work its magic.
5) Changes to taxation on rental income, specifically remove the tax relief on mortgage interest - makes it a level playing field with owner-occupiers.
6) ...and doubly so for companies owning residential property. In fact, outlaw this. Residential property HAS to be owned by an individual, not a company. That'll hit London very quickly as a lot of foreign investors do so through limited companies.
Anything that can impact supply or demand will affect house prices. Don't have to implement anything like price caps, just remove all the factors that are (IMHO deliberately) fuelling house price growth, and let the market sort itself out.
deadtom said:
I like the idea of this approach, but often find myself crippled by anxiety about it going wrong. Unless you get it right first time, it often feels like anything to do with significant works on houses is so expensive that I simply couldn't afford to get it wrong.
Trying your hand at project management but not being very effective, misjudging suppliers, trades people and what you actually want / need out of works could easily cost thousands (or tens of thousands if you're talking about complete refit or rebuild of the fabled semi derelict fixer upper), and that's a bit scary when you already feel a bit unsettled by the sheer cost of houses generally.
Ironically I expect the above would feel a lot more daunting to the fiscally responsible types who are less likely to be spending hundreds per month on Sky / Avocados / new Audi S-Line / [insert cliche here]; be savvy with money but too scared by the risks of running your own renovation or be willing to take those risks but have empty coffers to begin with
The same risks apply to buying any house but you would have to be really bad to completely wreck something. More likely you'll pay for something that you needn't have or go and redo something later. Trying your hand at project management but not being very effective, misjudging suppliers, trades people and what you actually want / need out of works could easily cost thousands (or tens of thousands if you're talking about complete refit or rebuild of the fabled semi derelict fixer upper), and that's a bit scary when you already feel a bit unsettled by the sheer cost of houses generally.
Ironically I expect the above would feel a lot more daunting to the fiscally responsible types who are less likely to be spending hundreds per month on Sky / Avocados / new Audi S-Line / [insert cliche here]; be savvy with money but too scared by the risks of running your own renovation or be willing to take those risks but have empty coffers to begin with
If you have empty coffers to begin with you can do a lot of things as you go.
Mr Penguin said:
The same risks apply to buying any house but you would have to be really bad to completely wreck something. More likely you'll pay for something that you needn't have or go and redo something later.
If you have empty coffers to begin with you can do a lot of things as you go.
true, these things are not necessarily insurmountable, it just requires some level of confidence that is harder to find in people under 40 ishIf you have empty coffers to begin with you can do a lot of things as you go.
Nomme de Plum said:
ARHarh said:
It would be easy to solve the problem of house prices. Stop lending 5 times the household income and go back to 3 x the main income. Add to this no borrowing for buy to lets.
Some won't like it, and there are probably very valid reasons why it won't work, but it would end up with prices at affordable levels. No government would dare to devalue houses though.
Unless we allow councils to build several million council houses, which IMO is absolutely necessary then private landlords are required. Some won't like it, and there are probably very valid reasons why it won't work, but it would end up with prices at affordable levels. No government would dare to devalue houses though.
Limiting borrowing will just have the impact of stopping from people moving so they won't be able to take that new job in a different area because the buyer pool will shrink.
The knock on could be very negative for the economy in general. Mobility is an essential part of our economy.
Having personally experienced a significant house price correction in my neck of the woods (Aberdeen/shire) I would say the experience has really not been that bad and in many ways pretty positive. I personally lost 10% from buying in 2015 to selling in 2022 (and that was after doing some work to the house) and I know friends who lost up 35%!
Believe it or not, but the world kept spinning and the vast majority managed to get on with their lives. Many, including myself, have been able to move up the ladder as the next property also dropped. Yes, it's been more difficult for those that moved away to parts of the country that have not dropped, but I know of many who have made it work. A wholesale drop in house prices wouldn't have that issue.
It's like when interest rates shot up and there were assumptions of mass defaults. Homeowners are more resilient than many assume.
Subsequently, it's actually made the place an affordable place to live. Having a look the average house in Aberdeen is now 185K (from a peak of 288K) against an average city salary of 38K.
But sadly this country is obsessed by house prices, with huge swathes of the population thinking they are gods to gift to man due to the returns they have "made" over the years. A deliberate attempt to correct house prices would be political suicide, as too many of the electorate are blinkered. It's also not in the banks interests either - so will never happen.
FamousPheasant said:
But sadly this country is obsessed by house prices, with huge swathes of the population thinking they are gods to gift to man due to the returns they have "made" over the years. A deliberate attempt to correct house prices would be political suicide, as too many of the electorate are blinkered. It's also not in the banks interests either - so will never happen.
All sadly true....so I think the best we'll get is (semi-) engineered stagnation for a while. Probably only until the Tories get back in and all their rich mates decide they want more returns again.
havoc said:
FamousPheasant said:
But sadly this country is obsessed by house prices, with huge swathes of the population thinking they are gods to gift to man due to the returns they have "made" over the years. A deliberate attempt to correct house prices would be political suicide, as too many of the electorate are blinkered. It's also not in the banks interests either - so will never happen.
All sadly true....so I think the best we'll get is (semi-) engineered stagnation for a while. Probably only until the Tories get back in and all their rich mates decide they want more returns again.
How much is the collective loan book on houses held by the lenders ?
Fish said:
It's very simple we don't have enough houses and politicians have fked the planning system so numbers being built are dropping off a cliff.
We just need to build more and us builders are happy to build we just need viable planning, which currently we can't get!
More houses of fewer people. I’d favour fewer people. England’s already quite densely populated.ked the planning system so numbers being built are dropping off a cliff.We just need to build more and us builders are happy to build we just need viable planning, which currently we can't get!
Earthdweller said:
havoc said:
FamousPheasant said:
But sadly this country is obsessed by house prices, with huge swathes of the population thinking they are gods to gift to man due to the returns they have "made" over the years. A deliberate attempt to correct house prices would be political suicide, as too many of the electorate are blinkered. It's also not in the banks interests either - so will never happen.
All sadly true....so I think the best we'll get is (semi-) engineered stagnation for a while. Probably only until the Tories get back in and all their rich mates decide they want more returns again.
How much is the collective loan book on houses held by the lenders ?
deadtom said:
I like the idea of this approach, but often find myself crippled by anxiety about it going wrong. Unless you get it right first time, it often feels like anything to do with significant works on houses is so expensive that I simply couldn't afford to get it wrong.
Trying your hand at project management but not being very effective, misjudging suppliers, trades people and what you actually want / need out of works could easily cost thousands (or tens of thousands if you're talking about complete refit or rebuild of the fabled semi derelict fixer upper), and that's a bit scary when you already feel a bit unsettled by the sheer cost of houses generally.
Ironically I expect the above would feel a lot more daunting to the fiscally responsible types who are less likely to be spending hundreds per month on Sky / Avocados / new Audi S-Line / [insert cliche here]; be savvy with money but too scared by the risks of running your own renovation or be willing to take those risks but have empty coffers to begin with
I’ve had to dive in and have a go… we moved the year before last into a “doer-upper”, and we’ve renovated top to bottom (and extended, which we did have builders in for, leaving us a plastered shell with completed electrics).Trying your hand at project management but not being very effective, misjudging suppliers, trades people and what you actually want / need out of works could easily cost thousands (or tens of thousands if you're talking about complete refit or rebuild of the fabled semi derelict fixer upper), and that's a bit scary when you already feel a bit unsettled by the sheer cost of houses generally.
Ironically I expect the above would feel a lot more daunting to the fiscally responsible types who are less likely to be spending hundreds per month on Sky / Avocados / new Audi S-Line / [insert cliche here]; be savvy with money but too scared by the risks of running your own renovation or be willing to take those risks but have empty coffers to begin with
Since moving in I’ve ripped out a wet room and fitted a family bathroom, designed and put in a new kitchen in the new extension, filled holes in walls, sorted sub floors, tried my hand at dry lining prior to getting a plasterer in (something I wasn’t prepared to have a go at!)
There are so many tutorial videos on YouTube and instructional videos, it’s not been difficult to research how to do pretty much every job I’ve needed to do. Plus, man maths has meant the money I’ve saved on having to pay trades to do those jobs meant I’ve been able to purchase a good selection of tools that I can use again and again.
I also now know basically every inch of the house, what’s where, how everything’s connected up, so I’ve been able to fix bits that have needed fixing.
Next job is the garage - the wiring was scary in there before. The builders disconnected the lot (the whole garage was spurred off a single socket in the kitchen!) and put me in a nice little separate consumer unit. Going to wire myself up some nice sensible lighting and some placed sockets in the spring.
Olivera said:
timbob said:
we’ve renovated top to bottom (and extended, which we did have builders in for
You had the *builders* in? What kind of lazy weakling are you? If you can't renovate top-to-bottom yourself in 6 months and make at least 100k profit then GTFO. Sums up the kids of today.Gassing Station | The Lounge | Top of Page | What's New | My Stuff