Surely if enough houses were built, then prices will fall,I understand what you are saying, but young couples are less likely than ever to be able to get on the housing ladder altogether for the foreseeable future.
There will be an increased need for rental property, not less.
But there are plenty of houses sitting empty up and down the country and prices have remained high. I blame government and central bank interference for this as keeping interest rates low is not helping.
After the coming crash, we need to property prices to bottom out and the market to heal itself. This never happened after the last crash.
There's also the point that if the country manages, through the work of it's people, to start having a better economic outcome, it's the property those people need to live in to work that rises so much in price.
It's telling that it's London that is getting the overseas investment rather than the North East for example.
Which underlines the fact that investment here from overseas in property is all about feeding off the endeavors of those working.
The more successful the people are, the more they are hurt.
I think it's more to do with the prestige of owning a place in London, the tourist venues and the fact that it is the place most foreigners people have heard off in the UK. Also London is multi ethnic and people like that it offers services and products and foods from a variety of places - and in the case of foreigners (for and restaurants from home)
. £30K in 1994 would have been a joke (a Range-rover would have cost more).
Actually, 1994 was just about the bottom of the market following the earlier boom, and before the long ascent into the massive boom of the early 2000's. The joke then was that some houses could literally be bought using a credit card.
In fact I bought my first house in 1995 at a knockdown price, aged 22. Spent the next several years doing it up. There is no way that I'd be able to do that at the same age now. Would be totally out of reach.
125% would be highly unusual. Assuming they already lived in a property, a second or subsequent mortgage would be tougher. And the risks are real. But if it was apparently as easy as you say, why didn't everyone do it; why didn't you?
The risks during the boom years were minimal. You could buy a house, sit on it for 6 months and then sell on a at a profit.
Can you explain to me what isn't easy about borrowing 100% of the money from a bank to purchase an asset which is ramping up in price by the week?
Anyway many landlords are cash buyers; they are genuinely risking their own money. (BTW where does the bank get the funds from which to lend out as mortgages? It could well be from your savings from which you profit in the form of interest, which in the past has been quite substantial, and virtually risk-free.)
Have you heard of fractional reserve banking? A bank does not have to lend £1 for every pound it holds in deposits.
And general inflation must be responsible for some of that increase, the same as it's responsible for everything going up (so a new car costs £15K now instead of £1K 40 years ago; obviously due to all those people buying up stocks of cars to hire out!).
Assets inflate at different rates. Wage rises and the CPI and RPI (which incidentally had mortgages removed from them for some time) were not anything like as high as HPI. So your loaf of bread might have increased by 2%, whereas your house was going up by 10%.
I think you must have been asleep. You DO realise the relationship between wages and house prices has completely changed. A bank used to lend no more than 3x salary. In the heat of the madness, they were lending 5 or 6x salary, based on both working parents incomes
Yes it is. I remember buying a house in 1990 that a couple of years later, had lost 45% of it's value. About the time your mate bought that bargain that later tripled in value. If price crashes of nearly 50%, followed by increases of 100%, don't represent a volatile marker, then I don't know what does!
There has been no real volatily since around 1997. The price trend has been up, up, up. This is why BTL piled in. The conditions were perfect. Easy lending and a ramping market. Even now, the govt are doing everything in their power to keep prices up (very damaging to the Economy but I wouldn't expect them to understand)
So £90K now? In other words, perfectly affordable. £30K in 1994 would have been a joke (a Range-rover would have cost more).
It sounds like you think prices should be high?. What do you mean a joke? It was about 2.5 times his salary back then and it was a starter home.
By the way "perfectly affordable" to whom? His salary hasn't tripled. Affordability is coming because we have very low interest rates. We are now at 300 yr lows and have been for 5 yrs. They will rise but the govt and BoE know that they can't rise too much because half the country will end up in negative equity......you know that massive risk that landlords take? but don't because the whole market has been rigged for years. Savers are getting fleeced so don't tell me I'm benefitting from my having my money in the bank. I'm actually losing money, in real terms.
The 'average' salary is around £25k. The average price of a house in the UK is about 160k. Is that 'perfectly affordable?' What happens if interest rates go back up to a more normal level? Say 3 or 4%?
Instead of looking at property prices here, why don't you buy property in an East European country?
This property here in Bulgaria completely renovated throughout and ready to move into, 4 beds, luxury bathroom and shower, huge dining room, large kitchen, Galleried landing, woodburner stoves, large double Garage plus workshop, Vineyard plus huge amount of ground with ample space to sink a sizeable swimming pool. Owned by a British couple who left UK six years ago and never returned.
Can you explain to me what isn't easy about borrowing 100% of the money from a bank to purchase an asset which is ramping up in price by the week?
If it was so easy, why wasn't everyone doing it? Why didn't people just snap up all these cheap properties, or at least move up to a luxury detached property? The reality is that it was not as easy as you suggest; you still needed a substantial deposit for example, especially for non-status mortgages.
Assets inflate at different rates. Wage rises and the CPI and RPI (which incidentally had mortgages removed from them for some time) were not anything like as high as HPI. So your loaf of bread might have increased by 2%, whereas your house was going up by 10%.
Unlike most other things, house prices go down as well as up. When you plot a graph of long-term house inflation, it will be flatter than you think (especially if your disregard London).
I think you must have been asleep. You DO realise the relationship between wages and house prices has completely changed.
Let's see: when my dad bought his first house, in the mid-60s, it cost 4 times what his annual wages were (I don't know what the average was).
The £90K house you mentioned, would be less than 4 times average salary. There are more expensive houses, yes, but when getting your first property, where you need a high LTV ratio and the salary multiple is critical, you generally don't buy an average house; you start with something cheaper. If there isn't anything cheaper, then you move! (As I had to.)
There has been no real volatily since around 1997. The price trend has been up, up, up. This is why BTL piled in.
There was a substantial decrease in prices since the last peak in 2007/8. And some BTL people, I suspect, have been looking at property as an alternative to investing their capital in savings products since interest rates dived. Otherwise they would hardly look at a risky property investment where you might get 5% return, if you're lucky, while the value of the asset might drop by 10% or more in the same year!
It sounds like you think prices should be high?. What do you mean a joke? It was about 2.5 times his salary back then and it was a starter home.
Yes £30K was low for 1994, especially for a house (I paid £22K for a small studio nearly a decade earlier).
The 'average' salary is around £25k. The average price of a house in the UK is about 160k. Is that 'perfectly affordable?' What happens if interest rates go back up to a more normal level? Say 3 or 4%?
I thought (mortgage) interest rates were at 3 or 4%? Perhaps you mean a more realistic level of 6-10%? (I remember paying 12%; others have mentioned 15%!)
But while rates were low (and they have been for quite a few years), why didn't people take advantage? 3% interest on that £160K house (which BTW would not be a typical FTB property in most areas) is £400 per month.
I don't get this obsession in this country of having to own your own property. We rent a council bungalow from a housing association. OK it may not be ours but we're paying half in rent what others pay out for a mortgage for a similar sized property and on top of that we get all our repairs done for free so no need to worry about my boiler packing up or expensive plumbers whenever there's a leaky pipe and our landlord leaves us alone and let's us do what we want to the property within reason. For example, our neighbour has just had permission to build a conservatory. They're pretty flexible.
Because the rent is so cheap we have more disposable income to go out and enjoy ourselves where others are tied down in debt not being able to afford to go out, we've got an extra £400pm to spend on going out or saving for holidays. What's the point in owning your own property if it means you can't have a life? Fair enough if you're buying to do it up and sell it for a profit then you could make money but most people buy a house to live in it. All it's good for is something to hand down to your kids. If you sell it, you still have to spend the money on another property so you don't really benefit from it being yours unless you sell it and downsize and pocket the difference. With a mortgage it's not actually yours until it's paid for in full. Until that time it's just on loan from the bank. By the time it finally becomes yours it's time to pass it down to someone else or let the nursing home take it from you to pay for your care. I don't see the point in paying double for a house just so I can leave it to someone else when I die.
Other positives of renting is that if you want to move, you don't have to wait for a buyer of her held up by a chain. If you lose your job the council will pay your rent unlike a mortgage where you still have to pay. If you get into money trouble they can't repossess your home because it isn't yours for them to take. When you're elderly and you need putting into care they can't make you sell your home to pay for your care because you don't own it.
I see so many people who were desperate to buy their own properties now struggling and never get to go through the door. We did have to wait a while for a council house to become available but I made sure to put my name down when I was young and now I'm so glad we're not on the property ladder as we'd be struggling too.
Maybe you don't. And a lot if other people don't want to also, which explains why they are cheap - but not necessarily a bargain.
When you see the average wage, you can see why they are cheap, 460,000 public employees who receive the minimum monthly salary of 340 leva (£146). The average monthly salary in Bulgaria is £336, while the average pension is £126.
I bought while some friends of mine rented. Their rent was 430/month as was my mortgage at the time. I paid my mortgage off after 17 years, with rates going between 3% and 15%-but I paid it so thst was great. My friends are still in the same rented house, but a few years ago their tenancy was transferred to another landlord; they've always looked after the house, amd is their home. But not for much longer; after suddenly seeing new tenancy arrangements every year their rent is now 850/month, and they've just been given notice to go. They are now in their 50s and own nothing. All their beautiful garden and decor they have put into the place has to stay- because they have to go because it's not their property.
I wouldn't want to be in their shoes.
Within the fixed term of an AST, a tenant can't be evicted without good reason.
And were is the security with a 6 month AST, which only ends up as 4 month as section 21 notice can be served on the 4 month no reason needs to be given,.
And were is the security with a 6 month AST, which only ends up as 4 month as section 21 notice can be served on the 4 month no reason needs to be given,.
Wow... I would find this terrifying. I'm glad I own my own place.
I don't get this obsession in this country of having to own your own property. We rent a council bungalow from a housing association. OK it may not be ours but we're paying half in rent what others pay out for a mortgage for a similar sized property and on top of that we get all our repairs done for free so no need to worry about my boiler packing up or expensive plumbers whenever there's a leaky pipe and our landlord leaves us alone and let's us do what we want to the property within reason. For example, our neighbour has just had permission to build a conservatory. They're pretty flexible.
Because the rent is so cheap we have more disposable income to go out and enjoy ourselves where others are tied down in debt not being able to afford to go out, we've got an extra £400pm to spend on going out or saving for holidays. What's the point in owning your own property if it means you can't have a life? Fair enough if you're buying to do it up and sell it for a profit then you could make money but most people buy a house to live in it. All it's good for is something to hand down to your kids. If you sell it, you still have to spend the money on another property so you don't really benefit from it being yours unless you sell it and downsize and pocket the difference. With a mortgage it's not actually yours until it's paid for in full. Until that time it's just on loan from the bank. By the time it finally becomes yours it's time to pass it down to someone else or let the nursing home take it from you to pay for your care. I don't see the point in paying double for a house just so I can leave it to someone else when I die.
Other positives of renting is that if you want to move, you don't have to wait for a buyer of her held up by a chain. If you lose your job the council will pay your rent unlike a mortgage where you still have to pay. If you get into money trouble they can't repossess your home because it isn't yours for them to take. When you're elderly and you need putting into care they can't make you sell your home to pay for your care because you don't own it.
I see so many people who were desperate to buy their own properties now struggling and never get to go through the door. We did have to wait a while for a council house to become available but I made sure to put my name down when I was young and now I'm so glad we're not on the property ladder as we'd be struggling too.
Now you are the smart one in this thread! It's a shame this type of set-up isn't more widely available.
But if a couple buy a house (as used to be the way, rather than individuals), and they've both saved £8400 each since 16, they'll have £16,800 towards a deposit, not to be sniffed at.
The attitude that 'it's only £30 a month' on an iPhone is exactly what is preventing people being more financially solvent. Take that attitude with the mobile phone contract, perhaps pay out a little more in car payments for a nicer flashier car, pay for high speed broadband, 'only' £20 for a meal out once a week, it all adds up.
I think people feel more entitled to a more comfortable lifestyle these days, than a few decades ago. We all want the nice shiny things, but they seem to have become a priority rather than a luxury. People used to really scrimp and save for things - I know how my grandparents lived would strike most people as horrific these days but it was okay because it was how everyone lived.
As for the DM story - wonder how many DM readers are middle-aged buy-to-letters, helping to strangle the market? It's just typical DM bollocks to blame the foreigners.
Agree 100%! It's like that saying (that i never understood when i was younger) 'look after the pennies, and the pounds will look after themselves' .
It's all the little expenses.... a few pounds here and a few pounds there.... that, over the course of the year add up into quite large expenses! When you sit down and think about it, it can be a shock! That's why I started taking pack lunches to work. I realised I was spending approx £1150 per year on work lunches (!!!!!)..... 'only' £5 per day, 5 times per week, roughly 46 weeks of the year!! It soon adds up. Some people I know (people around my age, with no kids etc) are totally broke almost as soon as their wages come in because of all the 'small' monthly payments they are making for various bits and bobs.
And were is the security with a 6 month AST, which only ends up as 4 month as section 21 notice can be served on the 4 month no reason needs to be given,.
No, you can't be evicted before the end of the fixed-term without good reason. You might get served notice at 4 months, but can stay until the 6 months up, if the fixed period is 6 months.
But it is also possible to negotiate a longer fixed period at the outset.
BTW if you're an owner-occupier with a mortgage that you can no longer pay, then your 'tenure' can be at risk there as well. If HS2 is about to be built through your back garden, then you will be turfed out then too.
I don't know why you want to paint every single landlord, as an evil, money-grabbing bastard, because that is not the case. A bad experience, perhaps?
Yes, but some countries have a higher risk factor than others. That means that as well as the market ups and downs you have to factor in the innate risks of that countries politics, geography, stability of landholding... as risk factors.
Well if it's low risk and stability you want with high return then Switzerland is where you need to be looking. Search around long enough and you might find a house for around £200k in one of the cheaper Cantons....but you won't get much at that price.
When you see the average wage, you can see why they are cheap, 460,000 public employees who receive the minimum monthly salary of 340 leva (£146). The average monthly salary in Bulgaria is £336, while the average pension is £126.
Yes wages are low.......as is the cost of living too which is extremely low.
There are many country cost of living comparison calculators easily found online which give a rough idea (not all figures are 'Gospel'!).
Have a look at other countries whilst you are on it.
Much depends on what people expect and the question of home affordability here in UK is now governed by unrealistically high expectations. The days of 'making do' aren't acceptable to most. They want the lot.....instantly.
Someone pointed out how much could be saved by not spending £30 a month on a contract phone, to which the response was "but you NEED a phone". So if it really is a 'must have'......get a PAYG and not a contract. Mine costs me zero to use in this country and the last charged call i made on it was in Serbia last July which cost £3.45.
In recent times we've seen the lowest interest rates in years for some considerable time. How many people used this time to whack off their mortgages by over payments? Very few. Many saw it as extra 'disposable income' in the Bank so went out buying new cars instead or booked expensive holidays.
No, you can't be evicted before the end of the fixed-term without good reason. You might get served notice at 4 months, but can stay until the 6 months up, if the fixed period is 6 months.
But it is also possible to negotiate a longer fixed period at the outset.
BTW if you're an owner-occupier with a mortgage that you can no longer pay, then your 'tenure' can be at risk there as well. If HS2 is about to be built through your back garden, then you will be turfed out then too.
I don't know why you want to paint every single landlord, as an evil, money-grabbing bastard, because that is not the case. A bad experience, perhaps?
Well, whoop-de-doo. A whole six months of security.
Possible to negotiate a longer term? Yeah, what landlord is going to agree to that in a rising market? I rented for a couple of years between houses; never got more than six months agreed and the rent went up on every renewal.
Face it, you have far less control over your circumstances and far less protection when renting. The current government beasts lenders to bend over backwards to avoid repossession when mortgage-holders fall into arrears. There's no such effort made for renters.
I'm not against BTL per se but it's silly to pretend that the deck is not stacked heavily in the landlord's favour.
Comments
But there are plenty of houses sitting empty up and down the country and prices have remained high. I blame government and central bank interference for this as keeping interest rates low is not helping.
After the coming crash, we need to property prices to bottom out and the market to heal itself. This never happened after the last crash.
Actually, 1994 was just about the bottom of the market following the earlier boom, and before the long ascent into the massive boom of the early 2000's. The joke then was that some houses could literally be bought using a credit card.
In fact I bought my first house in 1995 at a knockdown price, aged 22. Spent the next several years doing it up. There is no way that I'd be able to do that at the same age now. Would be totally out of reach.
The risks during the boom years were minimal. You could buy a house, sit on it for 6 months and then sell on a at a profit.
Can you explain to me what isn't easy about borrowing 100% of the money from a bank to purchase an asset which is ramping up in price by the week?
Have you heard of fractional reserve banking? A bank does not have to lend £1 for every pound it holds in deposits.
Assets inflate at different rates. Wage rises and the CPI and RPI (which incidentally had mortgages removed from them for some time) were not anything like as high as HPI. So your loaf of bread might have increased by 2%, whereas your house was going up by 10%.
I think you must have been asleep. You DO realise the relationship between wages and house prices has completely changed. A bank used to lend no more than 3x salary. In the heat of the madness, they were lending 5 or 6x salary, based on both working parents incomes
There has been no real volatily since around 1997. The price trend has been up, up, up. This is why BTL piled in. The conditions were perfect. Easy lending and a ramping market. Even now, the govt are doing everything in their power to keep prices up (very damaging to the Economy but I wouldn't expect them to understand)
It sounds like you think prices should be high?. What do you mean a joke? It was about 2.5 times his salary back then and it was a starter home.
By the way "perfectly affordable" to whom? His salary hasn't tripled. Affordability is coming because we have very low interest rates. We are now at 300 yr lows and have been for 5 yrs. They will rise but the govt and BoE know that they can't rise too much because half the country will end up in negative equity......you know that massive risk that landlords take? but don't because the whole market has been rigged for years. Savers are getting fleeced so don't tell me I'm benefitting from my having my money in the bank. I'm actually losing money, in real terms.
The 'average' salary is around £25k. The average price of a house in the UK is about 160k. Is that 'perfectly affordable?' What happens if interest rates go back up to a more normal level? Say 3 or 4%?
Why would I want to buy a property in Bulgaria?
No. Not at all. Just reported much more because of the 24 hour news cycle we have now.
Unlike most other things, house prices go down as well as up. When you plot a graph of long-term house inflation, it will be flatter than you think (especially if your disregard London). Let's see: when my dad bought his first house, in the mid-60s, it cost 4 times what his annual wages were (I don't know what the average was).
The £90K house you mentioned, would be less than 4 times average salary. There are more expensive houses, yes, but when getting your first property, where you need a high LTV ratio and the salary multiple is critical, you generally don't buy an average house; you start with something cheaper. If there isn't anything cheaper, then you move! (As I had to.) There was a substantial decrease in prices since the last peak in 2007/8. And some BTL people, I suspect, have been looking at property as an alternative to investing their capital in savings products since interest rates dived. Otherwise they would hardly look at a risky property investment where you might get 5% return, if you're lucky, while the value of the asset might drop by 10% or more in the same year!
Yes £30K was low for 1994, especially for a house (I paid £22K for a small studio nearly a decade earlier).
I thought (mortgage) interest rates were at 3 or 4%? Perhaps you mean a more realistic level of 6-10%? (I remember paying 12%; others have mentioned 15%!)
But while rates were low (and they have been for quite a few years), why didn't people take advantage? 3% interest on that £160K house (which BTW would not be a typical FTB property in most areas) is £400 per month.
Maybe you don't. And a lot if other people don't want to also, which explains why they are cheap - but not necessarily a bargain.
So why didn't they buy it then?
Because the rent is so cheap we have more disposable income to go out and enjoy ourselves where others are tied down in debt not being able to afford to go out, we've got an extra £400pm to spend on going out or saving for holidays. What's the point in owning your own property if it means you can't have a life? Fair enough if you're buying to do it up and sell it for a profit then you could make money but most people buy a house to live in it. All it's good for is something to hand down to your kids. If you sell it, you still have to spend the money on another property so you don't really benefit from it being yours unless you sell it and downsize and pocket the difference. With a mortgage it's not actually yours until it's paid for in full. Until that time it's just on loan from the bank. By the time it finally becomes yours it's time to pass it down to someone else or let the nursing home take it from you to pay for your care. I don't see the point in paying double for a house just so I can leave it to someone else when I die.
Other positives of renting is that if you want to move, you don't have to wait for a buyer of her held up by a chain. If you lose your job the council will pay your rent unlike a mortgage where you still have to pay. If you get into money trouble they can't repossess your home because it isn't yours for them to take. When you're elderly and you need putting into care they can't make you sell your home to pay for your care because you don't own it.
I see so many people who were desperate to buy their own properties now struggling and never get to go through the door. We did have to wait a while for a council house to become available but I made sure to put my name down when I was young and now I'm so glad we're not on the property ladder as we'd be struggling too.
When you see the average wage, you can see why they are cheap, 460,000 public employees who receive the minimum monthly salary of 340 leva (£146). The average monthly salary in Bulgaria is £336, while the average pension is £126.
It's simple.
The tenancy laws in the UK are dire. You have no security whatsoever.
You are an expendable pawn that can be turfed out whenever the landlord gets cold feet (or gets asked to do some repairs)
100% accurate
I wouldn't want to be in their shoes.
Not 100% accurate.
Within the fixed term of an AST, a tenant can't be evicted without good reason.
And were is the security with a 6 month AST, which only ends up as 4 month as section 21 notice can be served on the 4 month no reason needs to be given,.
Wow... I would find this terrifying. I'm glad I own my own place.
http://www.adviceguide.org.uk/wales/debt_w/debt_rent_arrears_e/assured_shorthold_tenancies_and_rent_arrears.htm
Now you are the smart one in this thread! It's a shame this type of set-up isn't more widely available.
Agree 100%! It's like that saying (that i never understood when i was younger) 'look after the pennies, and the pounds will look after themselves' .
It's all the little expenses.... a few pounds here and a few pounds there.... that, over the course of the year add up into quite large expenses! When you sit down and think about it, it can be a shock! That's why I started taking pack lunches to work. I realised I was spending approx £1150 per year on work lunches (!!!!!)..... 'only' £5 per day, 5 times per week, roughly 46 weeks of the year!! It soon adds up. Some people I know (people around my age, with no kids etc) are totally broke almost as soon as their wages come in because of all the 'small' monthly payments they are making for various bits and bobs.
No, you can't be evicted before the end of the fixed-term without good reason. You might get served notice at 4 months, but can stay until the 6 months up, if the fixed period is 6 months.
But it is also possible to negotiate a longer fixed period at the outset.
BTW if you're an owner-occupier with a mortgage that you can no longer pay, then your 'tenure' can be at risk there as well. If HS2 is about to be built through your back garden, then you will be turfed out then too.
I don't know why you want to paint every single landlord, as an evil, money-grabbing bastard, because that is not the case. A bad experience, perhaps?
Why? Because he is fortunate enough to be renting from a local council at a rent way below the market rate? NIce work if you can get it.
Given this is your first and only post in the thread i have absolutely no idea why you've asked this question at all.
Yes wages are low.......as is the cost of living too which is extremely low.
There are many country cost of living comparison calculators easily found online which give a rough idea (not all figures are 'Gospel'!).
Here is one.
Have a look at other countries whilst you are on it.
Much depends on what people expect and the question of home affordability here in UK is now governed by unrealistically high expectations. The days of 'making do' aren't acceptable to most. They want the lot.....instantly.
Someone pointed out how much could be saved by not spending £30 a month on a contract phone, to which the response was "but you NEED a phone". So if it really is a 'must have'......get a PAYG and not a contract. Mine costs me zero to use in this country and the last charged call i made on it was in Serbia last July which cost £3.45.
In recent times we've seen the lowest interest rates in years for some considerable time. How many people used this time to whack off their mortgages by over payments? Very few. Many saw it as extra 'disposable income' in the Bank so went out buying new cars instead or booked expensive holidays.
Well, whoop-de-doo. A whole six months of security.
Possible to negotiate a longer term? Yeah, what landlord is going to agree to that in a rising market? I rented for a couple of years between houses; never got more than six months agreed and the rent went up on every renewal.
Face it, you have far less control over your circumstances and far less protection when renting. The current government beasts lenders to bend over backwards to avoid repossession when mortgage-holders fall into arrears. There's no such effort made for renters.
I'm not against BTL per se but it's silly to pretend that the deck is not stacked heavily in the landlord's favour.
Maybe as a private tenant but not when you're a council or housing association tenant.