[Finance] Housing Market

[nicko31]

Why's that so wrong ? Surely it's a good deal for people with a mortgage ?

Rates basically at zero have consequences, we now have an asset bubble driven by cheap money, property, equities, not to mention the speculative stuff

Then we have governments that think they can just borrow forever and rack up huge debt. At some point it will end and it won't end well

 

[Berty23]

Rates basically at zero have consequences, we now have an asset bubble driven by cheap money, property, equities, not to mention the speculative stuff

Then we have governments that think they can just borrow forever and rack up huge debt. At some point it will end and it won't end well

I thought that after 2007/08 we would not see the ridiculous bubbles in housing. I could not have been more wrong. It is insane. Surely it can’t keep going up can it?

 

[Weststander]

It always amazes me how a even a small difference in demand can lead to extraordinary differences in the prices and rents that the marginal buyer or tenant pay.
I'm vaguely aware that it is something to do with the demand-supply curves in economics, but that's where my knowledge of it ends.

You quote the Scottish borders and here in the SE, but the same phenomenon applies at a local level.

Here's a pointer for any priced out kids on this forum.

A 3 bed Victorian terrace in Fiveways in Brighton - 650k.
Same house in Newhaven, 9 miles away - 300k.
Same house in Lancing, 10 miles away - 350k.
Same house in Bexhill, further away - 260k.

So why the differences? These are the result of long term differences in demand. We're talking decades. Generations.
And the root cause of the difference in demand is: distance from the main trainline (and therefore journey to work time) of commuters to London.

If you want to save 100,000s on your property purchase, simply sit down and google the train times to London, and confine your search to areas where very few people
are going to want to commute to London. Obviously there will be exceptions and anomalies, but the correlation is remarkable.

BTW, I'm not saying these disparities will last forever. The pandemic and trend for working from home has changed things, which may or may not last. Prices will take time to adjust.

Plus people want to live in the Brighton conurbation. Thousands of undergraduates and graduates from across the British Isles fall in love with the place. Nightlife, entertainment, restaurants and cafes, an eclectic mix of shopping, the welcoming of all spectra of gender/sexuality, a wider range of employment opportunities and professions.

 

[Weststander]

I thought that after 2007/08 we would not see the ridiculous bubbles in housing. I could not have been more wrong. It is insane. Surely it can’t keep going up can it?

It started in about 1994/1995.

I know examples of particular homes where the open market value now is 7x that of the early/mid 1990's.

 

[nicko31]

It started in about 1994/1995.

I know examples of particular homes where the open market value now is 7x that of the early/mid 1990's.

Yes, I remember a friend buying a one beder in Kemp Town in 96, think it was 35k. Today would have to be 250+

 

[marcos3263]

A couple of lenders can do 5.5 x joint incomes with a 25% deposit and a few will lend to age 75 if office type job, pm me if you want any figures and advice as this is generic

Thank heavens I have bought a house 10 years ago as on those figures I couldn't afford to buy it but also couldn't afford to rent it.

I do think rents are mad as my mortgage is 2/5 what the rent would be. how can anyone save to break that cycle

I dont take any comfort in the fact my house has doubled in price as everything is relative and the next move would eat it all up.

I couldnt possibly upsize as the next step up would be detached etc and would be another £300k+ which I am not able to borrow or afford anyway. luckily I am settled where I am.

When I eventually downsize, I will have to look in cheaper areas to free up equity to live.

I argued with the wife last night who said that it was a struggle to buy my first property when I was 18 so its all the same - I said that my first property was £35k and I was earning £14k a year.

now the same flat would be £300,000 and a shop worker out of college isnt on £100k a year!!

 

[Live by the sea]

I'm 39, wife and 2 kids, and run a successful company, and I would guess am in the top 2 or 3% of earners in the UK. I live in a 3-bed semi in Haywards Heath and would like to buy a 4-bed detached property with a decent garden, 2 or 3 bathrooms, couple of reception rooms and a driveway in Cuckfield / Lindfield / Hurstpierpoint or one of those villages at some point in the next 5 years.

I feel like with the job I do and position I'm in, that doesn't sound too extravagant or ambitious. Yet the numbers simply don't add up. It would require around a £700K mortgage, which I wouldn't get, and monthly mortgage payments that would make the whole thing pointless.

I'm not moaning about it, because I'm incredibly fortunate to be in such a position, but I just find the situation absolutely insane. There are hundreds, if not thousands of houses like this within a 10 mile radius of me, but they seem completely unobtainable to someone like me. Yet I don't think there are hundreds, if not thousands of millionaires in the area that have mountains of cash available to buy these properties. So who lives in these houses? Is it just the Boomer generation who bought them in the 70s for £60K and have 3 empty bedrooms? Are their descendants just waiting for them to die so they can sell them and make the move up themselves?

It feels like unless you have some serious inheritance, and are unfortunate enough to get it early, then you have no real hope of living in a really nice house unless you are literally earning £300 or £400K a year.

If I was doing what I do in my parents generation in the 80s I'd be living in a massive house with a swimming pool and a tennis court. Inheritance seems to completely skew the housing market, now more than ever before. Will it continue forever?



Also disagree. You can't take someone out for a couple of bottles of wine and a nice dinner over Teams and build and improve a relationship. It's not the same.

The top 2% of earners are in £250,000 plus , the top 1% £400,000 plus

The top 1% are usually medical consultants , senior tech people , people running very successful businesses etc . The Top 2% often includes tradesman that don’t have degrees but have qualified as plumbers or electricians or mechanics etc . Tradesman up to the early 1970’’s were considered 2 a penny and didn’t earn large sums but times I guess have changed .

Anyway my point is if you are in the top 2% you should qualify for a mortgage of at least £750,000 I would have thought !

 

[Commander]

The top 2% of earners are in £250,000 plus , the top 1% £400,000 plus

The top 1% are usually medical consultants , senior tech people , people running very successful businesses etc . The Top 2% often includes tradesman that don’t have degrees but have qualified as plumbers or electricians or mechanics etc . Tradesman up to the early 1970’’s were considered 2 a penny and didn’t earn large sums but times I guess have changed .

Anyway my point is if you are in the top 2% you should qualify for a mortgage of at least £750,000 I would have thought !

Ah OK. Perhaps not top 2% then! But my point still stands (kind of).

 

[Deleted member 2719]

I don't know, but it's not really my job to think of a solution.

Okay fair enough, just think if we want to debate or challenge anything or anyone, maybe a suggestion or a solution would be good.
Most oldies imo won't want to move, because of the hassle involved, whatever financial incentive could be given.
I had to do everything from start to finish for my parents. As I knew it would benefit them long term.
Now they wished they had done it a decade earlier.

Sent from my motorola one hyper using Tapatalk

 

[usernamed]

I thought that after 2007/08 we would not see the ridiculous bubbles in housing. I could not have been more wrong. It is insane. Surely it can’t keep going up can it?

It can all the while that professional landlords/property companies believe they can increase their income by expanding their portfolio.

In prior boom/bust cycles the U.K. housing market more largely consisted of owner/occupiers. This is no longer the case to the same extent.

So, rather than domestic mortgages determining the fate of the market, this time larger organisations owning multiple properties will have to reach a point where they no longer want to grow their portfolio.

If rates continue to rise, and rents continue to become increasingly unaffordable, those who lend to these organisations will stop lending, and start asking the landlords to reduce risk by repaying capital.

The effect is largely the same regardless of whether it’s 200 individual householders who can’t pay their mortgage, or 1 landlord with 200 properties who can’t repay their commercial debt. Except of course that the landlord continues to keep their own home thanks to Limited Company Status, and it’s just the struggling tenants who are hounded in perpetuity and/or issued with CCJs.


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[patchamalbion]

The top 2% of earners are in £250,000 plus , the top 1% £400,000 plus

The top 1% are usually medical consultants , senior tech people , people running very successful businesses etc . The Top 2% often includes tradesman that don’t have degrees but have qualified as plumbers or electricians or mechanics etc . Tradesman up to the early 1970’’s were considered 2 a penny and didn’t earn large sums but times I guess have changed .

Anyway my point is if you are in the top 2% you should qualify for a mortgage of at least £750,000 I would have thought !

Where is this from out of interest? Pretty sure I read an article last year saying to be in the top 1% you’d be earning in excess of £125,000.

 

[zefarelly]

It started in about 1994/1995.

I know examples of particular homes where the open market value now is 7x that of the early/mid 1990's.

It didn't really kick off until 2000

my flat went from 40-55 from 1992-1999 . .subsequent cottage went 65-150 by summer 2003.

its been bonkers ever since. everythings gone bonkers though, house extension & renovations have recently cost more than my first 2 properties combined . . .nothing left for man cave improvement, let alone a wine cellar!

 

[Half Time Pies]

thats interesting information, do you know the source?

the median price comparison a poor, not just regional difference, there's earnings and market segment differences. for example median income first time buyers are not buying at median house prices.

You surely cant deny that mortgage rates are central to house price rises...what do you think would have happened to house prices if the Bank of England hadn't lowered interest rates to near zero after 2008? With rates at historically low levels even a 1% increase now would have a huge impact on the housing market in the UK, we certainly wouldn't be seeing the current boom and prices would probably decline. Banks are not expecting rates to rise significantly in the short to medium term because they know that the BofE will avoid it at all costs due to the dire consequences. There is a good analysis of this here by researchers from the bank of England: https://bankunderground.co.uk/2020/01/13/whats-been-driving-long-run-house-price-growth-in-the-uk/

Without the lowering of mortgage rates, houses would be completely unaffordable for most at the current levels. Even with close to zero interest rates the government needed to introduce Help to Buy to get first time buyers on to the property ladder.

The data I used for my previous post came from here: https://blogs.lse.ac.uk/politicsandpolicy/tackling-the-uk-housing-crisis/

 

[Live by the sea]

Ah OK. Perhaps not top 2% then! But my point still stands (kind of).

I do however agree with your point , if you’re earning decent money , is it too much to expect to be able to buy a comfortable 4 bed detached house in Sussex . Unfortunately with huge house price inflation over the last 20 years , it’s very difficult .

Not the same story in many places up north or Scotland etc , but that’s not much help if you don’t want to live there !

 

[Berty23]

80k was top 5% of income tax payers in 2019.

https://election2019.ifs.org.uk/art...-income-tax-rises-for-high-income-individuals

 

[Creaky]

The prices are truly mad at the moment. My mother moved to a nice detached house in Chichester just over 12 years ago and paid £350k. Sadly when she died last year my sister and I put it on the market for £800k (as advised by the estate agent) and it sold within 10 days for £1.1m to someone from London as a second home.

We were lucky at the time we put the house into our names when it was purchased to avoid one day the inevitable inheritance tax, but to me even though we are quids in, it seems ridiculous that a property can triple in price in just 12 years. Yes, its a lovely area but no wonder youngers can't get on the housing ladder today. It has though allowed us to give our children a decent deposit each on their first purchases in the property market, one of which has just bought a 3 bed semi near us in Shoreham for £400k and the other just outside of Newcastle - a 6 bedroom detached house for the same price. Talk abour regional disparities.

Did you not get stung for capital gains tax if you weren’t living in the house?

Reason I’m interested is that we have given our property to our daughter. She and my son-in-law are going to be demolishing the existing house and build a new one for themselves and the two boys - my wife and I are going to live in a new “granny” annexe.

We have been advised though that the 7 year period for inheritance tax exemption won’t start until they move in or we start paying a market rent, (stuff that!). Even if we did pay rent and survived the 7 years and thus avoided inheritance tax they would be liable for CGT if they didn’t live here as well and sold the property when we died.

 

[mikeyjh]

Where is this from out of interest? Pretty sure I read an article last year saying to be in the top 1% you’d be earning in excess of £125,000.

The IFS says £160k, 'Live By the Sea' says £400k+, enough said.....

 

[Weststander]

It didn't really kick off until 2000

my flat went from 40-55 from 1992-1999 . .subsequent cottage went 65-150 by summer 2003.

its been bonkers ever since. everythings gone bonkers though, house extension & renovations have recently cost more than my first 2 properties combined . . .nothing left for man cave improvement, let alone a wine cellar!

I worked with a tight-fisted older bachelor who bought a very large bungalow (not run down) near Woodland Drive in 1995 for about £100k.

When I got back on the housing ladder in 1999, our £100k only bought a small Bovis home (we were the second owners) in Portslade. The first owners bought it from Bovis in 1995 for £65k.

Mrs.W bought a tiny 2 bed terrace house in the Southern Cross area for £45k in 1996, in 2002 they were selling for £135k, now £350k!!!

 

[Weststander]

Did you not get stung for capital gains tax if you weren’t living in the house?

Reason I’m interested is that we have given our property to our daughter. She and my son-in-law are going to be demolishing the existing house and build a new one for themselves and the two boys - my wife and I are going to live in a new “granny” annexe.

We have been advised though that the 7 year period for inheritance tax exemption won’t start until they move in or we start paying a market rent, (stuff that!). Even if we did pay rent and survived the 7 years and thus avoided inheritance tax they would be liable for CGT if they didn’t live here as well and sold the property when we died.

I saw clients caught out by this. Land Registry and HMRC share data.

Families only ever thought of IHT consequences.

Then HMRC enquired, resulting in inescapable CGT bills.

This also happened where parents passed on buy to lets/second homes to their descendents.

 

[Commander]

I do however agree with your point , if you’re earning decent money , is it too much to expect to be able to buy a comfortable 4 bed detached house in Sussex . Unfortunately with huge house price inflation over the last 20 years , it’s very difficult .

Not the same story in many places up north or Scotland etc , but that’s not much help if you don’t want to live there !

And it's hard to earn that kind of money living up there! Although not as hard as it used to be I guess.