[Finance] Housing Market

[zefarelly]

Never get high on your own supply!



Totally agree.



[MENTION=21158]Weststander[/MENTION] made the point about winter sports though. You have to 'get away' for this. I'm very happy where I live and I live in the middle of a city; I love snowboarding but the options are a bit limited here. And as much as I love the mountains I'd get bored living there all the time.

Well the climates not perfect, but my own supply has worked well in the past.

What ever ones social poison, a change of scenery is a must from time to time. even if thats a trip to a concrete jungle for a gig and record shops!

 

[Weststander]

Never get high on your own supply!



Totally agree.



[MENTION=21158]Weststander[/MENTION] made the point about winter sports though. You have to 'get away' for this. I'm very happy where I live and I live in the middle of a city; I love snowboarding but the options are a bit limited here. And as much as I love the mountains I'd get bored living there all the time.

We've chatted light-heartedly about living in The Alps, Austria being my preference. In reality, I probably couldn't afford it and Brexit has screwed many people's plans such as that.

I prefer nice hotels to self-catering, so living in a home there wouldn't tick that key box. Contradicting myself, I also like the buzz of cities.

It's good to dream though

 

[Seasider78]

I despair for the younger generation even those who get on the property ladder or move into rentals are saddled with huge mortgages and repayments which alongside general cost of living increases leave very little in the way of disposable income.

That income that would have been otherwise spent in the wider economy now goes straight to banks and investors which hardly helps with the spread of wealth.

House prices are like footballers salaries you are always waiting for the bubble to burst but they defy all logic and continue to rise regardless

 

[mikeyjh]

You're 2/5 ratio of mortgage to rent sums it up. Ridiculous.

In fairness, 2/5 would be an absolute extreme - A quick and completely unscientific check of 2 bed flats in Brighton suggest mortgage would be far more expensive than the rental. Even if we assume that a mortgage is slightly cheaper, there are obviously loads of costs that aren't considered regarding maintenance, insurance etc.

It's been on my mind this morning that it's not bad thing for a young person to rent while they work out what life is like as the 'housekeeper', many don't have a clue. I've had a mid 20s couple move in to a house in Swansea at the end of last year after a call out free 18 monhts. Within 2 weeks a curtain poll had 'just fallen off overnight, (I'm no Tommy Walsh but I can fix things to walls quite comfortably!), there was a leak under the sink, another one from the bathroom, all needs fixing. I take it on the chin, it is what it is but it's stuff they can learn about, at my expense of course They'll figure out that you can't just put clothes on all the rads and turn the heating up, you can't tape over vents etc and so on. Going on a bit but just pointing out that renting is something almost all of us have had to do for a significant length of time and it's not a bad thing.....

 

[Herr Tubthumper]

We've chatted light-heartedly about living in The Alps, Austria being my preference. In reality, I probably couldn't afford it and Brexit has screwed many people's plans such as that.

I prefer nice hotels to self-catering, so living in a home there wouldn't tick that key box. Contradicting myself, I also like the buzz of cities.

It's good to dream though

I'm off to Austria on Saturday as it happens; Kitzbuhel.

Ideally be weatlhy enough to have a place in the mountains and one in the city. I have been a good serving citizen in this life, maybe I will be rewarded with such in the next one.

 

[Herr Tubthumper]

even if thats a trip to a concrete jungle for a gig and record shops!

 

[Uncle Spielberg]

Interest rates have gone up to 0.50%, the second rise in 3 months

 

[Weststander]

I'm off to Austria on Saturday as it happens; Kitzbuhel.

Ideally be weatlhy enough to have a place in the mountains and one in the city. I have been a good serving citizen in this life, maybe I will be rewarded with such in the next one.

I skied Kitzbühel with a friend, we stayed in a hotel in that historic central square. Amazing place, a couple of nice bars a step away, drunkenly talking **** to other punters

I was going to ask you that .... would you also own a place in Ibiza?

 

[Eric the meek]

I despair for the younger generation even those who get on the property ladder or move into rentals are saddled with huge mortgages and repayments which alongside general cost of living increases leave very little in the way of disposable income.

That income that would have been otherwise spent in the wider economy now goes straight to banks and investors which hardly helps with the spread of wealth.

House prices are like footballers salaries you are always waiting for the bubble to burst but they defy all logic and continue to rise regardless

Maybe it's not a bubble.

If you take the view, as I do, that house prices are purely a result of supply and demand, then the problem can be narrowed down to 'too many households' and/or 'too few houses'.
Scapegoating banks, investors or anyone else is a waste of time.

IMO the root cause is we don't have enough properties to house all our people. Nothing else matters.

 

[Neville's Breakfast]

I despair for the younger generation even those who get on the property ladder or move into rentals are saddled with huge mortgages and repayments which alongside general cost of living increases leave very little in the way of disposable income.

That income that would have been otherwise spent in the wider economy now goes straight to banks and investors which hardly helps with the spread of wealth.

House prices are like footballers salaries you are always waiting for the bubble to burst but they defy all logic and continue to rise regardless

I don’t see how the younger generation are any worse off than we were once they have a mortgage. We paid 12%+ interest which translated into over 700 pounds a month mortgage repayment in 1990 on an 80k house. Both of my daughters have recently bought property and they achieved it through the traditional route of hard work and sacrifice.

 

[Neville's Breakfast]

Interest rates have gone up to 0.50%, the second rise in 3 months

Which in historical terms is nothing hence high and rising property prices.

 

[Berty23]

Maybe it's not a bubble.

If you take the view, as I do, that house prices are purely a result of supply and demand, then the problem can be narrowed down to 'too many households' and/or 'too few houses'.
Scapegoating banks, investors or anyone else is a waste of time.

IMO the root cause is we don't have enough properties to house all our people. Nothing else matters.

Is that last night the full story? There is only such high demand to buy because of very low interest rates and small capital gains. If people got smashed by tax for building property portfolios then the price would drop because less demand to buy houses. If house prices drop then everything else would follow.

If people who own property have lots of equity they can take some out and use as deposit for two more properties. If the rent covers the mortgage then they are just sitting there while someone else pays their debt. Once the prices go up then they take money out of those properties and buy more. Each time they are pushing up prices which benefits them and ensures people who want to buy can’t afford it so stay paying their rent.

I grew up in south Devon in the 80s and 90s and even then villages and towns were empty in winter and then suddenly summer comes and second home owners come to play. I reckon there are Plenty of houses about but people can’t afford them! Otherwise why have prices not dropped as migrants have left?

 

[Weststander]

Is that last night the full story? There is only such high demand to buy because of very low interest rates and small capital gains. If people got smashed by tax for building property portfolios then the price would drop because less demand to buy houses. If house prices drop then everything else would follow.

If people who own property have lots of equity they can take some out and use as deposit for two more properties. If the rent covers the mortgage then they are just sitting there while someone else pays their debt. Once the prices go up then they take money out of those properties and buy more. Each time they are pushing up prices which benefits them and ensures people who want to buy can’t afford it so stay paying their rent.

I grew up in south Devon in the 80s and 90s and even then villages and towns were empty in winter and then suddenly summer comes and second home owners come to play. I reckon there are Plenty of houses about but people can’t afford them! Otherwise why have prices not dropped as migrants have left?

There's been net EU immigration into the UK throughout, even in 2018, 2019 and 2020.
2018 - 150,000 (plus 100,000 other)
2019 - 161,000 (+ 132,000 other)
2020 - 52,000 (+ 147,000 other)

3.4 million EU citizens still live here, 5.5 million applied in time for permanent settlement status here.

Inexorably our population increases and the demand on housing. We must build millions more homes.


I sometimes ponder Devon and Cornwall's situation. Locals sold to wealthy folk from SE England. What can be done to stop that? Anyone with workable ideas?

 

[nicko31]

There's been net EU immigration into the UK throughout, even in 2018, 2019 and 2020.
2018 - 150,000 (plus 100,000 other)
2019 - 161,000 (+ 132,000 other)
2020 - 52,000 (+ 147,000 other)

3.4 million EU citizens still live here, 5.5 million applied in time for permanent settlement status here.

Inexorably our population increases and the demand on housing. We must build millions more homes.


I sometimes ponder Devon and Cornwall's situation. Locals sold to wealthy folk from SE England. What can be done to stop that? Anyone with workable ideas?

Maybe big council tax levy on second homes. There are of course people from the SE that have just moved to Cornwall especially with increased digital transformation and home working.

 

[Machiavelli]

Interest rates have gone up to 0.50%, the second rise in 3 months

Worth adding that the BoE also indicated that their current expectation is that inflation will go above 7%.

 

[Eric the meek]

Is that last night the full story? There is only such high demand to buy because of very low interest rates and small capital gains. If people got smashed by tax for building property portfolios then the price would drop because less demand to buy houses. If house prices drop then everything else would follow.

If people who own property have lots of equity they can take some out and use as deposit for two more properties. If the rent covers the mortgage then they are just sitting there while someone else pays their debt. Once the prices go up then they take money out of those properties and buy more. Each time they are pushing up prices which benefits them and ensures people who want to buy can’t afford it so stay paying their rent.

I grew up in south Devon in the 80s and 90s and even then villages and towns were empty in winter and then suddenly summer comes and second home owners come to play. I reckon there are Plenty of houses about but people can’t afford them! Otherwise why have prices not dropped as migrants have left?

It's a lot more complex than that.

Low interest rates have facilitated demand, but they don't create it ! People have still got to be willing and able to buy a house and service the mortgage debt.

As for landlords, they're just another scapegoat that people often blame high prices on, along with bankers, investors, estate agents, greedy sellers, second home owners, AirBnB owners, you name it. It's all a waste of time. All the time you blame someone else, you're waiting for a resolution based on the kindness of strangers. You're not spending time on solving the problem yourself. You could spend your whole life doing that.

You complain about south Devon and Cornwall, and I sympathise with the plight of the locals. I don't have an answer to it, and I'm sure the flight to space during the pandemic has made it worse.

Perhaps your very last sentence is the most telling. Perhaps migrants don't really have a material effect on house prices after all?
If you still feel a need to blame some section of society, perhaps you could do worse than blame first time buyers. There's an awful lot of them.

 

[Baker lite]

Interest rates have gone up to 0.50%, the second rise in 3 months

Just out of interest, what is the RPI for January?

 

[Weststander]

Maybe big council tax levy on second homes. There are of course people from the SE that have just moved to Cornwall especially with increased digital transformation and home working.

I know you're right about the last point, it's not all wealthy toffs from the SE.

Listening to radio docs about the issue, the genuine locals are put out by both, as their children can never get housed.

My (more complicated) idea is for housing trusts to build, with units only available to descendants of those born in the district. Let out at favourable cost-only rents ad infinitum, thus preventing resale to 'outsiders'. With the same principle applying to all future occupiers.

I suppose, de facto permanent council housing, but with restrictions on who can be tenants.

 

[Neville's Breakfast]

It's a lot more complex than that.

Low interest rates have facilitated demand, but they don't create it ! People have still got to be willing and able to buy a house and service the mortgage debt.

As for landlords, they're just another scapegoat that people often blame high prices on, along with bankers, investors, estate agents, greedy sellers, second home owners, AirBnB owners, you name it. It's all a waste of time. All the time you blame someone else, you're waiting for a resolution based on the kindness of strangers. You're not spending time on solving the problem yourself. You could spend your whole life doing that.

You complain about south Devon and Cornwall, and I sympathise with the plight of the locals. I don't have an answer to it, and I'm sure the flight to space during the pandemic has made it worse.

I
Perhaps your very last sentence is the most telling. Perhaps migrants don't really have a material effect on house prices after all?
If you still feel a need to blame some section of society, perhaps you could do worse than blame first time buyers. There's an awful lot of them.

I would argue that low interest rates do create demand for housing as it is an asset in competition with other assets. This is the intended outcome of Government stimulus programmes post the 2008 crash. I know someone who has an enormous property portfolio in and around Sheffield. He is always on the lookout for residential and commercial property and he once told me his motto was ‘never sell a house.’ If interest rates were higher he would park his wealth in other assets rather than property.
The reality is that all of the factors mentioned on this thread are true to varying degrees. It’s not really about blaming certain sections of society. Inward migration and the rapid growth in landlord purchases for Air BnB investment in an extremely low interest rate environment designed to support buyers are sending house prices in one direction.

 

[Berty23]

It's a lot more complex than that.

Low interest rates have facilitated demand, but they don't create it ! People have still got to be willing and able to buy a house and service the mortgage debt.

As for landlords, they're just another scapegoat that people often blame high prices on, along with bankers, investors, estate agents, greedy sellers, second home owners, AirBnB owners, you name it. It's all a waste of time. All the time you blame someone else, you're waiting for a resolution based on the kindness of strangers. You're not spending time on solving the problem yourself. You could spend your whole life doing that.

You complain about south Devon and Cornwall, and I sympathise with the plight of the locals. I don't have an answer to it, and I'm sure the flight to space during the pandemic has made it worse.

Perhaps your very last sentence is the most telling. Perhaps migrants don't really have a material effect on house prices after all?
If you still feel a need to blame some section of society, perhaps you could do worse than blame first time buyers. There's an awful lot of them.

My old man is one of the landlords. I am benefitting from it. It is nuts he can.

I would say that low interest rates do create demand at this price. If money was not so easily available then demand would fall because without cheap money people can’t pay it so fewer buyers. Obviously I wrote a very simplistic view as you would need to be very creative with solutions. Other people have said restrictive council tax, smash capital gains to make owning property pointless etc. it all needs to be considered but won’t be. Why? Because older people have the property. Who votes? Older people. Will politicians do something that old people don’t like? Very unlikely to do it at this scale.

And so we go on with vested interests preventing sensible decisions.