House prices..
- Thread starter fendi
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Something has to e seriously done with regards to housing, and the governments actions just fall short of pointless.
Building more homes is not the answer, the answer lies in addressing the gap between the average house price being EIGHT times the average salary. First time buyers or even second or third time buyers simply have no chance to move along the chain.
I bought my 4 bed, detached house 10 years ago for £51,900. According to todays prices in my area its now worth £240,000. 15 years prior to me buying it was sold for £32,000.
I'm lucky, I'd hate to think that I was buying a house in the current climate because eventually something will have to give. The market will be unable to sustain its current pricing in my opinion because vastly unaffordable homes will cause the the industry to crash when no-one can afford them.
Building more homes is not the answer, the answer lies in addressing the gap between the average house price being EIGHT times the average salary. First time buyers or even second or third time buyers simply have no chance to move along the chain.
I bought my 4 bed, detached house 10 years ago for £51,900. According to todays prices in my area its now worth £240,000. 15 years prior to me buying it was sold for £32,000.
I'm lucky, I'd hate to think that I was buying a house in the current climate because eventually something will have to give. The market will be unable to sustain its current pricing in my opinion because vastly unaffordable homes will cause the the industry to crash when no-one can afford them.
according to the office of national statistics the figures are
First time buyers
1999 ( after 10yrs of near zero house inflation ) - 18.5%
2003 - 19%
2006 - 21%
other buyers
1999 - 17%
2003 - 17%
2006 - 18%
so only small differences
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I hope there is a fall so I can jump on the ladder at a decent level. I'd be able to afford a decent house at the moment but it would have to be in a grotty area. I'm going to wait at least 18 months, continue to build my deposit and salary and see what happens. I can't see prices rising significantly over that period so I don't think my strategy is very high risk.
I'm at work at the minute so don't have the figures to hand but there is more to the first time buyers figure than meets the eye.
People who are first time buyers at present are earning significantly more than the average.
I'll try and dig up the data showing how average wages across the country and the average wages of first time buyers have diverged in recent times.
I'm sure they have as FTB are generally older than in the past thought his is as much to do with social trends as anything else
Dont forget that this country is significantly more expensive to live in these days and the level of non-mortgage debt is through the roof, couple this with the house prices and you get a lot of FTB's being able to afford very little in the housing market.
So you agree that houses are becoming more unaffordable than the data above shows if houses are only being bought by a wealthier subset than in the past and mortgage payments are still consuming a greater proportion of their salary than in the past?
can't fill in the blanks
, if it's a IT/PC place then no Live on the Ashfields development at Sutton-in-Ashfield
Maybe a little but not significantly, it was still difficult to be a FTB when I bought my first house in 1990, obviously this varies from area to area though
when I bought my first house I had mortgage paymnets of £430 a month ( 1990, £40k ) , the same house now would be £100,000 with repayments at about £660 so around a 50% increase in 17 years , allowing for inflation and wage increases this is as near to no rise as makes no difference
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Yes, you're quite right, sorry.
Was that the early 90's? I can just recall there was a significant crash - any idea as a percentage what that was?
Nationwide has a good set of data for this:
http://www.nationwide.co.uk/hpi/historical.htm
Go to UK House Prices adjusted for inflation and UK house prices since 1952 on the second drop down.
It gives you both nominal and real prices.
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I'd be a FTB and sod buying a house in the country frankly. I'll rent a few years and then bugger off somewhere where there are not too many people in too small a space. I'm not sure how many young professionals are with me but I wouldn't be supprised if after forcing all of us to learn a forign language and then rocketing the housing market a lot of young people with skills leave.
there was a reduction in some areas but taking the country as a whole there was not
The problem with your example is that you are looking back to a time when interest rates (and hence mortgage repayments) were fairly high. If you compare income:mortgage_payments with a period in which the interest rate was closer to what it is now, I expect you may find the picture slightly different.
Looking here http://www.moneyextra.com/dictionary/Interest-rate-history-003455.html , you can see that back in 1990, interest rates were around 14%, compared to the 5.75% they are today (and don't forget that current averages will be biased downwards somewhat by fixed rate mortgages taken out over the last couple of years when rates were under 5%). I'd be interested to see how the figures look for the mid-late 90s when rates were a more accessible 6-7%.
Another slight flaw in taking your stats at face value is that it disregards the effects of inflation, or to be more precise I mean that it doesn't look at the repayment picture relative to earnings over the entire mortgage term. Inflation is currently low, which means that over the course of a mortgage term (well, certainly the next few years at least), wages are likely not to increase by much relatively speaking. Whereas back in 1990 if you took out a 25 year mortgage on that 40K house, as the 90s progressed wages increased more in relative terms than today, and thus the £430/month represented less and less of your income (even allowing for a long term fixed rate i.e. no fall in repayments).
edit: That said, the overall point you are trying to make (that one shouldn't just look at house_price:income ratio, but mortgage_payments:income ratio too) is valid when considering the overall 'affordability' of housing.
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I was thinking the same and I live in Cambridge like the op too. Prices here are still going up.
One flat sale doesn't mean prices are going down.
They aint the 4 bed house price and above is really suffering. They just are not able to sell them. It's been like that for a year.
There are still 4 bed houses on the market in cambridge that I visited at the start of the year.
Where you are we looked at some 4 beds in great cambourne over 4 years ago. They where up at the time for £280,000. One now sits there at £289,000 after 4 years and another at £315,000. There are a few on rightmove on brookfields too that we looked at. They would have lost us money. For some reason the larger houses there have made next to nothing in 4 years.
