If there were no mortgages

[Shimmyhill]

Those with large amounts of capital are already here today. They're yet to buy up every building in the country ... It wouldn't make any significant difference if mortgages were a lot lower.

Yes it would, people with cash would buy up all the housing stock before a mortgage has been agreed for those 50k houses. They would then rent them for the same as people pay today or if they sold them would sell them for higher prices. i.e the cash rich get richer.

It all comes back to the value of land and the supply and demand of housing not the ticket price. If there was ample land land prices would be cheaper and people able to build more houses therefore more supply and price could fall.

Look at the housing drop we just had, people stopped buying temporarily so demand went supply stayed the same but some people had to sell so prices dropped. People are buying again now and prices are rising.

Factor in low interest rates for a while and the prices will rise as demand increases - demand that can not be met as there is no land to build more houses.

 

[[TW]Fox]

Supply AND Demand? Two things.

It's one concept.

 

["andy"]

Yes that's my whole point. If there are no mortgages property becomes really really cheap because the average price will be determined by what the average person can save not what the average person can borrow.

no it wont... because you cant make the materials or do the labour for so cheap. wed all end up living in trailers or to live in the same houses as now we would end up living with parents till we are 40 , saving money for it all of our lifes

basically what some other cultures do

 

[thedoc46]

Mortgages are a con though.

No house prices in ENGLAND are a con !

 

[thedoc46]

just to take the conversation in a different direction, in 10 years' time what will house prices look like do you think?

100% compared to today? ie no change
50% of today's?
200% of today's?

etc

Depends on what the interest rate will be.. At the moment they are kept artificially high because of the 0.5% interest rate.. They'll soon drop once the interest rate goes up.. BUT then, you'll still be paying high prices cos the interest rate will be higher..

Look at one thing, the UK is a highly populated state, with not a lot of land, and recent history has shown that the British don't moan too much at being ripped off. So always expect the UK to have higher prices than what you'd typically expect.

 

[Third Opinion]

Supply AND Demand? Two things.

Thats what the Halifax reckon. They also said in 2007 that in 10 years the average property would cost 1 million pounds.

Anyone fancy a 900k mortgage after you put the 10% deposit down?

 

[cm1179]

Yeah nice argument there, care to actually contribute to the thread with a proper response?

Im just guessing here but i suspect you're someone who fails to see the bigger picture.

ok

houses falling in value is not unheard of (happened a lot of the past 2 years) but to actually make a loss on a house is a rare occurance and will usually be down to it not being looked after or the unforseen eg. an old mine shaft opens up in your back garden or you get a new main rail line running close to you or (and i can see this happening more and more) you get a wind farm development by you. for the main though, an individual or family will look at their house as investment. i doubt my house cost (what i paid for it last year) five years ago and i doubt (and hope) it would sell for what i paid for it or less, should i decide to sell in 5 years time. it could go down, if there is only one party interested and i am desperate to sell, they are in the driving seat and i either have to take their offer, or try and rent it and still pay the mortgage and if that fails, moth ball it and still pay the mortgage until the time is right to sell. the buyers offer might be £20k upwards less than the estate agents value (like mine was when i brought the place but i was the only offer and she was going through a nasty divorce - £20k is nearly 20% of what it was valued at) and less than what she paid 3 years ago so i was lucky but in the main, houses are not like cars, they don't depreciate as such, infact they mostly accelerate in the long term. they're an investment IMO and an extremely practical one at that

 

[Sukh]

It's one concept.

Lol, I wasn't being pedantic, I thought you was inferring that the supply curve was vertical and hence demand was the determinant of price.

 

[dowie]

Unfortunately that is hardly ever the case, apart from a few pockets, usually where houses are unusually cheap.

its been less so in recent years due to low interest rates

it hasn't always been the case and likely won't always be the case - how many decades are people usually on the "property ladder" for - you don't know what could happen in the next 30 years etc...

 

[dowie]

Thats what the Halifax reckon. They also said in 2007 that in 10 years the average property would cost 1 million pounds.

LOL

where did they say that?

did some muppet just draw a line on a graph based on the previous few years rises?

 

[Destination]

the rich people would probably buy up all the houses so the rich would just get richer. its just how we are in england, buying a house is everything in life

Exactly this, folks with monye, buy everything, and then folks pay them rent, it is why most of Europe doesn't purchase until much later, they can't afford to, and make cities work on the basis of a rental market. Someone has to own all thoe properties, in many cases it is old established wealth continuing to be wealthy with a constant income stream.

The old 'landlord' system, where land wasn't owned by the people and they worked it for a small profit and for 'the master'.

 

[Third Opinion]

LOL

where did they say that?

did some muppet just draw a line on a graph based on the previous few years rises?

BBC reported it, still ramping up the property market seems to be their favourite type of reporting.

Here is a classic. 1 million pound starter home.
http://www.stroudandswindon.co.uk/one_million_pound_first_time_buyer_home_pr136.aspx

 

[HangTime]

I don't personally understand why you'd want to BUY a flat. You never own the land, or the building, you just... own the right to live in it for 99 years. No thanks

Possibly because they are in a situation where they believe it to be cheaper than renting a property over the long term (say for example they get a good mortgage deal and a very low price on the flat, and expect it to appreciate in value).

I've only ever bought houses but that's just down to personal preference (never rented a flat either), not because I'm worried about ownership of the land.

Moving back on topic, if there were no mortgages I think property prices would still remain reasonably 'high', as they would be sought after by (corporate) landlords seeking to make rental income. The demand for housing wouldn't be affected all much (few people choosing to live with parents for longer perhaps), it's just that it would be shift from demand for mortgaged properties to a demand for rental properties.

 

[D.P.]

Such as where? Just asking mate .

Switzerland is rent only.
Germny and france are also mostly rented acomodation, especially in the countryside.

Buying a stupidly expensive item just seems absurd.

There is nothing with paying rent. It isn't "Wasting money" as some people like to say. It is paying for the roof over your head and access to utilities.

 

[Lakeland]

Switzerland is rent only.
Germny and france are also mostly rented acomodation, especially in the countryside.

Buying a stupidly expensive item just seems absurd.

There is nothing with paying rent. It isn't "Wasting money" as some people like to say. It is paying for the roof over your head and access to utilities.

True but with a mortgage you can pass the house on to your children. If you don't have anyone to pass the house on to then I would agree that rent is the best option

 

[Bear]

Switzerland is rent only.
Germny and france are also mostly rented acomodation, especially in the countryside.

Buying a stupidly expensive item just seems absurd.

There is nothing with paying rent. It isn't "Wasting money" as some people like to say. It is paying for the roof over your head and access to utilities.

What you are saying is just garbage. Why is buying property absurd ? If you are happy with the concept of paying rent then unless the landlord already owns the property outright then the person renting will be paying the mortgage. In that case, if the property has a high level of occupancy then the property is being paid off by the renter.

If there is nothing wrong with paying rent, then there is nothing wrong with buying property as someone has to own the damn property that someone will want to rent !!

 

[dr_volki]

Switzerland is rent only.

no it isn't, most people just rent because they can't afford the expensive houses.