Does anyone still think the housing market isn't broken?

LabR@t said:
when i bought my first house in 2000 for £50,000
Per month, you repay @9%
£403 ( + i was paying into endowment)
Total you'll repay over full term
(Includes mortgage debt, £50,000 + total interest £70,794)


today the same house for £135,000
Per month, you repay @1%
assuming your interest rate stays the same

£509
Total you'll repay over full term
(Includes mortgage debt, £135,000 + total interest £17,550)

Don't seem to bad if you ask me, wages have gone up considerably in 17 years.
Click to expand...
That doesn't make sense, because at some point your 9% interest rate in your first example falls to 1%, given that the mortgage term is more than the 17 years between 2000 and now, and it looks like that deal would exceed 17 years.

Assuming you didn't fix at 9% for like 30 years ;)
 
I feel very sorry for those trying to get on the ladder, particularly in the South East. Being older, and having bought my first flat straight after leaving university in the 90s, I have had enough equity to move about a bit and now own a nice place. But right now I couldn't buy my place from three houses ago from scratch if I was starting out.

This reminds me of a conversation I once had with my mother. In 2003 I was buying a 1,000sqft 3 bed semi in Woking, the town I grew up in. My mother asked me why, when I had a similar middle management job to my father at a similar age to he was when we moved to the UK, why couldn't I buy something better like the 4 bed house I grew up in. It stood on a decent plot and was in one of the nicer places in the town.

So I asked he if she didn't mind telling me what my father was earning in 1979 when he bought the house. She said £30,000. I asked her how much they paid for the house. She said £90,000. And so we realised that he paid 3x his annual salary. By co-incidence my childhood home had in fact been sold in 2002.... for £1.2m. I asked her to divide that by three and asked her if she could then see why I wasn't buying a house like that!

Something has to change because it's only got worse since then.
 
Vonhelmet said:
That doesn't make sense, because at some point your 9% interest rate in your first example falls to 1%, given that the mortgage term is more than the 17 years between 2000 and now, and it looks like that deal would exceed 17 years.

Assuming you didn't fix at 9% for like 30 years ;)
Click to expand...

I sold that house in 2008 for £125,000, I was showing what I paid when I took it out, I have edited it because it was not right, but it cost me about £475 ish a month if i remember. I was taking home around £1200 a month.
 
in 2008 I used the £75,000 I had made, along with my new partners sale of her house to purchase the current house which was on the market for £215,000 for £203,000. Since then with inheritence, we have paid off in full. Would like to move at some point in future when kids are older.
 
LabR@t said:
I sold that house in 2008 for £125,000, I was showing what I paid when I took it out, I have edited it because it was not right, but it cost me about £475 ish a month if i remember. I was taking home around £1200 a month.
Click to expand...
If I rerun your numbers but actually plug in the real interest base rates (plus 0.5% for good measure) then assuming you paid a fixed £338 per month, starting in February 2000, you'd clear the £50k mortgage... next month, November 2017. You'd pay £50k capital and £21k interest, for a total of £71k.

Actually, possibly sooner, depending on how the endowments performed. I've not included that in my workings as I don't know how, but your workings give the same number as mine so I guess it doesn't matter.

Compare that to £152k total over 25 years if you buy the house for £135k now, and optimistically assume rates don't climb above 1%. Have wages more than doubled since 2000? I don't think so.
 
Vonhelmet said:
If I rerun your numbers but actually plug in the real interest base rates (plus 0.5% for good measure) then assuming you paid a fixed £338 per month, starting in February 2000, you'd clear the £50k mortgage... next month, November 2017. You'd pay £50k capital and £21k interest, for a total of £71k.

Compare that to £152k if you buy the house for £135k now, and optimistically assume rates don't climb above 1%. Have wages more than doubled since 2000? I don't think so.
Click to expand...

50k + 21k Interest ( i cancel endowment )
152k-135k is 17k interest.

I am in the same job, albeit a few promotions on and I am earning more than double what I was in 2000. If think m old
 
LabR@t said:
50k + 21k Interest
152k-135k is 17k interest.

I am in the same job, albeit a few promotions on and I am earning more than double what I was in 2000.
Click to expand...

I appreciate the interest is lower, but taken together the total cost is 2.15 times higher. Wages have not risen in real terms by 2.15 times.

"A few promotions on" and the unmentioned 17 years of experience are the operative parts of your sentence. The question is what someone in the role you were in back in 2000 earns today.
 
BigT said:
I feel very sorry for those trying to get on the ladder, particularly in the South East. Being older, and having bought my first flat straight after leaving university in the 90s, I have had enough equity to move about a bit and now own a nice place. But right now I couldn't buy my place from three houses ago from scratch if I was starting out.

This reminds me of a conversation I once had with my mother. In 2003 I was buying a 1,000sqft 3 bed semi in Woking, the town I grew up in. My mother asked me why, when I had a similar middle management job to my father at a similar age to he was when we moved to the UK, why couldn't I buy something better like the 4 bed house I grew up in. It stood on a decent plot and was in one of the nicer places in the town.

So I asked he if she didn't mind telling me what my father was earning in 1979 when he bought the house. She said £30,000. I asked her how much they paid for the house. She said £90,000. And so we realised that he paid 3x his annual salary. By co-incidence my childhood home had in fact been sold in 2002.... for £1.2m. I asked her to divide that by three and asked her if she could then see why I wasn't buying a house like that!

Something has to change because it's only got worse since then.
Click to expand...
This is interesting, could it mean that many people that have lived in the same house for 20 years or even longer don't actually realise the state of the housing market or how difficult it is to get a good home these days?
 
Vonhelmet said:
I appreciate the interest is lower, but taken together the total cost is 2.15 times higher. Wages have not risen in real terms by 2.15 times.

"A few promotions on" and the unmentioned 17 years of experience are the operative parts of your sentence. The question is what someone in the role you were in back in 2000 earns today.
Click to expand...
I think it's 50% more, not 100% sure if you are on the old contracts. Actually if you was to get that job now as a new starter you would actually be in less as we have had a restructuring since then.:(

Oh dear see what you mean, the debt ia considerable more but with rates how they are the monthly outcome is actually similar.
 
Last edited:
Well, we’ll see in 10 years time if the historic price rise continues where it left off ten years ago or whether house prices continue to stagnant or indeed drop not just in relative terms but in real terms as well.
 
In the area where I live in sw London numerous owners have built large extensions above the roof. This is now the norm, rather than opting to purchase a larger property and pay the stamp duty pissibly equivalent to the cost of the extension.
 
You must log in or register to reply here.
Back
Top Bottom