And boomers wonder why millennials are bitter towards them..

[southernorth]

again, no. It just means they've stayed at the same point relative to the wider market.

You need to think of it in terms of a race with no finish line, just a total km travelled when the bell rings. However far you've travelled in that scenario doesn't matter, only your position relative to the other competitors. If there isn't a huge trade up it's like keeping pace with the field but not overtaking anyone.

Also someone who is joining the race doesn't have to run all the laps covered to date, merely to join the track alongside the current field. The joining fee is steep but once you're in you get the same rules and benefits/risks as everyone else.

We scrimped and saved into our mid30s to get a place of our own. We didn't spank it all on iphones, foreign holidays and the latest trinkets. We went without a TV and limited what we spent, how often we went out, didn't get a car, etc. That latter one more than anything made a big difference - thuogh we did have season tickets to pay for the public transport. We also did our wedding on a budget and various other things. It's about priorities at the end of the day. We know people who blew all their money on depreciating items and while nice at the time would probably, if we were impolite enough to ask, would say that they would have rather been more sensible and put it towards a house sooner than they did.

So if they aren't trading up, you're saying the £70k they've made isn't beneficial at all? Wot?
If they buy their new house for 240k (original 1st house price) that 'free' 70k is hugely beneficial.
If you're continually leveraging yourself to the hilt with a massive mortgage every time, to 'keep pace with the field', then no wonder it's not such a good deal.

 

[ik9000]

how are they making 70k exactly? run that by me. to get that 70k they have to sell the property. To buy the new house now costs the new price, not the old one, so that "extra" 70k disappears immediately.

 

[Kenai]

So if they aren't trading up, you're saying the £70k they've made isn't beneficial at all? Wot?

Not until they liquidate it by selling up and moving somewhere cheaper.

I may have 'made' 20k on my house but if I want to go and buy a 4 bed detached house now as an upgrade to my 3 bed semidetached, that's also going to cost £30k more than it did when I bought this one.

I haven't gained anything from it other than keeping pace with the market. I don't have that 20k, it's not liquid, I can't do anything with it unless I sell my house and buy a cheaper one, but that would probably now be a 2 bed terrace for what I paid for my 3 bed semidetached.

I won't realise any benefit until I eventually sell up and move to a 2 bed bungalow when i'm 70 and have a lump of cash leftover. Assuming everything carries on as it works now.

 

[southernorth]

how are they making 70k exactly? run that by me. to get that 70k they have to sell the property. To buy the new house now costs the new price, not the old one, so that "extra" 70k disappears immediately.

I have quoted the wrong figures, was 110k not 70k.
Says they bought for 240k, and want to sell for an extra 110k (350k). Let's say they sell that for asking and ,assuming no mortgage, now have ~350k. They then buy another place for 240k. So they've 'made' 110k.
In this completely make-believe, theoretical example I'm saying they're not trading up, just looking at houses for original price of 1st. Maybe a reality if they were older and going from a house to a flat.

 

[Kenai]

I have quoted the wrong figures, was 110k not 70k.
Says they bought for 240k, and want to sell for an extra 110k (350k). Let's say they sell that for asking and ,assuming no mortgage, now have ~350k. They then buy another place for 240k. So they've 'made' 110k.
In this completely make-believe, theoretical example I'm saying they're not trading up, just looking at houses for original price of 1st. Maybe a reality if they were older and going from a house to a flat.

Whatever they buy for £240k will be a significant downgrade on what they have now though, whether in size, quality, location, whatever. If they want something equivalent, it'll cost them £350k too.

 

[ik9000]

I have quoted the wrong figures, was 110k not 70k.
Says they bought for 240k, and want to sell for an extra 110k (350k). Let's say they sell that for asking and ,assuming no mortgage, now have ~350k. They then buy another place for 240k. So they've 'made' 110k.
In this completely make-believe, theoretical example I'm saying they're not trading up, just looking at houses for original price of 1st. Maybe a reality if they were older and going from a house to a flat.

Whatever they buy for £240k will be a significant downgrade on what they have now though, whether in size, quality, location, whatever. If they want something equivalent, it'll cost them £350k too.

also a mortgage typically lasts 25-30 years. They will have the mortgage to pay off. You can however transfer most mortgages if still in term. Loan to value ratios may differ though on the new place, as will any fixed rates and standard variable rates that will apply to the new mortgage.

 

[Puzzled]

The only real way to benefit from your increase in value is to either downsize or move somewhere cheaper.

Plenty of Londoners could sell their small home and move to a far bigger property somewhere more rural, would probably still have a chunk of change as well. I believe that is what estate agents are seeing an increase in demand for now what with covid and working from home, just need a decent internet connection.

Locals probably won't like them though

 

[Bluecube]

That's kinda of my point. I should have ended with it... I think the market will downturn quite badly soon. The people who start the chain at the bottom can't or won't pay it. The people in the middle that want to see their houses can't cause no one is willing to pay these prices and the chain at the top never moves cause they can't get the bottom half to move.
Until people bring these prices down or the mortgages drop from 15 back to 10% it's gonna stall imo.

Be careful with that assumption of a market downturn. In the 20 odd years I’ve been paying attention to the housing market, every single year has been the year there’s going to be a downturn... While there have been years where prices have dipped slightly or flat lined, they’ve not dived in the way you wish they will.

 

[Scam]

Plenty of Londoners could sell their small home and move to a far bigger property somewhere more rural, would probably still have a chunk of change as well. I believe that is what estate agents are seeing an increase in demand for now what with covid and working from home, just need a decent internet connection.

Seems to be the case around here (zone 3).

Here's another good profit for someone, just gone on sale round the corner;

Sold prices provided by Land Registry
29th Sep 2020 - £1,495,000 - First listed
11th Sep 2009 - £616,000 - Last sold

That's a nice £80k per year. More than double the average London salary.

I'm sure everyone will be pleased to hear that the house opposite me sold within a week, so I'd imagine they got the asking price. Woop woop.

 

[touch]

Here's another good profit for someone, just gone on sale round the corner;

That's not a very good example. It now has more bedrooms and bathrooms than when it previously sold.

 

[Scam]

That's not a very good example. It now has more bedrooms and bathrooms than when it previously sold.

So take off the cost of that and you're probably still looking at what *puts finger in air* £60k/year (that accounts for a very fair £200k on work). I'm not sure why people sit here insisting bricks and mortar earning nearly three times the average salary for the country (every year, for 11 years) is perfectly acceptable. That house has probably had a better career than half the people on these forums... That's what this thread is about.

 

[Basher]

So take off the cost of that and you're probably still looking at what *puts finger in air* £60k/year (that accounts for a very fair £200k on work). I'm not sure why people sit here insisting bricks and mortar earning nearly three times the average salary for the country (every year, for 11 years) is perfectly acceptable. That house has probably had a better career than half the people on these forums... That's what this thread is about.

I'm not sure 'earning' is the correct term, as you can only realise that gain when selling and even then, unless you're moving to a market that has grown at a different rate, it's not really of any material benefit.

 

[builder22]

I'm not sure why people sit here insisting bricks and mortar earning nearly three times the average salary for the country (every year, for 11 years) is perfectly acceptable.

I don’t think they do....some folk insist that it’s not tho!

these 2 houses you mention were already really expensive anyway...no really average houses in the first place?

 

[Scam]

I'm not sure 'earning' is the correct term, as you can only realise that gain when selling and even then, unless you're moving to a market that has grown at a different rate, it's not really of any material benefit.

You need to sell to realise that gain in cash terms, but you still 'own' and 'realise' that capital increase. You have to compare it to the non home-owning population and you can see how far the first rung on the ladder is moving. Far out-performing average salaries and far out-performing salary inflation. Deposits are a proportion of the final price (obviously) so that goes up just as fast as the house prices. How are people supposed to save a deposit when houses are going up faster than pre-tax salaries?

these 2 houses you mention were already really expensive anyway...no really average houses in the first place?

I never said they were average.

 

[Basher]

You need to sell to realise that gain in cash terms, but you still 'own' and 'realise' that capital increase. You have to compare it to the non home-owning population and you can see how far the first rung on the ladder is moving. Far out-performing average salaries and far out-performing salary inflation. Deposits are a proportion of the final price (obviously) so that goes up just as fast as the house prices. How are people supposed to save a deposit when houses are going up faster than pre-tax salaries?

Indeed, it's only really an issue for first time buyers. Once you're on the ladder, you're not really gaining anything by increase in property value - until the point where you downsize or exit the market completely.

 

[Scam]

Indeed, it's only really an issue for first time buyers. Once you're on the ladder, you're not really gaining anything by increase in property value - until the point where you downsize or exit the market completely.

I'd imagine most people selling a £1m+ London pad would be moving out, I'd love to know what our neighbours are doing But anyway, contrary to all the arguments in this thread what you said above is the only point I'm trying to make with this thread. This is now a country of "haves" (those that own ever-increasing property) and "have nots" who are mostly <35yo and are not on the ladder.

 

[Terminal_Boy]

The only real way to benefit from your increase in value is to either downsize or move somewhere cheaper.

Plenty of Londoners could sell their small home and move to a far bigger property somewhere more rural, would probably still have a chunk of change as well. I believe that is what estate agents are seeing an increase in demand for now what with covid and working from home, just need a decent internet connection.

Locals probably won't like them though

Depends where these Londoners move to. The locals here seem to like me.

 

[413x]

It's a fascinating and turbulent time.

Long term birth rate decline will eventually mean a flat line in terms of housing?
Or will immigration prop it up?

New discussions about government backed 95 percent mortgages. If that goes ahead that's a good bit of propping up.

Job losses inbound.. Could cause a world of pain.

Working from home.. Regional variations in rise/fall could also happen.

Housing is everything in this country. It seems to define your early and late life particularly.

 

[Stu999]

New discussions about government backed 95 percent mortgages. If that goes ahead that's a good bit of propping up.

Absolutely terrible idea. Holds property prices at bubble levels or increases them. Instead of, you know, letting them find the actual level where people can afford them and the market volume is at decent levels.

 

[413x]

Absolutely terrible idea. Holds property prices at bubble levels or increases them. Instead of, you know, letting them find the actual level where people can afford them and they market volume is at decent levels.

Yeah I agree. Like others said. I guess they are doing everything to prop it up