House prices rose 7.3% this year, average now almost £250k

[HACO]

I'm waiting to sell mine up and put the money into the stock market instead, owning a property and renting it out is too much hassle for bad returns.

That's a good idea. Stock market has always returned more than rental property.

Apart from a 5% LTV rate will be around 3-4%

And a 15% LTV around 2.5%

So you will likely pay a similar amount in outgoings on your mortgage even on the cheaper house.

So you're not disadvantaged by the drop, and in the worst case scenario (which the example was supposed to show), you're just not advantaged or disadvantaged. You still save on stamp duty.

I wouldn't be surprised if you ended up paying more over the term of the mortgage on the lower amount at a higher rate.

Anyway, the point is that you likely wouldn't be able to move, you're not likely to get a mortgage with the 6% deposit.
I thought the main argument about house prices being unaffordable was because people can't save up the required deposit? and the actual cost of the mortgage over the full term is largely irrelevant.

At worst, they'll be within the same ballpark, and don't forget that the high interest period is temporary, once time passes everyone will remortgage on a better LTV. And 5% mortgages were common up until this year, and they will return. Hell, soon we'll also go the Netherlands way and introduce 100% or even 105% mortgages to keep propping up the market. All it needs is a mortgage government guarantee which is on the table anyway.

Outside of London, deposit is not a big issue, monthly payments are. In London, deposit is also a major issue as well as the monthly outgoings.

 

[HACO]

That seems different from a lot of posts in similar threads to this. I had thought that the general opinion was that most people who could afford to rent a house could also afford a mortgage on it as the monthly payment for a mortgage is often lower (or at least not significantly higher) and the main hurdle to ownership was the deposit required.
I don't know enough about the rental market though so maybe I'm mistaken.

I don't think you're wrong, it's largely depends on area.

 

[HACO]

What is the UK world leaders in? You think of other countries and Germany and you have many household names

Miele
Mercedes
BMW
VW
Porsche
Siemens
Bosch
Continental
Adidas

The list goes on and on.

Dyson has moved to Singapore. Virgin has his own Island tax haven. We need to stop these companies from leaving the UK and stop foreign companies from taking all the money out of the UK.

That will solve all the problems if you do that.

We're world leaders in financial services, computing and software tech. That's what we're good at. The rest of the country is nothing special and would be no different than any average European country.

It's good to prop up the manufacturing industry but we have no chance of competing against powerhouses like Germany. Brexit, which I expect you're much in favour of given your general posts, is going to hurt manufacturing far more than it helps it and will push us far more towards a services-based economy (we're already 80% services).

 

[HACO]

I'm very much anti Brexit. Pro independence for Scotland.

I think our politicians have the greater good of our people in mind whereas Westminster only have themselves in mind.

I'd also like to see northern Ireland just unified into Ireland with the Republic it would have made Brexit negotiations a lot easier and reduced the burden on the UK taxpayer.

Good for you.

I'm also a great believer in hard work. If you want to be able to afford a house in a nice area then you have to work for it. Not keep complaining and hope someone hands you it on a plate

Despite what you think and keep repeating about me, I'm doing fine and don't need a handout and if there's any handout I won't be getting it since I make too much money, lol. I worry about a crisis that is hurting this country and the future of the young generation are and will be carrying the full burden of it.

I know it may sound strange, but some of us are capable of empathy.

 

[HACO]

If you are making good money then you understand others can too.

Lol no. I make good money because I'm lucky that the particular things that I'm good at are currently valued a lot in the market. Not everyone is so lucky so that stars are aligned where their natural talents can be nurtured into developing skills that the market values highly.

Again it comes down to empathy which I have for those less fortunate than me instead of calling them lazy and telling them to just work harder. I don't think having something as basic as an affordable roof over your head has to be only for the winners in one of the richest countries in the world.

 

[HACO]

How do you define one of the richest in the world?

https://en.wikipedia.org/wiki/List_of_countries_by_total_wealth

UK are fifth, after the US, China, Japan and Germany. If you go by GDP, results are similar.

Why can't people who happen to be born in Africa, Asia, etc? Also have access to affordable housing wherever they want it?

You added the "wherever they want it" to make it sound unreasonable, as if anyone has ever suggested that anyone should be entitled to anything they want.

You have to be realistic. Or are you advocating communism?

Keeping housing affordable isn't communism. Just look at what other western countries who doesn't have a housing crisis have achieved. Policies like land value taxes (which even the US has), ignoring NIMBYsm, taxing or banning foreign ownership of properties (which is mostly why London has become so unaffordable), expanding social housing by major non-profit building projects, etc will make the housing situation a lot better.

You're pretending like any policy towards making this situation better for people = communism. There are reasonable policies out there that we can implement.

 

[HACO]

i would hazard that people don’t want boring copy/paste crap estates built near them. The government “help” schemes only help the biggest copy/paste developers as they are unavailable to riskier smaller developers.

if I owned a home I would fight proposals for a large stale development.

what is needed is a housing innovator in the same style as Tesla/Apple. Super modern build methods and materials, clever designs and a massive shove towards greener housing.

We just need to nationalise the building/developing industry, and build houses to sell them at no profit. The current margins of 35-40% for the larger builders is insane.

 

[HACO]

in London, we need to build higher, much much higher, allowing us to get more housing per a square foot of land. There's an optimal point where the cost of building and square footage floor space are their most efficient, and currently most buildings in London are way below that. Within 1h of London, we need to expand transport links, and expand and build commuter towns. This requires a country-wide mobilisation effort, similar in scale to those of World Wars, to solve this crisis for the long-term health of the country and future generations.

In the longer term, we need to diversify a bit out of London and the south east, it's a political, financial and tech centre at the same time, which has its economic benefits, but also problems.

As for "just move to Dundee", you can't tell skilled professionals to go where there's no fulfilling job and career prospects for them. And people in Dundee or Falkirk won't be having their current standard of life if there wasn't the economic activities of London subsidising it, so suggesting mass exodus out of London as a solution for the housing crisis is quite short sighted.

England's population density is among the highest in Europe, and very similar to Japan. You can't kick people out of England, you need to just view development and housing differently, and maybe take a clue from countries like Japan and South Korea.

 

[HACO]

Maybe when all the boomers die we will live like kings.

Interesting you say that, According to FT:

• % of UK's property wealth owned by people over 65: 46%
• % of UK's property wealth owned by people under 35: 5%

The first one is the highest we've ever had, and the second one is the lowest we've ever had.

On the other hand, when it comes to how much of the total UK tax revenue comes from people of certain age groups:

• People over 65: 12%
• People under 35: 15%

You can't keep on milking young people while leaving scraps for them while the richest demographics keep on getting richer and richer. This pandemic, on average, made young people much poorer, and people over 65 become richer.

A mass transfer of wealth is coming, whether it's when the boomers die off, or by sensible housing and wealth policies, or if all else fails, by concessions after mass uprising and riots, or even if that fails, by revolution. This level of wealth disparity and disproportionate milking of young people is how political/economic dynasties collapse.

Are our politicians sensible enough to make sure that it comes from sensible policies to avoid disaster later on? You only need to look at history to see what happens when you screw over a generation for such a long time.

 

[HACO]

Well. Yeah they will just die and thier kids will be better off. Sorted. Unless your parents dont own a house.

Mine don't (they don't live here), and yeah, we need an inheritance cap and all loopholes closed.

 

[HACO]

Inheritance cap? There is already inheritance tax why the need for a cap? Inheritance tax was introduced to help redistribute wealth from the richest elsewhere.

Inheritance tax is fine, and I think it's currently too high. We need to scrap it for people with under £1m in assets, have a marginal 50% or something at above it and raise the marginal rate to 100% (a cap) for assets above £25m. All ballpark numbers. ******* kids of multimillionaires will be fine getting £25m in inheritance instead of £250m, they won't die of hunger or go homeless.

That money can then be reinvested in education, social housing or local infrastructure.

 

[HACO]

All that will do is make people hide it elsewhere or give it away before hand so you get 0% of everything over £25m rather than 40% or you will have the wealthy who aren't exactly short of options just make themselves residents elsewhere.

They already hide it to avoid the 40%.

 

[HACO]

Prices don't always go up.

It's supply and demand.

I can show you several areas within a 30 minute drive if me and some within 5 minutes that have lost up to £100k in value over the past 12 years. Houses in the £300k-£500k range.

So not exactly cheap houses in dumps that nobody wants to live in. But areas where there was huge demand and lots of money floating around but people who were smart realised that so long as you don't need a new build you can buy a better house in a much better area for the same price or even cheaper.

New builds tend to be overpriced around here by at least 20% sometimes as high as 30%. I've never seen anyone make money on a new build other than the absolute top areas where demand just always outstrips supply.

They don't always go up, they usually do. There's this thing called statistics that can measure these. While you can always find exceptions, on average, property prices have gone up by over 200% in the last 20 years while inflation has been 75% and wages have only grown by 76% (barely keeping up with inflation). That means the average person in this country who wants to buy a home now, after adjusting for inflation and wage increases, needs to pay more than twice the prices they used to pay 20 years ago.

You can keep denying this, and say people can buy a tent in Sub Saharan Africa and 5 acres around it for £250, however the reality remains that buying a home now is more than twice as difficult as it was only 20 years ago. To deny this is to wage a war against mathematics.

 

[HACO]

Firstly, let's face facts. Hardly any boomers had the 'foresight' to invest in property, they just did what was (and should still be) natural which is the buy a home of their own to live in. What happened afterwards was nothing more than luck.

I'm not seeing any benefit to boomer parents sitting on expensive homes. For the most part they are staying there well into retirement and that means their millennial kids won't see that probably until their fifties/sixties. That is absolutely useless. Are we forgetting the whole point of having a larger house is to raise kids in? How is that going to work in your fifties? Obviously you'll turn around and say 'well boomers can remortgage/borrow on their house earlier in life' but tell me who wins with that? Oh yes... the banks... lol

The people who win are those with more than one house, e.g. property investors and mega landloards. The people who lose are those who want to buy their first home who now have to pay 2.5x the price they used to 20 years ago, just to have a roof over their heads.

Imagine if prices had only rises at inflation levels, tens of millions of people would have had tens of thousands more every year to spend in the economy, improving their own quality of life and supporting their communities and the economy.

 

[HACO]

It's very much area dependent. I can show you areas within Glasgow where house prices have tripled in the past 20 years and others where they have stagnated or even went down slightly.

Again I could show you an area with the best school where house prices have went up 15 times their original value in 30 years. Yes that's 15 times their purchase price.

It is area-dependant, however, statistics tell you that as a whole, prices have gone up 200% while wages have gone up 76%.

"I can show you X" doesn't disprove statistics.

It's harder to buy in certain areas for sure. Your solution is for house prices to decrease. I'm saying that's not a workable solution. Wages need to increase. However you cannot realistically pay everyone a high wage so even with the increases someone frying french fries in McDonald's realistically shouldn't be able to afford a 5 bedroom detached house in the west end.

That's not my solution. I want sensible policies (which I've listed before) that other countries do to manage the cost of housing, such as land value taxes, taxes on second homes, non-profit building, taxing foreign ownership of residential housing, rent control, banning no-fault evictions, going away with landlord subsidies and tax breaks, etc, and I want money raised from this to go into investing for more social housing, affordable houses for young people and education.

The average wage is what £25k? Realistically in a country like the UK it should be more like £35k arguably £40k. As an average. Minimum wage should be around £25k full time.

I don't disagree.

You seem to be fixated with house prices with no real solution on how you can actually make them cheaper.

The solutions are obvious, they exist and have been implemented in many countries. The outcomes are also quite clear, they improve housing prospects for younger people and help the economy, at the expense of mega landlords and property tycoons.

You should be advocating ways to keep money within the UK. Get more people abroad to buy from Britain and more people locally to buy British.

You can advocate for that,

AND

Advocates for sensible housing policies that exist in most other modern countries.

I'm guessing though that you drive a German car, have swedish furniture made in china and use Korean and Japanese electronics.

Actually no. I don't drive a car at all (use public transport for the environment even though sometimes it costs more), I cycle using a British bike and my furniture is made in the UK.

You may think the solution to the housing crisis in this country is "buy British chairs and tables", but actually, some of us want actual policies that directly help with this sort of thing, such as non-profit building, land value taxes, etc etc.

There is a massive elephant in the room but you seem to be fixated on the problem which will never be fixed without tackling the elephant first.

Yes, that elephant is the housing policies of this country.

 

[HACO]

That's not my solution. I want sensible policies (which I've listed before) that other countries do to manage the cost of housing, such as land value taxes

So council tax?


, taxes on second homes

So stamp duty and land tax? Which doesn't have any 0% rate on second homes.

, non-profit building

Which countries do this? Also don't housing associations already do this here?

, taxing foreign ownership of residential housing

Like non resident landlord tax?

, going away with landlord subsidies and tax breaks, etc

What subsidies and what tax breaks? They have all been removed. Keep up. Thy have been completely eroded over the past 5 years.

, and I want money raised from this to go into investing for more social housing, affordable houses for young people and education.

So you want an additional £0 to go to this because everything you have said above is already in place.

LOL no.

1. Council tax is paid by the occupier, land value tax is paid by the owner. And put rent control in place to make sure the cost is not passed down to the renter. Even the US does this in many places.

2. Yeah stamp duty on second home, just make it annual instead of one-off, and double it for every new property. That should be on top of the existing land value tax. Or increase it to a one-off 50% rate instead.

3. They have non-profit building all over Europe. Housing associations in the UK hire builders to do the building, builders have profit margins of 30% or even more. I'm talking about committing to building 500,000 non-profit houses every year for the next 10 years and selling them only to first-time buyers. Not 10 houses every year.

4. Non-resident landlord tax is a tax on rental income, taxing foreign ownership is a tax on ownership. Chinese guy who doesn't live here and wants to buy flats in London? They currently only pay stamp duty. We should put a 500% tax on it.

5. Lodger rental income is currently tax-free, landlords have a tax-free rental allowance, the 20% mortgage tax-credit, and more. All of them should go. Also pretty easy to just run the rental through an Ltd and keep full mortgage interest tax relief, that should also go away. I would also put a 2% tax on the mortgage balance of all second homes (including all rentals), as it's proposed in several European countries, to avoid people buying all properties on leverage to dry up the supply.

So you want an additional £0 to go to this because everything you have said above is already in place.

I mean, as you are someone who I'm sure has and continues to benefit tremendously from the current system, I don't expect you to support these policies. After all most people look for their own self-interest and pretend like that's in the interest of everybody, however, to pretend like these already exist is just pure comical.

UK property market is currently worth about £7.5 trillion. The tax revenue from this wealth is about £45 billion per year (over £30bn of it from council tax). That's 0.6% per year. In the US, this is about 2% per year. Even if we implement everything that I said, we won't reach US-level taxes. So my proposals are still quite conservative and benefit home-owners compared to the rest of the world.

Bringing this up to 2% (similar levels of taxation to the US), would raise an additional £105 billion every single year. That's enough to build 500,000 new houses (£200,000 each) every single year, while putting hundreds of thousands of young people to work, earning good money.

 

[HACO]

UK house prices see highest growth in six years in 2020

https://www.bbc.co.uk/news/business-55483432

In the worst economic year in a few hundred years, we have record property price growth. A few million people are probably permanently priced out of the market this year alone.

Even if the Government don't do anything (which I doubt they will) the market will eventually crash, just as it has done time and time again both here and abroad when valuations start getting too stretched.

If the government did nothing, the market would have crashed long ago. If they didn't do anything this very year, the market would have crashed as well. When the government does something, it's always to make it much worse.

Every time there's a slowdown in the market and growth returns to near zero (let alone a crash), government does something to make sure that prices continue to rise. Whether it's lowering interest rates (mortgage interest rates and BoE interest rates don't have to be the same, they're not in the US, but they are here), HTB loans (which caused massive inflation of new builds, also trickled onto older builds), or stamp duty holiday, shared ownership, or other plans.

I have no doubt that as soon as we get close to another crash, we'll see another stamp duty holiday, government-backed mortgages (which Boris Johnson said will happen), higher than 5x salary multiples, etc, to make sure that prices continue to rise.

After all, most MPs, almost all Tory MPs, and a huge portion of senior civil servants and their families are mega landlords and have huge property portfolios. They're not going to let it crash.

 

[HACO]

Quick solution;

95% LTV 2.5% mortgages fixed for the lifetime of the mortgage for first time buyers.

everybody would have access to a roof over their heads that they own.

upgrades / moves / rental / etc would then call in higher rate mortgages / tax etc.

Banks will not offer that, so it will have to be government-backed. Similar to the Netherlands (which offers 100% LTV or sometimes even 110% LTV).

I think that is going to happen here as well.

 

[HACO]

Didn't Northern Rock do that just before the infamous 2008 financial disaster?

Just sayin'.

Yeah. Subprime 100% mortgages to prop up the market, which collapsed and required the government to bail them out.

 

[HACO]

I can understand why people think it was an odd move and not on the list of national priorities, but on the whole I think it was a good idea.

There is a constant flux of people renewing their mortgages. The loans people get depend on the value of the property coupled with their wage. The pandemic already caused a lot of uncertainty with respect to people's wages, and to add the double wammy of a housing price crash into the mix would have put the banks in full-on panic mode (IMO, at least).

What this means for people is that all of a sudden their previously affordable mortgage could easily double (or more!) when they come to renew, meaning some people are forced to move out (further decline in prices) and those who remain in their home have left money to pump into the rest of the economy. I don't think they expected to have a property boom, they just wanted to keep things stable so they were not forced to raise interest rates to dangerous levels.

They 100% expected it and it was by design.

To avoid renewal problems due to negative equity, they could have just extended the fixed rate by two years for everyone and the government could have funded the difference, would have costed much less than the stamp duty holiday and would not have caused a property boom. It's not like this is unheard of, other countries did it. US did it many times in the last few decades. But our government wanted prices to significantly increase.

Also if people are going to benefit from price rises, it's only natural that they should also suffer for price downturns. You can't socialise the losses and privatise the gains. If housing is an investment, it has to be allowed to fall. If it's not an investment, it shouldn't go up in value. Nobody is entitled to risk-free growth using leveraged money, at everyone else's expense.