House Prices - Where does it end?

Surely a better solution would be for the government to force housing developers to build more houses quicker instead of just enough to make a profit but not enough to satisfy demand and therefore keeping housing prices high.

Neuter the chavs from birth and decrease the population in the long run. Thus reducing the overall need for housing I say
 
ci_newman said:
I can't understand why people are saying that buying a house in unaffordable..

At 21 years of age, I have a joint mortgage with my other half worth a full £180k (no deposit). Interest repayments are clocked up at around £800 / month, however our joint take-home pay is around £2500 / month. Account for ~ £500 for bills / month and that still leaves us with a fairly hefy sum of 'spare' money (paying off holidays, car insurance etc).

We are first time buyers in the south of England and it *is* affordable. Ok, so London may be more expensive but it doesn't get much more expensive than here!
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How are you going to afford to have a family with only one wage coming in for a time?
 
Visage said:
Isnt that nanny statism? If the buyer can afford it and the lender is happy with the level of risk then what right does the government have to stop them?

Incidentally, earnings multiples are increasingly irrelevent for large mortgages.

For example, if you ear 20k and have 15k living expenses you can afford 5k in mortgage payments. If you get a 5x wages increase you now earn 100k, but your outgoings dont necessarily go up at all, so you can now afford 85k in mortgage payments, 17x what it was before.

So a multiplier that is appropriate for a 20k income doesnt scale to a 100k income.
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How can someone on a 20K salary afford a 100K mortgage? It must be incredibly difficult - you'd be paying it back forever.

Where do you draw the line? If, as others suggest, prices will get higher because of a lack of housing, then there must be a point where people on normal salaries simply cannot afford to buy a house. It does not matter how many multiples of your salary the lenders are willing to loan - lenders have a moral and social responsibility as well BTW.

I just think it's mental that prices can continue to rise, lenders continue to loan more and everyone thinks that's fine?!
 
ci_newman said:
I can't understand why people are saying that buying a house in unaffordable..

At 21 years of age, I have a joint mortgage with my other half worth a full £180k (no deposit). Interest repayments are clocked up at around £800 / month, however our joint take-home pay is around £2500 / month. Account for ~ £500 for bills / month and that still leaves us with a fairly hefy sum of 'spare' money (paying off holidays, car insurance etc).

We are first time buyers in the south of England and it *is* affordable. Ok, so London may be more expensive but it doesn't get much more expensive than here!
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Out of curiosity, there's an implication in your post that you're on an interest-only mortgage - is that the case?

There's nothing necessarily wrong with interest-only imo, but I'd be curious as to what people plan to do later on?
 
Third Opinion said:
I strongly believe this is what has won Labour the last election. People have a false sense of wealth and many are borrowing to live well beyond their normal means. This helps are consumer led economy.
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Absolutely. People are much more comfortable borrowing money if they feel they have a huge lump of cash in the form of equity in their propertys.
 
ci_newman said:
I can't understand why people are saying that buying a house in unaffordable..

At 21 years of age, I have a joint mortgage with my other half worth a full £180k (no deposit). Interest repayments are clocked up at around £800 / month, however our joint take-home pay is around £2500 / month. Account for ~ £500 for bills / month and that still leaves us with a fairly hefy sum of 'spare' money (paying off holidays, car insurance etc).

We are first time buyers in the south of England and it *is* affordable. Ok, so London may be more expensive but it doesn't get much more expensive than here!
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That's a blinkered view, not everyone is in a relationship. You ought to be able to buy a decent home in a decent area on a single decent wage IMHO.

You've definately done the right thing buying so young though - probably my single biggest regret that I didn't.
 
The Mad Rapper said:
How can someone on a 20K salary afford a 100K mortgage? It must be incredibly difficult - you'd be paying it back forever.
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The figures I used were indicative only.

Where do you draw the line? If, as others suggest, prices will get higher because of a lack of housing, then there must be a point where people on normal salaries simply cannot afford to buy a house. It does not matter how many multiples of your salary the lenders are willing to loan - lenders have a moral and social responsibility as well BTW.
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Do they? The only people the lenders have a responsibility to is their shareholders. If people cant afford a loan and the bank forecloses then they dont lose out - they simply sell the repossesed home and move on....
 
The Mad Rapper said:
That's a blinkered view, not everyone is in a relationship. You ought to be able to buy a decent home in a decent area on a single decent wage IMHO.

You've definately done the right thing buying so young though - probably my single biggest regret that I didn't.
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Try buying something on an average salary in the South East. You'll be lucky to get studio / tiny one bed flat, unless you have a shed load of deposit, and i mean shed load.
 
I have 9 years left on my mortgage but have been advised I will probably have to borrow another 60-80K to give my children a deposit for a home. Lovely that means I will be paying off my house well into my 50's now.

Please tell me why rising prices are so fantastic?
 
Visage said:
Do they? The only people the lenders have a responsibility to is their shareholders.
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Do you work on Wall Street or something? I'd say we all have a responsibility not to stuff society in the incinerator rather than not being able to see beyond the construct of what our boss tells us to do.
 
cleanbluesky said:
Why so? I allows less flexibility but offers an investment...
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Why do I regret it, because when I was 21 house prices were what I consider to be normal, not increibly inflated as they are now.

Also, I'd of almost repaid half my mortgage by now if I'd started at 21.
 
Triad2000 said:
Try buying something on an average salary in the South East. You'll be lucky to get studio / tiny one bed flat, unless you have a shed load of deposit, and i mean shed load.
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Nah, I am from the North east originally and I can still just about afford a three bedroom home there. If I was going to buy, I'd buy there.
 
cleanbluesky said:
Do you work on Wall Street or something? I'd say we all have a responsibility not to stuff society in the incinerator rather than not being able to see beyond the construct of what our boss tells us to do.
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I never had you down as an anti-capitalist.....

Tell me - what would the attitude of the banks shareholders be if they turned around and said 'We've lost a load of money because we did the right thing. Sorry about that'

What about pension funds that invest on the stock market? The whole system is predicated on each and every company doing its best to earn as much wonga as possible.
 
scorza said:
Out of curiosity, there's an implication in your post that you're on an interest-only mortgage - is that the case?

There's nothing necessarily wrong with interest-only imo, but I'd be curious as to what people plan to do later on?
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My bank gave me 33% repayment and 66% interest only, they said that once my fixed rate finishes they will evaluate my circumstances again and convert it to a full repayment or reduce the interest only element, its tailored purely upon what i can afford per month.

I've borrowed 6x salary based on that but i don't see it as a problem, i'd rather pay money based upon that than throw my money away by renting, at least this way i own my house.

Plus i'm in a nice area of London that will *hopefully* always be in demand, only a one bedroom flat so i doubt i'll make a profit on it but thats not my aim.
 
johnny6 said:
Surely a better solution would be for the government to force housing developers to build more houses quicker instead of just enough to make a profit but not enough to satisfy demand and therefore keeping housing prices high.
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My mum just sold a large quantity of building land, the developer got it with planning permission for about £10 an acre and then give my mum 25% of the total valus of each house as they're are sold. But my mum gets to set the build rate, so if theres a crash she won't build that year - or two years or whatever.

I should imagine this happens quite a lot, as developers can't afford to buy 40 acres out right.

So anyway - government can't force the developers in all circumstances
 
It's worse for the people who have mortgaged themselves up to the hilt. All it will take is a big bill to come in a few times over a year and the reposessions will begin. The banks will recoup what the person owes, and likely take some extra profit on top. Everyone wins eh?

What goes up, must come down. The inevitable will occur at some stage but will probably take a lot longer than we think.
 
Visage said:
I never had you down as an anti-capitalist.....

Tell me - what would the attitude of the banks shareholders be if they turned around and said 'We've lost a load of money because we did the right thing. Sorry about that'

What about pension funds that invest on the stock market? The whole system is predicated on each and every company doing its best to earn as much wonga as possible.
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That's what's wrong with the world we live in now though. The West is full of greedy ***** who are more concerned about profit then the good of all.

This topic really doesn't bring out the best in me does it? :(
 
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