UK House Prices

[rcoobc]

I want to embed this video here just for some context, but I don't know how

http://www.lbc.co.uk/radio/presenters/james-obrien/james-obrien-chronic-unfairness-buy-to-let/

Where I live, house prices have increased by an average of 12.2% per year over the last 30 months. If things continue, a £250k 2 bedroom terraced house today will cost £297k in 18 months time. (Source)

This is a real problem. A couple earning £40k a year can borrow £180k for a mortgage (4.5 times annual income). Even if their wages increase by the same 12% a year, which is absolutely not going to happen for most people, they will then be earning £47.5k a year in 18 months time; and so will be able to borrow £213k... so will have fallen another £10k further behind!

For young people looking to buy their first home, they need to save £10k a year, and increase the amount they earn per year along with house prices, and then they will be just standing still.

The only hope is the Buy-To-Let restrictions Mr Osborne has introduced.

http://www.telegraph.co.uk/business...to-fall-as-george-osbornes-reforms-take-thei/

https://www.theguardian.com/commentisfree/2016/apr/01/chancellor-buy-to-let-landlords-george-osborne

Jesus, what to do. Anyone else in the same boat?

 

[11101]

It's a huge problem and not entirely restricted to the UK, although it's one of the worst places. Most city kids will never be able to afford their own house.

I'd ban buy to let landlords and foreign buyers, but it'll never happen. It would be alienating your biggest voter base and your money source.

 

[Redlambs]

I want to embed this video here, but I don't know how

http://www.lbc.co.uk/radio/presenters/james-obrien/james-obrien-chronic-unfairness-buy-to-let/

Where I live, house prices have increased by an average of 12.2% per year over the last 30 months. If things continue, a £250k 2 bedroom terraced house will cost £297k in 18 months time. (Source)

This is a real problem. A couple earning £40k a year can borrow £180k for a mortgage (4.5 times annual income). Even if their wages increase by the same 12% a year, which is absolutely not going to happen for most people, they will then be earning £47.5k a year in 18 months time; and so will be able to borrow £213k... so will have fallen another £10k further behind!

For young people looking to buy their first home, they need to save £10k a year, and increase the amount they earn per year along with house prices, and then they will be just standing still.

Incredible. Anyone else in the same boat?

The only hope is the Buy-To-Let Mr Osborne has introduced.

http://www.telegraph.co.uk/business...to-fall-as-george-osbornes-reforms-take-thei/

https://www.theguardian.com/commentisfree/2016/apr/01/chancellor-buy-to-let-landlords-george-osborne

Jesus, what to do.

I went through this recently, and we were forced to rent to save more. Where I am, the prices are ridiculous.

Fwiw we did speak to a mortgage adviser and he said the help to buy and part ownership schemes are actually pretty good though there's a lot of competition for properties under those because there is a lot of landlords signing their kids and all sorts up to get their hands on places as well as the demand.

All in all we would have definitely gone for one of those schemes as it's still cheaper than renting. But yeah, we are doing ok for ourselves but still face a mountain when we do try to buy.

 

[SwansonsTache]

It's a huge problem and not entirely restricted to the UK, although it's one of the worst places. Most city kids will never be able to afford their own house.

I'd ban buy to let landlords and foreign buyers, but it'll never happen. It would be alienating your biggest voter base and your money source.

Yeah it is ridiculous here as well. A 24 m2 apartment (250 ft2) in the building I live just went for £190k. This is basically a room with a small kitchen and a seperate toilet.

Oslo is even worse, there you can add 20%.

 

[rcoobc]

I went through this recently, and we were forced to rent to save more. Where I am, the prices are ridiculous.

Fwiw we did speak to a mortgage adviser and he said the help to buy and part ownership schemes are actually pretty good though there's a lot of competition for properties under those because there is a lot of landlords signing their kids and all sorts up to get their hands on places as well as the demand.

All in all we would have definitely gone for one of those schemes as it's still cheaper than renting. But yeah, we are doing ok for ourselves but still face a mountain when we do try to buy.

Yeah.

We've been looking at new builds although not found but hadn't found anything under £300k until last week, when we found a £250k 2 bedroom property. We went to look at it, although there is nothing there at the moment (just a building site) so we didn't actually look at anything. They could show us a 3 bed in a nearby town though.

The 2 bedroom £250k property would be £200k after HTB Equity Loan. We can *just about* afford this, although to get HTB we need to jump through all the HTB EL hoops... so, looking at that at the moment.

However, we totally will be ready to buy in 18 months time. We'll have saved an extra £10k, the girlfriend will have a job (her last job ended and and then we had another baby). But if house prices keep rising at the same rate... we'll be looking at the exact same house again for an extra £50k

 

[x42bn6]

You mean Help To Buy? Buy-To-Let is a stupid policy that drives up demand without increasing supply, which of course raises prices further.

Not that Help To Buy is much different, of course, just that it targets different people. And even then it's not a silver bullet because the government's loan requires interest after 5 years, and it's not a fixed rate.

I think this will increasingly become a problem because if house prices keep rising, rents will also continue to rise and eventually cities will start facing a brain drain. For example, what happens to hospitals and clinics when doctors and nurses can't afford to live anywhere near London? Either their travel times increase, which has associated costs (infrastructure, productivity, health, etc.), or they simply go elsewhere - which may be outside of the UK.

The solution is to build more houses, although falling house prices could trap people with large property portfolios with payments they can't afford, which could result in a lot of defaults, which could trigger another economic crisis. It's a good job that nothing major has happened recently to spook the global markets to make up for it, of course. It's also a good job that MPs don't own a lot of property and thus have no vested interests in prices continuing to grow...

 

[Jippy]

Yeah.

We've been looking at new builds although not found but hadn't found anything under £300k until last week, when we found a £250k 2 bedroom property. We went to look at it, although there is nothing there at the moment (just a building site) so we didn't actually look at anything. They could show us a 3 bed in a nearby town though.

The 2 bedroom £250k property would be £200k after HTB Equity Loan. We can *just about* afford this, although to get HTB we need to jump through all the HTB EL hoops... so, looking at that at the moment.

However, we totally will be ready to buy in 18 months time. We'll have saved an extra £10k, the girlfriend will have a job (her last job ended and and then we had another baby). But if house prices keep rising at the same rate... we'll be looking at the exact same house again for an extra £50k

Depends where you live obviously, but house price growth nationwide is currently 5.6% a year and has slowed over summer. It can't keep going up at 10% per year ad infinitum.

http://www.nationwide.co.uk/~/media/MainSite/documents/about/house-price-index/2016/Aug_2016.pdf

 

[rcoobc]

You mean Help To Buy? Buy-To-Let is a stupid policy that drives up demand without increasing supply, which of course raises prices further.

I don't know what I mean. HTB. BTL. BLT. Bacon double cheese burger with fries.

Instead, mortgage interest tax relief will gradually be cut back to 20% between 2017 and 2020.

So, our landlord with rental income of £10,000 and £9,000 of mortgage interest to pay will in future have to pay tax on the full amount, less a 20% credit on the mortgage interest.

The tax bill for a higher rate taxpayer would therefore work out at £4,000 (40% of £10,000 profit) minus £1,800 (20% of £9,000 interest), which equals £2,200, up from £400 under the current tax regime.

That’s a whopping increase of £1,800. A landlord who pays 45% tax could expect a tax bill of £2,700, compared with £450.

http://www.moneysupermarket.com/landlord-insurance/buy-to-let-tax-relief/
This is what I'm praying will help

 

[rcoobc]

Depends where you live obviously, but house price growth nationwide is currently 5.6% a year and has slowed over summer. It can't keep going up at 10% per year ad infinitum.

http://www.nationwide.co.uk/~/media/MainSite/documents/about/house-price-index/2016/Aug_2016.pdf

That's good. From 2009-2014 it seemed quite slow (double dip recession and stagnation), but since 2014 they've shot up here.

 

[LuisNaniencia]

I want to embed this video here just for some context, but I don't know how

http://www.lbc.co.uk/radio/presenters/james-obrien/james-obrien-chronic-unfairness-buy-to-let/

Where I live, house prices have increased by an average of 12.2% per year over the last 30 months. If things continue, a £250k 2 bedroom terraced house will cost £297k in 18 months time. (Source)

This is a real problem. A couple earning £40k a year can borrow £180k for a mortgage (4.5 times annual income). Even if their wages increase by the same 12% a year, which is absolutely not going to happen for most people, they will then be earning £47.5k a year in 18 months time; and so will be able to borrow £213k... so will have fallen another £10k further behind!

For young people looking to buy their first home, they need to save £10k a year, and increase the amount they earn per year along with house prices, and then they will be just standing still.

Incredible. Anyone else in the same boat?

The only hope is the Buy-To-Let restrictions Mr Osborne has introduced.

http://www.telegraph.co.uk/business...to-fall-as-george-osbornes-reforms-take-thei/

https://www.theguardian.com/commentisfree/2016/apr/01/chancellor-buy-to-let-landlords-george-osborne

Jesus, what to do.

The measures Mr Osbourne brought in will stop the middle class buy to let market (generally people investing in property rather than a pension.) But surprise surprise the people rich enough to buy out right will be relatively unaffected. People who have property investment limited companies aren't subject to the changes and also they generally don't need mortgages which is the real kick in the teeth to more modest investors as the mortgage interest is no longer tax allowable.

 

[villain]

I'm in the South and quite close to London, average house prices are around £400k in my area, and I'm going to need a deposit of at least £80k
My parents bought their first home for £80k.

The thought alone is depressing.

 

[ThierryHenry]

Unless I move in with my parents for years and years to save, I don't understand how I'll ever be able to afford a place around London. The market looks impossible for young people, and I'm a 'decent' earner.

I don't know what I mean. HTB. BTL. BLT. Bacon double cheese burger with fries.

http://www.moneysupermarket.com/landlord-insurance/buy-to-let-tax-relief/
This is what I'm praying will help

That's a promising development. Praise to Gideon. John McDonnell overthrowing capitalism could help too.

 

[rcoobc]

I'm in the South and quite close to London, average house prices are around £400k in my area, and I'm going to need a deposit of at least £80k
My parents bought their first home for £80k.

The thought alone is depressing.

With at Mortgage at 4.5 times your average wage, you and your partner will need to earn £70k a year to buy a £400k property with a £80k deposit.

I could cry.

 

[Jippy]

The thing is, even when you do get on the housing ladder, you get trapped- eg we can't afford to upgrade from a two bed to a three bed in our area- you're looking at c£900k for a three bed.

 

[FC Ronaldo]

In the same loop this end. My recent promotion helps but it doesn't conquer the problem, just hopefully shortens the stay of execution between no hope and some hope.

There's got to be a breaking point and a bust in the cycle somewhere, right.... right?

 

[rcoobc]

The thing is, even when you do get on the housing ladder, you get trapped- eg we can't afford to upgrade from a two bed to a three bed in our area- you're looking at c£900k for a three bed.

Jesus, that must be London right? Move out of London. Come live here.

 

[Jippy]

Jesus, that must be London right? Move out of London. Come live here.

Yep, Brook Green. Since we bought five years ago, our flat has gone up by around 30% on a conservative estimate, but so too has everything else round here. Where are you again?

 

[villain]

With at Mortgage at 4.5 times your average wage, you and your partner will need to earn £70k a year to buy a £400k property with a £80k deposit.

I could cry.

The earning isn't the problem, it's actually managing to save that much in the first place.

Luckily both our parents will be able to put down a sizeable contribution, but honestly without that, we wouldn't be ready to have that much money for at least another 4/5 years?

 

[rcoobc]

Yep, Brook Green. Since we bought five years ago, our flat has gone up by around 30% on a conservative estimate, but so too has everything else round here.

I don't think Home.co.uk can deal with London

http://www.home.co.uk/guides/house_prices_report.htm?location=w14&all=1

 

[Smores]

Around 280-300 around here for a 2 bed. We pulled out of a deal (offer had only just been accepted) after Brexit, im still uncertain whether it was the right decision.

Our savings and mortgage agreement means we can get a property but what comes up on the market and the prices is ridiculous. Im rather put off by it all.

Cant afford to buy and see the whole thing pop as we're planning on moving north at some point.

We're both well paid fortunately, you'd have thought it would be easy for us. Feel sorry for those who earn much less.

 

[rcoobc]

The earning isn't the problem, it's actually managing to save that much in the first place.

Luckily both our parents will be able to put down a sizeable contribution, but honestly without that, we wouldn't be ready to have that much money for at least another 4/5 years?

Yeah, well that's the thing isn't it.

We could easily pay the mortgage fees for a mortgage 6 times our annual wage. But I don't *think* anyone will lend that to us.

 

[Jippy]

I don't think Home.co.uk can deal with London

http://www.home.co.uk/guides/house_prices_report.htm?location=w14&all=1

Wow, my little flat could be worth £30m, according to that! The problem with looking at W14 as a postcode is a bit misleading anyway to be honest- it's a small postcode, but straddles, Brook Green, Hammersmith and Kensington Olympia, and prices vary wildly street to street, eg ours is a terrace, but the street behind has loads of detached Victorian houses which are worth a bomb.

 

[dumbo]

My older brother is a painter decorator on a relatively low income. He bought a house about 10 years ago. It's worth 3 times what he paid and he is set for life (as long as he moved to a cheaper part of the country, which is most of it). My sister is several years younger and is now completing a PHD. She has no house, student debt and the average house price around this way is about half a million. (I'm fortunately somewhere in the middle in terms of housing). The financial advantage that some have over others due to luck, age and a system fuelled by greed is fecking sickeningly unfair. Personally I can't complain and my sister will recieve help from the family but most people are not in such a fortunate position.

The problem is that for houses to become affordable and to reflect wages again, a huge number of people would need to fall in to negative equity and that would be politically disastrous. The powers that be (who have property portfolios of their own) would sooner the entire world crumble than for a house price correction. There seems no mystery why house building targets are never ever met and why scheme after scheme have the effect of stoking demand. The other thing is that the boomers, who have all this money tied up in housing will soon die and only the kids lucky enough to have parents with houses will be rewarded, creating further wealth disparity.

I reckon if I was 5 years younger the housing situation I would be in would make me genuinely suicidal. I simply couldn't afford rent prices on my own anywhere close to where I work, let alone a deposit or mortgage. I work with people who have no house of their own, or financial support, who have effectively been made slaves by this system. They have no savings, increasing rents and stagnant wages. How are they ever supposed to retire?

It should shame us as a society.

 

[rcoobc]

Cant afford to buy and see the whole thing pop as we're planning on moving north at some point.

We're both well paid fortunately, you'd have thought it would be easy for us. Feel sorry for those who earn much less.

I can't tell if I want it to pop, so house prices drop... or not, as I'd probably lose my job

 

[villain]

Yeah, well that's the thing isn't it.

We could easily pay the mortgage fees for a mortgage 6 times our annual wage. But I don't *think* anyone will lend that to us.

True, that's how recessions start.

The prices need to be dropped some way, some how though I'd rather stay at my parents house than pay extortionate renting fees in London.

 

[C.M.P]

Stop being poor

 

[Jippy]

Stop being poor

Might get messy when interest rates do finally start to rise, given so many people are so stretched.

 

[Smores]

I can't tell if I want it to pop, so house prices drop... or not, as I'd probably lose my job

No way out of the situation really. Any goverment intervention will come too late and recession will screw with earnings. Mass house building and a much bigger help to buy scheme is needed very quickly.

Its a complete failure of both goverments that they've left a generation in this mess and them you've got a pension crisis round the corner.

 

[LuisNaniencia]

Wow, my little flat could be worth £30m, according to that! The problem with looking at W14 as a postcode is a bit misleading anyway to be honest- it's a small postcode, but straddles, Brook Green, Hammersmith and Kensington Olympia, and prices vary wildly street to street, eg ours is a terrace, but the street behind has loads of detached Victorian houses which are worth a bomb.

I worked in a house in Kensington a year or so back and the whole Street had dug below the houses to make an extra floor. You half expect to whole Street to collapse into the ground! Any of that round your way?

 

[Sparky_Hughes]

A lot of it depends where you want to live. for £180000 you can get a nice semi or detached 3 bed round here, rising to £250000/£300000 for a very nice place. I fail to see why anyone who wasnt born there or has family there would want to live anywhere near london when there are so many better alternatives.

 

[Jippy]

I worked in a house in Kensington a year or so back and the whole Street had dug below the houses to make an extra floor. You half expect to whole Street to collapse into the ground! Any of that round your way?

Not posh enough round my way. You get loads of planning rows in Kensington over those massive basements- can imagine that having all the massive trucks and equipment excavating the ground would be a massive pain. That's more millionaire's row stuff tbh.

 

[Jippy]

A lot of it depends where you want to live. for £180000 you can get a nice semi or detached 3 bed round here, rising to £250000/£300000 for a very nice place. I fail to see why anyone who wasnt born there or has family there would want to live anywhere near london when there are so many better alternatives.

Jobs, I'd imagine is the main thing. I grew up in East Yorkshire and there aren't too many editorial jobs up that way.

 

[Stanley Road]

One of my colleagues here in NL was not allowed to go to open house viewings until she made a bid over the asking price, that's how bad it can get.

 

[SteveJ]

'Gentrification: it's not just for London...'

 

[The Purley King]

The measures Mr Osbourne brought in will stop the middle class buy to let market (generally people investing in property rather than a pension.) But surprise surprise the people rich enough to buy out right will be relatively unaffected. People who have property investment limited companies aren't subject to the changes and also they generally don't need mortgages which is the real kick in the teeth to more modest investors as the mortgage interest is no longer tax allowable.

Property investment companies absolutely do need mortgages.

 

[GloryHunter07]

Im in the same boat - its a nightmare in london. Prices going up faster than my earnings/savings.

Down the road from where i rent, in a nice area, someone has essentially put an extension on the side of their house, its only about 2 to 3 meters wide, But is on the market for £310k. It's basically a two story corridor ffs.

By the way, having looked at mortgages at 4.5 times earnings, the monthly payments are absolutely frightening. Well above the rent on our current place which we couldn't afford to buy. Basically if we bought a house it would be in a worse area, smaller and cost more money.

 

[GloryHunter07]

The earning isn't the problem, it's actually managing to save that much in the first place.

Luckily both our parents will be able to put down a sizeable contribution, but honestly without that, we wouldn't be ready to have that much money for at least another 4/5 years?

By which time prices would be so much higher that you would need to save more...

 

[rcoobc]

A lot of it depends where you want to live. for £180000 you can get a nice semi or detached 3 bed round here, rising to £250000/£300000 for a very nice place. I fail to see why anyone who wasnt born there or has family there would want to live anywhere near london when there are so many better alternatives.

Yeah. My job is here, my family is here, my friends are here. I'm not sure I could persuade the Mrs to move until her parents go

Hopefully that is a long time away yet.

 

[rcoobc]

Im in the same boat - its a nightmare in london. Prices going up faster than my earnings/savings.

Down the road from where i rent, in a nice area, someone has essentially put an extension on the side of their house, its only about 2 to 3 meters wide, But is on the market for £310k. It's basically a two story corridor ffs.

By the way, having looked at mortgages at 4.5 times earnings, the monthly payments are absolutely frightening. Well above the rent on our current place which we couldn't afford to buy. Basically if we bought a house it would be in a worse area, smaller and cost more money.

Really, I'm the other way around. At 4.5 times annual wages, my Mortgage/Rent would stay roughly the same. I could afford at least 5 times annual wages.

But then, we don't go on holiday. We don't go out. Our transport costs are negligible.

 

[Wibble]

Depends where you live obviously, but house price growth nationwide is currently 5.6% a year and has slowed over summer. It can't keep going up at 10% per year ad infinitum.

We have been saying this for a couple of decades in Sydney.