UK House Prices

[rcoobc]

Not to mention that there is eff all interest at the moment. So if you have to save £80k for a deposit, and want it to get some interest to even try and keep up with house prices your going to end up doing something like this:

TSB Classic Plus - £2k - 5%
TSB Classic Plus - £2k - 5%
TSB Classic Plus - £2k - 5%
Club Lloyds - £5k - 4%
Club Lloyds - £5k - 4%
Club Lloyds - £5k - 4%
BOS Vantage - £5k - 3%
BOS Vantage - £5k - 3%
BOS Vantage - £5k - 3%
BOS Vantage - £5k - 3%
BOS Vantage - £5k - 3%
BOS Vantage - £5k - 3%
Tesco Bank - £3k - 3%
Tesco Bank - £3k - 3%
Tesco Bank - £3k - 3%
Tesco Bank - £3k - 3%
Santander 123 - £17k - 1.5%

http://bankaccountsavings.co.uk/calculator

What can you say?

 

[skidmark]

It really is a serious issue. I'm considering getting mortgages on two flats to be held in my kids' names, not for rental income per se, although that would probably cover the mortgage payments, but more so that they have somewhere to live when they leave home in 15 years time. I recognise that would actually be compounding the problem for buyers of today, but am struggling to come up with an alternative solution that looks after my kids' future well-being. It's a ridiculous situation to be in.

 

[Jippy]

Not to mention that there is eff all interest at the moment. So if you have to save £80k for a deposit, and want it to get some interest to even try and keep up with house prices your going to end up doing something like this:

TSB Classic Plus - £2k - 5%
TSB Classic Plus - £2k - 5%
TSB Classic Plus - £2k - 5%
Club Lloyds - £5k - 4%
Club Lloyds - £5k - 4%
Club Lloyds - £5k - 4%
BOS Vantage - £5k - 3%
BOS Vantage - £5k - 3%
BOS Vantage - £5k - 3%
BOS Vantage - £5k - 3%
BOS Vantage - £5k - 3%
BOS Vantage - £5k - 3%
Tesco Bank - £3k - 3%
Tesco Bank - £3k - 3%
Tesco Bank - £3k - 3%
Tesco Bank - £3k - 3%
Santander 123 - £17k - 1.5%

http://bankaccountsavings.co.uk/calculator

What can you say?

The flipside of near zero interest rates is obviously lower mortgage payments though.

 

[rcoobc]

The flipside of near zero interest rates is obviously lower mortgage payments though.

Which is great for those that can afford to get on the property ladder. But if you are renting, keeping up with house price increases is unpossible.

 

[villain]

Which is great for those that can afford to get on the property ladder. But if you are renting, keeping up with house price increases is unpossible.

Had to be done

 

[rcoobc]

Had to be done

I love unpossible

 

[Jippy]

Which is great for those that can afford to get on the property ladder. But if you are renting, keeping up with house price increases is unpossible.

I was 34 when we bought- my mother was 21 I think when she bought her house. Times change and just as we'll have to work longer and save harder for our retirement, so too we don't get to buy until we are later. It sucks, but not really sure what you can do about it, particularly in London, where even if you do have loads of new housing put up, certain areas will always cost a premium.

 

[Sparky_Hughes]

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.

I can totally understand that, Im more thinking of people who have no ties there, yet move there then spend the entire time moaning how expensive it is. I cant think of THAT many careers that are only available in London. A guy I know got all excited about a development job in london at twice his current salary, he looked quite deflated when I pointed out it costs 3 times more to live there than here

 

[rcoobc]

I was 34 when we bought- my mother was 21 I think when she bought her house. Times change and just as we'll have to work longer and save harder for our retirement, so too we don't get to buy until we are later. It sucks, but not really sure what you can do about it, particularly in London, where even if you do have loads of new housing put up, certain areas will always cost a premium.

True. Times change. Still, I personally doubt I will live to each 70 (State retirement age)... so I'd like to retire earlier (never been very healthy)

I've calculated that if I put £5k away a year in a SIPP, I should be able to retire at 60 under current rules.

Right now I am putting £0k away a year.

 

[Classical Mechanic]

Good time to buy in Manchester City centre at the moment. It was the second highest appreciating property market in the UK behind London last year but you can still get a good positioned 2 bed flat for £170000. There are some major developments underway right now and overseas investment is very high due to high rental demands so the market should remain buoyant going forward (not guaranteed with Brexit etc obviously).

 

[Massive Spanner]

I've heard London is even more expensive and difficult to find a place than Dublin at the moment, which is a slightly terrifying thought because Dublin is fecking horrific right now both to buy and rent.

 

[Jippy]

True. Times change. Still, I personally doubt I will live to each 70 (State retirement age)... so I'd like to retire earlier (never been very healthy)

I've calculated that if I put £5k away a year in a SIPP, I should be able to retire at 60 under current rules.

Right now I am putting £0k away a year.

Doubt I'll live to 70 either- quitting smoking might be a step in the right direction. People tend to chronically underestimate how much they need to save for retirement. Another knock-on effect of ultra-low interest rates is that annuity rates are shite.

Good time to buy in Manchester City centre at the moment. It was the second highest appreciating property market in the UK behind London last year but you can still get a good positioned 2 bed flat for £170000. There are some major developments underway right now and overseas investment is very high due to high rental demands so the market should remain buoyant going forward (not guaranteed with Brexit etc obviously).

Hmm, they said that about Leeds and Manchester city centre new builds in 2007 and they promptly halved in value.

 

[Classical Mechanic]

Hmm, they said that about Leeds and Manchester city centre new builds in 2007 and they promptly halved in value.

I don't think that happened in Manchester Jippy. There was probably one property that was reduced by half its value and that made a sensationalist headline. I'm not even sue if there was any significant drop off. In 2007 you could get a one bed flat in the Beetham Tower for £120k. There is a new tower being built, the Axis Tower, on Deangate as well, and one beds start at £200k. That is a significant increase on a 9 year period, through a depression as well.

http://www.telegraph.co.uk/property...ll-see-the-biggest-house-price-rises-by-2020/

Developments in the pipeline

http://www.manchestereveningnews.co...er-city-centre-development-buildings-11139392

 

[GloryHunter07]

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.

What deposit are you basing that on, 5%?

I shudder to think about what it would be like if interest rates shot up.

 

[GloryHunter07]

I don't think that happened in Manchester Jippy. There was probably one property that was reduced by half its value and that made a sensationalist headline. I'm not even sue if there was any significant drop off. In 2007 you could get a one bed flat in the Beetham Tower for £120k. There is a new tower being built, the Axis Tower, on Deangate as well, and one beds start at £200k. That is a significant increase on a 9 year period, through a depression as well.

http://www.telegraph.co.uk/property...ll-see-the-biggest-house-price-rises-by-2020/

Developments in the pipeline

http://www.manchestereveningnews.co...er-city-centre-development-buildings-11139392

Recession not depression - sorry to be a pedant.

 

[rcoobc]

Doubt I'll live to 70 either- quitting smoking might be a step in the right direction. People tend to chronically underestimate how much they need to save for retirement. Another knock-on effect of ultra-low interest rates is that annuity rates are shite.

Hmm, they said that about Leeds and Manchester city centre new builds in 2007 and they promptly halved in value.

£5k a year should be enough to retire on, although I'm probably 15-20 years younger than you.

£5k a year over 30 years turns into £296,641 with 4% above inflation, £353,803 at 5% above inflation, or £424,008 at 6% above inflation (all in todays money, so you can apply inflation to that)

Using that 4% above, you can take out £75k tax free, then 4% of the remainder (the amount that is recommended to take out of a pension savings pot) is £8.9k, so below the level needed to pay tax.

All of the above is using figures in todays money, and assuming the rules we know about today. In reality inflation will cause all of that to rise, but I prefer to see it in terms of todays money.

But, telling someone who is earning £27k and struggling to save for a mortgage to save £5k a year is a joke.

 

[LuisNaniencia]

Property investment companies absolutely do need mortgages.

Not the mega rich ones. Also if you have 15 properties or more and set up as a Ltd company you are not subject to the same rules changes.

 

[rcoobc]

What deposit are you basing that on, 5%?

I shudder to think about what it would be like if interest rates shot up.

No... more like 20%. Or 30%.

Because to afford a 2/3 bedroom house, I either need to increase my wage by 15k overnight, or save another £50k.

 

[The Purley King]

Not the mega rich ones. Also if you have 15 properties or more and set up as a Ltd company you are not subject to the same rules changes.

No investment company would pay cash for a property when borrowing costs are so low, makes no sense whatsoever.

 

[rcoobc]

No investment company would pay cash for a property when borrowing costs are so low, makes no sense whatsoever.

Why? House Price increases have beaten Stocks and Shares over the last 20 years. And that's just average over the UK right?

 

[GloryHunter07]

No... more like 20%. Or 30%.

Because to afford a 2/3 bedroom house, I either need to increase my wage by 15k overnight, or save another £50k.

Ah ok - that makes the interest quite a bit better!

 

[Abizzz]

Why? House Price increases have beaten Stocks and Shares over the last 20 years. And that's just average over the UK right?

Because if you have the money to buy 1 you could buy 4-5 using debt and earn a lot more at the current interest rates.

 

[Grinner]

I thought my Canning Town flat was expensive at 31k in 1994.

 

[GloryHunter07]

Why? House Price increases have beaten Stocks and Shares over the last 20 years. And that's just average over the UK right?

Why pay 100% cash for 1 property when you can pay 50% cash 50% debt for two?

 

[rcoobc]

Why pay 100% cash for 1 property when you can pay 50% cash 50% debt for two?

Because if you have the money to buy 1 you could buy 4-5 using debt and earn a lot more at the current interest rates.

I am with you. I thought that's what you meant actually. Gotcha.

 

[Grinner]

Never be house-rich and cash-poor. Always look to leverage that equity and make more money.

 

[LuisNaniencia]

No investment company would pay cash for a property when borrowing costs are so low, makes no sense whatsoever.

Say if you bought a flat outright for 120k and rented it for 600 a month. That 600 is nearly all profit.

Alternatively you buy a flat with a mortgage for 120k and rent for 600, your mortgage will eat that 600. So unless you can get 600 a month for having 120k sitting in the bank I don't see what you mean?

 

[2mufc0]

The government need to release more land for housing, it's simple as that really, it's the only way prices will fall. Although it might not seem it, only 10% of the land mass in the UK is urban so it doesn't mean we have to destroy the whole cointryside. There has to be a political will to this and a change in people's attitudes towards development. The planning system is severely held back by nimbyism and politics.

 

[AshfordLad]

I thought my Canning Town flat was expensive at 31k in 1994.

Almost £400k for a good one-bed flat now.

 

[theyneverlearn]

I got onto the shared ownership scheme when I was 23 and owned 30% of that house. Over a period of 4 years I managed to make enough on the house to be able to sell and move into my current property, which has an 85% mortgage.

The scheme worked for me, there was no way I would have been able to afford my current home without it.

As for house prices, I purchased my current house for 245k and it's now worth 280+ in less than 1 year.

 

[MikeUpNorth]

Say if you bought a flat outright for 120k and rented it for 600 a month. That 600 is nearly all profit.

Alternatively you buy a flat with a mortgage for 120k and rent for 600, your mortgage will eat that 600. So unless you can get 600 a month for having 120k sitting in the bank I don't see what you mean?

You buy six £120k houses with mortgages (spreading your upfront investment as a deposit over the 6 houses) and make a lot more on capital appreciation than the interest costs.

 

[LuisNaniencia]

You buy six £120k houses with mortgages (spreading your upfront investment as a deposit over the 6 houses) and make a lot more on capital appreciation than the interest costs.

I think there's some confusion as im talking about the demographic that can buy 6 houses without mortgages. Or 10,20,100 houses without mortgages. The sort of people who buy houses in Mayfair and they sit empty for years as an investment.

 

[MikeUpNorth]

I think there's some confusion as im talking about the demographic that can buy 6 houses without mortgages. Or 10,20,100 houses without mortgages. The sort of people who buy houses in Mayfair and they sit empty for years as an investment.

You originally were talking about 'investment companies'. They would not typically buy properties outright with cash when borrowing rates are low, regardless of their capital position.

 

[Jippy]

£5k a year should be enough to retire on, although I'm probably 15-20 years younger than you.

£5k a year over 30 years turns into £296,641 with 4% above inflation, £353,803 at 5% above inflation, or £424,008 at 6% above inflation (all in todays money, so you can apply inflation to that)

Using that 4% above, you can take out £75k tax free, then 4% of the remainder (the amount that is recommended to take out of a pension savings pot) is £8.9k, so below the level needed to pay tax.

All of the above is using figures in todays money, and assuming the rules we know about today. In reality inflation will cause all of that to rise, but I prefer to see it in terms of todays money.

But, telling someone who is earning £27k and struggling to save for a mortgage to save £5k a year is a joke.

There are a lot of ifs and buts in that and £5k is very little, given you'll still face council taxes, sustenance, utilities and no holidays etc...Not sure I'm that much over than you btw! Dangerous to calculate anything on today's near record low inflation levels too. Even 5% a year requires a degree of investment risk too, with cash rates where they currently are/

I don't think that happened in Manchester Jippy. There was probably one property that was reduced by half its value and that made a sensationalist headline. I'm not even sue if there was any significant drop off. In 2007 you could get a one bed flat in the Beetham Tower for £120k. There is a new tower being built, the Axis Tower, on Deangate as well, and one beds start at £200k. That is a significant increase on a 9 year period, through a depression as well.

http://www.telegraph.co.uk/property...ll-see-the-biggest-house-price-rises-by-2020/

Developments in the pipeline

http://www.manchestereveningnews.co...er-city-centre-development-buildings-11139392

Am struggling to find an article I want, but this details much bigger price falls.
http://www.telegraph.co.uk/finance/...entres-left-reeling-by-house-price-crash.html
I remember going up to Leeds for a work meeting in 2009 and the guy was pointing out all of the unfinished new buy to let developments with cranes idle, dotting the skyline cos the developers had gone bust.

I wouldn't read too much into new developments- the development cycle has a massive lag, so you always get a load of stuff either planned or started right when the shit hits the fan. Various skyscrapers in London have been mothballed and revived several times due to the ebb and flow of the economy.

 

[LuisNaniencia]

You originally were talking about 'investment companies'. They would not typically buy properties outright with cash when borrowing rates are low, regardless of their capital position.

Okay, I see why the lines blurred. I was talking about very wealthy investors, whether they set up as investment companies I don't know.

 

[rcoobc]

There are a lot of ifs and buts in that and £5k is very little, given you'll still face council taxes, sustenance, utilities and no holidays etc...Not sure I'm that much over than you btw! Dangerous to calculate anything on today's near record low inflation levels too. Even 5% a year requires a degree of investment risk too, with cash rates where they currently are/

Yeah, I mean who knows what the future costs will be. Especially when you're old and health care costs might increase

But living on £10k a year, plus having £75k in the bank, plus already owning a house should be enough for me to get by for 10 years (until state retirement age kicks in, and you get an extra £6k a year or whatever)

This is all assuming everything stays pretty much as youd expect, which is obviously not going to happen.

 

[Raees]

Kind of glad I went through with my purchase inspite of Brexit

 

[The Purley King]

I think there's some confusion as im talking about the demographic that can buy 6 houses without mortgages. Or 10,20,100 houses without mortgages. The sort of people who buy houses in Mayfair and they sit empty for years as an investment.

Even those people will get mortgages. I used to work for a mortgage broker that had clients including Philip green. And he had a mortgage with every property.
In the last 15 years it has never made financial sense to buy somewhere without a mortgage because you can use your money far far more effectively by leveraging a purchase and buying another few as well.
Even for the £20m apartments at Hyde Park Corner which you aren't planning to rent out same principle applies.

 

[Jippy]

Yeah, I mean who knows what the future costs will be. Especially when you're old and health care costs might increase

But living on £10k a year, plus having £75k in the bank, plus already owning a house should be enough for me to get by for 10 years (until state retirement age kicks in, and you get an extra £6k a year or whatever)

This is all assuming everything stays pretty much as youd expect, which is obviously not going to happen.

I think we're all headed for longer working lives, pinning our hopes on income drawdown and facing an ever-diminishing state pension. It's a bleak picture tbh.

Even those people will get mortgages. I used to work for a mortgage broker that had clients including Philip green. And he had a mortgage with every property.
In the last 15 years it has never made financial sense to buy somewhere without a mortgage because you can use your money far far more effectively by leveraging a purchase and buying another few as well.
Even for the £20m apartments at Hyde Park Corner which you aren't planning to rent out same principle applies.

I know a mortgage broker that was involved with One Hyde Park. A few years ago, the Chinese etc...could buy a property and get such low interest rates on their mortgage that the yield from the £2m or so they had to hold in gilts to get their tier one visas funded the payments, so it was basically interest free. They don't care about renting the property out, they just want their visa so their money is held in a country with rule of law, property with deed of title and so their kids can get educated here. They aren't interested in renting these properties out- there's a significant misunderstanding of how the prime property market works in London.

 

[Mr Pigeon]

I was 34 when we bought- my mother was 21 I think when she bought her house. Times change and just as we'll have to work longer and save harder for our retirement, so too we don't get to buy until we are later. It sucks, but not really sure what you can do about it, particularly in London, where even if you do have loads of new housing put up, certain areas will always cost a premium.

Tbf you bought an eighteen bedroom mansion with two helicopter landing pads, five hedge mazes and a secret medieval sex dungeon. Or at least that's what I assume you bought.