to wonder why house prices are so high if the economy is so bad?(64 Posts)
I have been looking at three bed family homes in the area I live. Nothing amazing, just semis with a reasonable lounge and three ok sized bedrooms and small garden. They are around £750k about five years ago they were about £500k, property websites confirm this increase. No way can I afford 750k!
So Aibu to wonder how the property prices have risen so much when all we hear is the economy is dire? I live in south west London/ Surrey.
I haven't a clue tbh but, where I am, prices have stalled (central Scotland, less than an hr from Edinburgh and Glasgow).
Supply and demand is generally what controls the price of things. My guess is there's a hell of a lot more jobs/money where you are than were I am. And, a hell of a lot less houses!
3 bed semi in my town would be less than 200k. Not so nice areas probably just over 100k.
Because we live in an affluent area? I doubt they are rising that much in Durham or Burnley.
we bought our 4 bed semi last year for just under 100k, makes me gasp when I hear about England house prices. We're central Scotland....maybe not so nice area to an outsider but we love it here
Speculation/stupid estate agent valuations/unrealistic vendors/I don't really want to sell it price/the price I NEED/
All the bullshit reasons that the housing market is a shark infested pit.
We live in a not so nice area in the north west. The house prices if you are buying are between say £100,000-200,000 for a 3 bed. The problem is wages are very low, unemployment is high and so most people I know can no more afford that than they could £750,000.
Personally we saved £25,000 for a deposit but despite asking pretty much everyone we can't get a mortgage for enough money to buy a house as our income is not high enough. So we are stuck renting . Of people my age (20s) I don't know of anyone who owns their house here they all rent.
House prices here have not gone down, but houses don't appear to be selling much either . The same house are for sale now as 6-12 months ago.
Alongside this rents have skyrocketed. Despite the low cost of housing the rents average around £750-900for a 3 bedroom house. Not because they at lovely or in a good area just because there is So much demand and few properties to rent.
We have been trying to find a new house to rent for months but every time one comes up there are multiple applicants and you end up competing for the contract.
I have no idea why the prices to buy have not gone down they seem to be based on fantasy!
Yanbu, DH says that house prices will probably stall very soon and the Market will re-adjust to bring itself in line with the economy, as prices are unsustainable.
However, I think people are too greedy and have been expecting huge returns on property for too long, so sellers are unlikely to want to price their houses more realistically. Particularly where you are. At the end of the day, if there is someone willing to pay for the house at that price, the house is 'worth' it. In barnes / Richmond ( guessing that's approx where you are) people will pay those prices.
It's not right, though. Our housing Market is totally fucked.
In the South East there aren't enough houses and there are a lot of people. It's simple supply and demand. Plus the SE has the highest wages so people can afford more. And we have more jobs so more and more people are moving into the area. Finally mortgage rates are still v low so it makes financial sense to buy and pay a mortgage rather than rent (rental rates in SE make this even more true).
Those saying its to go with greed, it's not really, it's not greedy to sell at a price people will buy at, to do otherwise would be financial suicide. House in SE are selling quickly so they must be priced to reflect the market.
Supply and demand in the south east plus SW London/Surrey because of the mini baby boom since 2007 means everyone has wants these areas for schools as those babies are now school age.
Posted too soon - our DS was born in zone 1 in 2008 and every family we knew (prob 15 or more) has moved to the home counties in the past 5 years.
According to Halifax, house prices are going to keep on rising until at least the end of the decade, to average 1/2 million in the south east. Thats doubling in most areas over the next 7 years. (The SE being more than just London)
All the above, plus interest rates at historically low levels (and likely to remain so for a while, most experts suggest) means that people with mortgages can mre easily continue to pay them even if other costs etc rise and income falls.
Plus in London and other parts of the SE there is an influx of people from outside the UK who have wealth to buy expensive housing and who are largely unaffected by our domestic economic problems.
Because interest rates are low so money/credit is cheap and people can afford to borrow lots and service that debt (i.e. pay the interest on it). If interest rates rise, house prices will fall very quickly.
That is the crux of it.
I've been watching a history programme on Sky Bizarrely Obscure, following the social rise and decline of some of the more famous streets of London. This weeks was Caledonia Road - that largely has been bought lock, stock and barrel by a Cypriot who came to the UK with 60 quid in his pocket in the 1960's and created a property empire.
He buys shops and converts the upstairs accommodation into bedsit land. But he also does it with the basements. 300 quid a week, in a poor area, for a room in an underground bedsit. They are usually taken by backpackers working in bars, sleeping in shifts and 'hot bedding'.
Thats 1200pcm in rent for a dingy room that breaks every planning law going. Very jaw dropping as to what people will pay.
Rural town in Scotland half hour from a small city and an hour from Glasgow and Edinburgh. Detached four bed bungalow with huge garden and views...164000 two years ago. And that was top end of budget. I feel so sorry when I see the prices elsewhere.
We're in the north west, north manchester on the edge of the moors. The area has spread from 4 villages but they now almost meet each other as the suburbs have spread. It has been a great place for the children to grow up, with manchester 12 miles away but open countryside here. House prices generally continue to drop, but it is still very difficult for young people to buy because wages are low, jobs hard to get and deposits too high. The result is lots of houses for sale over a couple of years, and many being rented rather than sold. The north south divide is growing and can't be good for anyone, anywhere except those who manage to buy in the south east, and then sell and move to a less expensive housing area (if they can get work) It's grim isn't it!
Again with it being half term, I've caught a couple of the property programmes.
You sell a pokey 3 bed mid terrace house in London for 400,000 (In an area wild horses wouldn't drag me into in the first place) and wander off into the wilderness and the same money buys you a 6 bed Victorian cottage, complete with 17 acres, an annex, a trout pond and a set of stables.
All very idyllic - except these people are mainly about 10 years away from the probable onset of ill health - and who the hell wants to live half way up a mountain, with no neighbours and the nearest supermarket 2 hours away (or 2 weeks if its snowing) - plus it might be a lovely cottage - but do you really want to be starting up a B&B at 60?
I think a lot of problems have been caused by collective greed, tbh. Just before the crash, people were getting 110% mortgages, borrowing more than they could afford to, and making money just by buying a property, waiting for a few moths and then re-selling it for £50k more than they paid. Yes, it was a sellers market and property can o ly sell for what someone is willig to pay for it, but people's greed was what was driving up prices. Estate agents were going into people's houses, Over valuing massively, and people didn't argue. No one said 'I think that's too high'. No one complained when they sold heir houses at a huge price.
Even now, after all that's happened, mentality hasn't changed. There's a bloody rightmove ad on the telly with the line 'get the house you deserve'. People are greedy, and companies play on that. Who is at fault?
I think you must be looking in really very very very nice places that are an exception rather than a rule. I live in the south east and you can get a house like you describe for less that £200,000 in a nice area.
You are not being unreasonable it is crazy. In the South East lots of couples/young families are moving out of central London into Surrey. Central London prices are booming because of Foreign investors and that is filtering through.
Also i think house prices are really over inflated now due to dual income families and cheap mortgages.
Now nearly every household has 2 people earning, over a couple of decades this has meant that families can 'afford' to pay more for a family house and due to supply and demand prices have risen.
Also interest only mortgages have a lot to answer for, in that people can pay over the top for a house without ever being able to fully pay for it- if interest only mortgages hadn't been allowed I wonder if we would have seen such a boom- also I think the chicken will come home to roost for some people when they wake up and realise in 10/15 years that they haven't paid off their mortgage and still owe hundreds of thousands- no doubt it will be another mid selling scandal like endowment mortgages.
There will always be areas that are more expensive/desirable than others. If you grew up in an afflent area chances are that you will have to move away to get your foot on the property ladder.
Yanbu, the market by rights should have corrected in the crisis after having more than doubled because of prolific lending at high earning multiples. However cutting rates near zero kept existing mortgages affordable and prices only fell 20 percent from their peak nationally, and are up in desirable parts of London / southeast. Banks have also kept a lot of people in their homes who can't afford repayments, but it's politically preferable to mass foreclosures, and allows banks to avoid crystallising losses.
I'd expect prices to continue to stagnate in most areas, though there are always little pockets where people flock.
Join the discussion
Registering is free, easy, and means you can join in the discussion, get discounts, win prizes and lots more.Register now
Already registered with Mumsnet? Log in to leave your comment or alternatively, sign in with Facebook or Google.
Please login first.