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.
Supply and demand.
Lots of foreign investment in uk property, as investors in the EU and US don't want to invest everything in euros and dollars.... Buying up houses.
Lots of young Europeans finding work in uk... Need more houses.
General immigration ... Need more housing.
Birth rate booming..more need bigger houses.
More people than ever living on their own.. Need more houses
Social housing supply insufficient... Need more houses
Need more houses = price rises. In some areas prices have fallen sharply...less demand, no jobs/ fewer opportunities.
OMG op a 3 bed semi in my area would be about 75k according to zoopla
(sorry not very helpful )
Frogman: Bought a run down hope that had been rented by people who wrecked the place. We put a very low offer in in the first instance which was accepted.
The house had fag burns and broken windows but it was just cosmetics really, enough to put people off buying it at a standard amount though.
Then we deep cleaned the place, fixed broken windows, reprinted everything, bought furnitue that fits and shows off the houses potential, increased storage and just generally made it look a lot more loved.
Does also help that we are in a town that house prices have still been on the consistent rise and do not stay on the market for long
Beaver, it sounds like you must have done some fantastic work on your home for it to have increased in value by fifty-five thousand pounds in only three years. What tips do you have? What did you do?
Exactly, and the worry for me is if it keeps it up in this increasing trend, we will eventually be stuck in our first house and not able to move
Yep, that's the problem beaverfeaver. Your house is gone up, but that only makes the next step up a bit further away.
Those who benefit from this are:
* the dead (their heirs, at least)
* the government (taxation)
* people selling up to emigrate
* debtors, who remortgage to fund profligate spending.
For most people the knowledge that their £100k house is now worth £200k isn't really a good thing.
To add, we only bought ours 3 years ago for £225k, so it really shows how prices are rising fast in the area.
Also in the south east.
We are thinking of selling our small 2 bed cottage to move to larger three bed cottage.
Whilst ours is approximately £280k, anything worth buying as a small step up is easily £350-£400k + !
And factor in (for the near future) "quantitive easing" A.K.A. printing money that hasn"t been earned ,there is a mighty bill coming our way !
We don't know what effect the reduction of the UK's AAA credit rating might have. Might be that interest rates rise again.
Might just be the catalyst we need. (sorry, but savers have been royally shafted). We do need house prices to come down.
Around 2 million more people into the South East in the last decade. Have they built a million more homes? I doubt it.
I don't quite understand why prices are so high when the economy is bad. But I think it's a lot to do with exceptionally low interest rates. And the banks won't want lots of people defaulting on their mortgages. And what the banks want seems to go. That's my opinion anyway.
Here's an article by the BBC celebrating this:
Basically: mass immigration into central London causes existing white British population to move out the counties, where they bring their inflated London house price cash to buy properties there.
Of course anyone who doesn't already own a house is fucked, but hey.
Excessive immigration, property speculation, unreasonably low interest rates: many reasons.
Bubble in commuter belts will not bust. Demand will not cease. It will get more strained as salaries do not compete, but there will also be an upswing and then all this will be forgotten and change again.
Because the price of tangible items like property, gold, silver etc is always more solid. People are prepared to pay for something they have confidence in and things like this doi not drop confidence.
Things like pound value fluctuate as people have more varied opinions. Usually more negative. Most people are positive around actual items.
BTW - "we're all in this together" doesn't mean "we're all going to feel the effects of the downturn equally". there are a lot of people who have very secure and well paid jobs, and right now their mortgage rates are low, any services they buy are competing for less business so if you can afford a cleaner/gardener/building work, it's a lot cheaper than it was 5-6 years ago. There are deals on cars, clothes, holidays, restaurants near us have vouchers pretty much every other week. If you have the money to spend, your money goes a lot further, therefore saving more towards a house deposit is easier to do.
Round here, only one of my friends DHs does'nt work in the City. Everyone gets the train every day and we are in a strange little bubble. It sounds like you live in a similar area. The prices are effected because for a lot of these guys, throwing more money at housing in a good commute location is the difference between being home for bathtime or not seeing their DCs in the week. It's worth it to someone who's cash rich and only needs a 3 bed house to accept they are effectively overpaying for space compared to other areas in order to get that quality of life.
Move away from commuter belts and watch the house prices tumble to closer to the average.
here in argyll 750k would buy a small castle, a detached 4-6 bedroom victorian pile with 1-2 acres is about 4-500K (same in glasgow but will small garden would be 6-800K)
but prices have dropped in last few years here at least 10% in our perfectly ok village with good school ex-HA 3 bed semis are 85-90K we are 1 hour from glasgow, prices go up as nearer glasgow
it is demand in SE that keeps prices high but it can not last indefinitely as I reckon SE is over priced and at some stage bubble will burst
I agree with DontmindifIdo if you happen to live in an area attractive to bankers/City people, then prices are likely to go up rather than down in the (near) future. Large bonuses are coming back again as no reform has taken place whatsoever, all mistakes are probably going to be repeated, but that is not going to help you.
Can you move to another area or extend your current house?
i would say with your area, you probably have a lot of people who either work in banking or industries that service the banking industry - that's prime area for commuters into the city.
5 years ago or so is when redundancies were happening in those industries, we make a lot of our money as a firm from banks, we did a round of redundancies in early 2009. that was the year DH didn't get a bonus and a lot of people didn't either even though under normal years, their same performance would get them a large bonus.
we moved in 2009 (Kent, good London commute), and I know our sellers made a loss but needed to move (divorce). Since then, prices have bounced back quite a bit.
It could be the people you are 'competing' with for the houses are people who are those who've weathered the redundancies in their industries, so aren't feeling the pinch now, whereas if you'd been looking in 2009/10, you might have found a relative bargain as that's when your area really was badly hit.
There's a lot of recruitment going on in the city again. There's a lot of confidence that those who've held on to their jobs are 'safe' from the economic storms. If you are looking at houses in the £750k range with an easy commute to London, you are looking at houses being sold by/to the sort of customers banks want; people who probably have large deposits, with secure highly paying jobs - in industries where they can easily move to another job should something go wrong with this one. It's everyone else who are screwed, I think we might see bigger gaps between types of houses/areas than we used to.
A lot of people are sitting tight and not moving, but I think it's that that's driving the prices up because it creates more demand for fewer properties at the bottom of the ladder, and at the same level.
There will always be some people that have to move, then when they can't sell without making a loss, they end up renting, meaning that there are even fewer properties available for those willing to buy.
It's craziness, and I can't see it getting better any time soon.
It is not the asking price what is important but the price at which it sells.
In many areas, sellers egged on by estate agents are totally unrealistic. Those houses are not going to sell.
The UK has just lost its triple A rating, borrowing costs are likely to increase. The economy is still a quagmire. I would hold fire for a while.
However, there will be areas where prices are high and may even go up, like areas in Central London (lots of foreign buyers, Russians, Greeks etc. with plenty of money) and areas in good (and affordable) commuting distance to Central London.
The UK is a very capital centred country, everything happens in London, that is where most well paid jobs are, etc., as a result house prices reflect this. Really, it is madness as it destroys the rest of the country, but you get the politicians you (collectively) vote for.
People aren't being greedy by wanting to sell a house for £140k that they bought for £35k a few years ago. These people still need somewhere to live, and to get that they need significantly more than the £35k they invested.
That's a fair enough observation, but surely this just means they can not afford to move elsewhere? Trying desperately to attain the impossible is just driving up prices elsewhere. If everyone in their position sat tight and didn't sell just yet it would be easier for prices to come down to a much more sensible level. Then their £35k (plus a proportional profit, say £10k) WOULD buy them something else.
Although the value of the unit has gone up quite a bit, if we wanted to sell up and buy elsewhere, the value of all the other houses has either gone up as well or, if not significantly higher than before, are still far too expensive for us to feel comfortable with.
We're not in the UK but when we were looking to buy our first place, the bank we applied for the loan with said that they could lend us up to the equivalent of £600,000. We only wanted to borrow the equivalent of £75,000 because we already knew which place we wanted to buy. It was a 3 bedroom split level unit in an area that was not hugely popular then. It has become more popular since then due to a certain well-off immigrant community making it their base for restaurants, grocery stores etc. We had a deposit for about half of it. For a week, we kept getting calls from the bank agent about how we could get a much bigger place in a nicer area, buy a new car etc etc if we took out a bigger loan. Eventually, they reluctantly agreed to lend us what we originally asked for. This was in 2007 and pretty sure that banks were starting to try and rein in debt.
So I think one of the problems is that many people go to the bank and they think "Well hey, the bank says that they can lend us this much, and they know what they are doing, so we will take it!". That, of course, pushes prices way up beyond what most people could really afford if they were sensible with their finances.
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