to feel seething resentment towards those who profited from the house price bubble and hot anger at the Governments who allowed it to happen?

[TartyMcFarty]

You'll have to forgive my naivety here - I'm ranting about something I don't really understand.

DH and I are stuck. In 2006 we bought a (modest) property on a 100% mortgage. Foolish in hindsight, I know, but based on the advice of our IFA, the unshakeable faith of our families and society that property ownership was the way to go, and the increasing pressure at the time to get on the ladder or miss out, that was the decision we made. We then found that the lender, bastard bastard Northern Rock were unwilling to remortgage based on our lack of equity, despite us having overpaid by several thousand pounds. We couldn't shift the place, and with the agreement of a different IFA, remortgaged against the equity in my DM's property (love her!). It gets more complicated than that, but that's all that's needed here. Now we still can't sell it , our tax credits have suddenly disappeared, my pension contribution has increased (DH doesn't even have a pension) and the tracker rate is slowly increasing. We're on interest only, and as I'm part time since the having DD, with another DC on the way, there's not much of a cushion.

What's really angered me over the last couple of days is the dawning realisation of how people just a few years older than us have profited from the massive increase in property 'values'. I'm still in touch with our ex-neighbour. She bought seven years earlier than us, sold at £120k profit after 10 years (this is not London!), her partner was in a similar situation so they have ended up comfortably in a property of twice the size, renovated to a really lovely standard. Obviously my resentment isn't directed at them personally - they're good people, have profited from a stupid market and good luck to them - but it's just an illustration.

How can we possibly hope to survive in a property market that boomed by more than 3.5x in this instance alone? We can't even afford to maintain our own home to a good standard. Pay isn't moving at all, and we're currently looking at less than .75 of a pension between us. I can't even bear to think about how we'll support our DCs through HE, and the risk to my DM's home if interest rates shoot up.

I just need a rant. Those of us stupid enough to be sucked in at high LTV rates towards the peak of the market are fucked all ways, whereas people just 5 years older than us are untouchable. I know I've only given one example for which I know the exact figures, but there are others I can think of in the same lucky situation. There just doesn't seem to be any point in trying when you compare our situation with those who profited so enormously in the 00s.

If you go back to the 70's there was a big housing price crash in real terms, but it wasn't so obvious as HMG inflated their way out of it, I think they are trying to do this again now.

The issue is whether wages can inflate to match this time round. For the strategy to work they have to, which means tariffs on low wage goods.

Yes indeed massive economic crashes have been known to lead to protectionism (and war!) not sure I can see tariffs being allowed as we are part of the common market.

Amongst the BTLers I know (very professional outfits not your amateur 'back up pension' investors) there has been a quiet and concerted exit from property ever since Northern Rock went tits up. It strikes me the only folk still seeing it as a good investment are the equivalent of the shoe shine boy urging folks to buy stocks on the eve of the Wall St crash. The experts have left having successfully sold to a greater fool and cashed in their gains.

Housing crashes and bubbles should be a vivid reminder to all of us that there is a hell of a human cost associated when you gamble and speculate in a basic human need. It is as amoral as those city traders currently betting on the food commodity markets and raising the price of food staples around the world.

I know someone was has had their house for sale for £400k for over 3 years. They are looking to downsize to a smaller house. They don't understand the damage holding out for the price is doing to them.

Their money is losing purchasing power every year. They may as well have dropped the price. At 5% RPI a year the £200k they could have walked away with is dropping to £190k year1, £180k y2, £171 y3. They could have dropped their price, sold and banked the £200k in a 3 year fix. They don't understand that by the time they get their £400k their £200k is not going to be worth anywhere near what £200k would buy years ago.

Their money is tied up in an illiquid depreciating asset.

Wow great example! And every month when inflation keeps on rising - the BBC says with a deadpan expression 'an unexpected rise in inflation'. That seller is a classic example of trying to catch a falling knife. As inflation bites and the cost of living rises ironically their profits are worth less and the likelihood of finding a buyer and receiving said profits get smaller. Am sure their reasoning is 'I don't want to give it away'. After all they worked hard for that £200k profit of 'free money', I mean they had to live in the house for a decade and use it as a home! God forbid they don't earn a fifth of a million just for living in it and inflicting their interior design taste.

Did anyone listen to Jeremy Vine today?

They were having this exact same debate. Well, was about how old people are suffering because of low interest rates and annuities. Lots of older people ringing in complaining how young people expect everything on a plate and a big tv.

The spokesperson from saga had the audacity to say it was all the fault of younger generations for stretching themselves too much on their mortgage!

3 years??? they can't want to sell that much can they?

What are people around them saying?

It's crazy that people's perception is reality.

Even when I bought a tiny shared ownership house in 2003, the vendor wanted to hold out because the house next door sold for more...

That logic is now considered truth isn't it?

Like someone said way up thread - just because you've painted it magnolia and put twigs and pebbly shit in the fireplace doesn't mean it's worth any more

All day yesterday I was thinking that bricks and mortar are the only thing in every day life that we expect to increase in value. Nothing else does really (classic cars? wine maybe?) but not bikes/cars/trampolines, sofas etc.

But that's why house prices aren't falling - houses are just not selling.

The people selling don't HAVE to move. Yes, they would like to release the equity but aren't forced to and so have the luxury of hanging on for a high price - which will never come.

Then they will bleat on about how they 'couldn't sell'

Very true the market is very much set at the margins - the forced sales: death, divorce, ill health, bankruptcy, relocation due to redundancy etc etc at present it is a Mexican standoff - there are those that literally CANNOT buy because the finances just aren't available and those that DON'T WANT to reduce their price (but do have enough equity). Of the two one is a genuine impasse, the other is stubborness.

Just like to thank Tarty for starting this interesting thread. Upthread Tarty clearly explains she was having a bad day and venting and has been interested to learn other view points.

This thread has addressed a great number of the conflicting views out there re house inflation and it's been insightful to see how other people have rationalised their history of gains/losses.

Love reading Yellows' contributions- its as if years' worth of my muddled up thoughts are streaming out into a coherent format before me on the computer screen!

I'm someone who sold in 2006 as I didn't want to borrow more for the next step up the housing market. I'd seen our "next step up" move from about 20 to 70 grand away in just a few years. I couldn't convince myself that the house was now "worth" 70grand more. Yes I could borrow more but I've always seen debt as every single penny needing to be earned and paid off ie. always having final destination in mind.

Noticed friends happy to remortgage and buy a car, holiday etc. whilst I looked on in a kind of bewilderment (privately of course as I wasn't sure if it was me that was mad or the rest of the world?!)

Absolutely clear to me houses would not carry on upwards so sold and rented. However then the government came up with all these unexpected solutions to this credit bubble and the natural pin prick to the balloon didn't happen and I'm still renting and still don't think houses are worth what people want for them.

It's a strange place to be wanting a house and being able to afford a decent one (salary £140,000) plus previous equity in bank for a deposit. However just don't want houses at what people currently ask. It feels very Emperor's new clothes with me saying this to family and friends who say must buy - have missed boat. Rented too long etc.

However the house I would have bought back in 2006/07 are still same price currently. So swings and roundabouts is what I say. I'm still not that bothered about buying a house - everyone else is and thinks we should buy. I'd like to buy - but not at these prices.

Don't get me wrong I'd LIKE to buy but I won't be. This was eloquently addressed by Yellow upthread.

Vendors say they won't give their house away etc. and remove from market. All well and good as they're obviously not in a position that imminently requires a sale and are speculating.

Plenty of us out here just won't pay those prices however. Hence the current stagnation until people are forced to sell for downsizing, divorce, debt and then forced to understand that a market works by people deciding what they will pay and not what the seller wants.

I'm not hoping for a "crash" I'm hoping for a sense of sanity to prices i.e. something that people interpret as "fair". We all inherently know what we think something is worth and decide if the price is right whether its' houses or tomatoes. Each person will have a differnt yard stick and will pay more for certain perceived luxuries they choose. However there's also a price where no-one thinks those lovely tomatoes are worth buying. That's where I am - no tomatoes in my shopping basket currently (bad analogy thingy!)

As a country we seem to have got into the mindset that home ownership is an imperative and we have been buying houses as investments for our old age rather than as homes. The result has been that older people see their houses as a pension substitute and feel that they have a price they have to sell at, not realising the market will not accommodate them. (See Cassandra's posting, if her friends' house has been on the market for three years, with viewers but no buyers then it is on at too high a price).
My grandparents rented all their lives, not a council house but privately, they saw their house as their home not as something to make money out of. I think it was in the 70s some time that mortgages were made more freely available as there had been something of a waiting list before.
I am lucky, our mortgage is paid off and we have a paid-for second-home abroad. Our savings are, however, in reality declining as the interest rate is so low. We worked hard for all this and at one time mortgage rates were something like 15% so we had our share of sailing close to the wind, financially.
I think as a society we need to rethink our lust for home ownership and general acquisitiveness and think about our home not our property and think about how we can resculpt the housing/rental market. Am I right in thinking that in Germany, for example, renting is far more common and 'normal'?
Anyway, rather incoherent and rambling and perhaps a bit smug: over to you.

Tunip, you're forgetting the BtLers who are in it because they couldn't sell (lots) - they are still in that position.

Thank you kettle.

The bleating about savers today is making me cross - as always, it assumes that savers are virtuous and borrowers are profligate. Problem is, when you're paying through the nose on a mortgage for a house of bloated value, there's not often anything left to save. Or put into a pension.

How are you feeling about everything now Tarty?

I sort of feel better and worse in equal measures (renting and in debt )

At least I have nothing to lose, but OTOH we have nothing to show either...

'it assumes that savers are virtuous and borrowers are profligate.'

True enough about the mortgage aspect, but you only have to read the threads here going back a few years ago on style and beauty or hen nights to realise that until about 2008 people weren't just borrowing for mortgages. They were buying very expensive consumer goods on credit cards. And these weren't 'rich' people, they were people on average wages who thought they deserved to have all this stuff, too. Designer clothes, smart cars, the newest kitchens.

That's one reason we are in a mess. Because people spent too much on silly things. I'm stunned how much people will spend on things like handbags and make-up.

I agree that when you think of Sex and The City - Carrie would often talk about 'Maxing out her credit card' on a pair of Jimmy Choos. The viewers were never meant to throw their hands up in horror and say 'that's ridiculous; if you can't afford it don't buy it - especially not at that price!!!'

It did become acceptable and 'normal'.

Shame.

Like you IGC. Sometimes think.we need to grit our teeth and carry on as best we can, then I have a wobble about the whole thing collapsing and feel the urge to get out now. Problem is, if we did sell it would be at a substantial loss and I really don't want to start again with debt. Still feel very vulnerable.

Abra1d - seriously? People added to their mortgages to buy handbags?! That said, I remember all the equity release advertising.

I think Abra1d means that debt was OK - and we all became OK with it.

(I know we didn't, but society did)

Interestingly clothes is down in real terms it really is mortgage, paying for schools (by area), health care (US) and childcare that is putting us in debt.

Re. sex and city above. I agree with the idea of indebtedness for disposable items becoming almost a "fun" and "what am I like?!" kind of thing rather than "are you fucking mad?!"

I think the whole celebrity fascination made some people (I include all age groups in this by the way) think if the celebs can have it then so can I (if I borrow on credit).

Hence the rise of the champagne lifestyle on the lemonade wage. Interestingly another "bubble" analogy relating to finance.

Yes and 'comfort' and 'I deserve this' seems to be a relatively new phenomena.

As in 'comfort food'; and having a shopping spree as I need cheering up...

You would think that but we spend less on clothes than the 70s.

Check out yellow Welles link, it's long but good.

In the US anyway.

Really? We actually spend less now?

I would have thought that we have more of each item now (Jeans/trousers/leggings/jeggings/capri pants/tracksuit bottoms/chinos/combats) rather than just trousers... I also thought people made more of their clothes and then mended them when they became worn.

Or was it just our house in my lovely hand knitted hand-me-downs from my brother

Its only my anecdotal evidence I know but

I have 5DCs and my oldest and youngest have almost 20 years between them.

Clothes were so expensive when the bigs ones were small, I remember spending a lot more on kitting them out.
I had to do it via the catalogue so could pay it off bit by bit.
Specially when they were newborn and I was sorting out thier layette.

With the little ones I just popped cheap stuff in my trolly at the supermarket and did it for a fraction of what it cost me in the early 90s.

My favourite episode of Sex and the City is when Carrie discovers she would have had enough money for a deposit on her apartment if she hadn?t bought all those ridiculous shoes. Schedenfraude!

It's great because she says the same and asks the data person to check it 8 times. The shopping malls are full so we think that. But production is cheaper we wear cheaper fabric.

Food down, electronics up. But big ones up are mortgage, childcare and health (US).

More dual income families, higher risk of bankruptcy. Much more debt. And the biggest thing is how much we have to pay now to access the middle classes for our children. Well in the US. The big swooping curve is changing as the mc shrink.