good news for homeowners as house prices increase again

[nettlewine]

So the nationwide are reporting that house prices are up this month.

Seriously this isn't good news, even if you own a home as any step up becomes more expensive and even if you don't and have kids its no life to still be living stuck at home in your 20s and 30s!

The vast majority of homeowners in this country couldn't afford their home if they had to buy it now. The system is broken and its wreaking the whole country and the economy. London isn't a place for londners as they can't afford it and all new builds are sold off plan on Malaysia! Arrg every time I hear the thread title quoted I want to scream.

If only house prices were sensible and people could invest in something useful like producing stuff. I can't see this country as a good place for my children to grow up in.

Penguin, I think the current problem isn't that mortgage repayments are more challenging now than in the 80s - 1988-1991 saw mortgage payments as a proportion of income around 20-25% before dropping back to around the same level as today in 1992 (stable around 16% except in the mid-2000s when they rose to 20-21% again, back at 16% now). It's pretty widely accepted than renting is generally more expensive these days in many areas than mortgage payments. However, it's worth noting that mortgage payments as a % of income for first time buyers in 2007 were only slightly lower than in 1989, though they've singed dropped to 1987 levels (still well above most of the 90s).

But deposits have risen out of all proportion to both incomes and house prices - meaning it's much harder to get on the ladder in the first place. The deposit a first time buyer needed in 1988 averaged 10-12% for the decade from 1988. It's twice that since 2008.

Similarly, house price to earnings ratios have shot up nationwide, with a particular emphasis on London. The 4.3 nationwide ratio now is higher than in the end of the 80s boom (never went above 4, even at the absolute peak), and for most of the 90s was closer to 2 on average. In London, the ratio is 7.3 - at the peak of the 80s boom it was 5.7.

This all means that as both house prices (relative to income) and deposit as a % of house prices are significantly higher than in past decades, it's a double whammy in terms of increased difficulty in getting on the ladder at all, while servicing the mortgage once you've got it is easier than the 'blip' 3 years of the late 80s/early 90s (but harder than in the surrounding years).

You can refuse to believe it all you like penguin, but there are plenty of posters on just these two pages who don't share your glee at the situation.

I agree with the OP; it scares me that my kids might not ever be able to buy a house. Renting is fine up to a point but many people have a deep-seated desire to own their own home.

I think ToBeeorNot has hit the nail on the head - in 15-20 years time or whenever the baby boomers start dying in large numbers, leaving large houses - none of us will be able to afford them or be able to sell them on....so there will be a glut of very large, expensive houses and no market for them.

And definitely not 'only on mumsnet'. I was hugely lucky to have been able to buy at an opportune moment in 2008 (though clearly not as lucky as those who bought before 2005). We were lucky again to be able to move in 2012 before prices where I live went truly bonkers.

That doesn't mean I don't want to see more effective regulation of BTL that doesn't put owner occupiers and FTBs in particular at such a disadvantage in the market; a big increase in house building to reduce demand, and other policy reforms.

It's not just the UK. It's in Dublin (have friends paying huge money for semis), Australia (almost all cities), Canada (Vancouver). It's almost worldwide.

If you put £250,000 3 bed on rightmove for London plenty come up under budget. But they're not in naice areas, not great schools, no tube only national rail.

We bought 4 years ago in an area absolutely everyone said not to. Around 20 mins to Vic and 25 to LB. It's changed in that time as other professionals have moved in.

We will probably leave the UK in 5 years and of course hope our house has gone up but we're also working hard to pay off our mortgage as we see that as part of our savings.

There will be another slump, then another bubble, then a slump. It's all cyclic.

Should add we didn't have to pay stamp duty as FTB which was hugely helpful at the time.

Hey no chip! DH and I are both now well qualified professionals. He's an Oxford educated lawyer and I'm a teacher and we have a 280k mortgage on a 850k house. So I'm not at all downtrodden or bitter. House prices going up would suit me just fine.

But it's not just about me, is it? And lots of people remember the 80s as being bountiful. Forgetting that huge parts of the country were submerged in crippling poverty. That poverty is compounded by their being parts of the country were only those well off can afford to live.

I'm an NHS consultant. I have a big deposit and am struggling to buy a ONE bed in central London.

The system is fucked. Even 10 years ago I would have been able to buy a two bed in an equivalent area with ease. I could choose to move out but it would be more difficult for work and tbh I don't think a flat in zone 1 is an unrealistic ask.

London won't have a public sector soon.

The housing market is royally fucked. I regularly thank the cosmos that we bought our house 5.5 years ago when it was all a bit slumpy. We took a small hit on our 2 bed terrace but managed to get a bargain 4 bed which required some (massive understatement to follow) freshening up in terms of decor. However, based on what houses have been selling for in our road (in about 24 hours on average) we would never be able to afford it now.

The only way our kids will ever own property is from anything they inherit from their grandparents or us. If any of the above need care in old age then it won't happen. It's shocking to think like that but that doesn't make it any the less true.

We have a huge, huge problem and it's a large component of what is setting generations against each other.

I think we're more likely to see a glut when people who have banked on their house as a pension try to downsize to release funds.

Yes it's ridiculous. Historically a consultant would have had a house in Fulham or something, now you can't afford a flat in fucking Peckham.

Last month I had estate agent banging on my door as he had sold next door for well over the asking price in less than half an hour.

I replied that that was all very well but where did he want me to go. He's a complete wanker. Just moved his business into our village and he thinks he is doing everyone a big favour , when no ones children could ever afford to buy in the village. Even the houses on those special schemes for locals are too expensive. We can't even down size as all the smaller properties are character cottages or a converted workhouse and cost a bomb.

Great news for those of us with a property portfolio.

I don't want them to go down, why would I want to have an unaffordable mortage and negative equity?

It's not great news when it leads to massive societal discrepancies actually. And I speak as someone who is benefitting from this. Estate agent has valued our home at £150k more than we paid less than 18 months ago. We plan to tear it down and rebuild much bigger but how on earth a rundown building has increased in value that quickly is unfathomable. It's crazy.

When did you buy your home coke though? Will your children be able to buy?

I bought in 2013, so not so long ago. It was still a struggle to get the deposit but we managed it, through savings not inheritance or parental help.

My child is young so I can't predict whether they'll be able to buy, I can hardly predict their employment prospects or the economic conditions in a few decades' time. But he could inherit this flat, although only when we're gone of course and there's always the chance that it'll end up being sold for care home fees etc.

Slithy, why would a drop in prices make your mortgage unaffordable - unless you are on a short term fix on the cusp of LTV differentials?

Interest rates will go up. I expect a lot of people will find their mortgages unaffordable in a few years. I suspect that's not a good thing.

I don't know how people in London can afford houses. In my city, there are apparently 4 affordable houses on the market at the moment.

The housing market is royally fucked.

But it isn't in most of the UK. We have a 3-bed, study, 2 reception rooms house 30 mins from Edinburgh. It cost well under £250k.

primalass

Yes,....but the median pay is less in different parts of the UK.

So £250k is unaffordable to many people.
As is £180 k.

That's the price in my 'expensive' village though. Within another 3 miles there's a 3-bed townhouse for 75k. On the trainline to Edinburgh, nice town.

depending on what happens after the election, many big businesses are ready to engage plans to get out of the UK as other countries offer a cheaper solution.

The big earners will follow the big businesses and so on. Who is going to buy the over priced houses then?

Very uncertain times ahead.

Well if London is made less attractive for the worlds billionaire s to hide their ill gotten gains they will fuck off quickly, and I hope they do. Prices could go in free fall, its just not sustainable.