To worry that leading Economists say house prices will hit 15 times earnings

[Ijustwantaquietlife]

This seems like such a frightening prospect. I bought mine when it was 5 times my earnings and even that seemed like I was being a bit risky. How on earth will the next generation ever afford these along with paying back 60k tuition fees and saving enough into a pension to ensure they have enough to not be miserable in retirement?

[http://www.thisismoney.co.uk/money/mortgageshome/article-4825858/House-prices-hit-15-TIMES-average-income.html daily mail link warning]

@LakieLady that's an interesting bit of social history thank you 😊
I live nearby and did not know that.

Economists (even the best ones) have been wrong before and they'll be wrong again.

They can't even reach a consensus on the causes of the bloody Great Depression (or what ended it), despite having 80 years of hindsight.

@whiffle - obesity levels, increase in type 2 diabetes, less exercise, increase in drinking etc. It's going to take time to see the affects of this bit we will.

Might add, I would be interested to know, re anyone making this sort of prediction, how many properties they own and how leveraged they are.
In recent years there has often been a lot of 'talking up' of the market by so called 'property experts' who often have substantial vested interests in prices going up, and like to talk as if ever-rising prices are a good thing. As if!
One Times property journalist would often write of prices 'improving' - meaning going up. It wasn't ever an 'improvement' for the many who were priced out. What it meant for whatever portfolio she may have had was another matter.

Average earnings, average house prices.

That masks massive regional differences plus massive differences in house prices within that house price "average" as well as massive differences in "average earnings".

I'm 32 I'll be very surprised if I don't have to work until I die.

This is the logical end result as homes as investment rather than as homes to live in.
We need a return to social housing. That way, CHB moves from one department to another, not out into some private investors pocket.*
^ this^
If there were more social housing for those who need it, the buy to let investors wouldn't be competing with the first time buyers for housing. So many of the smaller (therefore cheaper) homes in our town are privately rented now, it's really hard to get on the first rung of the ladder.

I think house prices will fall post brexit. That is about the only benefit I can see to leaving the EU. It won't benefit me because I bought our house 20 years ago, but it could be good for some of the younger generation. However I think most people will be more concerned with how they're going to feed themselves than buying houses.

I don't expect to ever be able to retire and I have no pension at all, but I do expect to be made redundant in about 1.5 years (brexit again).

Totally agree, Maryanne.

I probably wouldn't have bothered buying if I could have got a secure tenancy, but I was hacked off with having to move every year or so at the whim of some landlord. And this was in the late seventies/early 80s, so it's not a new thing.

The combination of little regulation in the private sector and next to no chance of getting social housing unless you're homeless and vulnerable makes buying somewhere the only way of getting a secure home, which is a really basic human need. That must account for extra demand on properties to buy, which pushes prices up.

I really worry about what would happen if interest rates were to rise. Just a 1% rise would double repayments for a lot of people. Last time that happened and coincided with a recession, loads of people lost their homes because of repossession. At least back then it was in the early days of RTB, and the homeless families didn't have to spend years in a bloody B&B.

Just a 1% rise would double repayments for a lot of people

Really...

Going from 1% to 2% does not double your monthly repayments.

Having a drink with someone the other evening who said their house is worth £1.2m but has been on the market for 2 years. I gave up trying to tell them that it clearly wasn;t if no one had bought it.

Lol, my BIL had to sell his £2m house for a mere £1.7m. He does up property for a living and he was adamant that this one was going to make them a £1m profit (tax free, of course, because they live in them while he's doing them up).

They actually had a buyer at £2m. She worked for a German bank and the day after the Brexit vote, she pulled out because they'd all been advised not to enter into any significant financial commitments because a lot of jobs would go back to Frankfurt.

Guess which way BIL voted in the referendum?

I remember interest rates going up to about 12% in the late 80s/early
90s - was a teen then, but it scared my parents to death. When our fixed rate mortgage came to an end 5 or so years ago, I used an online calculator to work out what our mortgage repayments would look like at 12%, 15%. We could just about manage 12% if we cut back everything else hard, so we let it go onto our lender's SVR - which turned out to be 30% less than our old fixed rate.

Don't worry. Prices are already dropping in some ateasz there will be a crash like there is every ten years.

badbadhusky

You've prompted me to look at my mortgage in 5 years time. Luckily I have a little flat with a low mortgage on - so 15% in 5 years time is doable - assuming I am still working. And DS is nearly off my hands so that's one major expense gone

I do worry about people with large mortgages and low interest rates. Any slight change on such low rates and high mortgages can have a massive impact on monthly repayments.

I appreciate I am in a very lucky situation.

The value of my property has increased by 30% in two years.

The value of my property has increased by 30% in two years

You only really know the value of your property when someone buys it off you.

Mumsnet is going to have to adjust to the real difficulty and social impact of LTB. Two couples in their latest 40s have split up in the past month near me. All parties have set up separate households with a variable amount of space for children moving between the two houses. Hey presto, two family houses have become four, in the most unaffordable city in the UK, where there are people living illegally in tents on the margins because there is nowhere else to go. When do we decide that it is socially important to accept that the person you married is not going to be a saint all their lives and it is worth putting up with a lot for the sake of the country?

When do we decide that it is socially important to accept that the person you married is not going to be a saint all their lives and it is worth putting up with a lot for the sake of the country

I am sure there are a lot of people who can't afford to split up because of the cost of housing,

There's also a rise in older people house sharing.

The house price increases aren't universal though and averages mask massive differences, particularly between north and south.

I bought my house in a (major) northern city in 2005 (not even at the peak, one on my street sold for more the following year) and I'd be lucky to sell it for what I paid for it. That's not in a low employment area at all.

It's pretty meaningless to compare SE house prices to an average household income for the country as a whole. I could certainly get a nice house for 5x what I'd be paid in the city I'm from (I'm not there anymore). London I'd need more like 8-10 times (London) salary for the same thing.

Yes there are people on minimum wage everywhere but if you look at it historically, people earning at those levels have always rented. What we need is better security for people who have to rent - has the dual benefit of helping people and making bring a landlord less attractive. I say that as a landlord. I could (in theory) give my tenants two months notice to leave. They've been in the house seven years. How is that right?!

You only really know the value of your property when someone buys it off you.

Several identical properties have sold in recent months.

All have sold within a week or two of going on the market for above asking price.
There is a good solid local reason this is happening.

The enormous blocks of flats all over Vauxhall are being marketed to the Chinese, as investors or students. And they are buying.
Not all the Chinese are rich but there are 1.3 billion versus our tiny population.
Money will continued to be parked in the uk by Chinese or middle eastern or Indian investors who don't trust their own governments.
This is seriously skewing prices and the market.
Brexit or not the uk is relatively safe and is a democracy with a rule of law. Places like Russia etc don't have this so they will invest in Europe, if they can.
The uk is a good market because of the language and the relative ease of paperwork.

it is worth putting up with a lot for the sake of the country

More houses would help the country more than more shit marriages would.

I think we're going to see increased inequality. The existing wealth tied up in housing will get passed down through inheritance, and those who miss out on that will be increasingly priced out of the market.

I am 30. I would love my house price to increase to 15 times my salary! All that lovely equity! I don't actually see it happening though. Surely nobody could afford to buy houses then and the market would be stagnant?

Several identical properties have sold in recent months

True - I am sure if you were to sell at the moment, your house would have gone up in value.

But events happen...