To be incredulous at much property prices have risen in the UK!

[TwistyKnickKnocks]

Looking at buying a house and saw a 3 bed terrace for sale. bog standard 90s build box, tiny garden, no garage, needs work at £430k. It was sold 20 years ago for £105k so an increase of 300% or £16k a year.

20 years ago the average wage was £18k and it is now £29k, so an increase of £11k. Although where we live a managerial salary is less than £25k. Most jobs are advertised at around £20k and quite often want a degree! It’s quite a deprived area too.

How the actual fuck was this allowed to happen?

Does it come from estate agents? They inflate a price a bit to get the listing (and comission) and buyers negotiate down. But in this crazy market, buyers aren't negotiating down because demand is high and so prices are going up and up.

I posted here a few months ago that I was gazumped. It was a beautiful house with a double garage in the North at over 400k which I thought was an insane amount of money a year ago. It seems to be over 600k for a similar house now.

I also don't think that websites like mouseprice do anyone any good. The algorithm can show you a crazily high price for your property and we've had several agents come to value our flat over the years and they just pluck the price off there. They turn up with a printout off the site and have a quick look round. Why even bother!!

@TheHoptimist

My house cost £5000 in 1970- bought by a teacher with a non working wide. Male teacher earned about £1600. So affordable

In 2006 it was £570 k. Teacher earned about £30k I think

Now £1.1 million. Teacher earns about £35k.

So salary gone up x 22 but house gone up x 220

I bought my house 29 years ago for £49k, on a salary of £17k

The house is now worth £500k, the salary for the same public sector job is now £33k.

The salary hasn't even doubled, but the price of the house has increased more than tenfold.

Admittedly, interest rates are a tiny fraction of what they were when I bought it, so that balances it out somewhat. But I can't see that that sort of differential between prices and wages is sustainable.

And if/when that bubble bursts, it won't be pretty. Anyone old enough to remember the house price crash of the late 80s/early 90s will know that. People who'd bought at the height of the boom were trapped in negative equity for years.

My husband’s brother bought a flat in a nice area in London in 2011 for £550k, just sold it for £960k- in a ‘dead London flat market’

When a quarter of Tory MPs are landlords - www.opendemocracy.net/en/dark-money-investigations/quarter-tory-mps-are-private-landlords/ - then nothing is ever going to change.

House prices are just the most obvious example of how those with money are getting richer and those without are getting left further and further behind.

This is the capitalist system though. It did a good job getting us to this point, but now it's clear that for the vast majority of people life is actually getting worse and that's not looking likely to change. Unless we change it, it's all downhill from here.

You're right about the crash in the late 80s, @Mummyoflittledragon.

In 1988, more or less at the peak of the boom, my previous house was valued at £87.5k. I eventually sold it in 1993 for £49k.

Thankfully, I'd had it a few years and never remortgaged, so still had plenty of equity, and I was able to buy in the town where I now live for the same price. But anyone who bought at the peak and then had a compelling reason to sell, eg a job relocation, was absolutely stuffed. And people who lost their jobs and had their houses repossessed were literally left with nothing.

I saw a 3 bed semi in my village the other day going for over a million. Is insane. Yes it was very nice but it was still a 3 bed semi!

@LakieLady I think it very much depends on the area. Some areas are really overvalued i.e. Cornwall where the average wage is really very low and the boom is due to owners of second homes and people chasing the idyllic life.

However parts of London and SE which are appealing to bankers and top lawyers and tech developers, I am not so sure. A magic circle graduate lawyer can earn 100k as a young 20 something. Tech can pay very well too. There are lots of young people too with wealthy parents. However these people are only going to want to live in certain areas and in certain types of properties. The fact that they are crazy expensive does not surprise me;even in previously 'poor' areas like Brixton/Elephant and Castle/Kings Cross..I can see them being appealing to young well paid professionals on6 figure salaries. Read an article about a tech developer buying a £1 million in St albans- that kind of price does not surprise me..certain jobs and certain people are earning far more than the general population, our housing market is a symptom of the inequality.

There is an interesting article in the guardian today about a property agent who serves mainly wealthy clients; he talked about how one of his clients' net worth ballooned from 1 billion to 25 billion very quickly; and a net worth of £10 million is 'nothing'.

This is what happens when you suppress wages through subsidizing low pay. Asset prices have gone up in all developed economies in the last 20 years - UK house price rises at modest by comparison. The real problem is that wages have been stagnant in the UK due to government subsidizing low pay through welfare. Also immigration and nimbyism added to both problems.

@Notthemessiah

When a quarter of Tory MPs are landlords - www.opendemocracy.net/en/dark-money-investigations/quarter-tory-mps-are-private-landlords/ - then nothing is ever going to change.

House prices are just the most obvious example of how those with money are getting richer and those without are getting left further and further behind.

This is the capitalist system though. It did a good job getting us to this point, but now it's clear that for the vast majority of people life is actually getting worse and that's not looking likely to change. Unless we change it, it's all downhill from here.

TBH I would have thought it might well be more than a quarter.

Mind you I do recall seeing a general piece about MPs with rentals, it was some years ago now, but there were plenty of Labour MPs there too - one of them owned much of an entire street somewhere up north.

It's 9% of Labour MPs according to that article. Much less than 25% clearly, but still far too many.

I wonder how many MPs on either side are there to try and make the country better for everyone rather than just themselves. Not many I reckon.

I bought my house 3 years ago - it's now apparently worth 65k more which seems nuts to me. It's a nice house and all, but it's madness.

I've been on a new estate for a few years and it's still growing. I just had a look at the developer's website and a three bed semi that I clearly remember was £160K at the time we bought is now selling for £250.

Another one here who thinks renting history should be taken in to consideration, here in Sussex house prices have gone mental, it will probably settle down at some point but there was a bog standard 4 bedroom house about 10 years old, nice but nothing special sold for £800,000, I looked at it on Rightmove and I was expecting something magical to make it worth that price tag but there really wasn't, it's madness, having said that we get a lot of London buyers coming down here which pushes up the prices...

All my dad's family bought massive run down 5 and 6 bed houses in Hackney in the early 70's under the GLC hard to sell / rent scheme....a few have just sold for 1.4m....gone to Norfolk and bought for 300k...a place in Spain and are going to have a fantastic retirement.....we wonder how the buyers find the money to fund these expensive houses.....

Someone I know was urged by her mother to buy a house in Peckham (SE London) in the 60s.
At the time you could get one - a period terraced house, I think Georgian, with a small garden, for £1k.
She didn’t feel like buying then.,
After a year they had doubled in price, and she thought it was maybe not such a bad idea after all.
It probably needed a massive amount of work, but still…

She still lives in it, v likely worth £1m now.

@earsup I think the more interesting question is why hackney for £1.4 million! No offence to hackney but you can probably get a small terrace in Camden for £1.4 million. I would probably get a mansion flat in West Hampstead for that price...

People get money for all sorts of reasons- inheritance, well paid jobs overseas. An estate agent told me of a guy who was buying a house in Muswell hill for £2.5 million in cash. Maybe its just estate agent talk but I really wouldn't doubt it,.knowing what I know. London has one of the world's highest concentration of billionaires and it's fair share of millionaires!

And now a lot of the money is leaving London as cities tend to fall out of fashion during pandemics and brexit means London is less interesting to wealthy Europeans.

I would expect average house prices in fashionable and desirable areas outside London to reach average of £1 million e..g York, Bath, Didsbury, Sussex, Truro, Edinburgh. I mean average house price in Beaconsfield and radlett is also around £1 million so why not other hotspots for Londoners. London will fade for a bit but there will be some people who will still move to London and buy the houses albeit at less crazy prices i.e. £1.2 instead of £1.6 million but still a comfortable budget outside London

@sst1234

This is what happens when you suppress wages through subsidizing low pay. Asset prices have gone up in all developed economies in the last 20 years - UK house price rises at modest by comparison. The real problem is that wages have been stagnant in the UK due to government subsidizing low pay through welfare. Also immigration and nimbyism added to both problems.

Wages have been kept down because of the obsession with low inflation. It looks as if we’re about to move into a high inflation part of the economic cycle - a cost of living crisis will lead to higher wages which, in turn, will lead to higher interest rates.

- a cost of living crisis will lead to higher wages which, in turn, will lead to higher interest rates.

don't forget the increased tax, I can't wages going up much.

plus employers will be paying more NI

Incredulous is an overreaction. UK house price growth is nothing extraordinary relative to other countries content.knightfrank.com/research/84/documents/en/global-house-price-index-q2-2021-8422.pdf

@MorningStarling

+1 for supply and demand. Houses go for what people are willing and able to pay for them.

If there was a maximum wage of say 16K per year, with anything over that going to the government, prices would fall because people couldn't afford to buy at current prices.

If there was a hard-left government who deported/murdered millions of people, prices would fall because there would be fewer people chasing more properties.

The situation is how it is because we live in a free society where people are allowed to earn more if they work hard and educate themselves.

Tory bolloc*s

I can't wages going up much.

They’ll have to. If inflation is running at 7 or 8% in an employees’ market, employers will have no option if they want to attract and retain good staff.

We already have the labour shortage so those wages should already be up. I can't see care workers getting paid a fair wage & the sector being inundated with new applicants.

I don't think it's a coincidence that the benefit system has been shaken up despite that tactic unemployment is low so I can't see it helping.