House prices

[Socialmediamakespeopleunhealthilycompetitive]

In the mid 80s there were 3 bedroom family houses in ok areas of outer London for £50k, around 2.8 times a decent officeworkers salary. The same houses are now around £450k & ten times the same workers 2024 salary. I realise interest rates, even after recently hikes are somewhat lower. Since the late 90s I have wondered when people will demand government action on this, amd actually see lower housing costs as a good thing. When the above house was £200k ca. 2003, and 6 times a decent salary, I thought action might happen. Is the point at which action is taken the point at which the transactional costs of middle class young or middle-aged people buying their own home even wirh an inheritance become prohibitive? Do people doing jobs they don't like or which damage their health to pay enormous mortgages in expensive locations, London, Oxford, Cambridge, Dublin etc ever think about the opportunity cost of sitting on equity which could be invested to earn income if they relocated to a cheaper area? How on earth have modest, poorly insulated houses including those in rough areas been allowed to get to this astronomical level? Why is it politically unacceptable for a party leader to say they want to engineer lower house prices, perhaps even say 75 orn80£ lower (still leaves the million pound househat 200k)?

Are you suggesting that all properties are devalued by 80%, or just that new properties will be sold at 20% of current values? Both wouldn’t work, but I’m curious to first know which you mean.

Prices will continue to rise for as long as people continue to pay. I imagine, if all people looking to buy went on strike for a couple of month, the market would level out somewhat. This happened in times of recession and in more recent times of Covid and higher interest rates/CoL. Property prices started to come down because they were sitting on the market for ages.
Buyers can't simultaneously complain about costs AND pay above the asking price. I am looking to buy next year and I am very much part of the problem, I realise.

It would be better if house prices became more affordable and I say this as someone who owns outright but people who have lived exceptionally frugally ( me) to buy aren’t going to be happy if it happens suddenly and what about the people with mortgages. House was worth £200k, mortgage £150k, house now worth £75k. Who’s going to take the hit? The homeowner, the bank or are we going to spread it out amongst all tax payers?

Because homeowners currently have mortgages on their purchase price. You can’t just artificially knock 25% off their house value. Does this become their fault, or the banks fault?

A slow down of house price rise is needed, but a drop in prices is not good for our economy. They would all just be bought up at bargain prices and a few years later they’d rise above the max again.

The market is still moving, and has been through the rate increases, so it’s not true that they are unaffordable. We live differently than we did in the 80s, 2 incomes are usually essential for home ownership now.

A new council home build project might work to redress the balance - reasonable rents take the heat out of buy to let , and take the pressure off the need to buy

Hitting inheritance hard would also take the heat out as that's what's keeping the market moving at present - many people get on the ladder as a result of inheritance

Lots of other ideas have been floated

Yes it's quite mad at the moment and had been for a number of years

This

Well I would support a house price cap and 100% inheritance tax and I don’t really GAF about negative equity because homes shouldn’t be profit making assets. Yes, I’m a homeowner. But I lean towards communism when it comes to housing. Not many other people would vote for such policies though I imagine!

So you don’t GAF if someone is in negative equity and can’t move house? Or ends up losing everything they’ve worked for including their home?

You’re a communist homeowner? Ok

The majority of homes are owned outright and of those that are mortgaged only a small proportion were purchased by FTBs in the last few years.

Imo house prices could drop 10-20% and the majority of people would be fine, their houses would still be the same if not more than what they bought them for.

Hitting inheritance tax does nothing but ensure people use legal means such as living gifts and trusts to pass on assets.

it’s an absolutely vile tax that needs to be abolished.

We have a high mortgage in London but DH and I enjoy our jobs and they aren't dangerous. Not all high paying jobs are unpleasant - most friends in a similar income bracket are happy with their careers. My peers and I aren't interested in moving to a cheaper area because we enjoy the leisure and arts opportunities here, and travel connections and diversity - most Londoners aren't living here purely because of proximity to work. And for our family, it works out well to build equity vs other investments - a period family home in our part of zone 2 is going to reliably increase, with no tax and we get the benefits of living in this area in the meantime.

Labour has decided the way to solve this is to build all over green belt to lift the supply side. Hopefully that might bring prices down but don’t expect to look out of your window and see anything green.

I'm not sure what you think people earned but I was only earning £13k in the mid 90's London has always been expensive. My parents paid £48k for a 3 bed semi in 1984 in a roughish fairly run down south London neighbourhood, you were not getting a 3 bed anywhere nice for £50k

Then all the dubious legal methods to pass on inheritance , give people unearned wealth, should be tightened up at the same time

Yeah, I know, it’s hypocritical but we live in a capitalist society and I don’t want to live in a bus stop when I’m a pensioner. And no, I don’t GAF (including if it happened to me) because apart from a minority of genuinely unforeseen and urgent circumstances like a life threatening illness or bankruptcy nobody desperately needs to move house. So what, it’s worth less - but you still have a home. Homes shouldn’t be a prize you have to work for. They should be accessible to everyone regardless of wealth.

Massive drops in house prices won't suddenly bring up a flood of available cheap homes for those currently priced out. Anyone with a mortgage will stay put, so you'll be left with downsizers where they owned mortgage free and actively want a smaller property, or probate sales. Even if the whole thing shifted, a host of these are not going to be the property for 'getting you on the ladder'.

Apart from what has already been said, if house prices took a massive hit there'd be a lot of people with more than 100% LTV. That makes a massive difference when the time comes to remortgage, because you would not find a lender for this. Those people would end up homeless. And those are usually FTBs who have saved every last penny to finally get on the property ladder.

Oh wow. You really don’t understand people’s lives at all. There are so many reasons people need to move house, what an ignorant thing to say.

lots of people don’t work for their homes. They just don’t own them in that case… you know, like communism

And exactly what houses are all the first time buyers going to buy at knock down prices if no one can move 🫠

‘IMO’

It isn’t unearned wealth. My parents worked their arses off for their money. It is theirs to give to who they like. If people want a house maybe they should work 16/7 hours a day like my dad did. He’s made millions from the back streets of a northern pit village. How dare you think anybody has the right to tell him what to do with HIS money. Yes I have already benefited greatly and will continue to do so as he had the foresight to ensure his children received living gifts long before labour got the keys to number 10

But you don’t have to think about it for that long to work out that a 10-20% drop would make no meaningful difference to affordability. An £800,000 house is just as out of reach as a million pound house to someone earning £40k. If prices drop just enough to not make existing mortgage holders vulnerable, it’s not enough to help new buyers. If it’s enough to help new buyers, it will leave existing mortgage holders in negative equity and unable to move or refinance. And none of these are rich people, they are ordinary people who have done what they were expected to do to have ordinarily comfortable lives. If you want to make rich people, who aren’t vulnerable, share some pain, you can only do it through taxation of one kind or another. And that makes them very, very angry, as you can see from this thread.

Did he earn house price inflation? No.

Was that house price inflation taxed at any point? No.

... and did YOU earn any of it?
Also no.

or why not build homes for people that actually work hard for a living and want to be able to buy their own home

That’s income that hasn’t yet been taxed. If this country has to raise money by tax, I am quite happy for this to be applied to windfall gains such as house prices. Seems fair to me. Why not?