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)?

If the mortgage companies phased in the old way of calculating loans 3x higher and 1x lower then the house prices would not rise as quickly.
We had a point of being able to borrow 5x joint (and for some professionals based on their projected income)

lol you wouldn't be able to start off like that now, rung has vanished above the clouds. Boomer mentality.

The first rung is often the crappy shared ownership flat where you have all the costs and responsibilities but cannot do up as it is a high rise flat

@iamtheblcksheep 100% agree.

Cut public sector waste, red tape and nonsensical procurement policy before you ask anyone to pay a penny more in tax.

And if you want to overpay tax voluntarily there's a mechanism to do so.

Huge sustained increases in house prices have not particularly benefited society, even on an individual level it doesn’t help much - maybe inflating debt away feels good. Maybe it feels really good when you are dead? It needs a very long more gradual erosion of prices or everyone starts crying about how unfair it is that their lovely house they worked hard for isn’t worth as much as it should be. It’s perceived as a one way bet and mostly it has been for 20+ years for lots of complex reasons. Huge amounts of debt and money tied up in housing, could be used more effectively in the wider economy IMO.

This. Someone posted upthread to demonstrate how an average house should be affordable for two people with average salaries borrowing 4.5x joint income- but that’s an absolutely huge amount that leaves you with no flexibility at all in the event of redundancy, serious illness, needing to cut hours to manage childcare or any other life event. It shouldn’t be the norm. Our mortgage is about 3x our joint income, and it’s as high as I’d want to go.

Another massive problem with the high costs in London is stamp duty.

I’d be looking at £100k in tax to move to a bigger house. I don’t think I’ll ever be able to rationalise that.

‘People doing jobs they don’t like or are injurious to their health’ people are doing this to stay alive forget buying a house this is how it’s always been my grandad was a miner not a job he wanted to do and that eventually killed him but it kept food on the table and a roof over their heads

It is indeed a huge amount. I was purely stating that it is not impossible to get on the housing ladder, as some people make it out to be.

Have your salaries increased since you bought your house? The first few years are the most difficult, but actually mortgage payments become deflated as salaries increase and normal inflation occurs.

The (maximum) 4.5 x multiple for the hypothetical average income couple would have allowed them to borrow up to £65,000 MORE than the average house price. So they could realistically borrow substation ally less than this and still afford to buy.

My parents were in the situation in the first few years of mortgage - they both had good jobs and mum had to resign shortly before giving birth (statutory maternity pay only, no maternity leave and next to no childcare) - no fixed rate mortgages so when the mortgage rate went up to 13% for a short time it was a struggle.

The UK is full offer people who think their property wealth is down to ‘hard work and good financial sense’ rather than luck.

Properties on my road in London are worth 4-5x what they sold for in 2003. Wages have not increased 4-5x.

Your first properties at £180k between you would now be worth ~£720 - £900k at that level of growth. So about where you have ended up.

The massive growth in the equity is not because you’ve done anything clever - it’s just timing.

I mean you £90-160k first property is a good example of the issue. Initially you could earn ~£20k and afford a flat as a sole earner. A few years later that was ~£35k to afford it. Now… £80k? £100k? It’s a very different prospect.

We only bought a couple of years ago, so not significantly. I’m not really talking about my own position, but even from being relatively comfortable, having plenty of other savings, no huge expenses, no family to support, I’ve felt the pinch of higher payments. It must be incredibly hard to balance if you’re borrowed up to the hilt with additional commitments.

Absolutely and everyone has their individual priorities.

I’m a millennial who bought at a very young age and was screwed completely by the financial crash in 2008. So I haven’t exactly made a killing in the house price increases, even though I’ve owned most of my adult life. I’ve just about kept up with GDP in terms of growth.

People talk about house price inflation as if it’s a standalone thing, but most of the increase is just normal inflation.

buy do-er upper properties separately for around £90k in 2003, both earning around £18k at that poin

No doer uppers for that price around greater London now

On a 25k orc30k salary for young professional not a banker they can only buy a 1/4 share in a flat shared ownership

The speed at which house prices rose was what shocked me. I am lucky to be old enough to have bought my home before prices dramatically rose, but I only expected to be in that house for a few years. But then the prices rose and my salary didn't in any way keep up so I've never been able to 'move up' the housing ladder, I'm still there, blocking someone else being able to get on the first rung.

It felt like it happened because banks started lending higher multiples of salaries, and certainly where I live, people taking on buy to let mortgages also seemed to push the price up. I have known people who really couldn't afford those mortgages but benefited from renters paying it for them while being told they (the renters) couldn't afford to buy. I think that's dropped back a bit now though.

I'm curious, is this a blanket £ cap on all properties, or would it be tiered based on sq/ft or number of rooms?

Quite.

It would cost you £300k meaning a £30k deposit + a £60k salary.

I'm sorry but this is not true. Above inflationary increases in the value of a house as opposed to imcresesnin equity derived from paying down a mortgage out of earned income are unearned additions to wealth. Also it is the fault of the English electorate who voted in conservative (note.small c) governments continually from 1979 and made Labour and others turn into Tory lites just to get elected.

Because fleeing a partner due to domestic abuse isn’t a thing? Divorce isn’t a thing? Terrible neighbours aren’t a thing? Living miles from a suitable school for your SEN child isn’t a thing?

Nope. Can’t think of a single reason why people might need to move… it’s a head scratcher.

Honestly, some are but many aren’t. Don’t forget a lot of us between 50 and 65 have children of our own who are in the age bracket who are looking to buy so we’re extremely aware and sympathetic.

Well, I don't agree entirely with the poster but I also think that people should stop treating a house as an investment and a flipping opportunity. My grandparents live in a house they bought in the 60s. It never occurred to them to sell and move because they bought the right size at the right price to accommodate their existing family plus an extra child they had 6 years later. Prices of the property rose and fell many many times in those 60 years, it never affected them and we still don't know what it is worth now because nobody is planning on selling it for as long as they are alive.
If houses were more affordable, people would be able to afford their forever home. There would be no need to move unless in circumstances like a divorce or death.

But going with your averages, it also means that the average age to hit that 35k per year is 40 or more.

Not great for young families at all.

occaminvesting.co.uk/average-uk-salary-by-age/

I haven’t thought through the nitty gritty of it tbh. Perhaps the average price of all types of properties over the last 5 years could be calculated (so yes a tiered system) and rises limited to a % of that average?

The idea of home ownership being accessible to everyone may well be a short lived concept. Prior to the second world war it was relatively unusual to own your own home and it was only really the latter half of the 20th century where it became common and people began to assume it was almost a right.

Like so many things that originated in the post war era, a sense of entitlement has grown around this we need to think long and hard about whether these ideals are realistic in a modern world.

But what are single people meant to do?
It's all very well if you have a buffer of a partner/spouse to contribute to the mortgage calculations but what happens if you are a single 30-something healthcare professional earning 35k. Where can you buy something for 120k?
What happens if you are divorced and need a home as well as shelling out for childcare fees?
People stay in marriages because they can't afford to live alone. This can't be right.