Social consequences of house price boom

[Upwind]

comment at the guardian.co.uk [click]

One of my pet subjects but I have not seen this in the mainstream media before:

"If food or energy prices were rising at 8% per year, let alone at 20% there would be outrage. There would certainly be alarm that such price rises were not sustainable and that increasing numbers of people were unable to afford a basic commodity.
Academics at the university of Aberdeen are currently running a project on this, and other, changes in society and believe that "when the implications of these developments are taken together, they hold the potential to produce profound and, as yet, largely unanticipated social consequences for this age cohort, as well as for UK society as a whole".
Astronomical prices mean that couples who cannot afford to buy, or move to larger properties, or lose half a joint income, are having children later in life when their fertility rates are lower. You do not have to own a home before you have children but many people desire at least some stability before they do so. "

Here you go - quite a few in my neck fo the woods

se9

se6

In my area, this is the cheapest 3 bed I could find.

am i tempted?

This is in Sutton, surely?

\link{http://www.rightmove.co.uk/viewdetails-14825059.rsp?pa_n=1&tr_t=buy}

or how about this one in Croydon?

\link{http://www.rightmove.co.uk/viewdetails-7008486.rsp?pa_n=8&tr_t=buy}

Sorry I'm a bit of a Rightmove saddo!!!!

Ooops, I'm too stupid to do links properly!

I need to move South, think it must be cheaper than North London? Those houses look OK. Very inconsiderate of my mum to live North and be such a good babysitter.

but within 3 miles of there there are lots of places

like this here

of course if you extend your search to include up to 10 miles you can find some very expensive homes but there are a range of properties in Croydon, Thornton Heath, Catford etc

Catford is nicer now than it was 25 years ago..isn't it?

As housep prices go up areas change and improve (so me go down of course)

Moving areas is about the best chance to buy somewhere

chancery, yes I was always a very dull hard working little girl and I took a particular path knowing what the consequences were and obviously was lucky enough that I had a good education etc too. My sister joined a cult after Oxford and did all kinds of other things before settling down at 36 to have babies by IVF. Very different path and very different life. She earns less although she did manage to buy a small house in her early 30s in Cambridge but the difference between us - me at 22 buying a house etc and her now we're mid 40s is still there to be seen. I don't think either of us however wishes to have had the other's life and she has been able to buy somewhere so is fine in the end. My brother has been out of the property market for 4 years or more waiting for a crash that hasn't happened and his new house is costing lots.

I never get links right but the one on the exact road we bought on in 1983 if you go into nethouseprices.com which shows prices things go for not advertised (so is a better indicator) and type hillside crescent harrow you see a 3 bed terraced £200k last year, another £220k etc. Yes, it's not Chelsea in London but it's a nice quiet road, not far from the tube. Your junior lawyer and teacher could still afford those houses. And probably the same people who couldn't afford them in 1983 can't now.

Well my tuppence worth is that it isn't the shortage of affordable home ownership that is the issue, it is the lack of affordable and decent quality social housing.

That is what had changed most in the last 30 years, and that is what puts people who cannot afford outright ownership at the mercy of private landlords who are biased towards profits rather than ethics!

I've posted this here before but here we go again; PricedOut.org - The campaign for affordable house prices

For those of you declaring it's always been hard to buy, have a look at their house price calculator for a comparison of houses then and now, and whether you could afford your first home now.

"So teacher on £30k and wife on £30 - not that unusual for London salaries although I accept that's above the average UK wage of £20k. The average London wage is higher than £20k. They borrow 3.5 times their joint salary. It's still possible. It has never been possible or easy even in 1983 if you earn less than the average wage."

Of course they're instantly screwed if one of them becomes ill, or loses their job or, (God Forbid!) becomes pregnant.

In modern Britain you can either afford a house, or children. Not both.

Incidentally, UK average wage is around £23,000. Median wage (i.e. the amount half the population earns less than ) about £20k.

We had one of those shared equity houses for a bit (as I said before, we did own but Dh got ill and couldn't work, so we had to sell but thee things DO happen- the insurance paid, but was limited in terms of time, then he lost his job and- oh well). Anyway, it was better than social hopusing because it existed, which ids a good start and better than rent because it was yours to stay put in. And decorate how you wanted. And generally feel safe in. Ours was 50% actually, but the same idea.

Would buy one again perhaps, if we had the chance.

KH, I will look at that site, thanks. Well any family if someone gets ill and you lose the wage has major problems. That has always been so. When we were on those incomes we each paid half the cost of our nanny so we could work because we knew long term that was in our best financial interests. If my daughter nowadays did the same thing on her income with those houseprices she could still do it if she married a teacher husband as I did but it certainly is never easy if you have small children. Luckily it's just a small part of your life and as long as you keep on full time work do well, get promoted etc then the initial pain of house buying does over time wear off as a major issue.

Most people when my parents bought in 1961 I don't think owned their own homes or would have expected to. Probably more people did in 1983 when I first bought. Not sure if in 2007 we have more or fewer than in 1961. It would be interesting to compare. Interest rates are at a very low level historically so those allowed to borrow have a much cheaper deal even though prices are higher than a lot of us have paid over the last 20 yeras.

Well I have checked and we could not have afforded either of the flats that I have owned. Nor could we now probably afford the house that we currently own - despite the fact that we only bought it less than two years ago and DH is earning about £20K more than he did then

I think that Xenia misses the point - a huge proportion of the population are not in jobs where they get promoted and get salary increases. You need somewhere you can afford now, not in five years time.

Well, I must say I was pleasantly surprised by those houses in the area. They are all on main roads/railway lines and probably need a lot of work doing, but even so.

I had no idea you could get 3 beds round here that cheaply, and I am a veteran of rightmove. Croydon has always been a bit cheaper, but it isn't commutable for my job, so not an option.

Just as a bit of background, a place I used to work sold off a load of nice Victorian terraced houses in Croydon in 1995 for 10k. I think part of what puts me off is the thought that these 200k homes would once have gone for 10k, so it doesn't feel like especially good value only 10 years later. Beggars can't be choosers though.

Incidentally, the mortgage on 220k is about 1600pcm. That's still quite a hefty chunk of someone's salary for those places imo.

well the fact that I now live in germany is a social consequence of the uk's housing "boom."

But if you go to interest only then it's under £1000 (£500 for each one of the couple) although I'm not recommending that unless people eknow they'll inherit or will be earning more in due course or are sure prices will go up and are fairly young when they buy.

The interest only mortgage is another symptom of an overheated market. What on earth is the point, other than again security of tenure?

No previous generation had to get an interest only mortgage to get themselves a home. More to the point, with inflation being so low, and interest rate policy being driven by keeping it low, interest only mortgages will be a scandal in about 10 years time to dwarf the endowment debacle.

I think one of the problems is that if you get an interest only mortgage on a crappy home, you have no prospect ever of moving up the 'ladder', and in fact every possibility that you will sorely regret your decision if prices ever do come down.

We are renting.
£620 p/m.
Renewal due in november. and it will probably go up another £10 or £20.
We are living with pennies to spare.
People ask why we don't get a council/housing association place.
We can't because we earn to much between us (me 11,500 DH 30+)
And we will always be at the bottom of the list because we don't have children (yet) I am not a single parent,I am not in an abusive relationship etc etc.
(that's how it is with our h/a & council. I don't think there are any council houses left here, all been sold.
Oh well. Off to work.
(sorry if all that reads wrong,don't mean to upset any1)

Oh and all the mortgage we can get is 110k.
That gets you hardly anything down here in the south!
All those wealthy london pensioners like their summer holiday homes.

what about the effects of forcing both parents to work whether they want to or not. this is NOT an attempt at the sahm/wohm debate, but my mum had a choice to give up work when she had kids, i didn't. there are good & bad effects both ways. my mum was taken for granted in all that she did, instead of respected as doing a valuable, but unpaid job (not just by my dad, a general sort of 'just a housewife' attitude), whereas people seem to respect me more, and i have an identity away from the family BUT me working has caused some tensions - i'd love to be able to spend more time with dd, and we do both end up shattered at the weekend - dh is having a lie in while dd & i play in the study. it would be nice if we had more family time together.
however, dd is fairly equally attached to both of us, whereas i saw my dad as a relative stranger.

so, how about the effect on family dynamics? if housing prices go up, both renters & martgage payers are affected, but how is it making us behave towards each other?

Well if we agree historically most people never a million years could own their own home in the UK (see below on this thread) things are no different except some people have silly high expectations. If we can engender a revolution or get the communist party in power then we might change things but that's unlikely.

So for individuals the answer if you want to give up work to make babies (which I won't give my views on here but I suppose as long as it's the man not the woman doing it may be just about okay) then make sure you marry a partner who can support you or save enough to make that feasible for a year or two. Part of the answer is to ensure our children as teenagers make wise career choices which enable them to be in the narrow band in society which could afford a home to buy.

there's every point for some in having an interest only mortgage, affordability - for us it's been the only way to make our mortgage payments manageable enough to be covered by rental income from our tenants.

Yes, it's true we're not (yet) paying any money off the total lump sum, but we have an asset in which we have £200k equity currently. I think many are in a similar position and it makes an investment affordable which wouldn't be otherwise. Ideally, of course, we'd be paying on a repayment basis but that's not possible yet.

As long as people understand the risks it's fine. Also if you buy now at say age 25 when you retire in 40 years time inflation will probably have made your interest only loan a small part of the overall cost of the home and you might well be able to pay some of the capital off anyway over that kind of span which is the period over which many people own property in the UK if not longer. My father bought their house for £6000 in 1961. It virtually crippled them financially. Took them years even to afford to put in central heating but roll forward 46 years and whatever his very big mortgage then was it is not so big now. I suspect people will be in the same position in 46 years time even if inflatoin remains at current low-ish levels compared to the 1970s.

I just don't see why people should be shackled to a big loan for 40 years(!)in order to have a roof over their heads just because the govt have f**ked up the economy

ng, we don't live in the garden of Eden where God gives us fruits and safe harbour. We live on a dog eat dog planet riven by war and strife where people are dying of hunger and disease, where communism has always failed and no Govermnent owes anyone free or even cheap housing for life. It is how it has always been. The fight to keep a roof over your head and feed your family has always been there in one guise or another. I'm not sure it's any harder now than in the 1920s or the 1850s for most people in the UK. Indeed in many senses today in 2007 we have never had it so good and don't know we're born it's so much easier than life was for most of our ancestors.