What if there just isn't another property boom coming? Everything frozen where I am

[livelaughlambada]

I know it's not possible, but I sort of wish all house sellers would collectively agree to knock 10% (or whatever it would take) off their asking price. It feels like loads of people know their houses aren't worth what they're asking, but won't drop because the house they want won't drop either. Feels like the whole market where we are (south west) has frozen solid. Also round us, there are SO many older people trying to downsize who've been told that their houses are worth X when there just aren't that many people with X to spend! And lots of these houses have been on for a year, and in some cases you can see the deteriorations, but they just won't accept the prices have dropped. I do think it's really interesting in that the 65+ generation have seen so many booms and busts that I don't think they can process that there may not be another boom coming -- as in I just don't think there are enough 30 and 40 something with X to spend. It all just feels a bit weird right now.

To put this into context the average house price in the UK in 1995 was approximately £51,245 so your parents bought a very expensive house 30 years ago and now have sold an expensive house (average house price is now £270K).

Whilst I don't believe the triple lock can be sustained, I think perhaps a little perspective is needed here. The percentage increase is applied to the state pension, which is £12,500(ish) tops. For everyone else the percentage increase, possibly half, is applied to more than double the state pension.

If heating goes up from 100pcm (for simplicity) to £120 pcm, that takes a greater proportuon of the income for someone managing on state pension alone.

The argument for those with an occupational pension and their state pension differs, so perhaps this is another example of where means testing should prevail and doesn't. I can give some examples:

I get:

Free prescriptions
Free eye tests
Free flu jabs.

I am nearly 66 and still working, albeit part-time but still on £65k. When I retire my combined state pension and occupational pension will exceed £60k and I will stop paying NI and pension contributions.

The sysyem is absurd for me but far from absurd for the majority.

@TheyGrewUp , you are in a very privileged situation, most people have nowhere near that income in retirement. I think means testing would just reduce the incentive to save for retirement, why would people save for a pension if they know the government is going to claw back their state pension. You would need £280K to buy an annuity linked to the RPI that would give you the equivalent of the current state pension. The average private pension pot at retirement is £145,900 so half of that. As an addition that's OK and worthwhile saving, but as something that's just going to be taken from your state pension why bother?

Current years and next 5 years are cluster years for interest only mortgages coming to an end without sufficient repayment vehicle, mid nineties to early 2000s getting an interest only mortgage, even one that gave you extra lending on top, was unbelievably simple (125% mortgage). Maybe it was one of these?

My parents had one of those but they switched to repayment some years ago

We're pretty classic boomers, aged 70. Our house is lovely and about to be put on the market so we can move, and slightly downsize to another part of the country where our DC is buying a small Victorian house from their share of the proceeds of two grandparents' estates and two-thirds of our pension tax free lump sum. DC is very fortunate but without the family money, there is no way that they would be buying anything more than a galvanised shed on horticulture apprenticeship wages.

For me, living in rented flat in Germany it's bizzare that something like a "property ladder" even exists and that you expect a house to gain massively in value just by owning it for a few years. I think it would be fair if prices went up about the same as the average of goods, or inflation or whatever. But as long as you just maintain the house without adding an extension or massively updating stuff like heating, windows, insulation I really do not understand why it should be worth more just because you lived in it and owned it for 5 years?
Realistically, the tear and wear and ageing of roof, windows, boiler, water pipes and electrical wiring should lower the price.
It's not so common here to own multiple houses one after the other, buying "up". People usually buy once when they want to have kids/have kids, and then maybe a second one later to downsize when the kids left (most don't downsize though). Maybe a small flat before kids, but that's not as common. Nobody I know here would buy if they anticipated to move again in the next 5-8 years, probably even longer.
Might be different in very rural areas as there is not much being rented out there but otherwise it's very much a "buy to stay" culture here.
(Although houses do accrue value, but not as much as seems to be expected in UK)

There's 20% unemployment amongst young people in London. With older generation now living longer than ever, inheritance will go for paying care home fees and no bank will approve a mortgage without steady income.

It's fine if the first starter home doesn't sky rocket in value. But the property ladder was meant to be a case of buying a 1-2 bed home when your young, single, maybe just a couple on their own and maybe allow them to have a child, then as there incomes rise years down the line and they've started building equity in their home, sell and move to a larger home to allow for a more likely forever home. Then as you get older and children flown the nest, have the option to move to something like a bungalow if needed. But stamp duty fees on top of the estate agent fees, solicitors fees etc do mean people either need to skip the starter home and try to go straight to the forever home, which is difficult in most cases and older people are reluctant in selling their larger homes because of how much it costs to downsize. I don't know much about the rental side in Germany, but renting in the long run is more expensive than mortgages here and owning gives you more stability as no-one is going to be serving you notice if they want to sell the house

Renter protection is very strong in Germany. You can't serve notice just because you want to sell. The new buyer might be allowed ro serve notice but only if he mlves in himself (or a very close relative) and stays for a number of years and it also depends on the type of rental(flats in multi-storey houses have different rules than one-family-houses).
I still find it bizzare that "owning a property while living in it" is an investement that is supposed to generate wealth over a short period of time (a few years)

Buying and selling do have fees here as well, and they actually are quite sizable, so not an incentive so buy multiple houses one after the other.

The downsizing dilemma applies to renters here as well because while it's quite common for newer contracts to rise in rent regularly in a set percentahe, older contracts tend not to have that so the rent is usually lower compared to a newer contract for a same-sized flat. So for some people swapping a big 4-room flat for a 2-room flat might not be a drop in rent (but of course less work and less heating etc)

If the price of the house doesn't go up, it's not that much of an issue because you'll be increasing your equity by paying down the mortgage though whereas if you're renting you don't have any equity in the house.
Downsizing for a renter here would probably be less problematic than Germany by the sounds of things as it would be unlikely you wouldn't notice a drop in rent. Obviously there's still moving costs and things to consider, but very unlikely to not get a drop in rent from a 4 bed to a 2 bed

Bring on the bust. It's an unpopular opinion I know, but the artificially inflated house prices in this country is one of the biggest issues affecting society. The next generations are fucked if it isn't corrected. Why have houses gone from three times the average salary to eight/nine times the average salary in the last thirty years? It's a broken system which has been enabled by greed and cheap credit.

A bust will disproportionately impact the younger generations that have managed to get a house and would go into negative equity
The ones who have finished paying off their mortgages will not feel any of the impact

This is not the point. For the majority of older people the choice was only to buy a house or save, not both. While working the money goes to buy the house - there isn’t spare cash to save and when pensioners live on reduced income there still isn’t any spare cash to save. Your comment assumes that it is a choice to put all the money into a house rather than save. Hence as I said older people are not just hoping for another boom in house prices when they hold out for the asking price.

There's a distortion happening to the market which isn't helping due to supply and demand.

Round here you can see it easily - properties over a million have not increased in price. If anything they are falling slightly. No one can afford them and no one can staircase to them. There's more and more coming on the market with no one to buy them. They are above the point where even two people on a good income and an average deposit can easily afford. You need to be super wealthy or have recently received a large inheritance.

Then you have the properties at the bottom of the market. There's a large demand for them but people can't afford to staircase up so get stuck in them so there's not much availability.

And the middle of the market - the small three bed properties are what families want and what downsizers want. So there's really high demand so this is pushing up prices in this bracket. It also makes it not worthwhile for a lot of older couples in reasonably large properties to downsize because the difference in price and cost of moving isn't sufficient.

I think we will see some of these biggest properties split into flats if planning allows. Others will almost become virtually unsellable because of the cost of running them compared to smaller properties.

It will end up with properties which are currently in the £700k bracket in the same bracket as the £1million ones despite the size because of running costs and maintenance costs and they have to knock off £££s to get rid of with probate or to downsize.

It's a mess and owes a lot to there's not being enough middle sized properties at at affordable price because planning focused only on first time buyers to please politicians and large executive homes to suit builders. This has been observed as an problem by government (I forget which civil service branch) but everyone has bloody ignored it.

The triple lock percentage is calculated on a much lower income. People born before 1953 have a basic state pension of £169.50 and the maximum is £184.90 - the maximum would equate to £5.13 per hour for a 36 hour week. By contrast the minimum wage is £12.71 per hour. 10% of the hourly pension equates to 51p. 5% of the hourly minimum wage is 63p. So pensioners still get less of a raise in cash terms than someone on minimum wage. Think about that when you rage about the triple lock!

So do we just continue on this trajectory? Housing is a right not a luxury. The system is completely and utterly broken. It needs to be corrected.

House prices have actually been fairly consistent over the last 23 years if you correct for inflation. Quite shocking really. Shows how much wages have stagnated.

A History of UK House Prices

I don't want house prices to increase at any speed
But fine if they remain similar in value and wages have some time to catch up
But you want there to be an enormous dip in house prices, thats not likely to happen anytime soon and would be damaging
Those in negative equity become mortgage prisoners on crazy high rates and can't move
They'll be the same people who have struggled for 10/15 years to save up a deposit to afford the deposit, surely those are the people you're trying to say need the help

'Hence as I said older people are not just hoping for another boom in house prices when they hold out for the asking price.'
They literally are hoping for a housing boom though if they are holding out for inflated asking prices that no younger people can afford to or are willing to pay.

As you said, people need to face the economic reality. The young have certainly had to suck up a stagnant economy, rubbish wages, lack of job and training opportunities, extremely high house and rent prices in many areas, University fees (their GenX/younger boomer parents too). The elderly also need to deal with the fact that many of the downsizers homes won't sell at the prices they fancy. That's pretty tame in comparison to the problems that many young people face.

I totally agree with this. It is a problem which neither the developers nor a lot of older people seem to put any thought into.
Just to clarify, I mean that many older people seem to want to disappear to a cottage in a little village on retirement rather than somewhere accessible with plenty of amenities within walking distance, good public transport, etc

Although they actually made a very low return if they owned the home for 30 years through the largest boom in house prices ever.
My parents made multiples of that over roughly the same period.

That's all very interesting. I wish the UK had a much better rental market and had not put rocket fuel under the housing market. It was a major mistake and has causing and will continue to cause so many problems.

As you say, without family money, most people struggle in many (most) parts of the UK. I would say that your DC doesn't sound very typical of his generation though. If you are 70, he must be in his 30s or 40s, by which time the great majority people are supporting their own families, rather than being supported by their parents and, of course, that adds to all their outgoings and makes it even harder!

Yes and no. Yes, younger people who have stretched themselves and then lose their job or cannot afford increasing interest rates in the future will be badly affected. So will over leveraged investors. So will downsizers, who are generally older/elderly as a lot of the £££ that they thought they had would vanish.
A bust would certainly be damaging and, as you said, a long period of prices going nowhere in nominal terms but down a lot in real terms would probably be best overall. That doesn't generally happen though because the market goes through cycles.