If house prices keep increasing ...

[Jetpilot]

Incidentally its very similar in commercial property, decent places are very hard to buy as they have been bought as part of someones portfolio. A friend recently decided he had had enough of renting office space, business was good etc Took him 2 years to buy somewhere which ironically was the place he was renting, but he also had to buy the office block next to him, owned by the same chap who was selling up his portfolio.

[nowhereboy]

I'm 29 and me and my partner both work full time and earn 23+ grand a year each. Now thats not a great wage but I don't consider it to be bad either.

 

We can barely afford to run two cars and RENT a property in a rough end of Newcastle, we've made our place nice but the street looks horrible and we're keen to get out of the area. What makes it even worse is we are the only couple in the street that actually work, we graft our arses off yet can't afford to move away from the benefit scroungers, it's actually infruriating. Our system is a JOKE.

 

I'm not used to living in a place like this either, I was brought up in a very nice family home in a good area, my parents were not made of money but back then it seemed if you worked you actually had a better quality of life then those that didn't.

 

Granted if I stopped spending all my cash on cars and focused my time on saving up I could just about afford to have a nice place somewhere but I don't really want to make that compromise, not yet anyway.

[twobears]

coldel, I see what you are saying i.e. that houses are worth what people will pay for them but a lot of property is bought by investors to rent out rather than by people who want to live in it. On the one hand there is nothing wrong with this and I would do it myself if I could afford it but on the other it seems wrong that many hard working people can't afford to buy houses even if they have two fairly decent incomes. I am not sure what the answer is because I am not very clever at understanding economics etc but I can't help thinking that we need to find a way to enable ordinary people to buy houses and not force everyone into rented accommodation

 

Incidentally, the flat we live in is worth nearly 600K and whilst it is very nice, I far prefer our house in Yorkshire and we pay much, much less on our mortgage than we do on this flat. It seems unbalanced

[coldel]

I am not denying there are investors but they are not the majority (something like 20% of homes in the UK are investor owned) but that is still 'demand' - regardless of who is demanding it, that drives house prices. If there are buyers, be them investors or people wanting to live in the houses as long as people continue to pay the money that's what drives the price - until market conditions change that is the market that people have to play in.

 

It is tough on people at the moment to get on the ladder, although we are very much in a mini cycle of turbulence, a quick Google shows that over the last 50 years the average yearly increase in house prices has been just under 3% vs a salary increase on average of 2% - so yes house prices are out stripping salaries but its not always going to be the levels seen in the last couple of years. Its easy to sling up house price changes over a course of a few years as being huge but what does that mean? Historically, it has shown this has always happened even way back in the 50's, this is not a new issue for people today yet people still got on the ladder somehow - interestingly the data shows that house prices tend to fall rapidly after such price hike.

[spursmaddave]

1st world problems, don't you just hate them

[twobears]

SMD, I see what you saying but I think there are a lot of people in this country too poor to buy food if that helps? I think it is appalling that we need food banks but some may disagree?

[coldel]

I agree its sad that people are collecting at food banks, it is all linked to the economy though as far as I can see as you might expect, that poverty levels in the UK decreased for quite some time before something like 2008 when they started going up again.

[Mudman]

House prices in our area have dipped now are strengthening again but its the same sorry story that basically we have a population greater than the standard accommodation methods can provide therefore a need is continually generated. The only way to address this is reduce the population or build more houses. With economic migration in full flow its just adds to the problems and this is not a UKIP rant but I do feel that the UK cannot currently cope with its population and a period of stability is required. I also know there are lots of vacant/empty property's in the UK and these should be utilised. Being overseas for the last 4 years, I have noticed the difference in the UK and when comparing it to other countries we are more congested/longer queues/ and services that we took for granted are now no longer set in stone. The rental costs for my last apartment was £4250 per month mainly as there was a huge project ongoing and the expats needed housing so companies would pay the going rate. Here Government cannot afford to build and areas have their own micro economy and selling of social housing may be coming back to bite.

 

If any product is in demand is will attract a greater premium - houses included. The only way to combat that is to move to a cheaper area where you get more bang for your buck or increase your income to parity within the local area that needed to support the going rate for property. A lot of people would love to live in Beverly Hills, and we all could, we just need to have the finances and the will to do it.

[Chesterfield]

The move amongst all political parties to tax wealth as well as income will eventually hit the property market. Mansion tax, rejig of stamp duty, changing rules on companies buying residential property, leaving inheritance tax threshold unchanged. All these are designed to dig into higher property values.

 

The next government will have to start looking to raise income further, or cut spending further. Spending cuts, on top of what we have already seen will be a huge negative, and the popular culture at the moment is that the "wealthy" and corporates should pay up and we will have more than enough (even though if we did raise the £20 billion or so from estimated tax avoidance, we would still be £10Bn short of the funding needed for the NHS alone by 2020).

 

That will lead to even more moves against high property values. They have already raided the pensions which spelled an end to final salary schemes, and they have already hit welfare too. The only big ticket item left is housing, especially the massively over inflated prices in the South.

 

There will either be a massive shift in values and averaging across the land, or a crash, which will hit the south hardest. Start putting huge taxes on houses worth over £2m and suddenly that house that was on right move for £2.1m is suddenly down in value to £2m. the one that was then on at £2m will drop to £1.9m, and so on down the chain. Those at the bottom cheering for a mansion tax will be the ones sat in negative equity when it ripples through the market, and the oligarchs in London wont give a toss. So who is going to lose out?

 

Ive invested in property, and Ive invested in my own home to the extent that Ive spent way more on it than its worth - but Im not treating my own home as an investment, Im treating it as a place for my family to live in and a nice place to call home. Anyone who has all their eggs in the property basket is playing a very dangerous game imho.

 

If we start to see house building, and especially social house building in any large number, then we will see values fall. This is the predicament that any future government face. They can spout on about how they want to build 200,000 homes a year (which is quite frankly ridiculous as thats over 540 houses a day 7 days a week). If they came anywhere near to delivering those sort of figures, the value of the end product would crash. It would crash everyones house price, and leave the social housing that they have built as an asset worth less than it cost to build. Which would see the government in a worse financial hole than it is now.

[rabbitstew]

All depends on how fussy you are about where you live. I work in Cambridge. Houses in the street behind where are work cost £650k for a 3 bed victorian terraced house with no garden, no parking and no garage. They get snapped up in days for the full asking price. Theres no way in gods earth can I afford that, nor would I want to, when if you buy further out of Cambridge you can get a 6 bed mansion with land for similar money.

 

So whilst I work in Cambridge, I live in a town/village about 40miles out of Cambridge and here you can buy a 2 bed terraced house or flat for £50k. Sure it means a bit of a commute in to work, but it means I can afford to buy a house. If I decided to rent instead of buy, a 3 bed house identical to mine is currently up for £500 a month rent. Even if you are on the lower end of the salary scale, getting a mortgage on a £50k house or forking out £500 a month rent is not too hard to achieve, especially if you are a couple & have 2 salaries coming in.

 

I keep an eye on the house prices in my current town and the city where I used to live. My old house which I sold 4 years back looks like its worth roughly about the same price now. So, in that particular area house prices have remained static. In my current street, prices also seem to have remained pretty static since I bought my current house. Whereas, places like Cambridge and London have increased in value.

[sipar69]

Between the two of us, our household income is in the region of £120k and we have no kids. We would still struggle to buy anything half decent in our area. Jane already owns a place elsewhere and I've never owned. I'm reconciled to renting for the foreseeable future.

 

Perhaps some people who can buy expensive places without earning loads get help from parents, inheritances etc....

 

 

[Jetpilot]

They can spout on about how they want to build 200,000 homes a year (which is quite frankly ridiculous as thats over 540 houses a day 7 days a week).

 

When you say "they", who do you mean as the gov or councils arent building social housing any more, they expect the developers (wealthy) to fund it!

 

In Bournemouth if you build anything over 4 units, flats or houses, you are duty bound to allow 50% of those properties for social housing and i cant remember the exact figure but a % of those HAS to be allowed for minorities! Of course you can roll this over to another project but at some point a developer is taking it royally in my opinion.

 

I am building my own house out of some good fortune, there is a council infrastructure levy, £4600 on a 70sq m property, i know some of the big places being built are into tens of thousands and another guy i know who is building student pods is up to £150k in levy.

 

Its all madness if you ask me and i dont think it can last!

[gangzoom]

Personally i've always thought of houses as a home first and investment second. I bought my first house at the peak of the property bubble in 2008, and 'lost' £20K on it when I sold it in 2010 after buying a house with my wife. But we were able to knock down the asking price of our current house by over £30K because the market was so depressed at the time, so in affect it didnt matter I sold my first house for less than what I paid for it.

 

Luckly we don't have to move for another 3-4 years yet, and house prices in our area have not really recovered much, so we should be able to get a decent deposit down. The whole ecnomony does seem geared to enable those who have large incomes/money to grow their wealth quicket than those without money.

 

For example if you can drop a big 40% deposit your pay less interest than someone who can only afford a 10% deposit, so by definition those at the top of the ladder will continue to extend their wealth compared to those at the bottom. But actually if you can afford a 40% deposit you can probably afford to pay more interest than someone who can only afford a 10% deposit..... Even with cars, if you can afford £60K on a Tesla S, you can currently re-charge it for 'free' on Tesla superchargers, pay no road tax/congestion charge, and if you got a good accountant probably claim the VAT back on your tax returns.

 

But than again we all know what happens ina turely equal world....After all 'all animals are equal, but some animals are more equal than others'

Edited December 24, 2014 by gangzoom

[Ekona]

The mansion tax thing is incredibly dangerous. It may start at homes over £2M, but then it'll be £1M, then £750k, then £500k, and so on until it's hitting every single home owner who just so happens to have worked hard enough to provide for themselves.

[bronzee]

It's not a thing that's unique to the UK, over this end of the pond, in the biggest city here, our delightful council have artificially increased the value of houses, to grasp more rates from us. Not unusual for someone's council valuation to have increased 100k or 5 times that in a year. Average house price in my city is 750k at the lower end of the scale, anyone buying in a reasonable area is probably looking around 1 mill plus, unless you want to live in a gang infested area of town, even those are still around 300k +. Being heavily driven my influx of imports pumping up the market, and borrowing overseas to buy property here, and only paying 1%, unlike your poor Kiwi here at Kiwi bank rates. You go to an auction and 9 times out of 10, you will be beaten...... Unfortunately successive governments here have encouraged it, we do need more population here, but the right sort that pump money back into the economy, not send it straight back off shore.

Edited December 25, 2014 by bronzee

[Jetpilot]

The mansion tax thing is incredibly dangerous. It may start at homes over £2M, but then it'll be £1M, then £750k, then £500k, and so on until it's hitting every single home owner who just so happens to have worked hard enough to provide for themselves.

 

Mansion tax, stamp duty, gapital gains, even Inheritance tax comes into play now the average property is so expensive. My late father bought a small 2 bed flat as an investment back in the early 70's, even with the capital gains thresehold set at 1987 we would pay some £40k tax.

 

I would say property Is already heavily taxed, I am sure Labour proposed to tax you if you had lived in a property for a considerable time because they were loosing out on stamp duty from you not moving.

 

Your right though, property will be the next target to try to chuck money Into the black hole, what else Is left.

[bytespc]

Well...they aren't up to 30% fall in parts of London and the South East, we live on the South Coast and houses have been for sale for over two years, it's about b...dy time as houses are way over valued

 

Ho Ho Ho