news & politics:discussion

[lost]

For people who want to know what "normal" looks like to us oldies watch 90's sitcoms/dramas like Men Behaving Badly or This Life. The postcodes in London those people managed to buy/rent in from the jobs they had were not made up they were pretty typical during that time.

[mattiloy]

9 hours ago, steviewevie said:

That foreign investment thing only affects London markets surely..

They’re everywhere. Maybe even more in London sure, but thats also where prices have increased the most in the last couple of decades.

[cellar]

9 hours ago, Ozanne said:

It’s explains a lot to be honest. 

Care to explain what you mean by this? Are you insinuating something about my character because I'm a renter, and haven't been able to afford to buy my own place like you have? 

If that's not Tory behaviour then I don't know what is. I'd say it's unbelievable, but all the signs have been there with you, Ozanne.

[steviewevie]

There's multiple reasons for the house prices...since 80s and the council house sell off there have been more home owners and less social housing, plus mortgage market changed so there were more mortgages available...and house building didn't keep up which meant prices kept rising due to demand/supply except for the crash when interest rates went over 15% which caused a fall but also a lot of pain. Then it recovered and prices kept rising faster than wages because demand/suppply was still an issue, not enough houses, not enough social housing, buy to lets, mortgages allowing more and more to be borrowed, and then after 2008 crash we had super low interest rates to keep the economy going which helped people borrow more and more and kept the prices going up so they became out of reach for many, and then the pandemic and stamp duty changes and people wanting to move to places with more space kept it all going. Now we have a sudden increase in interest rates and people with big mortgages who could be in big trouble, but also a lot of homeowners don't have a mortgage, or are still safe on a fixed rate, and rates could start coming down next year. So, house prices might drop a bit, maybe to pre pandemic levels, maybe more, but mortgages are more expensive so still hard for anyone wanting to remortgage or first time buyers. We need more houses, but they don't get built in adequate amounts because of nimby voters.

[fraybentos1]

1 hour ago, lost said:

For people who want to know what "normal" looks like to us oldies watch 90's sitcoms/dramas like Men Behaving Badly or This Life. The postcodes in London those people managed to buy/rent in from the jobs they had were not made up they were pretty typical during that time.

Boomers and Gen Xers are always desperate to make out things were harder in their day, even tho their kids have seen with their own eyes their family homes 5x in value over the last 30 years while they struggle to get on the property ladder themselves. 

[fraybentos1]

22 minutes ago, steviewevie said:

There's multiple reasons for the house prices...since 80s and the council house sell off there have been more home owners and less social housing, plus mortgage market changed so there were more mortgages available...and house building didn't keep up which meant prices kept rising due to demand/supply except for the crash when interest rates went over 15% which caused a fall but also a lot of pain. Then it recovered and prices kept rising faster than wages because demand/suppply was still an issue, not enough houses, not enough social housing, buy to lets, mortgages allowing more and more to be borrowed, and then after 2008 crash we had super low interest rates to keep the economy going which helped people borrow more and more and kept the prices going up so they became out of reach for many, and then the pandemic and stamp duty changes and people wanting to move to places with more space kept it all going. Now we have a sudden increase in interest rates and people with big mortgages who could be in big trouble, but also a lot of homeowners don't have a mortgage, or are still safe on a fixed rate, and rates could start coming down next year. So, house prices might drop a bit, maybe to pre pandemic levels, maybe more, but mortgages are more expensive so still hard for anyone wanting to remortgage or first time buyers. We need more houses, but they don't get built in adequate amounts because of nimby voters.

Supply and demand is not a big a factor as the amount of capital people could borrow due to crazy low IRs- that accounts for most of the rises we’ve seen in the last 20 years 

[steviewevie]

7 minutes ago, fraybentos1 said:

Supply and demand is not a big a factor as the amount of capital people could borrow due to crazy low IRs- that accounts for most of the rises we’ve seen in the last 20 years 

house prices increased most between mid 90s and 2008 when interest rates weren't that low.

It is demand and supply...interest rates just help or hurt the demand side. Not enough housing has been built since the 70s.

[lost]

4 minutes ago, steviewevie said:

house prices increased most between mid 90s and 2008 when interest rates weren't that low.

They were for the time. After the planes hit the twin towers they dropped to 40 year lows. Infact you could argue that was the precursor to the financial crisis in 2008. The banks were really trying to create products with the yields people were used to by packaging up risky debt.

[fraybentos1]

9 minutes ago, steviewevie said:

house prices increased most between mid 90s and 2008 when interest rates weren't that low.

It is demand and supply...interest rates just help or hurt the demand side. Not enough housing has been built since the 70s.

The prices were still relatively low though and people could do daft things like get 110% mortgages… 

Also between the mid 90s and 2008 there was probably actual genuine wage growth in the U.K. and people were legitimately better off. 
 

Since 2008 it’s been fuelled by stupid low IRs, that’s a fact 

[steviewevie]

[lost]

Yep. The silliness started post the actions after sept 11th 2001 / dot com bust.

[fraybentos1]

17 minutes ago, steviewevie said:

I posted it last week but between 97 and 07 the supply of houses actually increased relative to population so it defo isn’t a pure supply and demand affect. 

[fraybentos1]

Also what really matters is average salary vs average house price. And the level that multiple got to was unsustainable 

[lost]

 

5 minutes ago, fraybentos1 said:

I posted it last week but between 97 and 07 the supply of houses actually increased relative to population so it defo isn’t a pure supply and demand affect. 

I've generally felt that post 2001 period was a perfect storm. Alot of people used to be able to retire or semi-retire at 55 in the days of final salary pensions and I don't think its a coincidence the first of the boomers (1946) turned 55 in 2001.

We've had this huge wave of people taking all the cash they have earnt during work and buying up assets which they expect will provide them with an income during retirement. The dot com bust with some stocks dropping 99% also put that generation off the stock market and made property the only game in town for them.

[steviewevie]

52 minutes ago, lost said:

Yep. The silliness started post the actions after sept 11th 2001 / dot com bust.

started mid 90s...various things have helped keep the increases...silly mortgages amounts, 100% mortgages, buy to let bonanza time...

[lost]

10 minutes ago, steviewevie said:

started mid 90s...various things have helped keep the increases...silly mortgages amounts, 100% mortgages, buy to let bonanza time...

They bottomed 2.7 average incomes mid-90's which although fantastic at the time, for me like any cycle they were always going to revert to trend which is 3.5 - 4x average incomes. It took till the 2000's to break that trend.

4x 33k makes ""fair" value £132k today which looks about right looking at that graph based on the trend between 1975 and 2000.

Edited August 10, 2023 by lost

[fraybentos1]

18 minutes ago, lost said:

They bottomed 2.7 average incomes mid-90's which although fantastic at the time, for me like any cycle they were always going to revert to trend which is 3.5 - 4x average incomes. It took till the 2000's to break that trend.

4x 33k makes ""fair" value £132k today which looks about right looking at that graph based on the trend between 1975 and 2000.

More dual earning households now too I think so people can usually reach further as a couple. 
 

If I was on my own I’d be living in a hovel somewhere but between me and my gf we can afford somewhere nice. Very tricky on your own even in a cheaper city like I am in glasgow

[lost]

7 minutes ago, fraybentos1 said:

More dual earning households now too I think so people can usually reach further as a couple. 
 

Yeah tax credits weren't a thing too in the 1990's which probably distorts reported incomes. Fair value is probably bit higher but nowhere near these levels.

Even if its £200k your hitting the bank stress test limits. What a mess.

Edited August 10, 2023 by lost

[fraybentos1]

6 minutes ago, lost said:

Yeah tax credits weren't a thing too in the 1990's which probably distorts reported incomes. Fair value is probably bit higher but nowhere near these levels.

Even if its £200k your hitting the bank stress test limits. What a mess.

Yeah, I think we can all agree though (except ozanne) that 10x average income is way too high.

I think prices need to come down 30% nominally, followed by several years of stagnation and allow wages to catch up a bit. Would be to benefit of most of society imo.

[steviewevie]

people aren't necessarily richer, but they can borrow a hell of a lot more.

Also, demand up because smaller family units, people living alone longer etc etc?

[fraybentos1]

16 minutes ago, steviewevie said:

people aren't necessarily richer, but they can borrow a hell of a lot more.

Also, demand up because smaller family units, people living alone longer etc etc?

they can't really now though as interest rates have gone up to a more normal level

there's a lot of factors but yes, I imagine oldies living alone in 3 bedroom houses doesn't help. Then again, they own it and they can do as they please. I think there should be incentives for oldies to downsize tho i'm not sure how that could work practically.

[Neil]

5 hours ago, squirrelarmy said:

Not with Virginmedia by any chance? Currently under investigation by Ofcom for making it very difficult to leave them. I’ve had an absolute nightmare with them the last month as I’ve moved and changed my provider. Virtually impossible to talk to a human. 

no, BT, too sh*t to do it properly.

(Swap the account from being a business account in the business name to being a normal residential in my name.

Edited August 10, 2023 by Neil

[steviewevie]

 

[fraybentos1]

3 minutes ago, steviewevie said:

 

Not good and hopefully not a sign of things to come. Things don’t look good for 2024. Hopefully Labour actually get in and offer some prosperity to average joes 

[Guest]

https://www.economicshelp.org/blog/8733/housing/uk-house-prices-high

This is a good write up of why houses prices are so high and pretty much backs up what some of us have been saying. One of the points is that demand has been growing faster than supply so at least part of the reason is supply/demand.