14 replies to this topic

[Simon]

I'm seeing lot's of 'for sale' signs and lot's of 'reduced' prices in the property papers. IMO they've spiralled to such an extent that first time buyers cannot get on the bottom rung of the property ladder and when that happens house prices can only go one way.

Does anyone have an opinion?
By the way we sold our house and are living in a rented place at the moment.

Simon

[yorkshire]

Simon,

I know house prices in our area have risen significantly over the past 10 years (850% theoretical profit from our house). In the nearest town a 2 bed terrace (modernised & centrally heated) is approx £80k this would mean a first time buyer would need to have an income (combined?) of about £20k - £25k. Based on that I know I couldn't have afforded one until about 5 years after I first started work (after Uni).

I think that making a lot of money out of houses is wrong and any profit people make is only theoretical - you have to live somewhere.

The reason for such price rises has to be related to how much money you can borrow. I believe you can take out a 100% mortgage on 5 x your income over 30 years! The lenders are willing to take this risk because as long house prices rise they make money either way.

I was talking to my German teacher the other day about the property market in Germany. We practiced our German by looking at current Estate Agent's brochures for Bremerhaven (North East Germany). For a nice 3 bed detatched house, with garden, the prices started at about 80k Euros! (£54k). A nice 2 bed flat overlooking a park was 30k Euros! (£20k). A big 6 bedroom Victorian house with 5000m2 of land (and stables, etc) was 220k Euros (£150k). Of course house prices in Germany vary depending on the location (jobs!), but this area is the middle of the market.

She tells me that the mortgage rules are different over there, i.e. minimum 35% deposit, 10 or 15 years term, maximum 3 x annual income. Could this explain the difference?

[Simon]

I know house prices in our area have risen significantly over the past 10 years (850% theoretical profit from our house).

Wow I bet that's comforting.

In the nearest town a 2 bed terrace (modernised & centrally heated) is approx £80k this would mean a first time buyer would need to have an income (combined?) of about £20k - £25k.

Assuming a 10% deposit; a 72 grand mortgage over 25 years at 5% interest is £425 a month, which is affordable. For a £160,000 house, same rates / terms as above the monthly payments would be £825, which is NOT affordable for most even on a decent income. And tell me what can you get for 160 grand these - days not a lot. When you actually look for property (like I'm doing at present) you sort of become blasé about the figures until you do the mortgage calculation. Its gone bananas and the current property prices are unsustainable IMHO.

The reason for such price rises has to be related to how much money you can borrow. I believe you can take out a 100% mortgage on 5 x your income over 30 years! The lenders are willing to take this risk because as long house prices rise they make money either way.

I think it may be the other way round Yorky; the lenders have had to increase the income multiple factor because there are not that many people on 100k a year. And they like to sell mortgages.

The market is being propped up at the moment by the government, lenders, estate agents etc. because a house price crash would be a disaster especially with the trillions of consumer debt. It will be payback time in the next couple of years especially if inflation and interest rates start to rise.

That said I will buy the right property at an affordable price taking into consideration that interest rates could go up. If I end up with some negative equity for a few years so be it. It doesn't really matter if you plan to stay put for a number of years. And the next move I make will be the last until they carry me out.

I was talking to my German teacher the other day about the property market in Germany. We practiced our German by looking at current Estate Agent's brochures for Bremerhaven (North East Germany). For a nice 3 bed detatched house, with garden, the prices started at about 80k Euros! (£54k). A nice 2 bed flat overlooking a park was 30k Euros! (£20k). A big 6 bedroom Victorian house with 5000m2 of land (and stables, etc) was 220k Euros (£150k). Of course house prices in Germany vary depending on the location (jobs!), but this area is the middle of the market.

Think it's time I dusted off my 'Learn German in 2 Weeks" book.

Regards,
Simon

[MartLgn]

I think that making a lot of money out of houses is wrong and any profit people make is only theoretical - you have to live somewhere.

I agree with Yorkshire on this point, the 40 somethings who have just paid their mortgage off are telling the folks in the pub that their 2 bed semi they bought for twenty quid when they got married is now worth £140k, which is nice but unfortunately the 4 bed detached they fancy is now worth £255k, unless your'e lucky enough to have picked an upcoming area to buy into the relative price of all houses is proportionally the same as it ever was, its just that the numbers have got an awful lot bigger.

Im sure you will know Simon , there are areas of Greater Manchester where you could have bought the street for the price of a family hatchback (and the rottweilers went around in pairs) where the windows are being un-boarded and the for sale signs are going up with unbelievable prices.

Edited by MartLgn, 01 February 2006 - 10:24 AM.

[Simon]

More than anything I fear for our children and future generations. I can't ever see wage inflation catching up without changing jobs or the benefit of repeat promotions. I mean has anybody's wage really increased by 3x (or more) over the last ten years. I think not.

Perhaps in the future we need to get used to renting for life as opposed to the fanatical pursuit of owning our own homes. In many countries renting is the norm and does not have the same stigma attached as has been the case in the UK. That said it is nice to leave something for the kids.

Like you say Martin the rise in house prices has made lots of rich (on paper) people often through luck rather than judgement or effort. If you're staying in the house the equity is comforting although not much use unless you remortgage or move to a castle in Latvia. If you are trading up the steps on the ladder are still as far apart.

Simon

[yorkshire]

unless you remortgage or move to a castle in Latvia.

How much?



See where all the UK jobs are going:

Chewits

[Simon]

See where all the UK jobs are going:

Yes the relocation of British (Western European, US) companies to developing states with lower labour costs has been going on for quite some time and there's no reason to believe it won't accelerate in the future. The largest proportions of cost in most businesses are due to labour and the advantages of moving to Poland, Turkey, Czechoslovakia, China, India etc. are self-evident. Many blue chip companies (and smaller) within the food and packaging industries have already opened up state of the art operations in the above mentioned developing countries. It's worrying in so much as when a company does this jobs are lost in the UK and then they export goods from Czechoslovakia or whatever back to the UK putting more UK businesses and more jobs at risk.

We can't compete on price - it's impossible; the only thing we can do is "be better" and hope this is enough to win the next tender. Better on customer service, on new product development, technical assistance, delivery performance, lead times, quantity and quality and even then we can only hope that our overall value package wins out against cheaper. It really ought to be a wake up call to all British business to get lean, mean and world class or its goodnight Vienna.

I don't think it's 'off topic' Yorky; the thriving (or not) housing market is linked to many things including inflation, interest rates, (un)employment and a million and one other things that I haven't the first clue about.

Interesting stuff though.

Simon

[Ferraz]

For your consolation in Portugal the house prices are much higher than in England.
For a 3 bed flat, the prices started at about 120k Euros! And 2 bed 100k Euros.
Considering that the average mothly salary in Portugal is 750 Euros, it's complicated to have a house!
The solution? I already thought in migrating!?

Edited by Ferraz, 12 May 2006 - 10:39 PM.

[Franco]

Does anyone have an opinion?
Did anyone know of seigniorage ? I didn't. I'm currently reading the book "Euroslaves" , unfortunately it's in italian

Seigniorage

[Simon]

At long last we've found a house that we like; you must have been picking up on my brainwaves to refresh this thread Franco.

I'd never heard of Seigniorage either; on the other hand I heard the other day that because of the high price of metals our 2 pence piece is now worth more as scrap at 3 pence. It is big in size and has a high copper content for its low value.

What is Euroslaves about?

[Franco]

What is Euroslaves about?

It's about seigniorage

[Simon]

It's about seigniorage

Doh!

[giorgiatto]

It's about seigniorage

Hi! If you want here you can watch a interview to Euroslaves' author, about his book:
http://video.google....602728649390194

[Simon]

Hi! If you want here you can watch a interview to Euroslaves' author, about his book:
http://video.google....602728649390194

Thanks Giorgiatto,

Please it is not nescessary to post several duplicate threads to the video, I have deleted them.

Regards,
Simon

[giorgiatto]

Thanks Giorgiatto,

Please it is not nescessary to post several duplicate threads to the video, I have deleted them.

Regards,
Simon

Ah ok!
I put another in general discussion, sorry. Maybe it could be a new topic.
Ciao

Giorgio