Houseprices...grrrr... - Page 2

JohnW · 13-07-2004, 11:07

Well Bazf, we are going to have to agree to disagree on this one. I don't doubt your knowledge, as you say it is your area of work, but, raging inflation on house prices which are not accompanied by substantial increases in wages spells trouble. If I'm earning $50K per annum and purchase a $150K house which in four years appreciates to $250K, then the number of people who can afford to buy my house goes down if wages do not increase. This causes the market to become slow and that causes house prices to drop. I am aware that this is not the only factor involved and that there are regional influences, but it contributes very highly to the problem.

You say people are not in a position to borrow minimal amounts on their houses because we have bred a "want more" society. My answer is, that they should curb their "want more" until they can afford it. So, in fact, they ARE in a position to do it providing they do not live beyond their means. It's all a matter of self-disciplin. As Mr. Macawber said, "Annual income one pound, annual expenditure one pound and six pence, result misery. Annual income one pound, annual expenditure nineteen shillings and six pence, result happiness." I'm sure you know your Mr. Dickens just as well as, if not better than, I do.

WillowTheWhisp · 13-07-2004, 11:35

People are often not able to borrow minimal amounts on their property because building societies/banks will not lend minimal amounts.

I wanted to transfer my mortgage to another company because the one I'm with at present has a higher interest rate than most. This repayment mortgage has been decreasing over the years and now there isn't enough of it for any other company to even consider.

If people are encouraged to borrow more than they would originally have asked for doesn't this also contribute to silly asking prices for houses?

JohnW · 13-07-2004, 14:43

WTW,

We were really talking about people taking the equity out of their property because they feel "rich" due to the appreciation that has been happening over the past 3 years or so. You were obviously just trying to transfer the amount you owed to a different lender in order to secure a lower interest rate. It is also pretty obvious that you are a good credit risk as the company to which you applied wanted to lend you more than you asked for. Of course, there often are minimum limits to people taking out a first mortgage, which re-financing really is, you're just swapping one first mortgage for another. We were really discussing 2nd. mortgages or home equity lines of credit.
What people need to remember when digging into their equity is that, generally, the whole housing market is appreciating and that when the time comes for them to upsize; the equity they have in the house they are selling will be needed to put down a bigger deposit on a far more expensive house. All I am really trying to say is that the equity in your house should be left where it is except in cases of emergency. I do, of course, realise that not everyone is blessed enough to be able to do this, like people being made redundant and things like that. However, irresponsible frittering, like taking out a few grand to go on a world cruise, should be avoided. IMHO.

matthewm56 · 13-07-2004, 19:52

The prices of houses in Accrington are nearly doubled!!! I live in Baxenden my family bought a new house 5 and a half yrs ago and we have decorated it and put a conservatory on it. Now the price of the house has tripled!!!!

Busman747 · 14-07-2004, 22:33

If you are fortunate enough to own a house and think you are rich because you have seen a 50% rise in its value, think again! Mathewm MAY have bought his house for say £60.000 and it MAY be worth £120.000 now, but if he sells, what can he buy? Another house in the same street which has also gone up in value?

In the south, we have lived with this problem for a number of years. I have 4 adult daughters and only one has been able to purchase! (A 2 bed terraced cottage and their mortgage is massive) The other three are renting at an average cost of £550-00 per month! If you search around, you may find a bedsit for around £80.000 or an ex council 3 bed house on an estate for £150.000

Unless the market crashes, Accie people will be facing a similar fate in a few years time along with the rest of the country! My message to all you teenagers out there is to do your research and find out what is happening to the rest of the country especially the south.

Wages WILL go up, but nowhere near fast enough to compensate for increased house prices!

I believe it was Willow that said they had gone into estate agents to be told that the cheaper houses were being bought up by investors, I found the same thing. I was looking for a cheap house to buy when I came up north and was advised to camp outside the estate agents office (tongue in cheek) as everything under £35.000 was being snapped up by the proffesionals sometimes before the house went in their window!

I decided to rent and friends down south find it unbelievable that I can rent a lovely house for well under £300-00 per month!!

I have been told that in most european countries, it is rare to purchase a house and renting is the norm....... can any one confirm that?

Darby · 15-07-2004, 05:08

Quote:

Originally Posted by Busman747

If you are fortunate enough to own a house and think you are rich because you have seen a 50% rise in its value, think again! Mathewm MAY have bought his house for say £60.000 and it MAY be worth £120.000 now, but if he sells, what can he buy? Another house in the same street which has also gone up in value?

In the south, we have lived with this problem for a number of years. I have 4 adult daughters and only one has been able to purchase! (A 2 bed terraced cottage and their mortgage is massive) The other three are renting at an average cost of £550-00 per month! If you search around, you may find a bedsit for around £80.000 or an ex council 3 bed house on an estate for £150.000

Unless the market crashes, Accie people will be facing a similar fate in a few years time along with the rest of the country! My message to all you teenagers out there is to do your research and find out what is happening to the rest of the country especially the south.

Wages WILL go up, but nowhere near fast enough to compensate for increased house prices!

I believe it was Willow that said they had gone into estate agents to be told that the cheaper houses were being bought up by investors, I found the same thing. I was looking for a cheap house to buy when I came up north and was advised to camp outside the estate agents office (tongue in cheek) as everything under £35.000 was being snapped up by the proffesionals sometimes before the house went in their window!

I decided to rent and friends down south find it unbelievable that I can rent a lovely house for well under £300-00 per month!!

I have been told that in most european countries, it is rare to purchase a house and renting is the norm....... can any one confirm that?

Sorry Busman I have seen the house market on the continent in a different light.

You assessment of the situation is astute, and partly hits the nail on the head. That's in the UK.

In Germany, the situation is similar, but different. (OK that's a conflict but correct). House prices are high, and have been high for the last 20 years. Most people rent, but over the last 15 years more and more are buying their own property. The reason is simple; the Government gives a helping hand for first-time buyers, but only if the property is new! (THis system ends next year---Government cuts...well you heard that one before)
This has the effect that more and more building work is created, thereby fuelling the economy to a large degree. In the cities this is OK in the short term. But house prices in thise cities has increased (not as much as in the UK, but between 40-50% in 10 years).
However, in the country or in small towns the system doesn't have the same effect! And normally a first-time buyer has to rent and then save for up to 15 years or more to afford to buy their own property.

One overriding factor in the house market in Germany, is the problem of a mortgage. Oh how I wish it was as simple as in the UK! Before you can buy you must have had a "Bausparkasse" (Building Society) for at least 10 years. This should be for at least 40% of the house price. You then take out 1 or more 10 year fix-term loans, and buy a bank guarantee of repayment!! You can then buy the house, but your payback is about 1% of the capital sum, and that means that the 10 year loans last (Renewed at current rates) for about 50 years or more!! So most people in the country buy a large house and then share the mortgage with their children when they get married and need somewhere to live. One good effect of this, is that families stay close together. Normally Grandma looks after the kids etc., whilst the daughter or daughter-in-law goes to work, but everything remains in the family.

Naturally, Germany has the problem of a working population that is not willing to move to find work. So somebody looses all the time.

Another little quirk that stunned me when I bought my house in Bavaria, was that as soon as I bought the property, I got a demanding letter from the local tax office - telling me that within 1 week I had to show them evidence of where I had got the capital from to buy the house or I would be fined 10.000 EUROS. NICE ONE....

By and large...house prices will never go down, and always creep (or currently leap) up.
I bought my furst house in Boston (Lincs) for £9,000, and sold it 10 years later for £40,000. It's now worth £156,000. A four time increase every 10 years or so!

By the way, It's much worse in Italy, maybe Jo (in Bolzano, N. Italy) can give us the rundown. Don't ask about Sweden!!

Mik Dickinson · 15-07-2004, 05:22

I can confirm all that that Darby says.We rent.We have an appartment 1200 Sq Ft and pay 510 quid a month.that is with heating costs and everything else included.eg. rates.To get a place of our own we would be looking at a price of about 220.000 pound.The farther East you go in Bavaria the cheaper it gets as there is no work there.

Gobsmacked · 15-07-2004, 22:21

I think for anyone who bought at the height of the boom in the 80s they may just about be breaking even now.

Is the answer to sell, rent for a while and wait for a slump and then buy?

JohnW · 16-07-2004, 10:58

I'm pretty sure that people who bought in the 80's are well in hand now Gobsmacked and I suspect they have been for some time. I bought in the 80's and sold about five years ago because I was living in the U.S. and couldn't be bothered renting it out any more. I did lose about 15 grand on the deal but I had spent a lot of money getting the house exactly as I wanted it to be, because I thought I was going to be there for the rest of my life. The house is now worth more than twice what it stood me at. I'm also pretty sure that prices will start to drop before too long. However, long term, real estate is the best investment you are likely to make in your lifetime. My advice is to hang on to your house. It's not worth all the hassle and expense of selling, moving, renting, buying and moving again. Of course, this is only one persons opinion and other people may think differently. I'm sure you would welcome other peoples ideas also.

becki* · 16-07-2004, 11:09

my bro has recently been house hunting and he is a first time buyer/ renter or whatever. anyway everything was asking more or less all his wages each month! he cant aford it yet. and i dont get the big bedroom for ages yet:.( haha