Nearly two-fifths (38%) of aspiring first-time buyers anticipate being 40 or older when they buy their first home.
And a further one in 12 believe they will never buy their own home.
According to new research from property website Globrix, based on a poll of 671 aspiring and existing home owners, the situation for first-time buyers is worsening.
Its research showed that 74% of existing home owners bought their first property before they were 30. Today, only 13% of aspiring first-time buyers said they would be able to get their foot on the property ladder before reaching that age.
Aspiring first-time buyers are also relying heavily on the ‘Bank of Mum and Dad’ to help them get their first place: over a quarter (26%) expect their parents will be able to provide 20% or more of the deposit they need to buy their first home.
Globrix’s research also suggests that university debt may be acting as a further barrier to young people getting on to the property ladder.
Of those surveyed who had graduated since 2006, one in seven (14%) agree that their university debt will delay them getting on the property ladder and one in five (21%) agree that they would have been able to get on the property ladder earlier if they didn’t go to university.
Nearly one in four (24%) of those who haven’t been to university said that, for them, getting on the property ladder is more important than getting a degree and one in five (21%) say they are glad they didn’t go to university as the debt wouldn’t have been worth it.
Comments
http://www.eyeonspain.com/spain-magazine/spanish-price-drop-case-study.aspx
Could never happen here could it?
rantnrave: "I am impressed that you managed to make so many replies before finally addressing the issue of where finances for mortgages to support current house prices are coming from. Your answer was, in all due respect, somewhat vague."
My 'answer', was "I don't have the answer. I am not a banker so I shouldn't be expected to." That's not vague - that is a fact. I followed by saying that well over 30,000 'answers' are being found every month by the bankers - as that is the turnover of new loans taken out.
Should you go on your 18-month cruise, I will naturally wish you a fond farewell (yes - sincerely...!) and please send lots of postcards to me via EAT. I would wholeheartedly agree with you that whoever would look at funding the trip might, maybe, want to know where the repayments are going to emanate from; however the difference is that unless you LEAVE a kidney or other useful organ behind as collateral, you could sail off and never come back, leaving the lender up creek and paddleless. If, however, someone takes a loan against a property, then the mortgagee holds a first charge against the property and will recoup its' monies by selling the property if the borrower defaults. I would therefore respectfully suggest the tensile strength of your argument be somewhere near own-shop Value range loo-roll...
With regard to posting on HPC - mate, I couldn't find the time! Takes me all my time to wiggle my little fat fingers at the keyboard and try to make sense on THIS site!!
Funny thing is, I spend FAR longer 'having a go' at certain Agents and other "property experts" and "professionals" than I do debating with your goodself, Sibley's... et all!
In many ways, I want what you want. I want you to buy a place. I want you to enjoy the experience of buying. I want you to be treated fairly and decently by a professional Estate Agent.
BUT, I cannot and will not lie down and accept the wholesale hacking of house prices without a fight - even if it benefits my family; my friends, and me personally. As I have pointed out ad nauseum, those who are engaged in the property market (which I still am despite no longer being an Estate Agent...) have a duty to those they work for to ensure their property prices are maximised.
So I guess you and I will have to continue to debate for a while... ;0)
That simply isn't true Rant, with the exception of one post on the other thread when I used a "market gone nuts due to everyone from Eastern Europe moving to the UK" inflation spurt to counter and equally biased quiet period. I have always used the maximum data available to me. If you can find data going back pre 1970 and beyound Feb 2011 please adjust my posts.
You simply can't un-tell what has gone before and you can't discredit me by suggesting I am cherry picking data to suit my argument.
RnR, was that a serious haha or a sarcastic one? Personally I think they are rather amusing. It's why I wrote them.
HPC may have been started as a discussion group, but a lot of the 'heralds' I have come across of it seem more like greed, argumentative people, paying no attention to some simple facts;
1. How do I, as an Agent make my money? ANSWER. By selling houses.
2. If a house is overpriced, will it sell? ANSWER. Of course not.
3. Therefore is there a benefit to me, as a good Agent, with the Estate Agents Act burned into my brain, listing houses at stupid prices? ANSWER. Gods' no.
4. If I feel the marketing price of a property is decreased, do I bring it to my vendors and ask them to adjust to a more realistic level? ANSWER. Yes. Duh.
Agents do not keep prices high to suit themselves. Although many believe they can sell ice to Eskimos, they certainly couldn't if they were surrounded by the stuff for free and they were charging £20/kilo!
I'm not overly interested in beating my head against a wall to try and convince people from the 'Channel 4 School of Estate Agency' that they are a complete and total nit. Especially when I feel some of them are doing it just out of greed.
There may be several accomplished Agents on 'your' site, who believe trying to restrain prices is for the best, and that hammering them down now will cause millions of people to flood and buy their first place. What happens to the poor suckers currently living there who can't afford to sell then? Are they stuck in negative equity for the rest of their lives?
Ha ha - very funny CL
For the record, the HPC site is not officially lobbying anybody on behalf of anybody. It is a forum and only that (unlike say the Priced-Out site or the FTB Strike organised on Facebook).
HPC was established in the middle of the last decade, almost on the basis of an exam question: House Prices Have Risen Inexorably Over Recent Years And Going By Historical Patterns A Crash In Prices Is Coming - Discuss. And that's what happens - discussion.
Yes, some of the views expressed there have not come to pass. However, some certainly have - the argument that the amount of credit sloshing around the world economy by 2007 was likely to lead to a sharp downturn, the prediction of house prices falling which they have and continue to do so, even the view that 0.5% Interest Rates would lead to a deadcat bounce in house prices.
I do not see EAT and HPC as an 'us vs them' at all. There are several EAs or who have an EA background that post over there already and more would be welcome.
Pee Bee and Jonnie - you both seem to have thought through your views. Why post on EAT where you are likely to find agreement? Try the validity of your points over on HPC. I have actually seen much more aggressive comments on EAT than I have ever seen on HPC!
80+ posts! I was hoping to find some new insights among those, but there seems to be a lot said here that has been posted on other threads. Naturally that means I'll have to bore you all with the same points I've shared before too...
George - you seem to be very good at picking and choosing data to suit your points but discarding other facts that might stand in the way. As I've already pointed out, by some indices, house prices today are exactly the same in nominal terms as they were seven years ago. The argument that they double every seven years went out the window once people could lie on mortgage application forms about how much they earned. The rules of the game changed and the latest data that shows house prices haven't budged for seven years clearly backs this up.
You also state correctly that while inflation is running above target, it has certainly been far higher not that long ago. Correct. However, how about the fact that Interest Rates are at a 316 year low? Yes, people can afford payments on a 150K mortgage when they are that low. That does not mean interest rates are going to stay that low! By many accounts, the markets are already factoring in a rise as soon as this coming May.
PeeBee - I am impressed that you managed to make so many replies before finally addressing the issue of where finances for mortgages to support current house prices are coming from. Your answer was, in all due respect, somewhat vague. This is an absolutely crucial issue though! If you or I were to announce to friends that we were take an 18 month round the world cruise, would it not be unreasonable for people to question where the money to finance that is coming from? It's not exactly an issue that can be swept under the carpet...
You also conceded on another thread that there is a very substantial difference between demand to buy a house and desire to. Demand is a fucntion of price and at these prices, many younger people are walking past EA shop windows without even thinking of having a look at what's for sale.
'Greedy Estate Agents Set Sights On Selling Mars'
'No Place On Earth Is Affordable For First Time Buyers'
' "Sod Offworld" Say EAT Posters'
' "Who Will Foot The Bill For My Viewings?" Cries Distraught FTB'
'Evil Bankers Add Astronomical Interest Rates To Sky High Properties'
Reckon those will be the headlines on HPC?
CL - don't you fret, none of this could ever get you in bother with the Yanks!
I'd just LOVE to see the posts on HPC... ;0)
Nah - let's be honest - it will never happen. FTB's will never colonise the Moon, Mars - or any other extraterrestrial body for that matter. They like to party too much.
There's simply no atmosphere anywhere else... ;0D
PeeBee - Officer AND a Gentleman (not to mention ex-Estate Agent!)
Thanks PeeBee, leave me open to litigation from NASA and the USA!
And I thought you were a gentleman.
Country Lass: "... if things keep going this way, soon we will run out of houses, and land to build them on."
NOW CORRECT ME IF I AM WRONG... but this would indicate a forthcoming shortage of property, yes? And an increase in numbers of people wanting them, yes?
Hmmm... supply down; demand up. The two controlling factors of the housing market.
(oh - isn't that what we've been trying to say politely to them all along...?)
Brit; Sibley's; r'n'r - LOOK OUT... THERE'S A BOOM ON ITS WAY!!!
(At least CL's given you an open invitation to start blaming NASA for the next one... ;0) )
Phew! Feared for your sanity for a minute! Not to mention your health after the chat with mum!
There is a lot of talk about our 'aging' population, and pensions etc at the moment, and you are correct, if things keep going this way, soon we will run out of houses, and land to build them on.
Lets hope NASA make progress on colonising other planets PDQ!
It was just to get the debate to consider that the UK poulation is growing at 4.02% (net) annually (doubling every 17 years and ignoring migration factors)
8.9% average per annum is only 0.7% per month. Most folk in the industry will whack on 5% to test the water or allow room to negotiate. It doesn't take very many 5% to get the average up.
With regards to your Mother, Mums always know best! The effects on HP inflation won't kick in for another 18 years and I don't think even the most ardent visitor from HPC is going to single you out for blame.
Huh. Duplicated post. Fair enough
George, Please tell me you aren't suggesting that I don't have kids as it will help stop house prices rising? If so, I'll let you tell my mother! I'm really hoping it was just to illustrate the reasons behind increases, not a suggestion of how people like Brit1234 and others (icluding myself) can stop them! Although there are a few people the human race could benefit from not allowing to reproduce.....
I think we will have to agree to disagree on this point, I DO agree that prices will rise, and that demand for property will increase, it's just the amounts and the timescales I'm unsure of.
George, Please tell me you aren't suggesting that I don't have kids as it will help stop house prices rising? If so, I'll let you tell my mother! I'm really hoping it was just to illustrate the reasons behind increases, not a suggestion of how people like Brit1234 and others (icluding myself) can stop them! Although there are a few people the human race could benefit from not allowing to reproduce.....
I think we will have to agree to disagree on this point, I DO agree that prices will rise, and that demand for property will increase, it's just the amounts and the timescales I'm unsure of.
Mine aren't actually predictions, I have simply reported what has happened. Untill folk in this country decide to stop producing children at a faster rate than people are dying there has to be an increased demand for accommodation.
Based purely on the the morgage equivalent of the average rent. The average tenant is finding interest payments of properties £100000 above the average property price.
The average tenant is affording a repayment and interest mortgage of £148,000 (90% of £161K)
Despite the current finacial woes of a few, the bonking Brits are providing the fuel for price rises and in comparison with inflation and interest rates of the 70, and early 80's 4% inflation is nothing.
If the trendline price inflation now flattens off to 4.5%, average Half of what it has been for the past 40 years, your place will double in value every 15 years. With no rent inflation at all you wil pay out £121,000 in the next 15 years.
We are all alowed to do what we legally want with our money, while the financial institutions are so bad at investing money for profit other than their own, I am going to keep sticking my money into property.
Brit1234, just a thought, but you seem to only be talking about people borrowing money, not paying it back. Yes, there are people with stupidly high mortgages who are having to sell, but can't afford to buy something else. Therefore, their mortgage of X returns to the bank, with no outgoings. (think of it kind of like a credit card, you're paying it off, but not putting anything else on it.) The same goes for repossessions, money coming in, not going out. And for probate sales. Unfortunately, despite the efforts of some of my colleagues, dead people can't buy houses.
And George, I'm not convinced that the prices will double every seven and a bit years. I bought mine just before the prices went crazy, and there is no way you, or the Gods themselves, can tell me it's worth over £200k. Historically, I'll grant you, from the figures you have provided that is the trend but the world and the financial situation is different now. I'm not saying there wont be an increase, but I can't see any scenario where my price would double!
And no, to those whose think prices are going to crash, I am NOT agreeing with you, I just think George's figures and predictions are overly optimistic.
Brit1234 you keep asking where the money is coming from.
It is quite simple, there are those that have and those that don't. I provided evidence of the trendline in property prices showing a consistent glacial growth of 8.9% since 1970.
Every 7 and a bit years property prices have doubled.
Sadly for you and lots of people like you, cheap finance is still freely available to about 15% of the ordinary population, that isn't a big percentage but is enough to keep you out of a home of your own.
You can sit on top of the mountain watching the glacier roll by, you can even predict the glacier is bound to retreat the trouble is you will be still be paying an average £8000/ year to be sat on the mountain.
Jonnie - DON'T YOU EVEN THINK ABOUT IT!!!
Soldier - engage in combat! '0)
Right then,
Erm............No, im going to keep quiet for a change, leave you all too it
Jonnie
Oh - and another thing. You say "Lets leave the market alone and allow it to self balance it self."
Mate - do you HONESTLY believe that ANYTHING you, I, or any other individual (or group of individuals...) say, either here on this site, HPC or anywhere else for that matter can or will make one thousand millionth of one percent of difference to what will happen in the future?
If the answer is YES, then I am deeply, deeply surprised at your naiivety.
Brit1234: A small point to start us off. Lower case 'e's, please. I don't 'shout' my name, I'd like it if you don't either. Thank you.
Okay. I am not intentionally ignoring your point. I don't have the answer. I am not a banker so I shouldn't be expected to. The banks are currently approving, if memory of what I read on here serves me correctly, well over 30,000 mortgages a month. I would have to say, then, that THEY are finding the money from somewhere.
But I doubt you are going to accept that. You keep banging back to simple economics as the primary controller, and disregarding the REAL FACT that the housing market is based upon 'laws' og want, need and aspiration.
SO, with that in mind, this is how I would see it, for what it is worth. Lending is a risk. The risk pays off when the borrower pays the money back, monthly, yearly, however. Banks are currently lending wisely, to low-risk (some would argue NO-risk...) people. Those with excellent credit history. Those with money behind them. This will not change in the forseeable future, so as long as they lend out LESS than they receive back in, then they will continue to lend (and reap the benefits). Lenders have plenty enough systems in place now (the threat of a PII claim to the surveyors is enough to reduce the lenders' exposure and increase the borrowers' contributions...) to forge forward. Even a 90% mortgage is fine - as it is LTV not to Purchase Price. Don't think for a second that the RICS boys and girls will expose a square nanometre of their flesh for the remotest possibility of a future whipping...
Where you and I DO agree is that interest rates WILL RISE! It is a banker that you wouldn't get an odds on bet for. WHEN, and HOW MUCH, is where we will have the fun. Here's my prediction - base rate to 1.75% by end of the year. I seriously doubt if this will bring the multitudinous floods of distressed sales and repos the HPCers are salivating over though - and even if it did, mark the words of a certain AoS and myself - the serious property people will be there first to lick up ALL the cream!!!
PEE BEE
So you can't say where the money will come from, you seem just to ignore it and hope it will go away.
Traditional lending was based on lending a ratio of savings the bank had. That limited the amount of mortgages and multiple of salary it could issue.
However in the late 90s and into 2000s mortgage investment vehicles appeared and took over. This allowed banks not to rely on savings but instead package up there mortgage debt and sell it off as investment vehicles. The low interest rate environment and these investment vehicles being in such high demand led to a lending boom. Banks suddenly started rapidly expanding and loosening their lending criteria to gain market share. House prices rocketed under the system till 2007 where it all exploded and mortgage investment vehicles died.
Now if house prices rose by X under these vehicles from Y when solely based on savers what happens then if these vehicles are gone and not replaced. Personally I think we go back to Y however due to extra low interest rates savings are discouraged leaving even less money to be leant out in mortgages. Hence we have the so called mortgage drought.
You say people can't afford to sell and that will stop prices falling. However you ignore banks can't afford to lend enough to support these prices. Who is going to break first? Well lets see what happens with interest rates, also all those people who lied on self cert mortgages.
Lets leave the market alone and allow it to self balance it self. If you reckon present prices are sustainable then maybe they won't fall. However if you are like me and think the finance system under mortgages can't support the housing bubble then prices will fall.
Sorry - three for the price of one here. Bear with me, please - your bit is coming...
Brit1234: "...can you explain where the banks and buyers are going to get the money to support todays prices?
As with out prices will fall back to normal."
Homeowners have two choices: Sell, or Don't Sell. Those who Sell, do so out of a) need; b) want. Those that NEED to, will accept the market as it is. Those that WANT, will to a degree do the same (equity permitting...) on the basis that you are buying and selling in the same market - but what you actually find is that in some cases, double standards come into play. They want top dollar for their own, and won't accept a penny less - then claim that because of the apparent falling market they are in an excellent position to play hardball and steal a bargain! Human nature - isn't it just a laugh a minute...? ;0)
Anyways - then you have the other sector of the market. I haven't got a clue what percentage - but I hazard a guess of well over 50%. They either CAN'T afford to sell at less than 'x' - or simply WON'T! Their properties will simply not come to market (or help to form the alleged 60% of 'non-sellers' from Henry's figures of doom and gloom...). This will almost inevitably cause a shortage of properties, leading to increasing prices - not what you want to see or hear.
Of course, it is ironic that people will wait for prices to improve (including those of the properties they will go on to buy...) before doing anything about it - but there is, as I have said frequently, NO SCIENCE in the housing market!
rantnrave: "...I don't see that my post says house prices have been reduced by 27%? It says they have fallen, in real terms, by 27%." Mate - HOW THIN do you want to split that particular hair?? ;0) Fallen... reduced... come down... spiralled... crashed. (The list is endless - but I included the latter just for you, pal...)
Your reasoning still doesn't work. Are you suggesting that homeowners (and Estate Agents...) now have to take into account current and future wage trends as a valuation dictator? That house prices must be index linked to the going rate for a hairdresser or an accountant, dependent upon type, size and location? (Surely that would have hairdressers up in arms that they couldn't afford a five-bed mansionette in the stockbroker belt? Who would fight THEIR corner??)
My bet is that you butter your toast on BOTH sides in the morning, just to be sure...
Simon: I leave you last for a good reason. I had a go at you before. I'm not apologising - so don't get TOO excited - but I DO want to agree with you on something. You said "It would be far better for buyers, sellers and estate agents if there wasn't this rolla coaster in prices." ABSOLUTELY! Nail:head - you get to hand out the pencils, mate. None of this diatribe between HPCers and Agents (and me...). Win:win situation.
But it ain't EVER gonna happen. Sorry and all that - but preaching to the converted isn't a good use of your time. We all know that already. Problem is, Sellers don't care - and Agents act for THEM! They are bound by legislation to act in their clients' best interests, and to secure the best price the market will pay - UNLESS the vendor instructs them otherwise. Seems to me that there are three categories of reader to this website: Agents; HPCers... and ME! You need to be spreading the word in another direction...
Last point. You can all answer this one. PETROL is universally high also. So are SPUDS, BREAD and BAKED BEANS.. They have risen WAY in excess of RPI and CoL. Surely THESE items affect you and all HPCers FAR MORE than house prices - because I would imagine they affect your daily spend. House prices affect you not one jot today, tomorrow - possibly never, as you aren't buying one. Why, then, is there not a petrolpricecrash website - or why you all not hassling ASDA and the likes to reduce your daily bread?
Pee Bee - I don't see that my post says house prices have been reduced by 27%? It says they have fallen, in real terms, by 27%.
Salaries in real terms are also falling, meaning FTBs are only able to capitalise on the nominal rather than real house price falls.
Simples!
PEEBEE can you explain where the banks and buyers are going to get the money to support todays prices?
As with out prices will fall back to normal.
Where does the money come from?
rantnrave: "...given that salaries on the whole are currently not rising in line with inflation, priced-out FTBs are not getting the full benefit of all of those house price falls."
Mate - your quoted "27% reduction" is a 27% reduction! HOW can you NOT get the full benefit of that? It is that much cheaper, full stop.
The fact that you state wages have not risen in line with inflation is pure window dressing for a poorly prepared window - not like you at all...
My word, I go away for three days and it all kicks off!
It's as I 've said before, if you feel you are priced out then you are probably aiming too high. To go back to the car analogy, how many people actually had a nice shiny, brand-spanking new car with A/C and CD player for their first car? That's why it's called a ladder, you climb up it getting bigger/better/nicer as you go.
Simon, Great, you went to Uni and got a degree/masters/PhD/whatever. Brilliant, well done (no sarcasm there btw) I didn't. I did college then entered the job market full time, and started saving for things I wanted. After getting some Government help, I managed to purchase my first place.
Do I complain that my lack of uni experiences has devalued my life, or made me less appealing as an employee? No, I made my choice and I'm happy with it. You had however-many years of fun at Uni. You (presumably) made many friends, and learnt lots of things which you should hopefully be able to use to get a good job, eventually paying a lot more than I make I presume. Give it time, if you are right and prices drop, you will get a really nice house at rock bottom prices, which you can then cash in on in the future when FTB's at that point claim they are priced out. You ARE correct that the housing situation is caused by greed though.
Vendors greedily want lots of money for their house, buyers greedily want to pay as little as possible and some mortgage lenders greedily want to rake in as much as they can. As PeeBee said, it's human nature to want everything for nothing (excuse the paraphrasing there please)
Simon: Wrap your University-educated mind around THIS...
The property market is controlled by WANT, not GREED. If someone WANTS something, they will pay for it. Who is in the wrong - the buyer for OFFERING, or the seller, for TAKING?
Google 'jealousy' on the internet. Then look in the mirror. See the similarity?
UK house prices are currently down about 27% in real terms since their 2007 peak and, outside of London, they are still falling .
At the same time, given that salaries on the whole are currently not rising in line with inflation, priced-out FTBs are not getting the full benefit of all of those house price falls.
Aceofspades: "Like EAT reported last week, lots of areas are reporting green shoots and I am hearing the same thing :)"
Then why are all these properties being put on the market in January and February dropping there prices in March.
This is the south east so if all these green shoots why are prices dropping.
So I missed the boat because I went to university and got a little debt. Where Mr Spades the boat is coming back into harbour with the price falls.
You do realise house prices should go up with inflation and anything really above that is a bubble. It would be far better for buyers, sellers and estate agents if there wasn't this rolla coaster in prices.
This bubble was caused by mass greed and priced out decent people, thankfully prices are now falling..
I have sympathy for some cases of FTBs being their mid forties. Some cases are genuine.
However, a lot of the cases were in their 30s when we had extremely cheap property across the whole country in the late 90s.
You missed the boat, probably out partying and not planning for your future at an ideal time to do so. Now you hate the World and agents because prices are much higher and YOU missed the boat...
Like EAT reported last week, lots of areas are reporting green shoots and I am hearing the same thing :)
This article is about the average age of first time buyers going to there 40s. Doesn't this sound alarm bells that house prices are simply to high. People should be having families in their 30s not putting their lives on hold to get on the ladder.
Thankfully house prices are falling and set to continue falling.
There are good times to buy and bad times to buy. Buying now and stretching yourself is stupid, far better to buy latter when prices are more affordable and thus more protected as interest rates go up.
Brit you are either a troll who gets his jollies posting on EAT or you are one of life's folk who can't achieve for fear of coming off badly
There is swath of the public who have paid off their own mortgages and are now either buying for their own pension provision or are taking mortgages out for their kids.
Most of the people who come here to have a go, get educated and then go off and get on with buying a property. You seem to be playing the Stupid Card. Its not that hard. Take what you have saved up so far and go and buy somewhere to live.
Brit1234: You have me SO wrong! I have NO 'pride'; NO ego. I have said many, many times before that it would actually SUIT ME if prices crumble - in two ways. Firstly, I would be happy to see my sons and their families as homeowners and a price crash may well facilitate this; secondly, I would be able to trade up a couple of notches myself. Don't need to - but Hell, why not.
MIGHT EVEN pick myself up a couple of renters along the way - the pension fund has taken a beating in recent years. Get in there quick, before everyone does it...
Oh - wait a minute. Isn't that what AceofSpades and I have been banging on about for as long as I've been posting here?
Look. Cards on table. You do your best to bring the mindset of an entire society down to your required level. In the meantime, each one of your kind will find one like me; several hundred diligent Estate Agents (whose legal requirement under The Estate Agents Act is to attain the best price possinble in the market for the seller of the property); and several THOUSAND homeowners standing firmly in your way!
So Pee Bee you can't say where the money is coming from to support today's prices. Yet you have the nerve to call my argument flimsy.
You know we are right, you secretly understand there is not enough money to support prices at this level. I understand your pride will stop you agreeing with us.
I am simply go to wait till prices fall to an affordable level and buy. Not out of greed but for a home.
House prices are set to fall this year and next.
Everyone should read Mike Wilson's post at 1357 today I think it was there is a great deal in what he says. As and when interest rates do rise - and that will include LIBOR - banks are going to continue rebuilding their capital base. I don't know where all this talk about 90% and even 95% mortgages comes from I must have miised the return to the good old days but I'll bet they come stacked with juicy lenders fees and goodness knows what else.
PeeBee talks sense and I don't always agree with his views but he is dead right when he refers to national culture and sees the wider picture beyond economics. Ssomeone earlier referred to property ownership being a privilege and not a right or no divine right to it or similar. How true that is along with my comment about home ownership not being suited to everyone?
TinyTim my missus swore no apron strings for our kids so no "kidult" culture in our family I can assure you. The fact my son went off to Italy to work in a boatyard for 2 years when he was 19 to get experience (of what I will not say!!) and toughen him up I trust speaks volumes.
Just batten down the hatches because whether buyers or sellers, estate agents or letting agents or anyone likes it or not prices simply have to fall this year and next. Hopefully not a crash but as and when interest rates rise with incomes static (and I don't know who optimistically said jobs will not be lost, or less of them, try working for the Council like my missus) it is going to be even tougher to afford mortgages for existing borrowers never mind aspiring new ones.
Hi HD,
Thanks for your reply.
I'm not suggesting people should sell it on the cheap, rather that they sell it at the current market rate - be that 20% higher or lower than today - and they of course subsequently buy another property priced 20% higher or lower depending on the prevailing market.
The people who would lose out in a market that has dropped 20% are those who have purchased property in the last five years or so and also those wishing to downsize.
The people who would gain are people seeking to get on the market and those moving on up the ladder.
2008/09 would have been a great time to sell your house if you were upsizing!
Notbuyingyet: My answer to you there is hardly much sold at all then. It was the 'HAVE TO' or 'FORCED TO' that sold, there wasn't very many 'WANT TO'.
There are always going to be 'have to sell' divorce,death etc, but people aren't going to sell for a loss, unless they really have too.
Of course there again are exceptions to this again, where someone was has lived in a house for a large number of years maybe happy to sell their property at a better price than their neighbour as they have more equity in their home, but even then they aren't going to sell it on the cheap.
Brit1234: Your argument is flimsy enough without resorting to choosing two sentences out of a lengthy post in response to another wordy offering - and relying on it to win you a war. If you re-read the post from 'notbuyingyet', you will ascertain that he is NOT frozen out of the market - he simply wants to wait to see what happens as he HOPES that prices will come down in a 12-18 month period. My response is clear.
I do NOT ignore economics. I simply know from my 33 years direct involvement in the property industry - that's THREE 'booms', three 'busts', and all the cr@p & cream betwixt... - that there are FAR greater forces at play in the decision-making processes of selling and buying homes which economics can only go so far to affect.
Until you find a way to change the mindset of a nation, you are doomed to watching and waiting - and, I respectfully suggest, regretting.
Look. I am NOT an Estate Agent. Was one - not now. I'm going to tell you something that you, the HPCers and all associateds should know. Estate Agents DON'T hate you all - they want to LOVE YOU! You make them money. Sellers; buyers - all put money into the pot. Why do you think they spend so much time on here trying to reason with you? You want to buy; THEY want you to buy! They cannot bring down prices to your required (or desired...) level, so they instead try to reason with you. I admire them for their patience. Personally, I don't give a tuppeny t0$$ whether you buy or not - but the truth is you apparently WANT to - just don't want to be shafted. Fair enough - don't risk it then. But don't make it a bad experience for the thousands who do every month.
Life is a gamble, mate. Buying a house is a gamble. Cross a road - you avoid the traffic. Buy a house - you buy the best you can in the best area you can.
Trust me - there's less chance of a bus mowing you down in a "prestigious turning"... ;0)
A question;
As HD points out, prices fell by something in the region of 20% in 2008/09 in his part of the country. I've noticed a number of comments something like this;
'Why would someone sell their house if prices fell X% - they would simply take them off the market'
My question is - If people did sell in 2008/09, why would people not sell again in 2011/12 if the drops were similar?
Brit 1234: I dont think you can keep going on about FTB not buying because of price, because people are still buying.
Now its a fair view for a FTB to have an opinion that properties are far too expensive, but the other view is that FTB's cant actually afford that property they want, thats life! and they should either low their expectations or pay the going rate.
I agree with you, prices will probably fall a little, but we are coming near to the bottom of the market.
Prices in my area of the south East dropped around 20% in 2008/09, with larger percentages in other areas of the country, this was the time to snap up that 'BARGAIN'
PEE BEE _ "Can I just ask - IF property prices DO happen to rise in 12-18 months, instead of your expected drop, what then for you? Do you then settle for LESS than you could have had today?"
What's less than nothing. First time buyers are frozen out of the market because of price not lending.
How can prices rise though?
There is no money in the the banks to support 80k transactions at today's prices. Prices will fall to where the lending criteria balances out with bank money. As there are not that many bank customers saving that much there isn't money to lend on artificially house prices.
Where is the money going to come from to support todays prices let alone rises. Its down to economics which you can continue to ignore. However prices are going to continue to fall.
There is one BIG obstacle to a sensibly priced housing market. That obstacle is the banks.
They lent too much and inflated the housing market - now they're lending too little - but doing everything they can to avoid repossessions and having to re-value their mortgage book.
What lending they are doing is at way above base rates and the rates they pay savers.
I don't know if anyone else has realised it yet but the banks are the spawn of the devil and hang around our necks like a millstone all our lives.
I think it's about time we had a nationlised bank to handle money transactions (cheques, cash, direct debits etc. - paid for out of general taxation) and let the rest of them fight it out for lending and investment.
AOS
Just seen another reply to your question to me (with no name). The reply wasn't from me!!
AOS - I should have clarified.
I am in a fortunate position of having accomodation rent free. It was suggested by the owner (a relative) that we could stay there rent free as long as we did it up a bit. So....after a lot of elbow grease and a bit of capital expenditure to put in a kitchen, hey presto!
Brit1234: "Pee Bee / Hamish / Sibley - Yes I am a member of MSE and FF. Not a member of HPC unless you created the ID there like one of your 20 fake IDs on MSE.
I am aware you have been chucked out of HPC under you multiple IDs"
ME?? A member of HPC?? Are you on drugs or something???
I don't think they would like what I have to say... YOU CERTAINLY DON'T!!
notbuyingyet: "I think it is inaccurate to say that greed is a key driver for FTByers waiting for prices to become more affordable any more than it is to say that greed lies behind peoples desires not to see prices drop."
How right you are. Humans are a greedy race. That is why there are wars. Greed fuels hatred. No country invades another unless its leaders see something worth taking. Then the you-know-what flies!
Totally simplistic view - but nevertheless relatively accurate.
So - we have an impasse. With yet another simplistic view. You greedily want a cheap house. The only way to get one is to wait for an equally greedy person to let you have one cheap. You WANT : they HAVE. Who will win?
I think you will find the uper hand lies with the HAVEs (unless you want to start a war, of course... ;0) ).
We bought our first property at the beginning of the 80's. Bucking the trend (thanks mainly to an inept solicitor), we lost what was the equivalent of 18% of its' "value" (I refer to the original purchase price here, no add-ons...) in less than 18 months - pretty much everything we had "invested" as our deposit. Our second home went on, in nine years, to make us 125% "profit" - which was immediately reinvested in home number 3, where we still live. What is THAT worth? Couldn't tell you exactly. Don't need to know. A fair bit more than I paid for it, I guess - but as I ain't going to invade next door who have the bigger garden my wife would like (not to mention two extra bedrooms), then it is immaterial.
Can I just ask - IF property prices DO happen to rise in 12-18 months, instead of your expected drop, what then for you? Do you then settle for LESS than you could have had today?
I admire your wish to do best for your family. Never mind been there - AM THERE, every day! But what price security? Surely BEST is giving them that security - as well as stability and peace of mind. If you do not plan to move, then surely a few grand up or down is nothing to fudge the issue - for the sake of what is the price of a couple of pints a week?
Ace of Spades: It doesn't take much intelligence to see prices will continue falling. They are falling now and interest rates are at a all time low.
Interest rates are going up and the price falls will increase.
I'm renting in a great area at a cheap price in London. I can easily afford to wait 12-18 months increasing my deposit and enjoying the price falls.
Yes I would like to take advantage of people misfortune, that of the buy to let landlords who priced us first time buyers out.
Simon - The suggestion I have made about sellers pulling their houses off the market and new instructions not entering, is based around the "dream" of a house price crash - 50 - 60% is often quoted by the HPC brigade. This would certainly be the case if the fantasy came true.
Notbuyyet - IF prices don't fall, then you are 12 - 18 months worth of rent out of pocket. If they do fall a bit, then you are no better off as you would have been paying rent anyway. Thats the gamble when you wait..
Waiting before paying in the hope there is a price reduction might cover the years rent for you. Many FTB's are hoping for a crash to recoup much of the money they have spent renting.
Brit1234 - HD kindly provided a breakdown of FTB's and let me guess which one you are?
The ship has sailed, bargain property with an easy way to make money has gone. A home is a hone. You are not entitled to one. You buy or you don't. You feel you can't afford to buy in today's market, that is absolutely fine, just dtop moaning about it left, right and centre as it makesyou sound dull (like Jonnie mentioned yesterday).
Brit 1234: I didn't say the market was healthy, but I dont read too much into figures.
You think the market is unsustainable, I disagree.
Im not against prices falling, what I don't like is people expecting to make gains at the expense of others.
HD - "Around 50,000 transactions a month disagree that prices are unsustainable."
Isn't regarded as 70,000 - 80,000 transactions for a healthy market and we are currently on 45,000. A long way off a healthy market.
I still say it is unsustainable.
Pee Bee / Hamish / Sibley - Yes I am a member of MSE and FF. Not a member of HPC unless you created the ID there like one of your 20 fake IDs on MSE.
I am aware you have been chucked out of HPC under you multiple IDs.
Anyway first time buyers remain on strike till prices become affordable.
The average property price 8 years ago when Brit1234 started saving was £81500, and with 95% mortgages all the rage back then. I think he is wondering why on earth he didn't buy back then.
In 8 years not only has he missed out on documented, bankable price rise of £81500 but will also have spent anther averge £64000 renting.
I don't think we need humour him anymore He can not possibly save are the rate of 8.9% on £163,000.
Some people leave it too late and miss the plane and just like the folk on "Airport" its always someone elses fault.
These prices ignore the big ramp of price up to 2007 and the re adjustment in 2008
I think it is inaccurate to say that greed is a key driver for FTByers waiting for prices to become more affordable any more than it is to say that greed lies behind peoples desires not to see prices drop.
I am a potential buyer with a good deposit who is waiting to see if prices will drop. I, like many here I presume believe that over the long term property values will go up. I am not against property inflation. I do however believe that the property inflation of the last decade has been unsustainable and has overshot.
My reasons for waiting are that I want to make prudent use of the money I have available - don't we all?. I am the sole breadwinner in my family and I have a wife and two small children. I fully recognise that buying a home is more than a financial transaction, but it is certainly a big financial transaction. I simply don't want a big mortgage - even though the banks will lend me enough. I would rather be able to comfortably support my family and contribute my spare cash to the wider economy than have to pay off a massive mortgage which doesn't benefit anyone.
So...I am going to wait for the next 12-18 months and see what happens. If, as I believe, prices will drop, then I can get something better for my family....waiting is a small price to pay. If I am wrong and prices don't drop, then I don't expect to be significantly worse off.
It's not all about greed.....it's about trying to make wise choices. time will tell how wise or foolish I have been.
Brit1234: "Firstly I am not a member of House Price Crash or Priced Out.com."
Hmmm. brit1234. Joined HPC 11/9/08. 20 posts.
COULD just be a coincidence, of course... ;0)
Brit 1234 also appears on MSE - 2800 posts!! (Signature strip reveals FIRST TIME BUYER STRIKE MEMBER refusing to buy till sellers price realistically.), LoveMoney, and probably more if I care to delve deeper
THERE IS ALSO a Brit1234 who is a member of LandlordZone. 120 posts since June 2007, and now a Senior Member. LANDLORDZONE????
HOW MANY COINCIDENCES should we overlook, Brit1234?
Any Estate Agent here willing to bet house prices won't fall then this year?
All this talk of sellers just taking there homes off the market to stop falls doesn't wash.
Even if people can get mortgages and deposits they still can not afford the prices which people are asking. There was a huge bulk of self cert mortgages where buyers inflated their wages in the boom. This corruption represented 40% of the mortgage market at the peak of the market.
Prices are going to continue crashing. ;)
Around 50,000 transactions a month disagree that prices are unsustainable.
Four types of FTB at themoment.
1. Want to Buy but cant raise deposit.
2. Have a deposit, but can't obtain a mortgage
3. Have both of the above, and just happy to buy a home they will enjoy
4. Have Deposit, can get a mortgage, waiting for a crash, not so much worried about the property, just that they buy at a good price to them
PEEBEE - "Your (the whole HPC community, not singling any individuals here...) whole argument is based upon greed principles - VERY poorly concealed at that. "
Firstly I am not a member of House Price Crash or Priced Out.com. I am simply priced out first time buyer.
Secondly the only elements of greed were employed by property investors, developers and bankers creating the housing bubble and economic collapse. I am not responsible for all the fraud/corruption they caused I just look forward to the day I can afford a bottom of the run property. Is that greed?
You dismiss economics at your Peril because they ultimately under pin what happens in the housing market.
Current house prices are unsustainable and there is nothing left to prop them up even though some sellers are reluctant to reduce their price.
Well done, Ted. Very sharp today.
Thank you for accepting the reality of what would happen though.
However, my point, which you seem to have missed, is that Birt1234 will not enjoy free and easy choice/run at bargain basement prices..like he seems to think would happen.
The big boys will turn to bully boys and he will be left to fight for scraps against similarly thinking FTB's and the new breed of buyer looking for second properties (there will be quite a few of these), which the crash would create instantly.
This activity would drive the prices right back up overnight.
PeeBee - on the money, my friend. I tried to avoid the 'greed', but is quite accurate. Although the words "at someones expense" could have followed your chosen word!
AceodSpades
If prices fall significantly wouldn't Brit1234 just fit in alongside yourself, existing homeowners and the "big boys" all of whom thinking that propertry was good value and worth buying?
I think that you are scaremongering a bit with the suggestion that s/hed be elbowed out.
Brit1234: You, Sir/Madam/Prefer-not-to-disclose, are another of our favourite HPCers who use economics as your mantra; and faithfully rely on economics to fudge the issue of homeowning as if each and every homer is this little cottage industry that needs to run as a profit. You are wrong. BIG style. Mr/Mrs/Ms/Whatever Average owns first and foremost a roof over their head. Stability; security - call it what you like, for them and their family. Yes, they have a tangible asset as well - but it is merely a notional asset until they cash in. They might (many have...) borrow on that asset - but whatever they borrow, they pay back with a penalty. Some will, no doubt, use it as a talking point over the dinner table with all the other Joneses. But the market is - or was - controlled by the Average families of this land of ours. Average families who don't play the money markets; don't invest in stocks or bonds; don't want to pay rent.
THESE people will not sell unless they really want, or need, to. Why should they? More to the point, why should they at reduced figures just to let you in? THEY need a roof over their heads. THEY need to pay whatever is the going rate for the next one. How - more like WHY - do you expect THEM to take a hit on what they already own, when they don't have or need to?
Look at the history. Most people buy and sell out of want, need, or simple desire.
Your (the whole HPC community, not singling any individuals here...) whole argument is based upon greed principles - VERY poorly concealed at that. IF it were simply a roof over your head you want, then you would not be bothered whether it was rented or mortgaged. IF it were simply necessity that drove you to own a house, then you would do what you do with a car purchase - pay a heafty loan on a fast-depreciating commodity without batting an eyelid.
It seems as if, as AoS has suggested, the emphasis is on the short term only. No overnight gain, no wanna play. Please, please, don't live that way. You are hopefully allowed to remain here for a long time. However, apparently you have a finite number of heartbeats - don't use them all up stressing over your accommodation arrangements.
I have two sons, both married, one with a young family and the other practicing hard! They would each give up a body part to own their own property - simply for the many benefits that owning offers over renting. If it never made them a penny they wouldn't bat an eyelid. Unfortunately, THIS BoMaD is out of funds, so I cannot give them a springboard for a deposit. They will, instead, work to sort out their own situations - just as I had to do, and my parents before.
I should be screaming from your hymnbook on their behalf - but I do not intend to waste my life and fill their heads with magic.
Firstly, well done on your 8 years of saving, it is truly good to see.
IF prices were to drop by the amazing values you desire, two things would undeniably happen.
1) You would see a lot of stock pulled from the market and a drought of new stock entering.
2) The only people selling houses would be those who are forced to. These properties (at such low prices) would be snapped instantly by the big boys out there, who search the markets for bargains to add to their portfolio. This would also create a whole new sector of buyers to the market. These are existing homeowners who would want to buy a second property at such low prices. To be honest, I would be one of them - how could you resist at such dirt cheap prices?
How do YOU fit into this?
I respect you worked hard for your deposit, but if you truly want to be a homeowner, a decision has to be made somewhere along the line. If you can afford a mortgage and have a deposit and personally are ready to move in, then it's probably best to up the ante. Just make sure you're on the boat when it does set sail again. Long term, prices will be much higher than they are today. Besides, owning a home is not a right. I get the impression that you can afford a one bed flat, when you went a 2/3 bed semi? Am I right?
However, sitting around waiting for prices to hit rock bottom is not the attitude to take as a serious FTB looking to get on the ladder - it doesn't look like it will happen - it certainly won't to the scale that the HPC brigade shout from the roof tops.
Our economy is going to benefit massively from the Olympics, which is just a year away and this will be a good thing for nearly every UK market. More mortgage options are becoming available by the day and the sun is out. Positive moods and all that, as well as a good start to March already.
If you KNOW that the prices of property in the criteria you are looking for WILL drop by the same amount you are paying for rent over the next year, then sit tight. If so, let me know the lottery numbers for tomorrow night as well, please.
You don't owe me the lottery numbers though, just like you are not 'owed' what YOU see to be satisfactory prices. Anyway, 50,000 people per month would disagree about prices.
@LongInTheTooth
And you miss my point. There are several comments below stating that it isn't so hard to save a deposit, especially for a couple earning £60k +. I agree with that.
The problem is that some "kidults" are so mollycoddled and wrapped in cotton wool that they are unable to fend for themselves. They would rather moan about how unfair things are and wait for the parents to step in. Again.
Owning a home is not a divine right and never has been.
RE "What you and other potential buyers need to watch out for is prices on the move upwards again soon! Traditionally, prices fall in the run up to Christmas and throughout winter, but more buyers go out looking in the spring and this has a tendancy to increase values again. This is likely to accelerate this year if more and more banks start doing 5% deposit mortgages at decent rates and this is looking likely."
Your looking at seasonal variations which I agree have an effect but in caparison with the macro economics environment in the world today. There is simply not enough money in the banks or individual persons purse to support house prices at these values. The banks are pretty much insolvent and can't sell off the mortgage debt as they did the boom in the form of CDOs. They are reliant on savings which are extremely low hence only lending to the best people. Out of the same money they are under presure to support small business over all other types of lending.
There simply isn't the money to support these bubble house prices. House prices are falling at 0.5% interest rates, this will increase as rates increase. People can refuse to sell but they will be left behind as overs sell at reduced prices.
The falls have only started again after the dead cat bounce.
Brit1234 :
House prices are extremely overvalued, unsustainable and now falling. Do you really think today's prices can be sustained and if you do can you tell me where the money will come from? .................
Brit 1234, house prices are sticky up and the vendors that don't need to sell, won't. Today we received an offer of £75k on a 1-bed house which is on the market for £109,995. The vendor bought it for his dad 2-years ago at £100k, who has subsequently died.This house is leashold and there is a clause that prevents it from being rented out, so the vendor can gain nothing by it sitting empty. The buyer was cash and was giving it his all with the "I can move in 14-days, the property prices are crashing, this property has been on the market for months", the whole 9-yards! My vendor simply said, tell him to get stuffed, I'm not selling it at a loss! I rang the buyer back to say his offer was rejected. 3-hours later, the buyer rang me back with an increase to £95k and this too was rejected by the vendor. I believe that in the morning I will tie the sale up at around £102k, giving the vendor his money back plus a little for fees.
While it is true that some people will sell for a loss, especially if they can pass this loss on to their next property purchase, many vendors will simply wait the market out.
It is worth noting that inflation tends to halve the buying power of sterling every 15-years. (It used to be every 10-years) so vendors waiting for a certain price may actually achieve that price when prices rise over time, but in reality the value of their property has reduced in real terms.
Vendors are quick to put prices up in a rising market and slow to bring them down in a falling market.
What you and other potential buyers need to watch out for is prices on the move upwards again soon! Traditionally, prices fall in the run up to Christmas and throughout winter, but more buyers go out looking in the spring and this has a tendancy to increase values again. This is likely to accelerate this year if more and more banks start doing 5% deposit mortgages at decent rates and this is looking likely.
Furthermore, the government is making a number of U-turns with it's big plans to cut spending, meaning that less people will lose their jobs than was originally intended, so the bleak outlook does not look so bleak afterall. Watch out as prices could start rising again in a couple of months!
Ace of spades - RE "What do you actually want?
I think I know the answer. Everthing. For nothing. Minimum effort. Gift wrapped (if possible). "
If you call 8 years hard saving putting my life on hold in the hope one day I can afford to buy a home nothing you can go to hell.
Making the biggest financial transaction of your life isn't like buying Bryl cream and a cheap Burton's suit.
House prices are extremely overvalued, unsustainable and now falling. Do you really think today's prices can be sustained and if you do can you tell me where the money will come from? I am not going to throw my hard saved deposit away.
George Daws - I give you the Property Bee hack for Rightmove. Showing asking price drops on first time buyer properties all over the country.
http://www.property-bee.com/
Then there is the olden fashioned Property Snake site.
Both very good tools to see house prices falling
There you have it. Both of the last posts suggest tennants would move out of rented accomodation if prices were increased as a resulton interest rates.
I FULLY appreciate that, but many would have to continue paying their rent.
However, if so many can so freely leave rented accomodation to share or live with family - then why not do it now and get a good deposit together? Regardless of house prices, surely you would rather be putting £8k per year into your savings (and a little to friends/family for having you) as opposed to paying your landlords mortgage anyway.
So, you would leave rent accomodation at the drop of the hat if prices were put up - which will eventually happen. You DON'T want to buy because prices are too high. Yet, you continue to pay someone else's rent, when you could live elsewhere to be saving money.
What do you actually want?
I think I know the answer. Everthing. For nothing. Minimum effort. Gift wrapped (if possible).
Brit1234, please provide some evidence of where you have seen falling asking prices of properties suitable for First Time Buyers.
We have put up with months and months of hack about prices falling, but sadly for FTBs the price drops that make up the minimal price adjustments mentioned in the press are all on property that the average FTB can not afford.
AOS - The landlord is going to absorb it or loose customers and increase void periods. Rents have fallen 2 months in a row (LSL) and likely to fall further with the housing benefit changes next month.
If landlords put up their rents people will just stay at home or increasingly share. Remember buy to let investors have been given a couple years of golden handshakes with 0.5% interest rates at the expense of savers.
I would expect buy to let landlords bail out before interest rates rise and house prices fall any more.
I imagine if interest rates rise and landlords increase their rents significantly there will be a good number of people returning to their parents/flat sharing etc - basically finding a cheaper alternative. If landlords raise rents too high, ultimately (I think!) it will probably be the landlords themselves picking up the bill.
Brit1234 - ....if a landlord's mortgage goes up due to an increase in interest rates- who will be the one to absorb this? Have a long, deep think about that one.
Nobody said renting and buying cost is the 'same'. For the sake of a few hundred quid extra and a little bit of sensible planning prior, I would rather be buying any day of the week, twice on Sunday.
As house prices continue to fall the age of first time buyers will hopefully decline. Borrowing huge amounts of money saying renting costs the same mortgage costs is stupid. We all know base rates are 0.5% and going up. What might be affordable today might not be tomorrow.
We also know the bigger house price drops were stopped by the massive cut in interest rates. However prices are falling again even at these low rates and will have bigger falls as rates return to more normal levels.
This housing greed bubble is deflating.
5%? You must be very young! Try 9 or 10%.
what work do you do Rant that gives you so much time to be almost constantly monitoring threads on EAT
Wesbland sorry didn't explain myself I meant mortgage interest rates at 7% or 8%. You miss the point - a well meaning scheme that still ends up kippering the borrower. Know why - because there is no solution same as there isn't to negative equity.
AoS is right. I spent 20 years approving mortgages and one thing was abundantly clear to me then and is even clearer now. If you cannot afford a 2% rise in interest rates cost on your mortgage then do not buy a house especially with a high %age loan to value mortgage. This is another area Wesbland where your scheme admirable though it is falls down - you want to subsidise everything, application fees (and how on earth did these ludicrous fees ever creep in, I saw one described as a "money reserving fee" last month!!).
There are some people that are just not suited to being borrowers and the coment that borrowing is as cheap as renting is well dealt with by rantnrave. It is a temporary phenomenon and if you want the true comparison just imagine the property you are renting at £750 a month you bought instead on a 95% loan and then see how much your monthly payment increases per 0.25% mortgage rate increase compared to your rent which cannot be increased anyway if you are in the fixed term.
By the way Wesbland the point on ASTs being short term and vulnerable for tenants is dead right. But if and when it ever reports isn't the Law Comission supposed to be looking at this and creating an Assured Longhold with 5 years security of tenure. In exchange for the tenant taking Statutory responsibility for some repairs.
Yay, GCSE debating again!
In every class in every school, some pupils will be successful others won't. At my class of 79 reunion, less than half own their own home. Owning property isn't something everyone aspires to achieve and it isn't something that all those who aspire to ever achieve.
Why do we need another no point story about society's under achievers?
'AOS' Well Said
AoS - the trend line takes inflation into account. As you may be aware, the level of current price rises is running somewhat higher than recent years. Since salaries are not rising by the same amount, it cannot be concluded that houses are becoming more affordable.
You state that the cost of a mortgage is not much more than a rental. This may well be true, but that is with interest rates at 300 year lows.
I wonder how many FTBs are asking themselves whether they could afford payments should interest rates return to the historical norm of 5%?
As you say, property is still selling at current prices. Transaction volumes are however significantly below levels seen even before the boom / bubble peak of 2007.
Long in the tooth - "what happens if interest rates are then 7% or 8% or more?"
Then the Mortgage Rate at current margins will be 12-13%
This is why the Taxpayer owned Banks should lead the way with trimmed margins
Other Banks will then follow if they want a share of the mortgage market
As for the possibility of losing your Job. Well we all risk that - FTB or not.
Of the 500,000 that moved back in to live with parents, how many were leaving rented accomodation, to live back at home to save money for a deposit? The answer should be 500,000....you hope.
The cost of a mortgage is not a great deal more than the cost of monthly rental.
I quoted last week that around 40% of FTBs I have dealt with will ask "whats the property going to be worth in 5 years". This generation you quote has witnessed their parents benefit from the property boom and have grown up with the belief of 'that's how property works'. It doesn't.
You can only buy a property when the price, mortgage and situation is right. The graphs and history are irrelevant. If it is not right for you, don't buy, it's simple. But the every man and their dog don't need to hear that the current situation is not right for YOU -It is working for others.
I have seen many FTBs enter the market. One couple had saved £25,000 in 3 years. They are a great example in my opinion. They saved £350 each per month, while paying rent to their parents too. They still had disposable income to enjoy, they just made their priority the rent to parents and their montlhy saving.
They were a pleasure to deal with and had their heads firmly on their shoulders.
Too many people leave home early to jump into rented accomodation and then realise they actually want to buy 2 years down the line. Then what? Of course your options are limited and the World owes you diddly.
Dozens of people have said it before on EAT - We live in an "I want it now" country. Look at the couple I mentioned, 3 years of hard work and now they have set themselves up nicely - truly admirable.
I'm sory to disappoint you, but property is still selling at current prices, in a restricted mortgage market. There is no possibilty of an immediate price slash. In fact, check your beloved HPC site and you'll see that your graph shows the current prices BELOW trend.
FFS - If you think we could just "get over it" and slash the prices overnight, you need a reality check.
Don't worry First Time Buyer - lots of bankers, vested interests and the government are working on some 'innovative lending' solutions, all in the pretence of helping you and keeping property prices way above historical norms.
Why don't they instead allow the market to correct and then devise solutions to help those left with negative equity?
The problems are that house prices are simply too high. Even the cheapest 1 bed flats are 6-7 times wages. Its not about deposits, its not about mortgages its all about stupid asking prices.
Sellers have to realise buyers have less money and this will continue as the increasingly indebted students filter through.
Lets hope prices continue to fall but they are a long way off being affordable.
I perosnally think these 'aspiring' buyers need to look at themselves, seriously 40's by the time they wish to buy. If FTB are still living at home they should easily be able to save up for a decent deposit within a few years, yes might have to give up on the luxuries, but depends what you want the most.
Understandbly different if you are renting, but it might just be the time to bite the bullet and move home for a year or two, theres no harm in that.
Funny too how the Boomer Generation cheer high house prices until they learn how much of their taxes is being paid out in housing benefit to keep certain people in those overpriced properties...
Tiny Tim as you don't have the faintest idea what you are talking about as you have no knowledge at all of my ability or willingness to 'lend' money to my kids or my very strong personal desire to see them enjoy their inheritance when they most need it. That is as opposed to when I am pushing up daisies when they receive it hopefully when I am 90+ and they are 60+ (and I have paid inheritance tax on it). So may I politely suggest you try and make more meaningful contributions?
Gullible if asked and just keep handing out money yes. In this case we suggested the 'loan' to them. I suppose you'd be even more shocked if you knew that on my son's flat we'd given him £20K deposit (his 'share' to even out what we had given my daughter and, of course, spent on her wedding a few years earlier).
You miss the point by a country mile - the comment was to show how difficult it is for buyers not how generous or gullible I am. As it happens my son insists on paying me the equivalent of ISA interest at 3% on this'loan' even though I don't want or need it and he has recently point blank refused the offer of a loan so he can buy a much better car as he now does a lot of mileage in his job.
For once all the comments on this thread so far other than yours are sensible. Though sadly Wesbland's suggestion for cheap loans while laudable and I'd support it is flawed in one serious respect.
The remortgaging at market rates after 2 years or whenevr - what happens if interest rates are then 7% or 8% or more. Or that the borrower has lost their job?
@LongInTheTooth
Sounds like your son and his partner are taking the p*ss out of their kind hearted but gullible parents.
They each own one property already yet scrounge £30k each out of the folks?! Crazy. Time to cut those apron strings my friend.
There is of course a problem with people not wanting to start a family until they have bought a home and that not happening until they are in the 40s...
A year or so ago, there was an article on the Times website (when it was still free to access!) cheering the possibility of house prices returning to double digit growth. Knowing that the Times aims for readers in their 50s and being the antagonistic type (!), I posted a comment in response that the over 50s should be careful what they wish for because if their children cant afford to buy a house, expect to see them back in yours soon! I heard that in 2009 (don't know about last year) that half a million adults moved back in with their parents due to the UK's cost of living.
As this trend progresses, there may soon be two generations calling for lower house prices. This is especially true as ever-increasing numbers of grown-up chldren ask their parents for a 30k 'loan' so they can put a deposit on a two-bed terrace with on-road parking.
There is something wrong with society when we force those who will naturally, as mature adults, want to have families in their 20's to wait until their 40's until they can settle down in their own permanent home.
Renting can never be the solution to home building or a stable family life when every six months the occupier may be forced to move on somewhere else. It does not provide for planning for the future and there is no incentive to improve or even maintain the property.
The recently announced 90 and even 95% mortgages available however are not the solution as they are at such a premium over Libor and at a level that any movement in interest rates could have dire consequenses for the family budget.
Mervin King pointed out over the weekend that the short term profits the Banks are chasing with their 5% margins over base rate does nothing to help the economy.
Why must we follow the Banking Philosophy of penalising the people who need the most help, with top level Lending Rates?
At the risk of repeating myself from a previous thread I still feel that the Government is allowing this situation to continue even though it owns its own Banks. (well, actually we own them)
First time Buyers only could be offered 95% mortgages from Northern Rock and RBS at 2% fixed for three years or at 2.5% fixed for Five years (not a ridiculous 5.99% with fees added) after which time they must re-mortgage at market rates.
This would reduce the Housing waiting lists, increase employment ( for housing improvement contractors and suppliers), improve the economy generally and the Councils would see a reduction in Housing Benefit payments they currently have to make
Lawyers could assist by setting a first time buyers conveyancing rate at lower figures. (on the basis that any fees are better than none)
Surveyors could offer a reduced FTB rate on Homebuyer Reports or Building Surveys for those who choose to have them
But I fear that the Government will continue to let Banks ( even their own) chase short term profits at the expense of the people they supposedly represent.
Makes me wonder who is really in charge of this Country
Oh dear AC you are correct and if you have any other kids currently off site I suggest preparing the spare bedroom for their return!!
FFS I wish I shared your near certain optimism but you sadly I am afraid are wrong. I don’t remember any similar cycle in the 1990’s or indeed throughout the last 40 years.
Yes there have been bumps and humps but previously in the tightest times it was possible to borrow on sensible multiples if you had the income and possible a small deposit. Now given average (inflated) even those on good solid incomes and with a modest deposit find it impossible to buy especially in the South. The lending just isn't happening and that is why, sooner or later, there simply has to be a big correction in property values - or more correctly prices.
Unless someone has all the cash and needs no borrowing then restricted lending will always have a severe impact on the market for buying anything.
The recent figure of roughly 16% market share for PSL is the interesting one not getting amateur BTL landlords out of the system, though I'd welcome that. In just the same way that home ownership like parenthood (or diving!!) aren't skills everyone has either neither is budgeting and personal finance.
The PSL share of the market has been going up gradually for about 20 years but is now really starting to increase much more quickly. FFS I hope that you are right but I am more in AC’s camp here having given a £30K deposit to my son a year ago matched by his partner’s parents to enable them to take a £180K mortgage to buy a 3 bed detached house down here in Hampshire for £240K and then spend £18K on it. They had a £60K deposit and are both in very solid, progressive jobs (as far as anything can be these days) and earning over £30K each.
They were gazumped three times yet were in effect first time cash buyers as both their flats are let out and more than cover those costs.
When potential buyers of that calibre and means struggle to buy does anyone really think there isn’t a problem that will last at least 10 years? If you were a bank and could cherry pick borrowers why would you take a risk on any loan over 85% at most (as is the case in much of Europe and by regulation and Statute). Rebuild capital base, increase profits, pay bigger bonuses - why not?
Yes there has been a major sea change and what goes around comes around and there is nothing new under the sun etc etc. But it is going to take a long time to come round and this particular sun may take a long time to rise again.
One of the most interesting thoughts on this subject I have come across recently is that if FTBs are not expecting to buy until they are in their 40s, then sellers should not be expecting to easily find people to sell their homes to.
I don't believe this is a permanent shift. I recall similar gloom & doom in the early 90s.
Once prices have truly bottomed out, I don't see us returning to crazy lending but 90 and even 95% deals will be commonplace again.
Banks, of course, won't do this until prices fall back to something like long term averages of salary multiple, which means they have a fair way to go yet (I'm in favour of a rapid realignment rather than death by a decade of stagnation - just let's get it over with)
But when they do fall, there will be FTB demand at the right price.
Another good thing about price falls (and indeed, a modest rise in interest rates which is also 100% certain sometime) would be the inevitable shakeout of amateur buy to let - the pro's will still be in the game but many of of those post-2003 amateurs whose yield barely covers the mortgage interest and whose back of the fag packet business plan (if it ever existed) relied on capital appreciation will be forced to give up the ghost.
At which point, we re-enter the mass market of FTBs.
We may be in for a rough ride short-term but long term this article is just another gloom-monger's delight.
Oh god!
Does that really mean that I have to put up with my (adorable?) brats for another 25 years?