So we're all a little poorer today.
Comments
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Rick Chasey wrote:The housing issue to me seems to be a supply issue.
It's NIMBY politics at its most literal.
i think that's far too a simplistic view of the current situation regarding the "problems" housing market. It's more about confidence that:
- You would be able to get a mortgage which (confidence which, rightly or wrongly is low);
- You would be able to continue paying an increased mortgage once you've moved (ie will you keep your job);
- Someone will want to buy your house if you put it on the market;
- There will be a suitable alternative property available should you sell yours; and
- That the current low interest rates will be sustained.SheffSimon wrote:verylonglegs wrote:Rick Chasey wrote:antfly wrote:.....
Or if they are in negative equity and/or getting on towards being 10yrs into a interest only mortgage with nothing in place to pay the the outstanding amount.
Why would you end up in this situation? When I took out my mortgage 15yrs ago, we had to show the lender that we had something in place (endowment in my case) to repay the capital. I've since had to increase the payments by £20 a month, but such is life. Have also changed my mortgage to reduce the interest only part to a lot less than the endowment is targetted to make.
Its about living within what you can afford.
We were offered an interest only mortgage in 2003 on a 'self certified' basis (ie I told them I had endowments to cover the capital amount. I have no evidence that they checked that I had.brin wrote:Just drove through the high street and noticed the £1 shop is now the £1.02.5 shop
Shouldn't it be the £1.02 shop?0 -
Rick Chasey wrote:The housing issue to me seems to be a supply issue.
It's NIMBY politics at its most literal.
i think that's far too a simplistic view of the current situation regarding the "problems" housing market. It's more about confidence that:
- You would be able to get a mortgage which (confidence which, rightly or wrongly is low);
- You would be able to continue paying an increased mortgage once you've moved (ie will you keep your job);
- Someone will want to buy your house if you put it on the market;
- There will be a suitable alternative property available should you sell yours; and
- That the current low interest rates will be sustained.SheffSimon wrote:verylonglegs wrote:Rick Chasey wrote:antfly wrote:.....
Or if they are in negative equity and/or getting on towards being 10yrs into a interest only mortgage with nothing in place to pay the the outstanding amount.
Why would you end up in this situation? When I took out my mortgage 15yrs ago, we had to show the lender that we had something in place (endowment in my case) to repay the capital. I've since had to increase the payments by £20 a month, but such is life. Have also changed my mortgage to reduce the interest only part to a lot less than the endowment is targetted to make.
Its about living within what you can afford.
We were offered an interest only mortgage in 2003 on a 'self certified' basis (ie I told them I had endowments to cover the capital amount. I have no evidence that they checked that I had.brin wrote:Just drove through the high street and noticed the £1 shop is now the £1.02.5 shop
Shouldn't it be the £1.02 shop?0 -
Beverick - d'ya not think there's a housing bubble?
Sure that's a lot to do with cheap credit, but is it not also to do with a lack of housing?
Cambridge is a classic example.
It's a nice Fenland town with a big university, big high-tech park, and within commuting distance of London.
Space is also restricted due to the 'green band' around the city, which is reserved for green stuff - fair enough.
That means that it's reasonably desireable - so much so in fact, that a lot of staff people who work there can't live there, because prices are too high. Every 18 months there's a request to build 'affordable'housing in the few areas that remain OK to develop (though why build 'unaffordable' housing I don't know..) and we're pretty much the only household in the 'hood who is in favour of it. Everyone kicks up a fuss and the planning can't go ahead - meanwhile, the houses that are there go up in value because the numbers are restricted. It's a bloody cartel operation, just like OPEC and is not to the benefit of the wider public.0 -
snailracer wrote:
The sort that were around before house buying took off: housing agencies, councils, the C of E, even private landlords/owners(!)Pross wrote:Who would they rent off if no-one was buying property?
The point is that those folks made money by collecting rent for accommodation, not through speculation on future property values.
The biggest issue with housing at present is the amount of people who jumped on the buy-to-let bandwagon who would be the private landlords (combined with the fact that a lot of singletons who used to stay at home until they got married now have their own places). Councils have very little housing stock now and would never have had enough for the demand, ditto housing agencies. Some of the housing available to rent even as recently as the early 80s was appalling and unfit for habitation in a so called developed country, the place my aunt had for a while when I was a kid was so damp it was dangerous. I don't think there is anything wrong with people aspiring to own their own property, it is aspiring to own lots of property thereby pushing up prices that is a problem.
Likewise, if most housing was rented the rental costs would be likely to be much higher due to demand and those on the lowest income would suffer even more.0 -
You are not looking far back enough. As previously posted, the government kickstarted the home owning culture in the 1960's, so it has been around long enough that there is no longer enough dedicated rental accommodation to meet today's demand.Pross wrote:snailracer wrote:
The sort that were around before house buying took off: housing agencies, councils, the C of E, even private landlords/owners(!)Pross wrote:Who would they rent off if no-one was buying property?
The point is that those folks made money by collecting rent for accommodation, not through speculation on future property values.
The biggest issue with housing at present is the amount of people who jumped on the buy-to-let bandwagon who would be the private landlords (combined with the fact that a lot of singletons who used to stay at home until they got married now have their own places). Councils have very little housing stock now and would never have had enough for the demand, ditto housing agencies. Some of the housing available to rent even as recently as the early 80s was appalling and unfit for habitation in a so called developed country, the place my aunt had for a while when I was a kid was so damp it was dangerous. I don't think there is anything wrong with people aspiring to own their own property, it is aspiring to own lots of property thereby pushing up prices that is a problem.
Likewise, if most housing was rented the rental costs would be likely to be much higher due to demand and those on the lowest income would suffer even more.
I agree there is nothing wrong with home ownership per se. However, the fact is that the purchase price of a property is made up mostly of a massive and unavoidable bet on the future price of that property, and only a small fraction of that price is for the accommodation aspect of it. In other words, the market has been shaped to the point that when someone buys a property, they are automatically speculating, even if they only want a roof over their head. It's like buying a loaf of bread to find it costs £2: 50p for the bread, the other £1.50 for a lottery ticket that you don't need. And, consequently, you have to borrow money to buy enough to feed your family.0 -
Is it really a gamble? House prices will rise continuously given a suitable period. I doubt anyone has bought a house which, all other things being equal, is worth less at the end of standard 25 year mortgage. It would be interesting to see the whole life costs of someone renting compared to buying say over the 50 years that most people would have a house of their own. Even if the residual value of the house were to be £0 I suspect the purchase would work out cheaper than renting the same place for 50 years.0
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SheffSimon wrote:verylonglegs wrote:Rick Chasey wrote:
Unless they lost their job or took a pay cut.antfly wrote:Nearly everyone with a mortgage is still much better off than they were when interest rates were high.
Or if they are in negative equity and/or getting on towards being 10yrs into a interest only mortgage with nothing in place to pay the the outstanding amount.
Why would you end up in this situation? When I took out my mortgage 15yrs ago, we had to show the lender that we had something in place (endowment in my case) to repay the capital. I've since had to increase the payments by £20 a month, but such is life. Have also changed my mortgage to reduce the interest only part to a lot less than the endowment is targetted to make.
Its about living within what you can afford.
Well no sensible person would find themselves in this situation and I don't claim to be representative of the market as a whole but I know of at least 3 households with interest only mortgages and no real savings to pay it off, to them it was the only way they could get on the ladder. How else were prices able to rise so much in relation to wages? The whole thing was nuts imo.
I think Rick has a valid point about the restriction on supply, it's really is a problem in this country. I've lost count of the times my local paper features an article about a protest against the latest proposed new development(s) in the area and it shows a picture of what seems to be just pensioners who expect the world to stay as it is and are purely concerned with the value of their own home.0 -
verylonglegs wrote:SheffSimon wrote:verylonglegs wrote:Rick Chasey wrote:
Unless they lost their job or took a pay cut.antfly wrote:Nearly everyone with a mortgage is still much better off than they were when interest rates were high.
Or if they are in negative equity and/or getting on towards being 10yrs into a interest only mortgage with nothing in place to pay the the outstanding amount.
Why would you end up in this situation? When I took out my mortgage 15yrs ago, we had to show the lender that we had something in place (endowment in my case) to repay the capital. I've since had to increase the payments by £20 a month, but such is life. Have also changed my mortgage to reduce the interest only part to a lot less than the endowment is targetted to make.
Its about living within what you can afford.
Well no sensible person would find themselves in this situation and I don't claim to be representative of the market as a whole but I know of at least 3 households with interest only mortgages and no real savings to pay it off, to them it was the only way they could get on the ladder. How else were prices able to rise so much in relation to wages? The whole thing was nuts imo.
I think Rick has a valid point about the restriction on supply, it's really is a problem in this country. I've lost count of the times my local paper features an article about a protest against the latest proposed new development(s) in the area and it shows a picture of what seems to be just pensioners who expect the world to stay as it is and are purely concerned with the value of their own home.
Being in that situation would scare the s*** out of me. If you cant afford it, you cant afford it IMHO. Easy for me to say, of course, having "got on the ladder" in 1995.0 -
Well, property prices in Japan have been falling for the last 20 years, after their property bubble burst.Pross wrote:Is it really a gamble? House prices will rise continuously given a suitable period. I doubt anyone has bought a house which, all other things being equal, is worth less at the end of standard 25 year mortgage. It would be interesting to see the whole life costs of someone renting compared to buying say over the 50 years that most people would have a house of their own. Even if the residual value of the house were to be £0 I suspect the purchase would work out cheaper than renting the same place for 50 years.
Rents (UK) are high - but that is because the market has been shaped such that there is very little to rent, and very little suitable to rent.
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A borrower would still be in a "situation" if he had taken out a capital repayment mortgage and couldn't afford to keep up the payments. Possibly worse off, as he has paid back more and still ended up evicted.verylonglegs wrote:SheffSimon wrote:verylonglegs wrote:Rick Chasey wrote:
Unless they lost their job or took a pay cut.antfly wrote:Nearly everyone with a mortgage is still much better off than they were when interest rates were high.
Or if they are in negative equity and/or getting on towards being 10yrs into a interest only mortgage with nothing in place to pay the the outstanding amount.
Why would you end up in this situation? When I took out my mortgage 15yrs ago, we had to show the lender that we had something in place (endowment in my case) to repay the capital. I've since had to increase the payments by £20 a month, but such is life. Have also changed my mortgage to reduce the interest only part to a lot less than the endowment is targetted to make.
Its about living within what you can afford.
Well no sensible person would find themselves in this situation and I don't claim to be representative of the market as a whole but I know of at least 3 households with interest only mortgages and no real savings to pay it off...0 -
when I bought my place in th UK in 1999, I got an endowment, the guy that sold it said 60 quid a month at 8% growth + bonus will pay it off. I decided 4% and 66 quid was more reasonable (call me a skeptic but 8% every year is ludicrous), after 3 years I sold up and moved to Canada and made money, at 8% I'd have lost.
As for renting, I currently do, the mortgage on our house would be $300 a month more, not to mention property tax/insurance/maintenance. As long as I invest the difference I should be OK.FCN 120 -
If you look at it purely as an investment, then yes, it is a gamble, and not a prudent one.Pross wrote:Is it really a gamble?...
A prudent investor will diversify their portfolio and stage multiple investments over time (eg rather like putting money into a pension). They will then cash in their investments over time, to spread the risk of "timing" their decisions badly. Housebuying, which is is not "diversified" in any sense, and also bought at one instant in time and sold at another instant in time, does not follow these common-sense strategies for prudent investment. It is like taking all your eggs, then borrowing more eggs, which you then put all in one basket, and you have to sell them all at once, at the market one day in the future.
What's amazing is that you can (or, rather, used to be able to) easily get a mortgage to do this, whereas no lender would lend you money to invest in the stock market which would actually be a less risky bet.0 -
I haven't bought my house as an investment. I think of it more as hire purchase, I need somewhere to live and to rent a similar house would be only about £100 a month less than my mortgage. At the end of 25 years it is paid for other than maintenance and upkeep whereas if I was renting I'd be likely to still be paying after 50 years. The big benefit is I have something that will have a value of some kind even if it is worth half then what it is now. I sometimes wish I rented for the flexibility as I may have moved overseas by now but in reality I suspect I would have just found another excuse to stay here!0
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Rick Chasey wrote:Beverick - d'ya not think there's a housing bubble?
Sure that's a lot to do with cheap credit, but is it not also to do with a lack of housing?
I totally agree it's just that there are several bubbles.
Typically in the UK, slumps in the housing market have been caused by either over-supply (ie too many properties becoming available) forcing prices down or under supply forcing pricess up and squeezing people out of the market and making vendors nervous to enter the market and lose money as prices rise.
Having spoken to a couple of local estate agents and a builder (around leeds) in the autumn what we have at the moment is a lack of confidence on both sides. There's no supply because people don't think their houses will sell (and builders aren't building new properties) and there's no demand because, well basically, there's no supply.
it's a vicious circle.
Bob0 -
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Pross wrote:I haven't bought my house as an investment. I think of it more as hire purchase, I need somewhere to live and to rent a similar house would be only about £100 a month less than my mortgage. At the end of 25 years it is paid for other than maintenance and upkeep whereas if I was renting I'd be likely to still be paying after 50 years. The big benefit is I have something that will have a value of some kind even if it is worth half then what it is now. I sometimes wish I rented for the flexibility as I may have moved overseas by now but in reality I suspect I would have just found another excuse to stay here!
The trouble is, probably 70% of your house's purchase price was pure investment, nothing to do with accommodation. You bought the lottery ticket along with the bread, whether you wanted it or not.
The flexibility issue has an economic cost, too. The theory is, owning makes it harder for you to relocate to take up a better-paying job, or for a company to be able to attract the most suitable workers.
Let's be clear, I'm not saying you're doing anything dumb - you are, like most others, making the most rational choices offered by a very wonky system.
I lived in the US (Chicago) for many years, and almost everyone I knew rented. Renting isn't like it is here, their purpose-designed apartments were spacious, well-maintained, professionally managed and rent was considerably cheaper than a mortgage. The US government has not (that is, not until very recently) "shaped" their property market over the last 40 years to artificially favour homeowning over renting.0 -
Location, location, location.Rick Chasey wrote:The housing issue to me seems to be a supply issue.
It's NIMBY politics at its most literal.
You can easily buy a cheap house - in the middle of nowhere. Or on some sink estate.0 -
snailracer wrote:
Location, location, location.Rick Chasey wrote:The housing issue to me seems to be a supply issue.
It's NIMBY politics at its most literal.
You can easily buy a cheap house - in the middle of nowhere. Or on some sink estate.
Can't live where there are no jobs.0 -
The desirable locations i.e. near jobs, near train stations, city centres, etc. are already developed, no?Rick Chasey wrote:snailracer wrote:
Location, location, location.Rick Chasey wrote:The housing issue to me seems to be a supply issue.
It's NIMBY politics at its most literal.
You can easily buy a cheap house - in the middle of nowhere. Or on some sink estate.
Can't live where there are no jobs.0 -
snailracer wrote:
The desirable locations i.e. near jobs, near train stations, city centres, etc. are already developed, no?Rick Chasey wrote:snailracer wrote:
Location, location, location.Rick Chasey wrote:The housing issue to me seems to be a supply issue.
It's NIMBY politics at its most literal.
You can easily buy a cheap house - in the middle of nowhere. Or on some sink estate.
Can't live where there are no jobs.
Every area needs to have a range of houses. Not just expensive ones.
My issue is that long term residents appear to behave like a cartel in their neighbourhood in order to ensure their house prices do not fall.0
