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House Price Rises

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House Price Rises

Old 26th May 2021, 06:33
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House Price Rises

Across Europe, not just the UK….

https://www.politico.eu/article/hous...id19-pandemic/

A real problem: House prices soar, despite coronavirus

https://www.theguardian.com/business...boom-continues

Value of UK house sales forecast to leap 46% this year as boom continues
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Old 26th May 2021, 12:08
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A threat of a looming price hike is one way to drive up demand and therefore the market.

Would interest rates be turning around? If so then my cynical self would say the hysteria is just a ploy for the rich to offload to the foolish.

The cost of housing in Australian capital cities is already at absurd levels, for the cost a boringly ordinary home in the burbs you could buy a country villa in Europe with servants quarters and have enough change left over to hold hooker parties once a month for the rest of your natural life.

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Old 26th May 2021, 12:16
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It's simply a matter of supply and demand.

We have not built enough homes in the UK to cope with increasing family break-up and more people setting up home on their own. when young. Years ago people left home to get married. The NIMBYs are out in force as well, especially in the suburbs.

Also, SDLT was far too high and did not permit people to move house closer to work as moving was so expensive, so they commuted, increasing congestion and pollution. With the SDLT holiday, people could afford to move closer to work so they will have reduced travelling when the stop WFH.

The UK needs to export jobs from the south east into the provinces, reducing pressure on London but also not swamping the markets in big cities.

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Old 26th May 2021, 15:37
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As long as we don’t start building more houses. Given the prevalence of working from home now, I would like to see many of the empty offices around the urban locations converted into flats/apartments.

Or population control!
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Old 26th May 2021, 16:04
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Thing is, NIMBYS do have a point.

If they have spent time doing research and moving to a house and area that suits them and their family, then they do have a legitimate say if hundreds of houses are subsequently allowed to be built nearby. They might not be city or town people, and want to live in a quiet, sparsely populated area. Increases in commuter traffic, and perhaps whole estates being built where they used to overlook fields or woodland will change their lives and quality of life. Some don't care if lots of extra houses are built, but those that do should not be dismissed as NIMBYs, as if they are being selfish and petty and who's opinion does not count.

I think there is a strong case for more new towns. When you fly over the UK, there are huge areas with no buildings at all - miles and miles of empty land. Some of those open, empty areas would be good candidates for new towns, rather than making existing settlements ever bigger all the time.
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Old 26th May 2021, 17:25
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Happening in USA, also.

https://www.wsj.com/articles/u-s-hom..._copyURL_share





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Old 26th May 2021, 19:27
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It used to be in the UK, and other certain markets, that there would be cycles of price rises and then price drops over several years. However, due to inflation the currency worth of a particular property would steadily climb over the decades. This allows us to declare that property always goes up. Hurrah!

Yes, in certain areas due to an economic boom, property does really go up detached from sober economic reality pushed by feverish demand, enabled by easy lending and coordinated by the greedy motivations of the estate agents. In the UK over the last 15 years the immigration, either short-term, or permanent has been quite remarkable and all those people needed accomodation, especially in major cities and towns. Music to the ears of developers, agent, banks, solicitors and ancilliary trades associated with housing. Boom time!

All this time, the interest rates have remained at a historical low, manipulated by a private bank that knows if interest rates were to rise to a level that would be 'marked to market' it would crash not only the housing market, but could well do the same to the whole economy. SInce Brexit and the uncertainty it has delivered, and the covid-19 lockdowns, a great many europeans and some from other countries have left the UK to return to their own countries. Has this exodus of 100,000's of people (perhaps much more) affected the housing market in both renting and buying ? Surely yes.....but no! Prices have been rising. What kind of madness is this ? A country where the young haven't a hope of living 'where the action is' as their parents did, and so on. You can't save, as the interest rate is pitiful and might soon come to the point that we will have to pay specifically to have money in a bank, what's the point ?

The idea to re-use unused office space, department stores, shopping centres as living/working spaces is a good one. Near to the action, central, and could very well build rotating communities that make a city more healthy in a myriad of ways. I have a surveyor friend who has been rushed off his feet since April 2020 re-assessing the rateable values of massive floor-spaces in various large buildings of various industries as the companies try to reduce their massive tax-liabilities despite almost no-one using them. At some point these companies, or enough of them will pull the trigger and release these golden albatrosses and this could well open up new possibilities, especially for the younger adults in society.
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Old 27th May 2021, 00:14
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Cheap money globally means asset price inflation.
House prices going ballistic down here in Oz, and across the dutch in NZ as well.
The average house price in Sydney is now A$1,112,671 and has risen $100,000 in just three months.
Totally out of whack with salaries, people's ability to absorb even slight interest rate rises - and households under mortgage stress increasing considerably.
Dropped my 20 year old son at his new job this morning and drove away wondering what the future holds for him and his 16 year old sister.
Thank God we bought when we did.
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Old 27th May 2021, 02:20
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Sydney real estate, historically, doubles every 8 years, though the last double only took 7 years.
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Old 27th May 2021, 05:39
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Bought mine when prices crashed around 1992 or so - its present value is somewhere round 10 times what I paid for it and it seems everywhere round here is rocketing way beyond 3 x single or 4.5 x joint salary levels that were the normal mortgage offers when I took mine out. No way on my last salary I could buy anything it would seem. If the average salary is around £30000 how can most people; 10 times salary needed.

Everything being built round here is a mix of 1/2/3 bed flats and the prices are absurd... nice old family homes are being demolished to make way for shitty purpose built blocks and they are trying to build up beyond existing 3 storey limits...
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Old 27th May 2021, 06:18
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Originally Posted by tartare View Post
Cheap money globally means asset price inflation.
House prices going ballistic down here in Oz, and across the dutch in NZ as well.
The average house price in Sydney is now A$1,112,671 and has risen $100,000 in just three months.
Totally out of whack with salaries, people's ability to absorb even slight interest rate rises - and households under mortgage stress increasing considerably.
Dropped my 20 year old son at his new job this morning and drove away wondering what the future holds for him and his 16 year old sister.
Thank God we bought when we did.
Depending on the standard used the average yearly wage in Australia is somewhere between $70-90k per year. Even using the higher figure that's an average house price of 12 times the average income. So the cost of a mortgage is crippling and that doesn't include repayments on things like repayments on the car to drive you 2hrs+ each day from the home than you can afford 40km+ from the CBD and the education debt you needed to get that job. Millennials in Sydney are resigned to renting for their working life and inheriting their parent's homes on retirement.

I was always told as a rule of thumb to never buy more than 5 times your income. Meaning the average house price should be about $350-450k. There's not a single house in the entire Sydney Metropolitan area that is under that price. An entire generation has been priced out of the ability to own a home.

Originally Posted by Ascend Charlie View Post
Sydney real estate, historically, doubles every 8 years, though the last double only took 7 years.
Unless the average wage also doubles every 7-8 years then eventually we're going to have a problem.
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Old 27th May 2021, 08:22
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inheriting their parent's homes on retirement.
You can do that in Oz; no Inheritance Tax. In the UK you have to sell it to pay it.
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Old 27th May 2021, 08:43
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Is it dead easy to get a mortgage as a first time buyer ? I always thought that was what fired off demand and, therefore, fuelled price increases. Many tell me it is really hard to get a "step on the ladder" because it is very difficult to get that first loan .
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Old 27th May 2021, 09:03
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In the UK, at current interest rates, renters are paying more in rent than they’d pay monthly for a mortgage. The problem being most lenders will require a 10% deposit.

As an example the average house/flat price in Brighton is currently £386K so that, including legal fees etc, a first time buyer has to save in excess of £40K, whilst at the same time paying rent. And, of course, house prices are currently rising by 7.5% a year, in the case above £30K, meaning the target is getting ever more unaffordable.

There is much talk of the “bank if mum and dad”, but most parents can’t afford to give their kids that amount of money - they’re asset rich but cash poor. The banks are keen to have people “release funds” using Equity Release schemes which, with compound interest, means the property will end up in the hands of landlords decreasing even further the pool of owners and increasing that of renters.

Last edited by ORAC; 27th May 2021 at 10:37.
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Old 27th May 2021, 09:22
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Originally Posted by slowjet View Post
Is it dead easy to get a mortgage as a first time buyer ? I always thought that was what fired off demand and, therefore, fuelled price increases. Many tell me it is really hard to get a "step on the ladder" because it is very difficult to get that first loan .
It is relatively easy as long as you gave a substantial deposit, which in the majority of cases for younger people means having parents who will give/lend you at least 10% of the cost. So in many parts of the country that is at least 25 grand. Then you need an income to support the borrowing. In my day you could get a non status mortgage. I borrowed £75k back in '86. For that you needed £25k a year which was quite an income. ( I was taking 18k out of my business) But I had the rest in equity.
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Old 28th May 2021, 07:40
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The rate of house price inflation in my neck of the woods is just crazy, you're seeing vendors market houses at prices that were unimaginable only a few years (or even months) ago and they're selling in a matter of days !

What's driving this madness? It's got to be a perfect storm of factors, including..
  1. Mass immigration. Nobody really knows the true numbers of new arrivals in the UK in the last 20yrs, but it's likely closer to 15million than 10. That's got to be the number one factor driving demand.
  2. An exodus from city centres. Related to #1, as our cities increasingly become more like ghetto's the native population (and by that I include first and second generation immigrants) seek respite in the suburbs and shires. So basically the population influx ("new" immigration) fills up the cities and those displaced fuel demand in towns, etc. Covid, I expect, will also be exacerbating the flight of the rich and middle classes from cities.
  3. Government support for the Housing market. Policies such as Help to Buy and Stamp duty relief have fuelled demand at both ends of the market.
  4. Very low interest rates and 30+yr mortgage terms. Shouldn't underestimate the impact of this one. Many buyers now can never remember paying above 2% interest on a mortgage, this makes it so easy to borrow ridiculous amounts and when combined with ever longer mortgage terms the repayments can appear affordable.
Where will it all end? Difficult to say, history tells us that what goes up must one day come down, but personally I think it will take at least two of the above four factors to change before we see significant falls. And right now I don't really see that happening.
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Old 28th May 2021, 14:34
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We wish to move to be closer to grandchildren. Difficult to find a suitable house in the area while our present house should be easy(?) to sell.
I would like to arrange a Bridging Loan to help the process (i.e. to make a firm offer before I have sold) but at age of 78 the only option seems to be very expensive brokers.
Normal Banks and Building Societies just moan with nothing available.
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Old 28th May 2021, 14:54
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We wish to move to be closer to grandchildren. Difficult to find a suitable house in the area while our present house should be easy(?) to sell.
I would like to arrange a Bridging Loan to help the process (i.e. to make a firm offer before I have sold) but at age of 78 the only option seems to be very expensive brokers.
Normal Banks and Building Societies just moan with nothing available.
Have you considered selling your home, banking the money, put the majority of your belongings in storage and keeping the treasured and basics with you, either short-term rent or air b&b a temporary dwelling close to your grandchildren and then look for a suitable property ? When the desired home has been found swoop in without a chain and cash offer in hand !? Bridging loans are a pain at the best of times, and at your time of life who needs to have to jump through hoops for someone else's needs. Give this scenario a thought, it might make things easier.
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Old 28th May 2021, 19:09
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The thing with high house prices is that people are still buying them. The money is there somewhere, despite the supposed need for high deposits.

However, it will all go wrong if interest rates rise. One or two percent increase will put a lot of people in difficulties.
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Old 28th May 2021, 19:14
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In my neck of the woods, Bournemouth area, many of the 1920s and 1930s houses that were converted to flats in the70s and 80s and were ideal for first time buyers or renters are now full of students due to the massive expansion of the university.
There are plans to build 1700 houses on the green belt near me, West Parley, having already had about 200 new homes in the last 5 years. The roads are full now so what it will be like in 5 or 10 years I hate to think.
Yes I probably am a NIMBY but why can't all these houses be built up north where the government says it wants to invest?
Tin hat on.
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