house prices relative to earnings

[Evilchap]

I know i keep banging on about this, but bear with me here...

I am at my parents for new year and got chatting, they noticed a house we are looking at is identical to one they bought years ago, same builder and same house...

This is listed at £169000...

They bought theirs for £16000 when the annual individual salaries were £5k and interest rates on the mortgage 7%.

Now average income is not 10 times as much, and high ltv lending isn't a million miles from 7%.

What happened? Is a return to the sensibleness of yesteryear in sight?

Bit of a dull one for 1/1 but just thought i'd post it while fresh in my mind :-)

[MEL]

Availability of buildable land, increased material costs, increased labour costs, the cost of borrowing and greed

House prices have risen approx 1% in the last few months so dony whole your breath for cheap houses

[Jon]

OK. Just switched on after a night on the piss, so pls forgive any speeling errors.

A first time buyer should have 15% deposit, and borrow about 3times their salary.
This is how it was, was for a long time, had a bit of a gap between 1990 and 2010 where weird things happened, and is I expect how things will be in future.

First time buyers will be unable to buy until prices return to sane levels or scamtastic rent/buy nonesense deals take off as well as wonga.com has.

[unipsycho]

I'm in one of those scamtastic part rent part buy ones.

But at least it's more stable than just renting and we are paying a mortage off on half of what we spend on housing every month. The rent part is kept in line by social housing rent costs too.

[snops]

I'm surprised the market is still sustainable without first time buyers. Been struggling to get a house myself for the last couple of years.

[frisbee]

I'm surprised the market is still sustainable without first time buyers. Been struggling to get a house myself for the last couple of years.

Exactly, they might not own a house but at least they aren't burdened by a HUUUGE mortgage and are likely to go into negative equity if they aren't already.

[Prior]

Greed happened, and easy credit. As soon as lenders started offering 95% to 110% mortgages then estate agents realized they could hyper inflate prices & people could afford it. People then got smug about the fact their houses were worth 5 times what it was bought for but didn't have the brain cells to realise its all relative & unless you sold up and lived in a caravan you gained nothing. The only winners were people who inherited houses & property speculators.

Its a gigantic scam pushed forward by the Labours Gordon Geckos

Things however are collapsing, but nobody wants to admit it so its floating along on a false level. I had a heated discussion with an acquaintance who bought at the height of the price boom & he outright refuses to believe prices are falling. It was like talking to somebody with his fingers in his ears shouting la la la.

[Turbo Gav]

. People then got smug about the fact their houses were worth 5 times what it was bought for but didn't have the brain cells to realise its all relative & unless you sold up and lived in a caravan you gained nothing. .

Thats the one.

[-ghost-]

There is ways around it tho.

When we was looking at houses we had a fair budget but every house we seen was either Ex council houses or tiny houses/apartments in built up areas ect.

So we brought land with 3 old barns on my old man knew some builders and suppliers. So we converted 2 barns one into a house and the other into a office. The intension was to convert the 3rd to offices but its in worst condition than the other 2 were. It was a lot of stress but once they were structurally sound it was just a case of call mates up and get them painting It was just the getting the furniture and finishes that took time as we ran out of money.

So now I would think we have at least doubled our investment

[Prior]

There is ways around it tho.

When we was looking at houses we had a fair budget but every house we seen was either Ex council houses or tiny houses/apartments in built up areas ect.

So we brought land with 3 old barns on my old man knew some builders and suppliers. So we converted 2 barns one into a house and the other into a office. The intension was to convert the 3rd to offices but its in worst condition than the other 2 were. It was a lot of stress but once they were structurally sound it was just a case of call mates up and get them painting It was just the getting the furniture and finishes that took time as we ran out of money.

So now I would think we have at least doubled our investment

You could never do that in east anglia now, land is like gold dust and nearly every barn has been converted. You'd need about half a million budget to do that, which sucks because all my family are in the building trade and id love to build a one off design

[Evilchap]

just in case there was doubt... the identical house we're looking at is over 10 times the price!

[skyshack]

Lots of people took out 2nd / 3rd mortgages on rising equity and used the money to buy cars or cruises.

[Robbie]

just in case there was doubt... the identical house we're looking at is over 10 times the price!

Estate Agents details have changed a bit over the years haven't they!

Zoopla has 49 Rowan Tree valued at approx £127k, so (assuming it's the same style of house) not quite as big a difference. Regional differences can be quite large and you're probably not looking in the same area.

Bottom line though is supply and demand determines prices. Prices are coming down in real terms because there is little demand at the moment; and for most people this is probably a good thing. The only people caught out will be those in negative equity who are forced to sell for some reason or people downsizing.