O/T Bank of England rates rise to 0.75%

What a load of tosh or maybe memory problems. Highest rates of 17 % under Thatcher at beginning and 15% at end of her disastrous tenure.

 

Remind me of the price of your first house in comparison to the same house today?

 

Then market forces will drive down the price of houses, but most do t want that either....

 

Yes & also compare the wages , your wages determine what you can borrow & that has always been the criteria , so to compare house price of today & years gone by is fine but your income then & now is the main ingredient , its all pro rata , whilst supply & demand will pretty much determine prices. One thing that will have changed over the years is income being inherited , my parents & many more of that generation who were working class had to rely on council housing & never owned property but from the seventies until the present time own ownership has increased & therefore eventually property & the wealth invested in bricks & mortar will be passed on , whilst I personally inherited nothing , when the time comes for me to go toes up, then at least my kids will get some kind of windfall & hopefully that will help them in years to come .

 

I genuinely feel sorry for any young couple trying to get on the housing ladder
at this present time. When we bought our first house my wife and I walked into
Abbey National without any deposit and walked out with a deal on a property
valued at £5,250 with a 100% mortgage. Spotted that that same property in my
home village in Donny has just been sold for £225,000. I put a new roof on it and
installed PVCU windows and apart from internal improvements, it looks the same
house to me. Absolutely barmy.

 

having lived through the d

JD There are many ways to slice and dice stats. the focus solely on house process is a bit disingenuous and ignores several factors.

The average house price in 1989 for example (when interest rates briefly hit 15% was £51709 (current to 2016 allowing for inflation 118981) and a mortgage for that amount C&I 25 years at an average of 12% would make £545pm repayments (total cost £163551) . Average wage was £10774 (£898 pm)so as a percentage of income the mortgage repayments was around 60% of income However personal allowances (around £2500) were also much lower and income tax basic rate was at 25% .
In 2016 average house price was £198564 and at 2.8% would result in monthly payments of £ 921 (total cost £276440). Average wage was £27600 (£2300 pm) so percentage of income is around 40%. Again allowances are higher and tax is now at 20%.

All the above simply proves interest rates have as great, if not a greater, impact on affordability than the cost of houses. I DO agree before you accuse me of distorting things that averages only tell half the story. The "average" house prices ignore the fact that back then AFFORDABLE housing (many terraced house could be picked up for well below the 'average' prices and to an extent still can but I agree the lower end of the market has seen the greatest surge in prices and at the same time wages at the lower end have stagnated.

Interesting debate eh!

 

I agree with a good amount of what you say, but the likelihood is that the majority of the people that inherit wealth from their parents tend to do so in their late 40s and 50s, not when they need that initial rung up on the housing ladder.

 

This does my head in even though I'm from a completely different generation (as you know!). I despair at several hard-working young friends, and a couple of relatives, who can't afford their own place despite earning above average wages. They are forced to either stay at home with parents, sometimes well beyond 30, or opt for a live-together relationship before they are ready. Both options lead to unpleasant arguments and eventual fall-outs.

I feel so privileged that in my day almost anyone could afford a house if they were working full time and earning average wage or higher. It's utter madness today and you lot have my utmost sympathy.

 

Yes house prices have risen well above inflation but house prices back then (which appear cheap to modern day eyes) were relative to how much things cost then and of course the majority of people got paid less then too. My dad bought our brand spanking new bungalow in silkstone in 1973 for 5k: he sold it for 7.5k 2 years later. That house now is worth 350k!

 

I agree with this. I’d rather not inherit anything than lose my parents and to be honest I don’t think there’d me much to inherit anyway. I’m hoping they’ll be around for at least another 25-30 years so it won’t be much good to me at 55-60 anyway so it’s not exactly anything I’d take comfort in.

 

So say someone today on £40k was to buy this £350k house, are you seriously saying the same person was earning £857 per year in 1977 so that they were proportionally earning less?? Or were they earning so little less its borderline irrelevant? Not having a go, more an observation

 

It honestly wasn’t relative though, take a look at the link I posted earlier about how much other things would cost now if they had gone up by the same amount as houses (e.g. a chicken would cost £51!) Houses in the 70s were around 2x annual wage, they are now 7.6x

 

That's the problem with the inheritance route , you might not receive any monies till your 50s 60s ........ What if you want to start a family , you need a house in your 20s 30s . Inheritance is a really crappy way to pass wealth from generation to generation .

 

My big worry is a fall in house prices post Brexit. If/when there is a hit to the economy then plenty of mortgages will be unaffordable leading to negative equity, flash sales and repossessions. That will drive prices down (or make them more attractive to investors). Either way, with this much uncertainty in the market its a bad time to buy until you know more about what the future holds.

 

If you are planning to return North, now's the time to do it I reckon. I don't see house prices doing anything but stagnate or go down now in Surrey/London

 

Yeah I know but we’re not planning on selling it so if house prices drop it doesn’t really matter so long as we can afford the payments. Interest rates hikes would be a problem but our plan is to get the 10yr fix then try and over pay as much as possible to limit that. We’ve no idea if waiting helps or not with Brexit looming but at 30 it’s time to get on the ladder now. For all we know we could miss our chance and then rent will go up as Landlord’s costs go up. This way we know what our payments will be for 10 years which will hopefully be enough time for the dust to settle.

 

Thing is as well the rent you have to pay before you can buy is ridiculous making it even more difficult to save up the deposit.

 

Very true , but it can help them out bringing their mortgages to an early end or indeed helping their own offspring get on the ladder .