Home prices
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I don't think the market is going to recover to the point where we'd make a profit for years. And Sandy has a job offer for about 25% more than she's making here. We've considered renting this one out and waiting to sell it, but that's always such a hassle... no, we're going to take a hit, but I think it's the quickest path for us to recover.
L u n a t i c F r i n g e
Fair call. I'm sure you've thought of all this before I mention it.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Dalek Dave wrote:
people offer the money, then that is the price, it is how it works.
Exactly. That seems pretty reasonable. I was watching a property show last night and people were spending about $250k for an apartment in the London area, I guess it depends on the actual area, but I'd heard horror stories about housing in London that made me think the prices were universally high. What's the average wage in the UK ? It's about $45k here.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
Christian Graus wrote:
people were spending about $250k for an apartment in the London area
Depending on which part of London. For quarter million, you could buy very little in Chelsea at that price range, and probably nothing (other than a garden shed) in Mayfair. Whereas in Acton, Brixton or East Ham that might be a realistic price.
Christian Graus wrote:
What's the average wage in the UK ? It's about $45k here.
Average wage in UK is meaningless. £45K might be good for Wolverhampton, very good for Liverpool, but almost slave wages in Central London for the same person with same knowledge/experience/qualification doing the self same job.
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Christian Graus wrote:
people were spending about $250k for an apartment in the London area
Depending on which part of London. For quarter million, you could buy very little in Chelsea at that price range, and probably nothing (other than a garden shed) in Mayfair. Whereas in Acton, Brixton or East Ham that might be a realistic price.
Christian Graus wrote:
What's the average wage in the UK ? It's about $45k here.
Average wage in UK is meaningless. £45K might be good for Wolverhampton, very good for Liverpool, but almost slave wages in Central London for the same person with same knowledge/experience/qualification doing the self same job.
Richard A. Abbott wrote:
Average wage in UK is meaningless.
Well, average wage is always somewhat meaningless. The average is $45k here. That doesn't mean a lot to the many people on $25k, and given that you can't earn less than zero, but you can earn a lot more than $90k, it's clear that there's a few people with really high wages who pull the average up more than anyone can pull it down. But, it's a reasonable measure of affordability. Where I live it's also true that different areas have different prices, there's no way anyone on less than $100k could buy in Battery Point, for example.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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There's been an ever increasing bubble in the UK housing market since the late 90's. When I bought the house I currently live in in 1994, it cost me ~£450,000. A fairly recent valuation put the value at closer to £4 million. It's a fairly desirable area of the country, with land and I've done some extensive renovation, but nothing in the order of 9-10 times the value I paid originally. However, this sort of inflation has occurred elsewhere. I was looking through a local paper the other day and some of the prices are simply staggering. About 20 miles from me, the average price for a 2-bedroom flat is something in the order of £180,000, a three bedroom house £220,000 - £250,000 and anything bigger and you're looking at £250,000 - £Name it(depending on how much land is included/location/etc). What's happened here is a number of things, none of which are to do with the free market: Firstly, the Government stopped counting house prices in inflation calculations, which created a false sense of where the economy was actually heading. Secondly, regulations were relaxed and where previously individuals or couples could only borrow three times their annual income, suddenly the banks were prepared to lend ten times (and more) that amount and on an interest only basis. Thirdly, property became to be seen as an investment (this actually happened before the late 90's) and saw a massive growth in buy-to-let, buy-to-sell and buy-to-speculate transactions artificially pushing prices up due to a perceived lack of supply in the face of increasing demand. This focus on housing and mortgages (and we'll remember that very few people own their house outright) is crippling the economy as far too much money is tied up in servicing these unrealistic mortgages. There's a real, and dangerous, disconnect between what a house costs and what it's actually worth. I'm glad I'm not a first-time buyer getting saddled with a huge mortgage, which realistically most of them won't be able to pay off and that I don't have a mortgage. But it is a bubble and it will eventually burst; at the moment the Government is trying to prop-up this house of cards it has created, but ultimately we are going to see a collapse here that makes the US situation look like a walk in the park, potentially leaving hundreds of thousands unable to keep up with their mortgages and homeless.
martin_hughes wrote:
Secondly, regulations were relaxed and where previously individuals or couples could only borrow three times their annual income, suddenly the banks were prepared to lend ten times (and more) that amount and on an interest only basis.
Yes, that is happening here, too. With no disrespect to anyone, my impression locally is that most people who are losing their houses, are losing them b/c they thought that low interest rates would last forever, when we were plainly in a period of unreasonable rates due to external pressures.
martin_hughes wrote:
There's a real, and dangerous, disconnect between what a house costs and what it's actually worth.
I'm not sure how easy it is to calculate what a piece of land is worth, I guess you could measure it in terms of wages in the area ( that is, what you can earn by living there ), but apart from that....
martin_hughes wrote:
I'm glad I'm not a first-time buyer getting saddled with a huge mortgage, which realistically most of them won't be able to pay off and that I don't have a mortgage.
Yes, we own our house, and it's perhaps the best thing to come out of us making some money, to know we own where we live. I used a mortgage calculator this morning. If someone has no debts ( unheard of in our society, and has saved $50k, they could buy an entry level house in todays market, on the average wage, which is $45k. Very few young people make that much money, most make something in the low 30s, or less. It's a tough market. I intend to use our rental property to help my kids save to buy a home, without having to live at home, that's one reason I want to buy a second rental property. I'm just waiting for the bubble to burst before I jump in.
martin_hughes wrote:
potentially leaving hundreds of thousands unable to keep up with their mortgages and homeless.
The bit I don't get, and have never got - if I have a stable job and I make my payments, who cares what the market says my house is worth right now ? Is the issue that the bubble has meant people need to borrow more than they should to even have somewhere to live ? I drive every day past a house that was on the market when we were looking, but it was $500k then, ours was $300k. We could have afforded it, and could have owned it now, but at the time, I simply
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Fair call. I'm sure you've thought of all this before I mention it.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
Yeah... just write us off as buyers who unfortunately bought just before the bubble burst. We'd lived by the sword for the decade leading up to it (we'd made a killing on the two properties we'd owned before this one); we died by the sword when the market collapsed. I really didn't expect that values here would drop like they did - it wasn't one of the overheated markets, but even here, it's been pretty disastrous. Meh. Life goes on. As long as we can recover a piece of the down payment, it's not as bad as it could be.
L u n a t i c F r i n g e
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Richard A. Abbott wrote:
Average wage in UK is meaningless.
Well, average wage is always somewhat meaningless. The average is $45k here. That doesn't mean a lot to the many people on $25k, and given that you can't earn less than zero, but you can earn a lot more than $90k, it's clear that there's a few people with really high wages who pull the average up more than anyone can pull it down. But, it's a reasonable measure of affordability. Where I live it's also true that different areas have different prices, there's no way anyone on less than $100k could buy in Battery Point, for example.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
I feel sorry for the first time buyer. As Dalek Dave would tell you, if the first time buyers cannot afford to purchase even modest priced property, it has the effect of creating problems further up the chain where higher priced property just cannot sell. Unless property company's can be persuaded to build first time buyers homes as subsidized under some dual ownership scheme, the first rung on this ladder will remain missing (or not properly afixed in place).
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I feel sorry for the first time buyer. As Dalek Dave would tell you, if the first time buyers cannot afford to purchase even modest priced property, it has the effect of creating problems further up the chain where higher priced property just cannot sell. Unless property company's can be persuaded to build first time buyers homes as subsidized under some dual ownership scheme, the first rung on this ladder will remain missing (or not properly afixed in place).
Yeah, as I said before, I plan to help my kids get into the property race. But, I don't see it as the end of the earth that some people are forced to rent, so long as people of reasonable means can work their way into the market still.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Average wage is similar as in 45 thousand pounds, or if you convert it ( making it about 22k ) ? The pound was far stronger a few years ago, it's very weak compared to the AUD right now, as is the USD. 500k for a house with significant land, or just an acre or less ?
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
£23,000 is about ave wage. £500,000 would get nowhere near an acre. A good sized 4 bedroom with front and rear garden. for example[^] And that is a Semi, not even a detached, and Bedford is not even the best of areas near here.
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
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£23,000 is about ave wage. £500,000 would get nowhere near an acre. A good sized 4 bedroom with front and rear garden. for example[^] And that is a Semi, not even a detached, and Bedford is not even the best of areas near here.
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
In that case, bloody hell. I'd have expected wages to be lower in country areas and prices to drop as a result. That's how it works here. Our house would be worth a ton in the city, being 20 minutes out lowers the value, even with the river view. Not that I care, I chose to live here, we love it.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Yeah, as I said before, I plan to help my kids get into the property race. But, I don't see it as the end of the earth that some people are forced to rent, so long as people of reasonable means can work their way into the market still.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
Christian Graus wrote:
so long as people of reasonable means can work their way into the market still.
And there is the problem. For more years than I care to guess at, house prices have outstripped wages so wages can never really catch up. Before this financial crisis, salary multipliers went stupidly high, coupled with in excess of 100% mortgages, so people bought property that was beyond their reasonable means, and although interests rates are low at the moment, severe pain will be felt when they hit, for instance, double figures. Then wholesale repossessions occur that can have the effect of, for example, banks not lending as much as they once did - their capital is tied-up in property where a sale can be protracted. And with many properties worth substantially less than the financed mortgage, many people just give up with their investment thus having the added capacity of causing more pain to the bank as well as the mortgage surrenderers. Strangely, it is often cheaper to pay a mortgage than to rent.
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martin_hughes wrote:
Secondly, regulations were relaxed and where previously individuals or couples could only borrow three times their annual income, suddenly the banks were prepared to lend ten times (and more) that amount and on an interest only basis.
Yes, that is happening here, too. With no disrespect to anyone, my impression locally is that most people who are losing their houses, are losing them b/c they thought that low interest rates would last forever, when we were plainly in a period of unreasonable rates due to external pressures.
martin_hughes wrote:
There's a real, and dangerous, disconnect between what a house costs and what it's actually worth.
I'm not sure how easy it is to calculate what a piece of land is worth, I guess you could measure it in terms of wages in the area ( that is, what you can earn by living there ), but apart from that....
martin_hughes wrote:
I'm glad I'm not a first-time buyer getting saddled with a huge mortgage, which realistically most of them won't be able to pay off and that I don't have a mortgage.
Yes, we own our house, and it's perhaps the best thing to come out of us making some money, to know we own where we live. I used a mortgage calculator this morning. If someone has no debts ( unheard of in our society, and has saved $50k, they could buy an entry level house in todays market, on the average wage, which is $45k. Very few young people make that much money, most make something in the low 30s, or less. It's a tough market. I intend to use our rental property to help my kids save to buy a home, without having to live at home, that's one reason I want to buy a second rental property. I'm just waiting for the bubble to burst before I jump in.
martin_hughes wrote:
potentially leaving hundreds of thousands unable to keep up with their mortgages and homeless.
The bit I don't get, and have never got - if I have a stable job and I make my payments, who cares what the market says my house is worth right now ? Is the issue that the bubble has meant people need to borrow more than they should to even have somewhere to live ? I drive every day past a house that was on the market when we were looking, but it was $500k then, ours was $300k. We could have afforded it, and could have owned it now, but at the time, I simply
Christian Graus wrote:
The bit I don't get, and have never got - if I have a stable job and I make my payments, who cares what the market says my house is worth right now ? Is the issue that the bubble has meant people need to borrow more than they should to even have somewhere to live ? I drive every day past a house that was on the market when we were looking, but it was $500k then, ours was $300k. We could have afforded it, and could have owned it now, but at the time, I simply refused to borrow that much. I don't really regret it, but it passes my mind ever day.....
The problem really is that people have needed to borrow far in excess of what they can actually afford to repay in order to have somewhere to live. And I don't mean anywhere nice, but simply somewhere to live. When times are good and there's low interest this works, but as now when interest rates are rising (despite base rates of 0.01%) for borrowers, the cost of living increasing, house prices start to fall and jobs are not readily available it leads to negative equity and eventually repossession. It's a sad state of affairs where people can't actually afford a home, however rude, and almost the entirety of their income is spent paying for it.
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In that case, bloody hell. I'd have expected wages to be lower in country areas and prices to drop as a result. That's how it works here. Our house would be worth a ton in the city, being 20 minutes out lowers the value, even with the river view. Not that I care, I chose to live here, we love it.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
Them with money move to the Rural Areas. As mentioned above the exception is London, where it is all higher. But generally anywhere on the M25 Feeder Corridors or Main line rail networks are going to be expensive, Luton has both (M1 and Rail). Move to Virginia Water[^] and watch Millions disappear as you buy a shed. Or Burford[^], poshest village in the Cotswolds.
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
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Christian Graus wrote:
so long as people of reasonable means can work their way into the market still.
And there is the problem. For more years than I care to guess at, house prices have outstripped wages so wages can never really catch up. Before this financial crisis, salary multipliers went stupidly high, coupled with in excess of 100% mortgages, so people bought property that was beyond their reasonable means, and although interests rates are low at the moment, severe pain will be felt when they hit, for instance, double figures. Then wholesale repossessions occur that can have the effect of, for example, banks not lending as much as they once did - their capital is tied-up in property where a sale can be protracted. And with many properties worth substantially less than the financed mortgage, many people just give up with their investment thus having the added capacity of causing more pain to the bank as well as the mortgage surrenderers. Strangely, it is often cheaper to pay a mortgage than to rent.
That's what parents are for, or it seems to be for my son. He has already said that when he wants to buy a house he will need me to buy half of it with him. Seems ok, he lives in it and pays a small rent for my half, and I get my share when he sells. (Nominal rent of £1 per week for legal reasons, he cannot then live there for 12 years and claim habitable possession!) But the principle being he could not afford to buy without bank of Ma and Pa.
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
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That's what parents are for, or it seems to be for my son. He has already said that when he wants to buy a house he will need me to buy half of it with him. Seems ok, he lives in it and pays a small rent for my half, and I get my share when he sells. (Nominal rent of £1 per week for legal reasons, he cannot then live there for 12 years and claim habitable possession!) But the principle being he could not afford to buy without bank of Ma and Pa.
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
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Dalek Dave wrote:
But the principle being he could not afford to buy without bank of Ma and Pa.
You are in a very small minority who can do that. The overwhelming majority would like to help their kith and kin but just can't, not won't.
OT: Did a read up and played with external CSS over the weekend. Much better, and quite easy to implement, thanks very much. I googled a few beginner sites and after a couple of walk throughs I threw a few test sites together. Main Topic: you are right that there are not many that can, but such is life, and if Tom, (my son), is to ever get a place he will need help. (Or find a rich wife).
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
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Christian Graus wrote:
The bit I don't get, and have never got - if I have a stable job and I make my payments, who cares what the market says my house is worth right now ? Is the issue that the bubble has meant people need to borrow more than they should to even have somewhere to live ? I drive every day past a house that was on the market when we were looking, but it was $500k then, ours was $300k. We could have afforded it, and could have owned it now, but at the time, I simply refused to borrow that much. I don't really regret it, but it passes my mind ever day.....
The problem really is that people have needed to borrow far in excess of what they can actually afford to repay in order to have somewhere to live. And I don't mean anywhere nice, but simply somewhere to live. When times are good and there's low interest this works, but as now when interest rates are rising (despite base rates of 0.01%) for borrowers, the cost of living increasing, house prices start to fall and jobs are not readily available it leads to negative equity and eventually repossession. It's a sad state of affairs where people can't actually afford a home, however rude, and almost the entirety of their income is spent paying for it.
martin_hughes wrote:
It's a sad state of affairs where people can't actually afford a home, however rude, and almost the entirety of their income is spent paying for it.
I own two homes outright, so I am perhaps speaking a little out of turn, but I don't see any issue with a world where minimum wage earners cannot own their own home and have to rent, so long as some of the taxes taken from the wealthy are used to provide affordable public housing and places in nursing homes that meet a basic standard of care.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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Them with money move to the Rural Areas. As mentioned above the exception is London, where it is all higher. But generally anywhere on the M25 Feeder Corridors or Main line rail networks are going to be expensive, Luton has both (M1 and Rail). Move to Virginia Water[^] and watch Millions disappear as you buy a shed. Or Burford[^], poshest village in the Cotswolds.
------------------------------------ I will never again mention that I was the poster of the One Millionth Lounge Post, nor that it was complete drivel. Dalek Dave
I guess it's a different market. We live 20 min drive from the city centre, and that's considered so far that it pushes our prices down. We live on 11 acres, river views, it's magic. The population of Tasmania is around 500k people, around half in and around the capital.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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martin_hughes wrote:
It's a sad state of affairs where people can't actually afford a home, however rude, and almost the entirety of their income is spent paying for it.
I own two homes outright, so I am perhaps speaking a little out of turn, but I don't see any issue with a world where minimum wage earners cannot own their own home and have to rent, so long as some of the taxes taken from the wealthy are used to provide affordable public housing and places in nursing homes that meet a basic standard of care.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
I know what you mean, there is no stigma in renting. But the banks don't see it quite that way. They would much rather have mortgage payments going to them (an effective rental), than see money pass to private individuals. This is why they, and Government in collusion, offer these silly mortgage terms; they may get some of the collateral back, but for the most part they own the property, earn interest on it so long as the tenant pays up and then repossess and "resell" the property on the same terms when the tenant cant repay. I disagree that minimum wage earners shouldn't be able to own their own homes. There are many essential, but low paid, jobs that you and I rely on - rubbish collection, post delivery, road sweeping... people are employed to do these things, should they all be doomed to public housing? I say not: people should be able to afford a place to live, without state funding. After all, state funding admits there is a fundamental inequity in society.
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I know what you mean, there is no stigma in renting. But the banks don't see it quite that way. They would much rather have mortgage payments going to them (an effective rental), than see money pass to private individuals. This is why they, and Government in collusion, offer these silly mortgage terms; they may get some of the collateral back, but for the most part they own the property, earn interest on it so long as the tenant pays up and then repossess and "resell" the property on the same terms when the tenant cant repay. I disagree that minimum wage earners shouldn't be able to own their own homes. There are many essential, but low paid, jobs that you and I rely on - rubbish collection, post delivery, road sweeping... people are employed to do these things, should they all be doomed to public housing? I say not: people should be able to afford a place to live, without state funding. After all, state funding admits there is a fundamental inequity in society.
martin_hughes wrote:
I disagree that minimum wage earners shouldn't be able to own their own homes. There are many essential, but low paid, jobs that you and I rely on - rubbish collection, post delivery, road sweeping... people are employed to do these things, should they all be doomed to public housing?
Everyone who has a job, is doing something useful to somebody, and there's no shame, in my mind, in having a low paying job. I don't mean that I think we should aim for them to not afford housing, I'm saying that if someone does not make much money, they can't expect a new car, or a trip around the world, they perhaps cannot expect to own a home. It is just the way life works, society does not OWE people the right to own a home, is really my point.
martin_hughes wrote:
I say not: people should be able to afford a place to live, without state funding. After all, state funding admits there is a fundamental inequity in society.
There is always inequity. Any attempt to readjust that, is obviously a form of socialism. The question becomes, do we hate socialism so much that we don't help, or do we help ? And if we help, we have three choices: 1 - try to interfere with the market to force down house prices 2 - subsidise the purchase price of housing for people who have less money ( which, ironically, just causes prices to go up to absorb the subsidy, as we've seen in Australia ), or 3 - provide public housing Of those three, I think the last option is the best one all around. Of course, if the market moves in ways that make housing affordable to people on lower incomes, that would be better, but, you can't count on it, or expect to change it and have things work out exactly as you'd hope.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
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In that case, bloody hell. I'd have expected wages to be lower in country areas and prices to drop as a result. That's how it works here. Our house would be worth a ton in the city, being 20 minutes out lowers the value, even with the river view. Not that I care, I chose to live here, we love it.
Christian Graus Driven to the arms of OSX by Vista. Read my blog to find out how I've worked around bugs in Microsoft tools and frameworks.
I don't think there can be a basis for comparison, outskirts of Tasmanias capital and the outskirst of one of the worlds mega cities is just a little too much of a stretch for me. We looked at buying something (small) in the uk a while back, when the pound was reasonably strong but the numbers just didn't add up. The UK have some quite draconian laws for offshore investors. If you were going to do some sort of comparison you would need to pick some backwater in Scotland... What gets me is the return on investment, in Oz I can expect 7-10% return, in Singapore they are getting less than half that on properies in the 1.5m to 5m range, astonishing.
Never underestimate the power of human stupidity RAH