EU Referendum: The result and aftermath...

[Trog]

This post Paul is complete case in point as far as I'm concerned to your entire mantra on things. It's the constant I'm alright Jack philosophy. Your family have all been educated to a high standard, you all own your own home, and no doubt you all have gold plated pensions with a lovely big lump sum. Many hundreds of thousands or even millions would love to be in your position. Many people can only dream of getting on the property ladder.

How about stopping moaning about it and working to earn some money.

Like Paul I own my own house, although I am no where near as highly educated as he is, and I expect my house is smaller. I got it by working long hours in all weathers and did any and all the overtime that was offered, I have never owned a new car and have not had a holiday away since 1986. My wife also worked hard all her life, we saved our money and paid extra into our pensions and that is why I am now financially secure.

 

[Trog]

A terrible deal would force May to stop pandering to the right wing extremists in her party or face mass job losses.

By the time there is a terrible deal it will be too late to pander to anybody, and we will be stuck with it.

 

[WelshBluebird]

How about stopping moaning about it and working to earn some money.

Like Paul I own my own house, although I am no where near as highly educated as he is, and I expect my house is smaller. I got it by working long hours in all weathers and did any and all the overtime that was offered, I have never owned a new car and have not had a holiday away since 1986. My wife also worked hard all her life, we saved our money and paid extra into our pensions and that is why I am now financially secure.

The problem is the country has changed, mainly the following:

1 - Long term, stable, and half decently paid employment (and especially where any overtime is paid at all) is becoming a lot less common than what it was.

2 - House prices have increased an insane amount when compared to how wages have risen.

3 - The lack of both council housing (thanks to the sell of and the lack of building) and genuinely affordable private housing (and I don't mean the "affordable housing" that we hear about these days, which is still not affordable at all in many areas) has meant that those who would have been able to get stable housing in the past now can't and have to rely on an expensive private rental market.

I am 26. The people I know my age who own any property either:
1 - Inherited it.
2 - Had a large amount given by parents for a deposit.
3 - Have bought as a couple with both partners wages being taken into full account to actually get the mortgage.
4 - Have bought back at home where house prices are still cheap (but jobs are not that easy to find).
5 - Have had it bought for them by their parents.
6 - Were able to save themselves because they were able to live at home for a number of years rent and bill free.
7 - A combination of the above.

So if you don't come into those categories, then it is pretty much tough luck.

As for pensions - well all I'll say on that is look how pension schemes for new entries have been cut right back. Certainly compare them to what was on offer 20 years ago and you'll be in for a shock. This country is sitting on a massive ticking timebomb regarding today's younggetting old - millions of young people cannot afford to save much, are being offered poor pension schemes, will struggle to own a property so may well still be needing to pay rent when they are OAP's and based on recent history will probably have to work until their bodies give out before being able to get a state pension (if one even still exists by then).

 

[AlterEgo]

I am 26. The people I know my age who own any property either:
1 - Inherited it.
2 - Had a large amount given by parents for a deposit.
3 - Have bought as a couple with both partners wages being taken into full account to actually get the mortgage.
4 - Have bought back at home where house prices are still cheap (but jobs are not that easy to find).
5 - Have had it bought for them by their parents.
6 - Were able to save themselves because they were able to live at home for a number of years rent and bill free.
7 - A combination of the above.

It's not true to say that getting a mortgage is impossible unless you fall into those seven categories. I bought a £145,000 place at 26, on my own, without any help to get a deposit. I now rent it out, and have another place of my own.

I did live a pretty frugal life for about five years to get there, but get there I did.

 

[WelshBluebird]

It's not true to say that getting a mortgage is impossible unless you fall into those seven categories. I bought a £145,000 place at 26, on my own, without any help to get a deposit. I now rent it out, and have another place of my own.

I did live a pretty frugal life for about five years to get there, but get there I did.

I did say out of the people I personally know. But thats takes me back to what i said about prices. In much of the country, £145k won't even get a bedsit / studio flat (and I am not just talking London or specific cities here, I am talking fairly large areas of the country). Also I suspect you were not paying as much rent as some people have to (though if you were, fair play to you).

Really though, the people I feel sorry for are those on less well paid jobs who are being forced out of areas, sometimes their hometowns.. I live in a fairly expensive city (which granted, probably has shaped some of my opinions about the property market), and I look at some of the friends that I've made here who were born and grew up in this city, and some of them just have literally no chance at all. I find it really sad that some of these people will be forced to move away from there area they grew up in, not because of a desire to (like me moving away from Wales), but because they literally have no choice. I guess it is a smaller scale version of what is also happening in London (but at least in London council housing is much more common).

 

[Bletchleyite]

In my parents' day, just about nobody bought a house *on their own*. It was normally a couple. Up north one breadwinner on a good job could get a mortgage - but down south even in the 1990s that was difficult if not impossible for most people.

Why do people feel they are entitled to be able to afford to buy a house (rather than a small flat) on their own? It has near never been the norm for people to be able to do so.

Why do people think they should be able to buy a large family home in a nice area as their first home? It never worked like that.

 

[WelshBluebird]

In my parents' day, just about nobody bought a house *on their own*. It was normally a couple. Up north one breadwinner on a good job could get a mortgage - but down south even in the 1990s that was difficult if not impossible for most people.

Why do people feel they are entitled to be able to afford to buy a house (rather than a small flat) on their own? It has near never been the norm for people to be able to do so.

Why do people think they should be able to buy a large family home in a nice area as their first home? It never worked like that.

Certainly when my parents were my age a single breadwinner mortgage was the norm. Now it is not. Even in the same area where house prices have stayed fairly low. It was also much rarer to have to rent privately for years on end, and in general rents were also cheaper relative to wages when you compare with today.

And I am not only talking about family homes. I am talking about anything. AlterEgo mentioned £145k - in many places in the UK that won't get you a bedsit / studio flat. And you also have to consider we have a general shortage of small flats too.

 

[Trog]

Took me seven years to save the deposit on my first house, built up equity in that for three years then moved into this house. At the time we moved here the mortgage was more than my basic salary and we lived on what my wife earned. Frightened the life out of me at the time, but was worth it in the end.

 

[WelshBluebird]

Took me seven years to save the deposit on my first house, built up equity in that for three years then moved into this house. At the time we moved here the mortgage was more than my basic salary and we lived on what my wife earned. Frightened the life out of me at the time, but was worth it in the end.

Bolded the important point there!
If you are a couple, then brilliant. Even living in an expensive city as I do, if I was buying with a partner I'd be able to afford a fairly decent house. As it is being single, even a tiny studio / bedsit flat (basically one room in a converted terraced house) is currently just a little beyond reach. I think that is part of the problem tbh, in many areas the costs of smaller flats aren't actually a huge amount less than larger flats or houses (mainly caused by a supply v demand problem).

 

[AlterEgo]

I did say out of the people I personally know. But thats takes me back to what i said about prices. In much of the country, £145k won't even get a bedsit / studio flat (and I am not just talking London or specific cities here, I am talking fairly large areas of the country). Also I suspect you were not paying as much rent as some people have to (though if you were, fair play to you).

Really though, the people I feel sorry for are those on less well paid jobs who are being forced out of areas, sometimes their hometowns.. I live in a fairly expensive city (which granted, probably has shaped some of my opinions about the property market), and I look at some of the friends that I've made here who were born and grew up in this city, and some of them just have literally no chance at all. I find it really sad that some of these people will be forced to move away from there area they grew up in, not because of a desire to (like me moving away from Wales), but because they literally have no choice. I guess it is a smaller scale version of what is also happening in London (but at least in London council housing is much more common).

I was paying proper rent to a proper landlord. No bank of mum and dad.

I travelled only on my Priv/passes and went teetotal to afford it, but it is doable. My first property was a studio flat.

 

[Dave1987]

How about stopping moaning about it and working to earn some money.

Like Paul I own my own house, although I am no where near as highly educated as he is, and I expect my house is smaller. I got it by working long hours in all weathers and did any and all the overtime that was offered, I have never owned a new car and have not had a holiday away since 1986. My wife also worked hard all her life, we saved our money and paid extra into our pensions and that is why I am now financially secure.

How about you stop making massive presumptions eh? I have worked very very hard to get myself on the property ladder. Some of the people I worked with were astonished at the amount of deposit I had to save up. Like I said some can only dream of a secure job, and earning enough to get a mortgage.

 

[Trog]

Bolded the important point there!
If you are a couple, then brilliant. Even living in an expensive city as I do, if I was buying with a partner I'd be able to afford a fairly decent house. As it is being single, even a tiny studio / bedsit flat (basically one room in a converted terraced house) is currently just a little beyond reach. I think that is part of the problem tbh, in many areas the costs of smaller flats aren't actually a huge amount less than larger flats or houses (mainly caused by a supply v demand problem).

But missed the important detail that it referred to the second house that we bought together, the first house was mine alone.

 

[EM2]

I don't understand this obsession with wanting to own property. My wife and I bought a flat in the early 90s, it caused us no end of problems and heartache, and I was glad to get shot of it, even at a loss of £10k.
I've rented ever since, and never regretted it. No worries about unexpected repair costs for a start.

 

[AlterEgo]

I don't understand this obsession with wanting to own property. My wife and I bought a flat in the early 90s, it caused us no end of problems and heartache, and I was glad to get shot of it, even at a loss of £10k.
I've rented ever since, and never regretted it. No worries about unexpected repair costs for a start.

By the time I retire I will be mortgage-free. That means I have absolute security about my own home, and can't be subject to an eviction because my landlord changes their mind. It also means I won't have to find money from my pension to pay rent.

By owning my own property and building a portfolio of other properties to let out, I will not need to worry too much about when my pensions kick in, or how much I'll get per week.

Buying property and being sensible with it gives me a much greater chance of having an earlier, more secure retirement with extra income.

 

[meridian2]

Certainly when my parents were my age a single breadwinner mortgage was the norm. Now it is not. Even in the same area where house prices have stayed fairly low. It was also much rarer to have to rent privately for years on end, and in general rents were also cheaper relative to wages when you compare with today.

And I am not only talking about family homes. I am talking about anything. AlterEgo mentioned £145k - in many places in the UK that won't get you a bedsit / studio flat. And you also have to consider we have a general shortage of small flats too.

Joint earnings mortgages are probably the biggest single factor in house price rises. My mother stopped work when she had her first child and only returned part time when the last one (me) was 14. She was far from untypical. My parents lived in a rented terraced house and finally got a council house when the area was demolished under slum clearance. By then they were retired. They never owned their own home. Rents were cheap, but you didn't get much for it - a cold tap, no bathroom and an outside lavatory. Tell that to a young person and they play an imaginary fiddle. However it was real life for millions. My father worked 12 hour shifts for 40 years and was sick twice, for a couple of days, in that period.

My kids are typically well educated, middle types, but my upbringing means I could never call myself anything other than working class.

 

[radamfi]

There were a few years around the mid 90s when house prices were quite cheap after falling for many years after the late 80s crash. Lots of people were sworn off the property market because of the fear of negative equity, which was big at the time. People forgot about that within a few years and the market has been hyped every since, helped by absurdly low interest rates. We need interest rates to return to historical average levels to force prices down.

 

[miami]

If interest rates returned to 7%, with a fall in house values, I wonder how many young people who have bought in the last 5 years would be forced to declare bankruptcy - unable to sell (negative equity), and unable to afford repayments. Maybe they'll just flee the country. If they hit 14% again...

 

[meridian2]

There were a few years around the mid 90s when house prices were quite cheap after falling for many years after the late 80s crash. Lots of people were sworn off the property market because of the fear of negative equity, which was big at the time. People forgot about that within a few years and the market has been hyped every since, helped by absurdly low interest rates. We need interest rates to return to historical average levels to force prices down.

I remember that period well, houses may seem cheap in hindsight, but they weren't relative to wages and mortgages. The 89-91 crash followed a huge hike in mortgage rates, up to 13%. Even half that rate would completely wipe out the current housing market.

What happened from 1991 to 1998 was the market froze. Houses stayed in EAs windows for years, owners couldn't afford to drop prices and almost nothing shifted, not unlike the situation in Ireland today. Estate agents who'd been around for years, plus all the new ones who joined the market in the 80s, went out of business. By 1998 the housing corpse started twitching and things slowly began to move, and by 2001 the market was beginning to seriously overheat. I remember a radio show at that time where the panel agreed we were in a bubble and the burst was immanent. That point should have corrected the market, but government and banks intervened to take the housing market into uncharted waters of low interest rates, 110% mortgages, joint earnings and the rest which has artificially propped it up ever since. Anyone betting on an old style crash has had to sit on their hands for the last 15 years and watch prices rise exponentially. Even the 2008 global crises did little more than briefly apply the brake on prices. It's madness, but you can only live in your own time.

 

[radamfi]

I remember that period well, houses may seem cheap in hindsight, but they weren't relative to wages and mortgages.

http://www.housepricecrash.co.uk/graphs-ftb-average-house-price-to-earnings-ratio.php

The first time buyer average house price to earnings ratio had dropped to 2 by the mid 90s. We bought our flat at that time after just one year after graduation. We were earning typical graduate wages at the time, around £14k. We could easily have afforded a much bigger house but we were worried about negative equity and how we would pay the mortgage if we lost our jobs so we didn't want to take that much of a risk.

 

[meridian2]

http://www.housepricecrash.co.uk/graphs-ftb-average-house-price-to-earnings-ratio.php

The first time buyer average house price to earnings ratio had dropped to 2 by the mid 90s, compared to around 5 today. We bought our flat at that time after just one year after graduation. We were earning typical graduate wages at the time, around £14k. We could easily have afforded a much bigger house but we were worried about negative equity and how we would pay the mortgage if we lost our jobs so we didn't want to take that much of a risk.

I can only offer anecdotal evidence. I sold in '91, rented and watched the market constantly and there was no value in it. Nothing remotely resembling a bargain and most people didn't even bother putting houses on the market. This changed around 1998 when houses came on in numbers and I bought again in '99. Between was a housing desert apart from recycled starter homes and top end stuff. I'd imagine most of the fall was made up by chumps who'd paid a million for their place and ended up with less than half that in a forced sale.

 

[radamfi]

I can only offer anecdotal evidence. I sold in '91, rented and watched the market constantly and there was no value in it.

If you look at the period from 1991 to 1996, nominal house prices were roughly static, falling from £55K to £51K, so it didn't look like a fall had had happened, but in real terms that was actually a substantial drop. In today's money, prices dropped from a peak of £144K in 1989 to £111K in 1991, bottoming about at £90K in 1996.

http://www.housepricecrash.co.uk/indices-nationwide-national-inflation.php

 

[meridian2]

If you look at the period from 1991 to 1996, nominal house prices were roughly static, falling from £55K to £51K, so it didn't look like a fall had had happened, but in real terms that was actually a substantial drop. In today's money, prices dropped from a peak of £144K in 1989 to £111K in 1991, bottoming about at £90K in 1996.

http://www.housepricecrash.co.uk/indices-nationwide-national-inflation.php

That sounds about right, but you have to factor in interest rates and fear of the late 80s crash. There needs to be something to make people put their houses on the market, and other people buy them, and that trigger wasn't there for much of the 90s. In hindsight the 90s situation is almost inconceivable to a potential 2017 buyer, but a lot of people got burned in the 80s and the current generation are used to a bullet proof market. I wouldn't want to bet on its future direction either way.

Whatever, people are forced to put stupid amounts of their earnings into shelter alone, which has a stifling effect on confidence and the economy.

 

[Tetchytyke]

I think London is distorting the entire market. I bought my house in 2005 at the age of 22 for £100k, certainly not at the top of the market, but had to sell at a £15k loss (plus the amount I'd spent on renovation) in 2012 after separating from my wife I'd bought the house with. House prices up here still aren't back to where they were in 2005.

London, though, is spreading its effects further and further out. Because people can no longer buy in London, they are spreading their wings out into the commuter towns. This makes the nice commuter towns out of reach, pushing first time buyers into the less desirable towns. Luton saw a 20% increase in average house prices last year. Great if you live in Luton and work in central London, terrible if you live in Luton and work in Luton. My (new) wife worked in Amersham and didn't get London weighting on her NHS wage, and I doubt she was alone. So the people who work in Luton can't afford to live there, they move further out again, and the price inflation effect ripples out as far as Swindon or Grantham.

Something has to give in London, but the problem isn't interest rates. The problem is foreign capital flight, particularly from China and Russia, and the solution is to prevent that from happening. I blame the Russians and the Chinese for much of what is happening in London.

 

[Howardh]

London - how many on here live in or around London in a 3-bed semi detached and thought of selling it, move oop north and buy similar for half, and live off the balance? Sure you would have to be fairly close to retirement - but if they are fed up with their job it's an option for the mid to late 50's?

 

[radamfi]

London - how many on here live in or around London in a 3-bed semi detached and thought of selling it, move oop north and buy similar for half, and live off the balance? Sure you would have to be fairly close to retirement - but if they are fed up with their job it's an option for the mid to late 50's?

I've asked that question to many colleagues at work over the years and they simply aren't interested. That's even the case when they could relocate to the same company up north, earning not much less.

 

[meridian2]

London - how many on here live in or around London in a 3-bed semi detached and thought of selling it, move oop north and buy similar for half, and live off the balance? Sure you would have to be fairly close to retirement - but if they are fed up with their job it's an option for the mid to late 50's?

In my slightly posh bit of the north, London accents are commonplace along with pretty much every other. Twenty years ago you'd have only heard local voices. Why anyone would want to live out their remaining years in a semi in suburban London when they could have a view stretching miles, is beyond me, and I worked in the smoke for years. Each to their own I suppose.

If the so-called northern powerhouse comes to fruition, it'll turn Lancashire/Yorkshire into another south east. Manchester prices for anything decent are already off the dial.

 

[WelshBluebird]

I think London is distorting the entire market. I bought my house in 2005 at the age of 22 for £100k, certainly not at the top of the market, but had to sell at a £15k loss (plus the amount I'd spent on renovation) in 2012 after separating from my wife I'd bought the house with. House prices up here still aren't back to where they were in 2005.

London, though, is spreading its effects further and further out. Because people can no longer buy in London, they are spreading their wings out into the commuter towns. This makes the nice commuter towns out of reach, pushing first time buyers into the less desirable towns. Luton saw a 20% increase in average house prices last year. Great if you live in Luton and work in central London, terrible if you live in Luton and work in Luton. My (new) wife worked in Amersham and didn't get London weighting on her NHS wage, and I doubt she was alone. So the people who work in Luton can't afford to live there, they move further out again, and the price inflation effect ripples out as far as Swindon or Grantham.

Something has to give in London, but the problem isn't interest rates. The problem is foreign capital flight, particularly from China and Russia, and the solution is to prevent that from happening. I blame the Russians and the Chinese for much of what is happening in London.

The issue is even more complicated than that. As Howardh suggested, another thing to consider is those who own in London, sell up and use that moeny to buy something elsewhere. Doesn't even have to be up north. For the price of some London flats you can get some pretty nice houses in places like Bath and Bristol. So while you won't get many London commuters in these areas (though you do get some, more than what most people would expect really, and you certainly get a lot of people who do one or two days a week in London and the rest elsewhere), you still get the spread of London money.

 

[Xenophon PCDGS]

In my slightly posh bit of the north, London accents are commonplace along with pretty much every other. Twenty years ago you'd have only heard local voices. Why anyone would want to live out their remaining years in a semi in suburban London when they could have a view stretching miles, is beyond me, and I worked in the smoke for years. Each to their own I suppose.

If the so-called northern powerhouse comes to fruition, it'll turn Lancashire/Yorkshire into another south east. Manchester prices for anything decent are already off the dial.

Perhaps you may like to visit my very own area of "The Cheshire Golden Triangle" comprising of Prestbury, Wilmslow and Alderley Edge that is none too far away from Manchester Airport and judge for yourself the house prices there. Seven figure homes are just part of the available housing market and it says much that the better-quality estate agencies such as Savilles and Jackson-Stops and Staff have premises next to each other in Wilmslow town centre.

Of course, me being me, I never miss the opportunity to state that as far as I am concerned, living in the rural area of the aforesaid "triangle" that borders Prestbury to Mottram St Andrew, is where the crème de la creme choose to reside...

 

[AlterEgo]

Of course, me being me, I never miss the opportunity to state that as far as I am concerned, living in the rural area of the aforesaid "triangle" that borders Prestbury to Mottram St Andrew, is where the crème de la creme choose to reside...

Yawn. :roll:

 

[Tetchytyke]

The issue is even more complicated than that. As Howardh suggested, another thing to consider is those who own in London, sell up and use that moeny to buy something elsewhere.

True enough, the ripple effect is massive. You see it in Cornwall with second houses driving locals out, and it's the same in Cumbria and, to a lesser extent, the Yorkshire Dales.

And as clappers says, we're seeing it in many cities too. The Prestbury Set have always been the Prestbury Set, but prices in Manchester are mad, and not just in the obvious places like Chorlton. We're seeing the same in Leeds and, to an extent, in Newcastle too, though only in very specific and obvious locations like Tynemouth up here.

The foreign capital flight drives up prices in London, people cash out and move elsewhere (or even just invest elsewhere), prices get driven up there and so on and so on. I partly blame the capital flight in London and partly blame Kirsty Allsopp. All these property porn programmes about "investing for the buy to let market" make me want to put my foot through someone's face (probably Dion Dublin's tbf).