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House Prices

TravelDream

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I am sure I am not the only one to notice, but house prices in my local area have gone a little crazy in the last year or so.
It's not just prices too. Anything decent is being snapped up at a moment's notice. Local agents have stopped organising viewings when customers want and now just book people into a set block. Say viewings on 123 ABC Street are on Monday from 10 until 11.30. They are having no issues getting people to make offers with that.

UK prices are up 13.2%, but of course there are big regional variations.

''Wales showed the biggest jump in house prices of the four countries of the UK, registering property inflation of 16.7% in the past year. The price of a home rose by 13.3% in England, 12% in Scotland and 9% in NI.

The English region with the hottest property market in the past year has been the north-west, where prices were up by 18.6%. London, the part of the UK hardest hit by the repeated coronavirus lockdowns of the economy, recorded the smallest annual increase, 6.3%.''

The question is, what can be done about it?
Clearly massive growth year on year when wages remain relatively flat is just not sustainable. First time buyers will find it increasingly difficult to get on the property market.

I live in Wales and 16.7% is very believable. In fact, I think my local area may be even higher than that.
 
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DelayRepay

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It's crazy - prices where I live in the South East (not London, but commutable) have increased significantly, but prices in the area where I would like to move to in Yorkshire have increased even more. Now that my job is pretty much work from home (and this will be the case for ever - the days of spending five days a week in an office in my industry are now history) I have been thinking about a move back to Yorkshire to be closer to family.

I do wonder how much of this is temporary and how much is here to stay. Some will have been driven by the Stamp Duty holiday, some by very low mortgage rates and some by a spike in demand in certain areas due to people re-locating. But will it last? Or will we see prices stabilise or even drop?

The economist in me wonders if, in a few years, as interest rates rise we'll start to see issues like we saw in the 1980s where people cannot have to sell up because they can no longer afford their mortgage payments?
 

deltic

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Quantitative Easing has pumped huge amounts of money into the economy which has to go somewhere. It tends to lead to asset bubbles which we are seeing in house prices. The fact, that in some parts of the country at least, rents are falling while prices are rising suggests there are some underlying issues. There are so many unknowns, the increased number of excess deaths due to Covid may lead to more houses coming on to the market and there is great uncertainty about how many EU nationals left in the last 18 months and who will not return.

If QE is reversed and interest rates rise then we may see the reverse situation of falling prices.

As someone in a very well paid job who can no longer afford to buy my own flat which I brought on a modest junior civil service salary some 30 years ago I sincerely hope so.
 

Mojo

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I’ve a family member who bought a house (new build) in 2007 in a town in the north. They tried to sell it, and indeed it was on the market, for over a year in 2015 and it did not receive any offers anywhere near the asking price (even that would have taken a small loss). Earlier this year during the temporary stamp duty suspension, they listed it and they accepted an offer in a few days.

So much talk was made about how prices have risen since the end of the last recession, but it’s easy to forget that in a few places (primarily towns in the north of England not connected with any cities), it was only earlier this year that prices recovered since the crash in 2008.
 

TravelDream

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So much talk was made about how prices have risen since the end of the last recession, but it’s easy to forget that in a few places (primarily towns in the north of England not connected with any cities), it was only earlier this year that prices recovered since the crash in 2008.

Is that really true?
Nothing I have seen suggests that, though I know regional variations can be massive with the property market.

I am not from the north of England, but grew up in a fairly deprived part of South Wales. I can assure you that house prices are far far higher today than they were in that period. I suppose most of the SW Valleys fairly easily connect to Cardiff through both public transport and car though.
Statistics show the average UK house price is also much higher. From a low of £155k in early 2019 to almost £255k today. And, for once, we can't blame London as London has the lowest growth of any English region.
 
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BluePenguin

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The news of house prices rising has been very disappointing for me as I am due to buy a house in the next year.

There has been a lots progress on the building of yet more new builds so hopefully that should help keep prices fork increasing too much more.
 

yorksrob

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There need to be controls/limits on buy to let, buying up properties as investment, multiple property ownership etc if the Government is serious about having affordable housing.
 

BluePenguin

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There need to be controls/limits on buy to let, buying up properties as investment, multiple property ownership etc if the Government is serious about having affordable housing.
A lot of these “affordable” properties seem to only be available through long council waiting lists and realistically are still on UNaffordable.

It is completely unfair that young people are becoming priced out of their home towns because of old timers who became rich on old money unnecessarily reducing the amount of houses available.

Let us turn this on its head: would a retired person who cannot afford to buy a retirement flat be as newsworthy as a single Mum? Neither have an income, much of a support network or savings but will be judged very differently by society because of their age.
 

yorksrob

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A lot of these “affordable” properties seem to only be available through long council waiting lists and realistically are still on UNaffordable.

It is completely unfair that young people are becoming priced out of their home towns because of old timers who became rich on old money unnecessarily reducing the amount of houses available.

Let us turn this on its head: would a retired person who cannot afford to buy a retirement flat be as newsworthy as a single Mum? Neither have an income, much of a support network or savings but will be judged very differently by society because of their age.

I certainly think that there's a case for prioritising prospective owner occupiers in house purchases. I'm not sure what the best policy options would be to achieve that.
 

LSWR Cavalier

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Average: mean, median or mode? This Property Price Madness has been going on for decades, could it be sustainable?

How does the UK compare with other countries? How do people buy their first homes without well-paid jobs, without inheritance or help from rich relatives?
 

al78

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Average: mean, median or mode? This Property Price Madness has been going on for decades, could it be sustainable?

How does the UK compare with other countries? How do people buy their first homes without well-paid jobs, without inheritance or help from rich relatives?
They just about manage to buy homes in places that are regularly on fire or where you have to regularly replace the wheels on your car and not go outside without an armed escort.
 

Gloster

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My main experience of practice abroad is in northern Europe, where it is far more common, particularly in towns and cities, for people to rent. The difference seems to be that legislation is far more balanced between the rights of tenants and those of landlords. Landlords find it more difficult to exploit tenants, but tenants have more difficulty in abusing their status. Both sides can look to the long term: they can and do rent for years, possibly only buying when the family gets too big or they are heading for retirement.

Here tenants are all too often in fear of eviction and the landlord can play the system to increase their income, while at the same time having the worry of awkward tenants. There are good landlords and good tenants, but you never know when the situation might change.

And prices may have hit their peak: the house I exchanged contracts on a week ago has already lost around 5% of its value since the offer. However, I don’t think there is going to be a crash, at least not in the provinces. (Selfishly, I hope not.)
 

johncrossley

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Is that really true?
Nothing I have seen suggests that, though I know regional variations can be massive with the property market.

From 2008 to 2017, prices in Durham went down, not even in real terms, in actual pounds!


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TravelDream

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From 2008 to 2017, prices in Durham went down, not even in real terms, in actual pounds!

Durham seems to be a real outlier then. I am not sure why the area should be doing so badly.
Other economically depressed areas have done well in that period.

Rightmove says prices are up 9% since 2017
 

johncrossley

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Durham seems to be a real outlier then. I am not sure why the area should be doing so badly.
Other economically depressed areas have done well in that period.

Rightmove says prices are up 9% since 2017

Looking at the Nationwide Price Calculator


prices in Scotland went down 3.92%
prices in the North went down 6.76%
prices in Wales went down 5.45%
prices in Northern Ireland went down 35.03%

from Q1 2008 to Q1 2017


prices in Scotland went up 6.26%
prices in the North went up 4.53%
prices in Wales went up 15.36%
prices in Northern Ireland went down 21.78%

from Q1 2008 to Q1 2021

Inflation from 2008 to 2021 was 36.87%, so all those regions have seen a huge price drop in real terms.
 

Dai Corner

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Because there is a limited supply. Those buying their place of residence should get priority.

The generally better off people who can afford to buy should be prioritised over the generally less well off who rent?

That's an interesting view.

One reason why the supply is limited is under-occupation. I live in a row of four three-bedroom houses and one four-bed. The four-bed is owned by an older couple whose children have left home. One of the three-beds by a couple with two teenagers and two of the three-beds by single people. The final three-bed is rented by a single person.

That's one household who would probably like a larger house and four who are in accommodation larger than they need.
 

yorksrob

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Why? What is 'wrong' with renting?
Nothing wrong renting until there are too few suitable homes to buy.

The problem occurs where the proportion of rental properties is driven not by the proportion of householders who need to rent, but instead is distorted by wealth looking for a place to stash the cash.
 

yorksrob

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Mass home ownership is a relatively new concept, you haven't explained why it should be the norm.
You didn't ask me to explain why it should be the norm.

If the majority of people aspire to home ownership, which seems to be the case at present, then that's a good enough reason why it should be the norm.
 

johncrossley

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Renting would be fine if it was like in other countries. i.e. you know what you will be paying for the next 10 years and you don't get kicked out at the landlord's whim. The UK used to have one of the highest home ownership rates in Europe but not now, due to lack of affordability.

However, it might not be financially worth buying anyway, at least not in London or much of the south. I don't blame people for balking at the prospect of taking out a £500K loan just to buy a small house or even a flat when the rents can be lower than mortgage payments, even with today's rock bottom rates. Just image how expensive those repayments would be if rates go up, plus the risk of a house price crash given such insane prices. Plus you can invest the deposit in the stock market instead, which has historically outperformed housing anyway. Renting isn't always 'wasted money'. If you are lucky you can profit by renting when prices are expensive and buy after a crash.
 

Horizon22

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I think the majority of people aspire to it only because you have to - prices have risen pretty much continuously barring a severe recession (and Covid has done nothing, so its not exclusive). It's a nailed on investment and you can live in it. If renting was more reasonable and there were fewer dodgy landlords around, then we might have a balanced renting system. Unfortunately everyone with property wants prices to rise and every renter aspiring to buy wants prices to fall.
 

simonw

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You didn't ask me to explain why it should be the norm.

If the majority of people aspire to home ownership, which seems to be the case at present, then that's a good enough reason why it should be the norm.
Because, as often, you opine that something should happen or not without explaining why. On what basis do you say that the majority aspire to home ownership?
 

Horizon22

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Renting isn't always 'wasted money'. If you are lucky you can profit by renting when prices are expensive and buy after a crash.

Well rule 101 of investing is that you can't time the market. It's basically financially vital if you're young to try and get on the market ASAP. Sure the renter might see improved economic performance, but it won't be as good as someone who bought, judging by the experience of the past 50 years.

The UK housing market is very, very broken. I think demographically it will come to sort of crunch point as people will pass away and people simply won't be able to afford to move up the chain. That or inheritance becomes even more important thus leading to a more unequal society
 

simonw

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Financially you are somewhat "wasting" money. Paying back a mortgage is something you are invested in.
but you pay a lower rent than mortgage * as you don't pay to maintain the property.

* All other things being equal.
 

Horizon22

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but you pay a lower rent than mortgage * as you don't pay to maintain the property.

* All other things being equal.

In London & SE I am sorry but that's simply not true. I could get a very similar property to the one that I rent for lower monthly payments. Yes there's maintenance costs but even then it would still be advantageous because you also own a product.

As I said before every renter wants prices to fall before buying, every owner wants them to rise. And once you've bought, you then want them to rise!
 

yorksrob

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but you pay a lower rent than mortgage * as you don't pay to maintain the property.

* All other things being equal.

They never are though.

For starters there's no guarantee that rent will be cheaper than the equivalent mortgage, then there's no prospect of actually owning an asset outright at the end of it all. There's good reasons why ownership is aspired to.
 

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