House Price Crash

[BlasterBates]

That's not true. It's a great narrative but factually way off.

I know we all like a graph so here's the stats to prove it

Indeed reposession rates in the early 1990's were far worse than in 2008.

[Hobosapien]

The principal is now much larger so the interest rate is not the issue. On top of this, salary growth has flat-lined.

Interest rate is not the issue while it's low during 'emergency interest rate' ongoing since 2008 crash.

It's always been a balance between purchase price and interest rate. They'll never in modern times with magic money trees available both be historically low at the same time so have to weigh up whether better to buy at high price using low interest rate to fund it then pay off asap if think rates likely to rise significantly soon, or wait for 'house price crash' and hope prices fall enough to make it overall cheaper than currently, as rates will inevitably rise if there's such a shock to the economy (or those mishandling it) to force prices significantly lower.

Even the 2008 financial crash that caused the now low interest rates didn't bring prices down all that much compared to the massive gains prior to 2008.

Better to price them in non-sterling such as gold or bitcoin if want genuine value.

[Fraidycat]

After several years and a few salary increases it gets easier.

Nothing much has changed.

The very fact that the average age of a first time buyer has risen from 28 to 34 since 2007 says that something major has changed.

Even with extremely low interest rates first time buyers cannot easily get on the housing ladder. It takes years to save the much bigger deposit that is now needed. 13 years by the looks of things (assuming you start work at 21).

Also if you bought a house in your mid twenties you had years of big pay rises ahead of you and that would help ease the burden.

Now at 34 you are at or near peak earnings for most careers.


The average deposit placed by a first-time buyer in 2019 was £46,200.
The average deposit for a first-time buyer in London (£110,000 ) is almost as much as the total mortgage for a buyer in the North of England (£112,000).
The average first-time buyer mortgage in 2019 was £185,300.
£231,500 was the average price of a home bought in the UK by a first-time buyer in 2019.

First-time buyer statistics: Average age to buy a house in the UK | Finder UK.

[SueEllen]

People have always spent a large proportion of their income on mortgage payments. Interest rates in the 1980's and 1990's were much higher than today. That is always the case when you buy a new house. After several years and a few salary increases it gets easier.

Nothing much has changed.

Problem is when you hear of people on 70-80K in London and SE who can only buy a flat, you know the housing market is fecked.

[Andy2]

People have always spent a large proportion of their income on mortgage payments. Interest rates in the 1980's and 1990's were much higher than today. That is always the case when you buy a new house. After several years and a few salary increases it gets easier.

Nothing much has changed.

Not sure about others, but in IT , salaries have not increased since the last 20 years while the house price have increased 2-3 fold

[Fraidycat]

Not sure about others, but in IT , salaries have not increased since the last 20 years while the house price have increased 2-3 fold

This is strictly not true.

In 1999, £55K was a top end developer salary for skill set, and £500 per day was a top end advertised contract rate in london for a developer (i am aware some people were earning more than that)

(Things went much higher in 2000, due to the nasdaq market bubble, but im going to ignore the pay rates in 2000 as they were part of a bubble)

Now that kind of 55K role is paying 90K, and the £500 a day contract in the city is typically advertised at £700 a day.

So i would say perm salaries are up 65% since 1999, and contract rates are up 40% since 1999.

Offical inflation since 1999 is like 75%. So contracting has lagged quite a bit but perm not so much.

[BlasterBates]

Not sure about others, but in IT , salaries have not increased since the last 20 years while the house price have increased 2-3 fold

Adjusted for inflation house prices haven't changed since 2007.



No difference between the price of piece of cheese or a house.

Salaries have been flat in real terms since 2007

The average UK salary in 2007 was 30,000 and is now 38,000
House price in 2007 was 184,000 and is now 224,000

What you probably mean is that there were highly paid contractors 20 years ago and the gravy train ended, but you can't extrapolate from that, and you're probably looking back to the depths of the housing crash, but they weren't realistic long term prices. Prices today are just at a reasonable level given the low interest rates. Those "low prices" in the 1980's and 1990's came with mortgages at eye watering interest rates often above 10% and much lower salaries in real terms. People were paid less in those days.

[Fraidycat]

Prices today are just at a reasonable level given the low interest rates.

Monthly payments are just as reasonable.

But you ignore my point about how much harder it is to raise a 20% deposit.

Takes 8 eight years longer to save that deposit these days.

Getting on the housing ladder is harder now than at any point in the past.

And inflation is low these so doesnt erode the debt like it did in the past.

[BlasterBates]

Monthly payments are just as reasonable.

But you ignore my point about how much harder it is to raise a 20% deposit.

Takes 8 eight years longer to save that deposit these days.

Getting on the housing ladder is harder now than at any point in the past.

And inflation is low these so doesnt erode the debt like it did in the past.

After the financial crisis banks were weak so they demanded high deposits you can buy a house with a 5% deposit these days.

95% Mortgages | 5% Deposit Mortgage - HSBC UK

High inflation doesn't help because the banks jack up the interest rates to compensate.

[Fraidycat]

After the financial crisis banks were weak so they demanded high deposits you can buy a house with a 5% deposit these days.

95% Mortgages | 5% Deposit Mortgage - HSBC UK

High inflation doesn't help because the banks jack up the interest rates to compensate.

Those wont help most people because prices are so high. You need to raise much more that 5% to get within the lending multiple.

The property you want is 250K but bank will only lend 200K based on your salary, so you need to raise a 50K deposit.

The days of self cert/ liar loans are long gone.

This is why the average first time buyer deposit is 50K ( and 100K+ in London).
Most cant qualify for 5% mortgages any more. Not unless you earn IT contractor rates...