Is the first rung on the property ladder broken?

[TimberWolf]

So your "solution" is to reduce deposits?

The solution is for prices to come down to sensible level - that's the net positive effect of x3 salary and 25% deposit, it allows to keep sale prices under control.

What did an average house cost in more austere times? It would be more than x3 salary because an average house isn't bought by first time buyers. Say x6 average salary?

[AtW]

What did an average house cost in more austere times? It would be more than x3 salary because an average house isn't bought by first time buyers. Say x6 average salary?

I think 10 years ago average house price was something like £70-80k?

Granted now pound is worth a lot less, but still I can't see any justification in average house costing more than £100k in country where average salary is like £25k and cost of living is very high.

[Cyberman]

Nobody has a devine right to own a house. Thatcher brought potential home ownership to the masses, but a house should only be available to those that can afford it. Otherwise, they should rent, just as they used to in bygone days.
If these people then aspire to better paid jobs they will then be able to save and one day buy. I did not buy my first house until I was 29. Far too many people expect everything to fall into their laps nowadays for very little effort, possibly because of the way Labour dish out benefits to all and sundry.

We need to return to the days of reward for effort and removal of reward for failure !!

[TimberWolf]

I think 10 years ago average house price was something like £70-80k?

Granted now pound is worth a lot less, but still I can't see any justification in average house costing more than £100k in country where average salary is like £25k and cost of living is very high.

But bringing house prices back to sensible levels would spell Armageddon for debt riddled Britain. Likewise high interest rates for over mortgaged Britons would bring about rioting in the streets.

I am selling my flat hoping in the hope of a further drop in house prices, but don't really see how it can come about without things falling apart. Inflation may be the only way of this mess, in which case selling my flat (and holding cash) was a bad move.

[AtW]

But house prices back to sensible levels would be Armageddon for debt riddled Britain.

Well, until house prices fall further lending won't resume because banks expect prices to fall further.

I am selling my flat hoping in the hope of further drops in house prices, but don't really see how it can come about without things falling apart. Inflation may be the only way of the mess, in which case selling my flat (and holding cash) was a bad move.

Usually inflation was the thing that did it, but this time the whole world is affected and central banks are printing money in sync, so inflation comes only to countries with weak currencies... like pound.

[Cyberman]

But bringing house prices back to sensible levels would spell Armageddon for debt riddled Britain. Likewise high interest rates for over mortgaged Britons would bring about rioting in the streets. Inflation may be the only solution.

I am selling my flat hoping in the hope of further drops in house prices, but don't really see how it can come about without things falling apart. Inflation may be the only way of the mess, in which case selling my flat (and holding cash) was a bad move.

With as shortage of housing, prices will remain relatively high purely due to supply and demand. With the recent adjustment in taxes, this could add to demand for property for investment as an alternative to pensions, so HMG policy is not helping.
If swine flu takes off here we could see some very cheap property !!

[TimberWolf]

Well, until house prices fall further lending won't resume because banks expect prices to fall further.



Usually inflation was the thing that did it, but this time the whole world is affected and central banks are printing money in sync, so inflation comes only to countries with weak currencies... like pound.

Where do you feel will be the safest haven for wealth over the next years. Property (obviously not), precious metals, currency (e.g. Chinese), shares...? I think I might have been better off renting out my flat and renting somewhere cheaper myself rather than being left holding a pile of cash.

[AtW]

Where do you feel will be the safest haven for wealth over the next years.

Nothing safe left, not even cash reserves split into different currencies: the prospects are pretty crap for everything - we'd be lucky if this swine flu won't kill half the world in a week.

Invest into some canned foods...

[TimberWolf]

Nothing safe left, not even cash reserves split into different currencies: the prospects are pretty crap for everything

Perhaps that's why people are deciding they might as well sit tight in their overpriced houses.

[AtW]

Perhaps that's why people are deciding they might as well sit tight in their overpriced houses.

Indeed, so it will take some time for forced sellers to drop prices. The sooner it happened the faster the recovery will come.