British Property Market Booming: House prices in England and Wales reach highest ever level; Waiting for the UK bubble to burst. Affordable home seems an impossible dream.
Tweet Topic Started: 12 Aug 2013, 06:20 PM (1,762 Views)
As house prices rise and rents soar much faster than wages, how are we supposed to find somewhere to live?
Eva Wiseman The Observer, Sunday 11 August 2013
Britain is booming. House prices in England and Wales have reached their highest ever level, which is great news for the wealthy, the government and the forgetful. Because in 2008, the last time this happened – the last time houses turned to gold, the bricks of mansion blocks flaking saffron – we learned quickly that booms go bust. We learned that our houses should not be treated as centrally heated investments, that we should start thinking about success in different ways. We learned also, that what is good news for one person can be crushingly, life-alteringly bad for another.
How many of us are really cheering at the rise of house prices? Scrolling through property website Zoopla is my low-level self-harm – fork scratches instead of razors. Savills says the average price of its London stock has reached £3.2m, so here are the houses I will never own. Here are the kitchens I'll never argue in, the bathrooms I'll never paint regrettable shades of green. But mine is a sad and secretive habit.
In my world, my world that reaches horizontally to the London suburbs and vertically into the internet, my friends don't talk about house prices. They talk about the impossibility of paying rent. And we're working, we're all delighted to be working. We're working in kitchens, offices, bars, other people's front rooms, and the conversation when we get home is never of houses but of rising rents and frozen salaries.
There is no point in saving, now. Not only is interest so low as to be meaningless, but, without a charity cheque from a deceased relative or rich parent, my peers will be 62 before they can afford their own home. Largely due to foreign investors, rents have gone up eight times faster than wages; for my generation, the threat of homelessness feels far more real than concerns about home-owning.
Every week, more friends are trickling down motorways from their homes of over a decade, another weekend of shovelling mattresses into vans in the awful tarmac sun, another forwarded email: "Does anybody want my wardrobe?"
When possible, they move into their mums' houses; when possible, their mums give them their savings. Last year, parents gave their children £2bn to help with housing costs; Shelter has launched a campaign imploring the government to build more new, affordable homes, because the current situation, it says, is unsustainable. The increase in the supply of mortgages (one in 10 of which is buy-to-let) and a chronic shortage of housing mean prices are rising at the fastest rate ever. We need more homes. We are overheating. We are the summer of 2008.
Last Thursday, Channel 4's provocatively named How to Get a Council House visited my east London borough, a diverse and thick-aired place, where each week 24,000 people hope to get one of the 40 council properties available. To me, it painted a portrait of a system that is as humiliating as it is impenetrable, but Twitter's hashtag showed that much of Britain was seeing something quite different.
The hashtag #howtogetacouncilhouse revealed a humming swarm of racism and anger. "What a bunch of lazy, scrounging, teenage pregnant scum"; "Can someone knock me up please? I'm bored of paying a mortgage"; "How to get a council house? Become a Somali, have eight kids and then get a £2m house in London for a grand a month". If their opinions didn't exactly mirror those of Kirstie Allsopp, they certainly reflected them in a dirty puddle. She claims that young people are "losing the concept that you make sacrifices to get on the ladder". Sian Astley, a TV presenter, agreed. "Many twentysomethings seem to want Hollywood and handbags, rather than pensions and property… Hard work reaps rewards."
People shock me, constantly. Who still believes this? Who, in these times of zero-hours contracts still believes that the unemployed, the poor, the young, are simply not working hard enough? Who still believes that it is possible to buy a house on a single income, without an injection of family money?
There's a moment in Noah Baumbach's new film Frances Ha, where Greta Gerwig's character is told by her flatmate (a bohemian writer whose parents' wealth is evident in his every eye-roll): "You're not poor." Saying you're poor, he says, "is offensive to actual poor people". And yet. And yet she is living on the very edge of comfort. She, like so many people I know, is floating. It was a reminder that as summer 2013 fades to a close, gradations of poverty get ever murkier.
When did social housing become the last stop, the final sigh? When did it stop being desirable, a place of hope and gardens? Today, those claiming housing benefits are routinely dismissed as scroungers, yet more and more, there are clues that this is a title that might better fit their landlords. Landlords who are profiting from exploiting their tenants' desperation – these are the people screwing the system, not the tenants. They just want a bed.
Simon Childs, a reporter for Vice magazine, went to the Property Investor show in London, where he sat through a talk by Mike Frisby, a "housing benefit expert" with Cameron hair who teaches landlords how to squeeze every penny from the local housing allowance. Key to this, he said, was charging the highest possible rents on the lowest value properties (the difference is paid by the council and taxpayers), and remembering that you can get more money from four single LHA tenants than a family of four. One in 12 families in Britain is on the waiting list for social housing. But, increasingly, as a housing benefit cap (at £500 per week for couples and £350 for singles) is being introduced, private landlords are turning down tenants on benefits, simply because they won't be able to afford the rent.
And me? I have this great idea. Where all my friends and I club together and buy an office block. And in it we build a modest utopia, with amazing broadband and a really good bin rota. I just want out of it, really, all this. All this news that means the carpet you walk on is a mirage, moving. I don't want to be at the mercy of hungry landlords or to scratch together that extra 3% stamp duty on top of the £250,000 I'm borrowing for a tiny flat above a fried chicken shop. I want to sit there, in a home I can afford, and eat pasta with my friends and wait for the bubble to burst. And then, we can start again.
By Tom Gardner PUBLISHED: 09:29 GMT, 27 September 2013
House prices rose at their fastest annual pace in more than three years in September - stoking yet more fears of a property bubble.
For the first time since 2007, all 13 UK regions have seen annual house price growth, according to Nationwide.
The figures are signs that 'the pick-up is becoming increasingly broad-based', the building society said.
On the up: House prices rose by five per cent since last year - stoking fears of a property bobble developing
But experts warned that a housing price bubble could emerge as demand for housing continues to far outstrip supply.
The annual rate of house price increases rose to 5per cent across the country, marking the strongest uplift seen since July 2010.
Prices are also up by 0.9per cent month-on-month, following a 0.7per cent monthly increase seen in August, meaning the typical UK home is now worth £172,127.
Fears have been growing in recent months that Government schemes such as Funding for Lending and Help to Buy, which have widened mortgage availability and encouraged more low-deposit lending, could be helping to stoke up a house price 'bubble', with people overstretching themselves.
But these concerns have been dismissed by lenders and by Chancellor George Osborne, who recently said that house prices have 'barely grown' outside London.
Nationwide's chief economist Robert Gardner warned that house building is still running at levels below what is needed to keep up with demand, which will fuel the upward pressure on prices.
He said the acceleration in house price growth from a subdued pace last year has been 'surprisingly quick', although prices are still way off their previous peaks in many areas of the UK.
He said: 'Overall, UK house prices are still around 8per cent below their 2007 highs. However, there is still significant regional variation, with prices in Scotland, Wales and the North of England around 12per cent to 14per cent below their previous peaks, while in many southern regions prices are 5per cent to 7per cent lower.
'Only in London are prices at an all-time high, 8per cent above their previous peak.'
He added: 'The risk is that if demand continues to run ahead of supply, affordability may become stretched. House price growth has been outstripping average earnings growth since the middle of the year, for the first time since late 2010.'
At the moment, 'ultra-low' interest rates are helping to support the affordability of mortgage payments, he said.
A typical mortgage payment for a first-time buyer is around 29per cent of their take-home pay, which is in line with the long-term average.
On a regional level, the biggest increases continued to be felt in London, where prices have risen by 10per cent year-on-year and at £331,338 typically they are not only at an all-time high but are sitting 8per cent above their 2007 peak.
But the pick-up remains patchy. Manchester also saw a 10per cent increase in house prices over the last year and Newcastle recorded an 8per cent rise - but at the other end of the spectrum, prices were down by 3per cent annually in Carlisle and by 2per cent in Southampton.
Despite all regions across the UK seeing house price growth, the gap between average property values in the North and those in the South of England has widened to a new high, topping £100,000 for the first time.
A house in the South of England is typically 74per cent more expensive than one in the North. Prices in southern regions have risen by 6.1per cent year-on-year and this increase is almost double the rate of the 3.1per cent rise seen in the North.
Nationwide said that the 10per cent year-on-year growth in London marks the first time the English capital has seen a double-digit increase since 2010.
East Anglia saw the second highest annual increase in house prices at 6.6per cent. House prices were up by 3.6per cent in Wales year-on- year and by 2.2per cent in Scotland.
Northern Ireland saw its first annual price rise since 2007, albeit a small 0.9per cent increase, indicating that prices there are starting to stabilise, Nationwide said.
Northern Ireland has the lowest average house prices out of all the regions, at £108,671. The lowest year-on-year price increase was recorded in the North of England, at 0.2per cent.
London sure is the place to be - for half of Europe, the ME and Africa.
Billy, the British people have been gouged through every orifice by the FIRE sector and the whole economy is just about dead now as a result.
I am reminded of what someone once said about the difference between a nation with a military and a military with a nation.
The UK isn’t an economy with a FIRE sector, it is a FIRE sector with an economy.
Urban land being around 300 times too high per square foot results in the OECD’s densest cities for their size (smaller amount of space per person than even Japan) and yet “housing” is still unaffordable.
Yes, it is possible to keep ratcheting up the economic land rent decade after decade after decade, with the people desperately downsizing to stay alive. It is possible to stave off the full and final crash for a long time, but having London helps – the biggest global finance centre in the world, the capital of the historic British Empire, the biggest media industry in the world. If London was not a parasite on the whole world as well as the FIRE sector located there being a parasite on the entire UK economy, the UK economy would have had its full and final collapse a long time ago.
It remains to be seen how long economies like Australia and/or NZ can last imposing the same insanity in spite of the land-richness of their economies.
And the UK has had its share of busts – there is just always a higher floor underneath the property prices. But the desperation mode that its government is in now, suggests to me that the full and final bust cannot be far away for them. The loose credit and FHB subsidies are a sure sign. Pity the FHB’s entrapped by it.
Well friend, I guess you couldn't respond in a sensible fashion to my post, could you now?
London sure is the place to be - for half of Europe, the ME and Africa.
There aint no doubt they won't have trouble finding buyers over there.
:pop:
London has always been an international trading port and has always have an international flavour. As do most international trading ports. It tends to add to the character. If you are talking about recent levels of immigration - point to the place in the world where this hasn't happened?
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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