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Saturday, 3 August, 2002, 11:34 GMT 12:34 UK
Are house prices out of control?
UK house prices are growing at their fastest rate in 13 years, according to the Nationwide building society.
House prices rose by 21% in the year to July, in the biggest annual increase since 1989, Nationwide said.
According to the building society, the sharp rise helped to head off fears that recent stock market slumps would affect consumer confidence in the housing market.
However, it warned Londoners that the sharp fall in city share prices had already contributed to a "significant" weakening of the upper end of the housing market in the capital.
Have you benefited or suffered from the boom in house prices? Send us your experiences of the housing market.
Iain McLaurin, Scotland
Why can't people see homeownership for what it is - an investment? If prices are too high, don't buy! Find a reasonable property to rent and invest your money in other ways. Even with low interest rates at the moment do people realise how much interest you pay on a mortgage?
The fact of the matter is that the government needs to take a dual approach. One, ban people from owning more than one house and two, create more national parks and allow the rest of the countryside to be built on. Yes the nimbies will complain but who cares? The fact of the matter is that the population is greater and 40s planning restrictions just won't work nowadays. An affordable home for everyone is more important than a few people having a nice view!
I think we are seeing a transition in this country whereby more and more home owners are becoming small time property agents. I think we will see the days where a greater proportion of the population live in rented housing rather than own their own property, but rather than renting from the local authorities as it was 25 years ago or more, it will be through privately let property. The house market is merely going through (a modified) full circle.
Over the last 30 or so years house prices have been based on two incomes rather than one. As more people divorce or separate each person tends to want their own property. So you end up with a lot of single people after properties they could only afford as a couple; or to put it simply fewer properties to go around which hikes up the price.
Peter Wright, USA
Prices in London and the south east have always been wrongly used as the barometer for housing prices. Ever since I was a kid in London 50 years ago, ordinary people have been unable to afford to buy, except in the most run down neighbourhoods. We know that the abundance of public housing met the needs of the lower income families. Private sector housing will never be an alternative for them.
The size of this country simply can't sustain the population size with what it wants. Especially if near 20 million people want to be packed in the south east, it's no surprise population prices are out of control there. Come up north and you can get a decent four-bed detached house for less than £100,000. Myself, I'm moving to Australia, a country with the equivalent of the south east's population spread over an area the size of the US.
I live in Germany and people do not expect to own a house because property is expensive. The UK is playing catch-up. Also, the UK is two separate and distinct economic areas; London and the rest. Prices outside London are very cheap. I own 40 properties in the UK and achieve yields of 20%. Therefore the property I buy in the UK, is ludicrously cheap.
The rental market is already overheating. There is a glut of properties available and many have been on the market for months. Rental prices are coming down which is going to affect buy-to-let landlords. We may see a large dumping of housing stock soon by those who can no longer afford their buy-to-let mortgages without tenants.
The government should keep its hands off. Enabling teachers, nurses etc to afford to live in the south east will perpetuate the problem. When the employers who insist on concentrating investment south of Oxford can't educate their kids or get hospital treatment, maybe they will move north.
We now see Thatcher's mistaken "right to buy" policy bearing a bitter fruit.
Before the creation of our current planning laws after WWII there was an adequate supply of housing and it cost most middle class workers about a year's salary to buy a decent home. Since the creation of planning laws supply has dwindled and prices rocketed
Although I agree that supply and demand is part of the problem especially in the south, I think part of the problem as well is people thinking they need to get on the property ladder at any cost. I think buyers should have the common sense to say "I am not paying that ridiculous price." If people start doing that then buyers will start realising they can't just ask for exorbitant prices and get away with it. I was thinking of buying earlier in the year because then I could afford what I wanted where I wanted it. Now due to the price rise and because I can still rent I will only start looking again when
prices have fallen to more acceptable levels.
It is not greed that is driving up the cost of housing. It is an issue of supply and demand. With the breakdown of cohesive family values, we are increasingly unable or unwilling to share our lives with others. We therefore find an incredible demand for single person households. There simply isn't the supply to cater for this demand. The sooner we lose the isolationist concept of the Englishman and his castle and embrace a society and community which supports the family, then we may begin to address a significant part of this very complex problem.
The Council for the Protection of Rural England (CPRE) restricts new house building. This limits the supply and raises prices. I used to live and work in Portsmouth, and still have a house there. Most housing in Portsmouth is of the old terraced variety, two-up two down. People with money buy to the north of Portsmouth, out in the countryside, where supply is limited and hence prices very high.
In England, by and large, the plebs are kept in the reservations. In America (where I lived for some years) such a policy would be unacceptable. Although we have less land here, in the case of Portsmouth and Hampshire, the standard of housing would be greatly improved by building on the sacred English countryside.
For those of us who are over 50 who lost out in the last property slump, this recent boom in house prices has been my saviour. I have recently traded down and have released capital which I shall invest in other ways back into the housing market in an effort to build a retirement fund. There is no prospect that my pension will be worth anywhere near enough to live on in eight years time, so what else can I do?
I'm turning 25 after graduating University at 21 and will have debts for many years to come. I see lots of comments about public sector and low paid workers not being able to afford housing. The problem goes a lot further than this. As a civil engineer living in London I get paid the same as my partner who is a teacher and my sister who is a nurse. None of us can dream of buying properties as individuals or, the way things are going, maybe as couples.
Under current circumstances any children I have will only inherit a nice rental deposit, if they can ply it from the hands of the agent that is! I'm sorry to say it for those people who are set to lose, but I can't wait for the crash. Otherwise I'll have to take a 100%, 5x salary mortgage, buy myself the shoe box I've always wanted, rent the kitchen cupboards out to students, and spend 40 years and 75% of my wage paying it off. I can't wait!
On Tyneside and throughout the north there are many fine terraced houses that can be bought at a very reasonable price. Investment in industry has been in the south and that is why house prices have spiralled. Come up north and live on Tyneside!! You get more house for your money and the countryside and coast are fantastic.
It may well be wonderful and cheap to live in Tyneside, Dr Gilbert, but when all of your family and friends live down south and your work is located down south, it isn't really an option is it? Plus, you can't expect everyone to relocate to Tyneside. I am in pretty much the same situation as Iain Alexander. I have huge student debts, my husband has a huge loan and we are paying really high rent to live in a small flat. We can't get the deposit together as all our money goes on rent and even if we could, house prices are so ridiculous we'd probably have to move to Tyneside!
From this side of the Channel, the situation in England is laughable. Here you can buy a detached house with land for about 1/4 the price of a dingy semi in south east England. It really is mad.
I have to disagree with Michael Collet from France. I remember back at the height of the 80s when my parent's house was worth about £45,000 you could buy a flat in Greece for about £5,000. My parents' house is now worth about £70,000 yet a flat in Greece is about £50,000 +. The point being is that everyone is complaining that house prices are too high in the UK but the reality is that house prices are high across the whole of Europe.
What do you expect in a fairly small country with a huge population? Housing is going to be at a premium.
I've been to the UK, and love it, but you have to face the fact that supply and demand are going to drive prices up.
Don't forget there are people in some areas of this country having trouble selling their houses at any price. The problem is the ridiculous, pathetic and unsustainable concentration of employment in a few areas - particularly the South of England. Government and employers (especially ignorant multinationals) are to blame.
David Taylor, UK
I don't understand why it is so great for house owners. My house has gone up in value 25% over the last year - so what? Unless I sell and decide to rent or buy a smaller house, I will never see the money. What is more likely is that if I want to buy a better house, the price differential will be commensurately greater, meaning that I'll actually lose out!
I'm now 31. I graduated from university nearly six years ago and I'm still paying off my student debts. It scares me to think that I will probably never own my own house. I can't even afford to buy a pension at the moment, let alone think about saving for a deposit on a house.
I feel for people like Iain, 31 and still paying off student debts. I sold up three years ago and moved to Japan. Very few people own property here as it has the opposite effect. But here you can really save lots of money and have a wonderful lifestyle. I found it so worthwhile learning the language here and leaving all the woes in UK forever.
The people saying that property prices can only keep on rising must be the same ones who thought the dot.com bubble would never burst. Anyone who took the trouble to analyse long term property price figures would be able to spot an over inflated property market at the moment.
No wonder house prices are going up: with people talking pensions down and most investments looking like a lost cause, people are putting their money in the only safe place left - their homes!
House price inflation is always reported as good news. But who does it benefit? Only the lenders, estate agents, and those moving to a smaller property. To most of us it is just as damaging as any other form of inflation. Soon it will become clear that money cannot be created from nothing. This has already become apparent in stocks, and will hit house prices next. It can't come too soon as far as I am concerned!
I've sold my house and stashed the money away in anticipation of a massive slump. It has to happen. Then I will make the killing that will pay me back for losing in the last slump.
Although the property market is often considered to be one that can only go up, it should be made clearer to the general population that this is only in the long-term, and even then not an absolute certainty. Every 10 years or so we see a boom followed by a recession and to me this appears to be just another example. This year may have seen the biggest annual increase since 1989 but in 1992 house prices fell (along with the rest of the economy). I find it hard to believe that there won't be some sort of similar slump in the next few years.
As a mature student with a wife and two kids I am looking forward to graduating so I can finally leave this country. Chronic under-funding by successive governments has created a huge shortage in social housing. While I feel for the plight of public service workers the government should also consider that most of the population receives less money than them but would also like to buy their own home.
Brendan Fernandes, UK
The housing market has overheated already. All we are seeing now is greed as people try to jump on an already over laden bandwagon. How is it that prices are skyrocketing? Is it due to a phenomenal population explosion causing increased demand? Is there a shortage of construction materials pushing up overheads? No. So where are these price rises coming from? Greed.
It's great for those of us who already own properties, but I do feel for those who are trying to buy for the first time. As it is, a lot of people will be in trouble if interest rates rise to any extent. So although Bob may be right that it is greed driving it, it isn't all on the part of the investors. It is due in part to the lenders.
After losing so much investment in shares and ISA savings, I'm pleased to have made a profit from the sale of my home. Although I may be paying more for my new home than I would have a year ago, I see it as a rock solid investment.
I agree with Jeff. Whilst I acknowledge that we need key workers, the key workers I know (including a nurse and a police officer) are on a much higher salary than I am, with paid overtime, more holidays, improved job security and access to better pension schemes. What government help is available to those of us not classed as key workers?
This is great for those of us who are on the property ladder, we are making money hand over fist. Spare a thought for those who have to survive and find a place to live on what most companies offer as a "living wage". In most cases policemen, nurses and teachers are on far better salaries yet they are being given preferential treatment when it comes to buying a property.
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