Anticipating major slowdown in UK housing market

All very interesting points, thanks to everyone for weighing in. 

After hanging out in a couple of our friends' homes this weekend, which are each in the £2mil (not a typo) range, I don't see how they are going to make money in home appreciation in the next 20 years.  Maybe I'm wrong, but it's hard to see (for me).

Dennis, you make very good points about work sectors and housing.  Though everyone we know who has a large home in our area is self employed in the IT business.  Not financial or law.  One fellow is a former creator of Teletubbies so he doesn't count, but the rest are in IT.

Perhaps the US is a good place for real estate investment.  I certainly do not want to have to live there!  So we wouldn't invest there, as we couldn't manage a property well enough from here.  It seems the same locations in the U.S. continue to be the high income, good investment options (such as lots of counties in California and Florida), whilst others continue to struggle with poverty (Texas, North and South Dakota, for examples).  Despite predictions of 'growth areas', doesn't seem like things will change that much.

And my own personal 'yuck' response to 'growth' in the U.S. comes from what growth typically means:  chains shops, strip malls, mega stores of all variety.  If these planned McMansion communities called, 'River Run' actually had a river...

Whilst I understand frustrations are running quite high when it comes to buying a place in the UK - extra or higher tax for those in the BTL or second/investment market isn't the way forward. Targetting a specific group based on their relative success isn't the way it should work - knee jerk reaction to that argument is 'if I pay more tax becuase I've been successful in my market, it should mean I get more in benefits if/when I need it - like jumping the NHS queue or getting 50% prescription discounts, or free public transport' etc etc.

I don't think that argument holds up very well.  After all, I earn more money than certain people, so I pay more tax, but I don't expect to jump them in any NHS queue.  Tagetting people for tax based on their sucess is the basic principle of taxation - people who earn more pay more tax.

What about Keynsian economics?  (the only economic theory I actually understand)

High taxes during times of prosperity and low taxes during lean times. 

this would certainly even out the playing field for real estate - raising taxes for those who own more than one abode and lowering taxes for those who are first time buyers. 

Makes sense to me. 

hiya!

Yes I can see your view on taxing more if you have more properties - to some extent I do agree with that, however I still beleive more 'common sense' would be to build upwards. We are short on space, so logically, when building, we should add more floors to get more liveable/workable space for the same footprint of land. Increasing the taxes is an easy way to generate more cash for the govt. whilst still leaving the same underlying problem - which is over inflated, unreachable/unaffordable housing for a vast majority of the population - so which is the most common sense thing to do? I think a mixture of the two, build upwards and increase the tax on a 2nd or 3rd property - but not to strangling levels.

I'm not looking to buy my next property investment here anyway, I'm off to buy in the US or Canada - I'm happy to pay the amount of tax there in proportion to the property I get which offers me a greater level of value for money.

Like anything, its impossible to please everyone all the time every time, but housing- which is a basic need in any country, here is at the level where serious compromises must be done in order to get what basically amounts to a small, lower value for money property - I've had enough, and similarly, many thousands of others have too buy buying abroad.

Also, Muse - I understand there are indeed some very well paid IT jobs out there, but in reality they are by far and few between. The Average IT salary is £35K across all IT sectors, which doesn't really go very far in most areas of the UK - like any industry, yes there will be top earners, but for 'most' they'll be on a salary which doesnt really go very far in terms of the housing market. There was a statistical breakdown of IT jobs by area and slalary levels and the sector with most jobs was the £22-30K bracket, with something like 45% of the IT sector. The higher 30-50K and over 50K brackets were a very small proportion. I read a report of 'professional' occupations and law and financials had the highest salaries across the board - even medicine has fallen off the radar to an extent - simply put, less people are doing what used to be deemed as high earning careers because of the fact after all that hard work, they still can't (generally) get a decent paying job, get on the property ladder - oh and will have £30-50K in debt upon leaving uni anyway.

govt needs to fix these 'basics' - housing, costs of living to be more in line with realistic earning levels in order to get back the quality and willingness to invest in the country - right now its dwindling.

I'll shutup again now! as always, there's alot of inter related aspects !

Cheers! DtM! West London & Slough, Overpriced & Dwindling Value for Money UK!

Like anything, its impossible to please everyone all the time every time, but housing- which is a basic need in any country, here is at the level where serious compromises must be done in order to get what basically amounts to a small, lower value for money property - I've had enough, and similarly, many thousands of others have too buy buying abroad.

But what if one has to actually live in the 'better value for money' investment?  Take Texas, which has the highest number of the poorest counties (measured by income per capita) in the United States, within it's borders.  And a climate which doesn't bode well for keeping energy costs down.  And is not generally regarded as a physically beautiful state.  High rates of domestic violence.  Etc., etc.

As you know well, it's the surroundings, schools, community around the actual property which can make such a difference.

Maybe I won't have a huge hob with a hood and massive fridge, or things like 'retreat' off a master bedroom.  Or 25' high ceilings (to cover with curtains I have to pay for) but I would so very much rather have a cozy, charming, rich-in-history English home than some American cookie-cutter creation.  I know not all homes there are like that, but an increasingly amount are and are 'good for money value' in terms of cost per square footage.

Dennis, you mention the government needs to do some things about the cost of living, housing.  Do you think that will happen?

Muse -
Yes, 'value for money' can and does vary in every individuals personal view. Some people consider buying a 2 bed flat overlooking the thames in eton for £450 grand 'value for money compared if they tried to do the same in Central London etc etc - However, looking at the 'broader' picture and the vast majority of people in all industries and demographics, 'buying a house in the UK is currently a) not possible b) any hope of buying usually involves alot of compromises and c) financially stretches and strains and represents less value for money'

It's the reason stupid 5 and 8 times multiple salary mortgages have become common, it's the reason why buying with friends has/is becoming more popular - they are 'patchwork' temporary resolutions and the very few who are financially astute will steer clear of them -

Flipside is, the UK's 'borrow now pay later' ethos is what has kept the country afloat - and that acceptance by the 'majority' of the populace to burden themselves with insane amounts of debt is what's fuelling the diminishing value for money thing in terms of house pricing and cost of living amounts.

the govt. won't do anything (as such) becuase it all 'looks' good on paper, they collect ever higher amounts of tax based on those artificial monetary values on housing - they know they're onto a good thing there in terms of revenue raised for it's coffers. If they did the sensible things - oh like build upwards, then prices will come down and they'll collect less revenue - how will they pay for public transport and the nhs and the proposed trident replacement then?! by taxing us even more right?!

'change' always takes time, it's easy to be negative based on frustrations, 8 years ago I didn't hear of people complaining, becuase we were coming out of a recession/general econmic slowdown - over the years the increases have gone up and up and up oh and up again (not just housing! but everything!) yet income hasn't! so there has to be a point where that 'vast majority' just cant function anymore - earlier in the thread,  Mrs Pink mentioned theres a likliehood of house prices 'doubling' over the next few years! will ANYONE be able to afford any property in the UK? will salaries also 'double'? the ratio doesn't make sense as if everything doubled, we'd still comparitively be in the same situation! IF that happened it would be that house prices doubled and average salary levels might go up by 1 or 2 grand or something stupid like that!

From your example I understand what you are saying, not everyone wnts a big hob 25 foot ceilings and a den from the master bedroom etc - granted.. Life is full of change and I'll stick my neck out slightly and say 'most of us in the rat race' will undergo some sort of change - getting hitched or unhitched, having sprogs, job changes etc etc - problem then arises when your needs change and what you 'want' an dquite often 'need' is unreachable. What if you found you cant have the rich in history, charming, cozy cottage becuase now it's 40% or so above your means? the very basic level, first time buyers - there are very very few places left in the UK where they can get a 1st time stuido or 1bed place - those higher in the chain, another sprog has arrived for instance and need a 2 or 3 bed home, schools, hospitals etc, either cant move or must compromise and go to a 'cheaper' area.

My personal way forward, is that 'you have to make the changes yourself' - the govt. isnt! (if it is, its incredibly slow) if there's something wanted, then do what needs to be done to get it, 2nd jobs, business ventures, etc to get the money in to get what you want - investing in BTL - absoutley go for it, if you get taxed extra as idea has been put forward here, then think of something to do in order to 'make up for it' -

Basically, it's galling being a G8 country and looking at other G8 countries and seeing what the vast majority of the populace has or has access to or has option of compared to here. Another internet site/forum I visit has 99.9% members/posters in the US - I'mthe only English person on there, I asked them if they'd ever consider a move here and out of about 25 who responded only 2 said they would or seriously consider it - becuase of the higher costs, less value for money, greater degree of compromise 23 out of 25 wouldnt even give it thought (I know its not representative as a whole! - but they are similar to UKY people in terms of jobs, professions, so thats why I asked)

I'll shutup again! - maybe what I say others will laugh at or say I'm stupid or something, I dont really know too mch about politics etc - but like many others, I would like to be able to build, aim for, go for something as basic as housing without having to compromise too much as seems to be the case in the UK (other thing I'll rant about is Petrol Prices here and having to compromise there - but thats a whole other thread!)

Cheers! DtM West London & Slough UK!

 
The USA housing market is coming down. in Dubai is going to -25%.
My US real-estate agent told me the market is slowing down , and nobody is buying ..

Many landlords in my BHX are buying houses between 40-8 houses per person with interest only and renting them.  They are losing money in short term, but they will be making money in long them let say in 5 years. They are taking a lot risks..
kal