You’ve never had it so good! Too good?
Discussion
Interest rates at a crazy low for years. Any issue the government prints more money be it for furlough, BB loans or to maintain the feelgood factor.
Food has been ridiculously cheap, cars - cheap, consumer electronics and white goods - cheap.
People “Making” £100,000 a year as there house value increases.
Have we become too used to this way off life which in many ways is soft and artificial.
We are seeing change now.
Once it normalises and people accept higher interest rates and inflation I think many will realise they need to work harder, spend less on trash and enjoy a different way of life.
I’m generalising of course but what do others think?
Food has been ridiculously cheap, cars - cheap, consumer electronics and white goods - cheap.
People “Making” £100,000 a year as there house value increases.
Have we become too used to this way off life which in many ways is soft and artificial.
We are seeing change now.
Once it normalises and people accept higher interest rates and inflation I think many will realise they need to work harder, spend less on trash and enjoy a different way of life.
I’m generalising of course but what do others think?
Absolutely. I get the impression that “growth” and wealth, predominantly in the south-east, is built upon house prices. It’s ludicrous and unsustainable.
There’s a thread in Homes and Gardens and there’s some godawful new build shoebox on some estate that will look like a prison camp in a couple of years. £900k. Nine hundred thousand pounds!!!! It’s absolutely insane - what kind of mortgage would someone need for that? It’d be thousands a month. Crackers! Can’t carry on.
One thing that might come out of this is people not buying cheap Chinese tat that ends up in landfill after a couple of uses.
Cars? Are they cheap when new? I’d argue that they’re not.
There’s a thread in Homes and Gardens and there’s some godawful new build shoebox on some estate that will look like a prison camp in a couple of years. £900k. Nine hundred thousand pounds!!!! It’s absolutely insane - what kind of mortgage would someone need for that? It’d be thousands a month. Crackers! Can’t carry on.
One thing that might come out of this is people not buying cheap Chinese tat that ends up in landfill after a couple of uses.
Cars? Are they cheap when new? I’d argue that they’re not.
IMO people will feel they already work too hard. If there is little light at the end of the tunnel they will not work harder.
They may mitigate by spending less. I think they will do just enough to get through as they will feel there is no incentive to work harder. I cannot recall that recent phrase where people basically keep working but doing as little as possible as they are cashing out and waiting for the pension or the redundancy. If pay rises are not possible, the job market slows, people will take their foot off the gas instead.
I think this has all been delayed due to softening of energy and in particular petrol prices, and the resilience in the job market. Any of that changes and the situation becomes very difficult
People will struggle to rationalise selling their houses for 100k less than the neighbours did two years ago. So the housing market will IMO stagnate as people keep their asking prices above where we are clearly now at.
IMO this is probably going to be the situation for the next decade.
They may mitigate by spending less. I think they will do just enough to get through as they will feel there is no incentive to work harder. I cannot recall that recent phrase where people basically keep working but doing as little as possible as they are cashing out and waiting for the pension or the redundancy. If pay rises are not possible, the job market slows, people will take their foot off the gas instead.
I think this has all been delayed due to softening of energy and in particular petrol prices, and the resilience in the job market. Any of that changes and the situation becomes very difficult
People will struggle to rationalise selling their houses for 100k less than the neighbours did two years ago. So the housing market will IMO stagnate as people keep their asking prices above where we are clearly now at.
IMO this is probably going to be the situation for the next decade.
The whole market, government printing money, interest rates etc... it's all an artificial construct. The problem isn't the money or the rates, it's getting enough people to agree.
Worse still, no matter what measures we use, there will always be many levels, even a pyramid with the well off at the top, down to the not at the bottom. It won't matter if those at the top are earning £1/year or £100,000/year, the levels ensure that the things the people at the top can buy, aren't available to the people at the bottom. And all the various levels in between have similar issues.
So to the intent of your question, monetarily, yes. But it won't change anything. Houses may not have such big numbers attached, nor salaries, but the system around them will adjust just the same.
Worse still, no matter what measures we use, there will always be many levels, even a pyramid with the well off at the top, down to the not at the bottom. It won't matter if those at the top are earning £1/year or £100,000/year, the levels ensure that the things the people at the top can buy, aren't available to the people at the bottom. And all the various levels in between have similar issues.
So to the intent of your question, monetarily, yes. But it won't change anything. Houses may not have such big numbers attached, nor salaries, but the system around them will adjust just the same.
Yeah let's ignore the decade of wage stagnation, the decade of increasingly unaffordable housing and the increase in in-work poverty.
Yes, some people have had a good ride and have not had the same "inflation" in their own lifestyle either through fortune or ability to buy their way out of it.
But millions of people have had a decade of decline long before the last 3 years of pandemic/energy/conflict crisis.
Yes, some people have had a good ride and have not had the same "inflation" in their own lifestyle either through fortune or ability to buy their way out of it.
But millions of people have had a decade of decline long before the last 3 years of pandemic/energy/conflict crisis.
Dog Star said:
Absolutely. I get the impression that “growth” and wealth, predominantly in the south-east, is built upon house prices. It’s ludicrous and unsustainable.
There’s a thread in Homes and Gardens and there’s some godawful new build shoebox on some estate that will look like a prison camp in a couple of years. £900k. Nine hundred thousand pounds!!!! It’s absolutely insane - what kind of mortgage would someone need for that? It’d be thousands a month. Crackers! Can’t carry on.
That house will likely have been funded by someone "making" £x hundred thousand on their previous house, combined with a large-ish mortgage.There’s a thread in Homes and Gardens and there’s some godawful new build shoebox on some estate that will look like a prison camp in a couple of years. £900k. Nine hundred thousand pounds!!!! It’s absolutely insane - what kind of mortgage would someone need for that? It’d be thousands a month. Crackers! Can’t carry on.
As for "it can't carry on"......well, they said that 10 years ago, 20 years ago, 30 years ago.
Will it carry on? Who knows. The one thing about financial armageddon though is that most people don't seem it coming, otherwise it wouldn't come.
Dog Star said:
There’s a thread in Homes and Gardens and there’s some godawful new build shoebox on some estate that will look like a prison camp in a couple of years. £900k. Nine hundred thousand pounds!!!! It’s absolutely insane - what kind of mortgage would someone need for that? It’d be thousands a month. Crackers! Can’t carry on.
Thousands? Make that many, many thousands per month if they don't have previous housing equity.Muzzer79 said:
Dog Star said:
Absolutely. I get the impression that “growth” and wealth, predominantly in the south-east, is built upon house prices. It’s ludicrous and unsustainable.
There’s a thread in Homes and Gardens and there’s some godawful new build shoebox on some estate that will look like a prison camp in a couple of years. £900k. Nine hundred thousand pounds!!!! It’s absolutely insane - what kind of mortgage would someone need for that? It’d be thousands a month. Crackers! Can’t carry on.
That house will likely have been funded by someone "making" £x hundred thousand on their previous house, combined with a large-ish mortgage.There’s a thread in Homes and Gardens and there’s some godawful new build shoebox on some estate that will look like a prison camp in a couple of years. £900k. Nine hundred thousand pounds!!!! It’s absolutely insane - what kind of mortgage would someone need for that? It’d be thousands a month. Crackers! Can’t carry on.
As for "it can't carry on"......well, they said that 10 years ago, 20 years ago, 30 years ago.
Will it carry on? Who knows. The one thing about financial armageddon though is that most people don't seem it coming, otherwise it wouldn't come.
There are definitely several groups who have done very well for a long time.
It's by no means everyone however. Lower incomes who don't own property, and - typically but by no means all - younger generations less so.
It's why there is such a negative response when someone from one of the former, better off, groups (like the governor of the BoE) says to the worse off groups 'we all need to get used to lowering our expectations'.(or similar) - there never was an "all" benefiting in the first place.
"We need to address the self perpetuating structural inequalities in our system" however doesn't have quite the same ring to it, especially for the former groups.
It's by no means everyone however. Lower incomes who don't own property, and - typically but by no means all - younger generations less so.
It's why there is such a negative response when someone from one of the former, better off, groups (like the governor of the BoE) says to the worse off groups 'we all need to get used to lowering our expectations'.(or similar) - there never was an "all" benefiting in the first place.
"We need to address the self perpetuating structural inequalities in our system" however doesn't have quite the same ring to it, especially for the former groups.
Olivera said:
Dog Star said:
There’s a thread in Homes and Gardens and there’s some godawful new build shoebox on some estate that will look like a prison camp in a couple of years. £900k. Nine hundred thousand pounds!!!! It’s absolutely insane - what kind of mortgage would someone need for that? It’d be thousands a month. Crackers! Can’t carry on.
Thousands? Make that many, many thousands per month if they don't have previous housing equity.I just ran it through a mortgage calculator - 900k property with 100k down is £5200 a month for 25 years!!!
Horrific!Thankyou4calling said:
Interest rates at a crazy low for years. Any issue the government prints more money be it for furlough, BB loans or to maintain the feelgood factor.
Food has been ridiculously cheap, cars - cheap, consumer electronics and white goods - cheap.
People “Making” £100,000 a year as there house value increases.
Have we become too used to this way off life which in many ways is soft and artificial.
We are seeing change now.
Once it normalises and people accept higher interest rates and inflation I think many will realise they need to work harder, spend less on trash and enjoy a different way of life.
I’m generalising of course but what do others think?
My first car was a 11 year old Austin A40 which cost two weeks wages in 1978. It had wind up windows and you had to lock each door with the key. It was noisy, handled like a boat and had a top speed of about 70mph. My present work car is a 20 year old C200, which cost 2 days wages last year. It has electric everything along with auto wipers, auto lights and heated seats. It handles well and will do over 130 mph. Food has been ridiculously cheap, cars - cheap, consumer electronics and white goods - cheap.
People “Making” £100,000 a year as there house value increases.
Have we become too used to this way off life which in many ways is soft and artificial.
We are seeing change now.
Once it normalises and people accept higher interest rates and inflation I think many will realise they need to work harder, spend less on trash and enjoy a different way of life.
I’m generalising of course but what do others think?
Not sure life has ever been better, I can order any choice of food on my phone and have it arrive in an hour or so, I have the ability to speak to almost anybody in the world in seconds both on the phone and online. I can research and buy anything from the comfort of my sofa. We are off to my sisters soon, that 100 mile drive would have taken 6 or 7 hours in the 70s it now takes 2 even on Friday afternoon.
We go out to eat two or three times a week, not only on birthdays or other special occasions. May be it takes living through different times to appreciate what you have now or may be we are just lucky but as a tradesman and a nurse I cannot imagine a couple in the same jobs we do being able to have lived the way we do 40 years ago.
I think a certain age group under 30? Maybe will have gotten used to it they have known no different than very cheap money and the buy it now pay later culture.
I could never understand it nothing was ever 0% you had to save hard for everything and mortgages being so cheap seems unreal it’s just going back to how it used to be.
I could never understand it nothing was ever 0% you had to save hard for everything and mortgages being so cheap seems unreal it’s just going back to how it used to be.
None of it is going to change because the people borrowing the money genuinely believe the interest rates will be back down to zero in a year or 2. I certainly speak to a few people who think they will be back below 1% this time next year. No one remembers that the low rates were emergency rates to get us past the last crisis then the pandemic.
I think spending has slowed a lot but most people are still spending. It will only stop if the credit line ends.
I think spending has slowed a lot but most people are still spending. It will only stop if the credit line ends.
Dog Star said:
The thing is that I can’t see someone with a previous home wanting to move into these - in the NW I’d say those would be middle income starter homes for a young couple.
I just ran it through a mortgage calculator - 900k property with 100k down is £5200 a month for 25 years!!! Horrific!
Everyone I know who's bought aged 30-35, and is still under 40 now, has taken out a 35 year mortgage as there's no way they could have bought their pretty modest homes, even on joint income, on a 25 year term.I just ran it through a mortgage calculator - 900k property with 100k down is £5200 a month for 25 years!!!
Horrific!Not sure whether that's banks increasing payment terms as a result of rising prices, or prices rising because people can borrow more as they're repaying it for longer. Or both.
FNG said:
Everyone I know who's bought aged 30-35, and is still under 40 now, has taken out a 35 year mortgage as there's no way they could have bought their pretty modest homes, even on joint income, on a 25 year term.
Not sure whether that's banks increasing payment terms as a result of rising prices, or prices rising because people can borrow more as they're repaying it for longer. Or both.
Its prices rising due to how much can be borrowed. If a 4 bed house costs £900k but the families wanting to buy it could only borrow 3 times the principle earners wages at 5% for 25 years (repayment not IO) that £900k house would probably sell for £500k. Previous to the 80's boom this was the case and people could afford houses. hence why all the young complain about the boomers. But they only made their money from houses because the young were willing to borrow so much.Not sure whether that's banks increasing payment terms as a result of rising prices, or prices rising because people can borrow more as they're repaying it for longer. Or both.
ARHarh said:
FNG said:
Everyone I know who's bought aged 30-35, and is still under 40 now, has taken out a 35 year mortgage as there's no way they could have bought their pretty modest homes, even on joint income, on a 25 year term.
Not sure whether that's banks increasing payment terms as a result of rising prices, or prices rising because people can borrow more as they're repaying it for longer. Or both.
Its prices rising due to how much can be borrowed. If a 4 bed house costs £900k but the families wanting to buy it could only borrow 3 times the principle earners wages at 5% for 25 years (repayment not IO) that £900k house would probably sell for £500k. Previous to the 80's boom this was the case and people could afford houses. hence why all the young complain about the boomers. But they only made their money from houses because the young were willing to borrow so much.Not sure whether that's banks increasing payment terms as a result of rising prices, or prices rising because people can borrow more as they're repaying it for longer. Or both.
I would argue otherwise, not just on housing, but also on pensions.
We've got machinists at out place that enrolled in DB pensions back when they were 18. Paying 6% of your salary from 18 to 60 left alot of people with £1m+ pension pots. The DB scheme has since been closed & replaced with a DC scheme, when inflation is taken into account I'd need to pay in 20% of my salary to reach the same figures at retirement.
We've got machinists at out place that enrolled in DB pensions back when they were 18. Paying 6% of your salary from 18 to 60 left alot of people with £1m+ pension pots. The DB scheme has since been closed & replaced with a DC scheme, when inflation is taken into account I'd need to pay in 20% of my salary to reach the same figures at retirement.
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