38 minutes ago, nod said:

Quick answer to the above is NO Self build hasn’t become unaffordable 

Whilst costs have gone up So have property prices 

Where else can you get a home exactly how you want it and in the location of your choice 

That rather depends on where you live though. It costs what it costs to build a house and it isn’t any cheaper in Scotland but house prices are very variable based on location largely driven by the value of land. Property prices are also starting to cool and could well start to decrease whereas the cost to build is only likely to increase due to inflation. Will building plots drop in value if house prices drop? Possibly but good plots are scarce so likely to still command a lot of money. 
 

The benefit of building yourself is as you say, you get to build exactly what you want based on what you can afford in a location you chose. Could we have found a modern well built house in 1.4 acres with a stunning view in Perthshire? Not likely. For me that above all else makes it worth it and why we are not stopping. 
 

 

1 hour ago, Ferdinand said:

And at present there is hardly anyone without 20-25% headroom on their Loan to Value.

 

That sounds optimistic.

 

1 hour ago, Ferdinand said:

I'd be after tax reform. CGT on Main Residence, Proportional Property Tax.

 

Interest rates will be going up modestly on their own.

 

The almost impossible to model/predict danger would be that the indirect economic damage caused by such changes could multiply the effects of the changes themselves, possibly quite significantly. You'd then potentially have a vicious cycle of falling house prices causing deterioration in economic conditions causing falling house prices etc.

 

The only way I could see this working is if it was announced in advance as a 10 year (say) plan, where the impact of the changes are phased in via updates every quarter (say). By making the changes frequently, they'll be small quarter to quarter, so hopefully no panicky behaviour. 

Still politically unacceptable for any government to try, not least because it would involve being honest with those they govern.

Second homes and holiday homes should be taxed to make them unaffordable. 
 

Grand designs had a good realistic home on last night’s show. Modern prefab. 
 

 

46 minutes ago, jack said:

>And at present there is hardly anyone without 20-25% headroom on their Loan to Value.

 

That sounds optimistic.

 

Run the numbers.

 

The % of mortgages at fixed rates has been running at 96% since 2019, and of the total stock 74% are at fixed rates. That's one buffer, especially for recent mortgage takers. Virtually all - especially recent mortgagees - buffered against rapid rate rises.

https://www.ukfinance.org.uk/news-and-insight/blogs/how-the-bank-rate-affects-mortgage-rates

 

Plus house prices are up 20-25% in the last 2 years, which roughly for everybody with a mortgage 1 year old means their max possible LTV is 85% (assuming 95% max), and for 2 years a max LTV of 75%. That's a huge buffer against negative equity.

No ref but that is about right.

 

Taking owner-occupied England, 8.8 million homes owned outright, 6.8 million with a mortgage. So the people at risk of -ve equity are less than that number. Add a notional 12% for the other nations.

https://www.ons.gov.uk/peoplepopulationandcommunity/housing/articles/researchoutputssubnationaldwellingstockbytenureestimatesengland2012to2015/2020

 

The only ones at really serious risk are those very recent purchasers (and amongst those FTBers have had all sorts of support packages as we know).

 

How many does that leave at immediate existential risk in say a potential 10-20% house price correction over 2 years? You're more the boffin on population than me.

 

I'd say in the words of Paul Daniels - Not a Lot.

 

(In the Great Financial Crisis the top to bottom correction was about 13% aiui.)

 

It could be a 10 year plan, or say applied to an increasing % of the value of the house per year say by 10% pa, or in some way immediate.

 

The lesson to learn is from the disastrous 4 month warning given in 1988 when Nigel Lawson abolished the double tax relief on mortgages and caused market chaos and soaring prices.

 

I'm not convinced the consequences will be as bad as you think, as it is basically redistributing froth on house values, and not prices.

Somehow we need to lance the boil of a non-functional market, and to me this looks like a good time. It would cause *some* disruption, but the concept of housing as an investment and a source of profit before it is a home needs to be destroyed. In fact a more functional market would make housing a realistic store of value.

 

My take.

F

 

1 hour ago, Kelvin said:

Second homes and holiday homes should be taxed to make them unaffordable. 
 

Grand designs had a good realistic home on last night’s show. Modern prefab. 
 

 

We could perhaps Nationalize holiday homes and give them to poor 

No need for that just don’t make it so easy for folk that have lucked out on the property market to buy up houses in nice parts of the country making it unaffordable for people born there to buy or rent a house. 

Edited September 8, 20224 yr by Kelvin

1 hour ago, Kelvin said:

No need for that just don’t make it so easy for folk that have lucked out on the property market to buy up houses in nice parts of the country making it unaffordable for people born there to buy or rent a house. 

Unfortunately it’s market forces 

Perhaps under a labour government 😂

1 hour ago, Kelvin said:

No need for that just don’t make it so easy for folk that have lucked out on the property market to buy up houses in nice parts of the country making it unaffordable for people born there to buy or rent a house. 

No seriously 

I do see your point Over the lockdown we competed the framing on a job in the Lake District 

32 expensive duplex apartments and houses A group of six at the beginning of the site where being sold to locals at a reduced rate We called on on our way home from Windermere and apart from the six the place was deserted 

It is a problem 

No criticism of your numbers, but:

 

19 hours ago, Ferdinand said:

I'm not convinced the consequences will be as bad as you think, as it is basically redistributing froth on house values, and not prices.

 

I think they could well be worse than I think!

 

Bubbles generally don't deflate gracefully. We have a debt and fiat bubble that's built up over decades, and a lot of that has ended up inflating housing to an insane degree. It's certainly possible that there's just froth that will be distributed, and that it will happen without overshoot if not outright contagion, but there's absolutely no guarantee. 

On 08/09/2022 at 20:29, nod said:

...

Windermere and apart from the six the place was deserted 

It is a problem 

 

Prices in that neck of the  woods are as bad or worse than Sandbanks near Poole. 

Many properties never appear on the market, they merely change hands.

So, if you've seen some empty for a while @nod then there's a problem.

Interesting local news (Maidenhead) this week where the LA have admitted that the land value of the old leisure centre site has plunged by £11m due to rising build costs for the proposed replacement residential development which assumes the ceiling resale price is somewhat fixed.

 

Will be interesting to see if this becomes a trend and land values start to drop as the overall economics

get re-adjusted. 

Which takes is back to the start. Land values probably will drop other than the very best highly desirable scarce plots. That said, land in Scotland is at an all time high including arable farmland commanding an average of £7000+/acre and as much as £19000 in some areas. 

11 hours ago, ToughButterCup said:

 

Prices in that neck of the  woods are as bad or worse than Sandbanks near Poole. 

Many properties never appear on the market, they merely change hands.

So, if you've seen some empty for a while @nod then there's a problem.

Absolutely no chance for locals 

We did a framing and plastering job for the chap who owns [a large company - name deleted by mods] 

26000 sq foot overlooking Lake Windermere. Weekend place for him and his wife 

 

Edited September 12, 20224 yr by jack
Please don't (even indirectly) identify private individuals

One question I keep on having is "how can this situation be sustained"? All prices have gone up, house and energy prices even more than "loaf of bread" prices while income is maybe up a little but certainly not keeping up even with the basic needs prices. 

 

So does this mean that there will be a crash? Or do we land in a situation like switzerland where only a minority of people own their house, and most people rent from the uber rich (individuals, companies/banks, government)?

 

Seems to me UK is fast going into a situation where you can only get on the property ladder if your parents were on the property ladder or somesuch.

9 hours ago, puntloos said:

Seems to me UK is fast going into a situation where you can only get on the property ladder if your parents were on the property ladder or somesuch.

Depends where you live.

I know a young couple that should have moved into their own place yesterday.  They both do minimum wage jobs, no help from parents.

22 hours ago, Bitpipe said:

Interesting local news (Maidenhead) this week where the LA have admitted that the land value of the old leisure centre site has plunged by £11m due to rising build costs for the proposed replacement residential development which assumes the ceiling resale price is somewhat fixed.

 

Will be interesting to see if this becomes a trend and land values start to drop as the overall economics

get re-adjusted. 

 

The biter bit.

I'm not sure about a crash - there maybe a minor correction due to interest rate rises and confidence but ultimately whatever the economic cycle the fundamental issue from the last 30 years still persists in that we have not build enough houses to meet the demand from purchasers or for the rental market. 

 

There maybe a few corporate sales (repossessions in old school) coming through in about a years time where some people have no wiggle room in their mortgage. Historically and unfortunately these tend to be starter homes in the more affordable towns although there are always others.

 

As for building plots I think decent individual plots will not be affected as the demand for these are enormous and unless they are seasoned new self builders will always underestimate the build cost.

Edited September 13, 20224 yr by Happy Valley

9 hours ago, puntloos said:

Seems to me UK is fast going into a situation where you can only get on the property ladder if your parents were on the property ladder or somesuch.

My kids will only get on the housing ladder when I kick the bucket. 

We’re already there. But it is doable for young folk but it need two salaries and they need to have lower expectations. My daughter and her boyfriend bought their house when they were both 21. They bought a wreck of a house in a nice location and spent the last 3 years gutting it. They’ve done a great job of it too and mostly themselves. 

part of the problem with young people trying to get on the ladder is they want it all and they want it now. house, needing no work, new furniture, new car(s), kids. then they find mortgage rates go up or in the recent instance fuel prices and now rates creeping up.

I think young folk are much maligned. My kids (22 and 23) both have a wide circle of friends and I’ve got to know them a bit over the years. Most of them have their heads screwed on and most don’t eat smashed avocado on toast either. Every older generation  probably has had a negative view of the younger generations of their era. 

23 minutes ago, Kelvin said:

I think young folk are much maligned.

"Teenagers these days are out of control. They eat like pigs, they are disrespectful of adults, they interrupt and contradict their parents, and they terrorize their teachers."

Aristotle ~350 BC

Back in 1950, in the US (I imagine UK is similar), an average house cost 7400, where the average worker earned 2900 (although often the wife didn't earn)

where a car would be something like 2000, so with 2 cars in your driveway your house might not even be the majority of your assets in quite a few cases.

 

Today... somewhat different.

 

 

Today, well, b

I remember a conversation I had in Florida in early 90’s the guy I was chatting with said a rule of thumb is your house is one years salary and a car is 6 months

On 12/09/2022 at 10:44, Bitpipe said:

Interesting local news (Maidenhead) this week where the LA have admitted that the land value of the old leisure centre site has plunged by £11m due to rising build costs for the proposed replacement residential development which assumes the ceiling resale price is somewhat fixed.

 

Will be interesting to see if this becomes a trend and land values start to drop as the overall economics

get re-adjusted. 

 

Whenever I see large pieces of land sold by LA, NHS etc they always seem underpriced.

 

On 12/09/2022 at 11:26, Kelvin said:

Which takes is back to the start. Land values probably will drop other than the very best highly desirable scarce plots. That said, land in Scotland is at an all time high including arable farmland commanding an average of £7000+/acre and as much as £19000 in some areas. 

 

The only thing that I can think is that people massively underestimate build costs, especially with the recent increases.

 

My architect says that recently builders have told people to assume a cost of 3-4000/sq metre. Clearly you can do things cheaper, but with a main contractor I think it is now hard to get under 2500-3000/sq metre. Then you have a load of fees on top.

 

Round the corner from me a small house just sold for £725,000 with the buyers immediately applying to build a replacement house of around 200sq metres. The plans look very nice with double height glazing and rooms and I imagine it will be very very expensive to build. I would guess around £800k including fees. Houses in the area go for maybe £5-550 a square foot. That puts a maximum value on it of £1.2m and I think that is pushing it. 

 

Across the road, a guy just knocked down his 1970s bungalow and got permission for two houses. He has built one and put the other plot up at offers over £650k. It is under offer, so I assume he has an offer between 700 and 750. The house would likely cost around £900k-1m to build and be worth around £1.6m. Surprisingly he told me that the bidder is a developer.