Tuesday, April 10, 2007

The Housing Market

I know I'm not the first to point this out - and I doubt I'm going to be the last - but what the hell is going on with the housing market in this country?

Where I currently live (North London) we pay £850 a month between us to rent a two bedroom flat. That rent includes Council Tax and Water Rates and I consider it to be a pretty sweet deal. Yes the kitchen could be bigger and the bathroom would be greatly improved by a shower that worked, but otherwise, it's not a bad place to live.

I've just been looking to see what the cost of buying a similar place would be. And I was utterly astounded. For a one bed in Palmers Green I'd be looking at £160k. Assuming I don't have a deposit of any great size, that would mean a mortgage repayment of about £1k a month. Which is more than we're currently paying for somewhere twice the size, and there'd still be Council Tax, Water Rates, Buildings Insurance etc on top of that.

How in God's name is *anyone* supposed to buy somewhere when it costs that much?

And it's not just because I'd want to buy in roughly the same area I currently live in. There's just not a lot out there. If I wanted to live in Tottenham or Edmonton I'd still be looking at £120k for a one bed - unless it's in a tower block, and you can't generally get mortgages on the upper floors of tower blocks - which strikes me as bonkers.

Surely if no-one comes onto the bottom of the property ladder, then there's no movement? It's just people churning through similar properties higher up the ladder, trying to make a small profit. The potential for buying to let is similarly restricted (unless you already own lots of property and can get a relatively cheap mortgage) as the mortgage repayments per month are higher than the money that can be made back from rental income.

And yet, the price of houses continues to rocket.

I think - and here's my prediction for the year - that within 12 months; the housing market will have slowed and begun to cool; interest rates will have risen by over 1%; and more houses will be repossesed.

So yeah, basically, I'll not be looking to move house within the next year.

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Blogger Mia said...

...which is precisely why I'm so pleased that I've managed to get my foot on the property ladder - even if it is on the bottom rung with my tiny but lovely 1 bed flat. I feel very sorry for the young people. Now I sound very very old.

Anonymous Oxy said...

I know what you mean boy, I been in the same situation, got a cheap but big rental place, but no effing way could I afford anywhere bigger than a shed in Enfield if I was to try and buy, just en't blimming worth it. I know rent just disappears for ever, but I don't think tis worth buying a prison cell just so that you can say you own something. And if you think the market is gonna slow, forget it, I been waiting 5 years now for that to happen, and it don't like any likelier to happen now than it did then


Blogger Nick said...

Er... why can't you get a mortgage for the top floors of tower blocks?

Blogger silas said...

I'm not entirely sure, if you see this article,,915990,00.html you'll see the second last paragraph makes mention that "some lenders have an aversion to heights"


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