What happens when house prizes continue to rise in UK. Its pretty serious....?

Question

At some point in the near future, its impossible for this country to continue.

If you look at house prices, my mums flat when she put it up for sale 9 years ago was struggling to get 72 grand. Now she put her house back on the market and its asking price is 140 grand. Almost double.

In that time, the money that people get for working has not went up by the same amounts.

So for an average standard 3 bed flat its 140k notes, so say in 10 years at this rate, the same flat may cost 280k notes.

Its a run away train because these days most parents both work. How can it be possible for a kid out of school to get a house in 20 years time, the minumum wage is 10.96 and the average flat is going for over 3 quarters of a million pounds?

The UK has over 1 trillion pounds of consumer debt. it will NEVER be paid, just continue to rise.

Is the economy going to collapse or does a change NEED to be made? It cannot continue to rise like this.

Answer 1

I absolutely agree.
The people that benefit are the ultra-wealthy, speculators, blaggart real-estate agents and local & upper governments. And those prize vampires the Banks.
This is not just a UK only scenario- it is happening in many places of the developed world- when I was living in Melbourne Australia, the same debate was occuring (now prices have dropped somewhat),
but there were even areas of 150% increase in value over 1 year.
Ridiculous!

I disagree that it's a case of supply and demand that fuels the pricing- I strongly opine that it is more a case of governments not forcing realistic caps on housing prices that are linked to post-tax earnings.
If house prices reflected what people could afford- there is no way possible these housing prices now would be able to sell.

Furthermore, there is little market competition when real-estate agents all engage in effective collusion as all want the highest commission possible- they prefer not to sell in volume as it means more work and more likely, lower commission.

I completely agree with the point about consumer debt, but it is more of an issue at a governmental level than any other.
Here again, with the credit card splurge, banks have invested in putting people on a long-term money-making treadmill where everything they purchase is subject to interest and banks inevst the money in the interim for high gains in currency exchange markets to profit even further.
Again, we have a situation where products have risen in cost (but most products are actually cheaper to make due outsourcing) and manufacturers are profiteering on the margin. The market no longer sets the pricing, the producer does as it is a captive market- they have no choice other than to purchase at stated price.
I disagree there willl be a catastrophic collapse, but certainly the housing bubble will burst and house prices will plateua.
I strongly believe inflation is going to rise again in the UK due to the Blair government's poor fiscal policies, rising CPI and over-reliance on credit lines.
If we comparing the UK to Japan, the UK is in a shocking state of financial affairs.

Answer 2

It won't continue like this.

The housing market is the most volatile and changable market we have. It always pushes the envelope in terms of values and people access to the market.

When I was 38, I was told that I would probably never be in a position to buy a house. When I was 42, I bought one.

We are close to the point where so many first time buyers are unable to get a foot on the ladder that the market will stagnate and possibly start to fall in order to bring in the customers that all markets need.

It is always a matter of timing.

Answer 3

The fact that prices are rising means that people can afford to buy them. If people could not afford to buy the houses, then there would be no buyers, and therefore the prices would not continue going up, would they? I don't know why people have such trouble grasping this very obvious point, but it's an an iron-clad, indisputable fact.

Answer 4

It has a lot to do with supply and demand.
There aren't enough houses so the prices have gone up.

We need to build more and I think the government have a large scale building plan underway, though it will take a while to carry out and stabilise prices.

As you say, the current levels of price growth are not sustainable.

Answer 5

that will mean the have's will only have until they get old and go into a nursing home then they will once again return to being have not's and share the same nursing homes as the never did have's.

Due to the fact this robbing government will take back any capital made OR wait to you die to take it back in Inheritance tax

Answer 6

OMG! i was just thinking that this morning. It has to come down or it will be toooooooo expensive to live with continuous gas price rises and maintenance costs. Its like its too expensive to even bring a child into the world now lol :D dearo dear. let me knw when they go dwn coz i need to knw too. thanks for bringing it to light.

Answer 7

Do an internet search on www.google.com

The key search phrase is " ponzi finance "

Any related articles should explain why runaway house prices are most definitely unsustainable.

Answer 8

Don't worry about it, that's the Chancellor's job.

Just get yourself on the property ladder in any way you can and in time you'll have enough equity/earning capacity to move up.

Answer 9

you are right,