Monday, April 20, 2009
Commentators don't understand the new paradigm on house prices says LettingFocus.com
It matters, yes, and so does the ratio of earnings to house prices but it does not matter as much as it did before
For quite a long time now I have said that in the future, the new driver of activity will be either professional investors or wealthy parents with spare cash to pass on to their kids.
Don’t forget that over 40% of people have no mortgage so don’t give a stuff about mortgage rates and if they are not buying for themselves they will be giving their lucky offspring at least some of the money for a deposit and for the hefty mortgage fees which are now the norm.
Hard nosed property investors and rich parents of first time buyers are two key groups with the money to buy property and many commentators should wake up and realise the paradigm has shifted.
They should stop looking only at the standard measure of the ratio between a young person’s earnings and house prices or the affordability of mortgage interest payments but look instead at the stock of wealth that first time buyer’s parents and experienced property investors have.
I think it was the think tank, "The Future Foundation" who said that property was becoming more "dynastic" in nature.
I agree and about four years ago I wrote a press release suggesting that because of these and other factors, the proportion of property in the UK that is privately rented (then about 9%) could hit a third within 20 years.
Well, today I expect the budget may well give a boost to more private rented accommodation so I think my predictions could yet prove correct as more people either choose or are forced to stay in private rented accommodation.
It is sad to say - and a real shame for would be first time buyers- but if your parents are not rich your chance of getting on the housing ladder these days and in the future will be a whole bunch harder than it was in the past.
Maggie Thatcher gave us hope that we could all be home owners if we saved a little bit and worked hard. This hope is slowly being dashed.
ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the property letting experts. Read Property Articles.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - buy Property Investing Book.
The new edition is for accidental and experienced landlords and is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing and capital gains taxes.
I’m an expert property writer and property speaker - and I run the well known property letting blog that you are reading now.
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general advice on property letting and consulting to anyone looking to buy property for themselves or to let out. I can help private individuals with any aspect of buying property or buy to let.
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Copyright: David Lawrenson 2009. This blog is updated roughly once a week.
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