The Cost Of Living Crisis

[Herman 9,819]

On 20/04/2023 at 12:08, nevermind, neoliberalism has had it said:

I have two cucumbers growing in the greenhouse as we speak, from last years seeds, maybe people should sacrifice some of their lawn, a couple of feet all around the border, and grow some veg for themselves, unless they are ruminants and can eat grass.

 

It's 2023 and we're back to "Dig For Victory". Next up, "Make Do And Mend".🤨😀

(In fairness growing some of your own is a good idea, not that hard and you get a better choice. Saying that, I bought the wrong chilies so have a small collection of ridiculously hot ones.)

[keelansgrandad 6,679]

47 minutes ago, Herman said:

It's 2023 and we're back to "Dig For Victory". Next up, "Make Do And Mend".🤨😀

(In fairness growing some of your own is a good idea, not that hard and you get a better choice. Saying that, I bought the wrong chilies so have a small collection of ridiculously hot ones.)

Ersatz coffee or one of Baldrick's lattes.

[nevermind, neoliberalism has had it 159]

On 28/04/2023 at 15:39, Herman said:

It's 2023 and we're back to "Dig For Victory". Next up, "Make Do And Mend".🤨😀

(In fairness growing some of your own is a good idea, not that hard and you get a better choice. Saying that, I bought the wrong chilies so have a small collection of ridiculously hot ones.)

Growing Scotch Bonnets, Red Muroroga, Red Lantern and Armageddon, as well as some Chillies from Indonesia somebody brought back from holiday, making chilli sauce from them with pineapple, Mango various secret ingredients and ...cucumbers.... the latter without seeds and skin. Great fun. Also use some Bonnets to make a wicked chilli Kimchi.

[KiwiScot 1,459]

https://www.bbc.co.uk/news/business-65853400

Windfall tax to go when energy wholesale costs reduces back to "normal." Consumer costs won't reduce of course.

[keelansgrandad 6,679]

1 hour ago, KiwiScot said:

https://www.bbc.co.uk/news/business-65853400

Windfall tax to go when energy wholesale costs reduces back to "normal." Consumer costs won't reduce of course.

They couldn't reduce it quick enough.

[Pyro Pete 1,915]

[keelansgrandad 6,679]

Great point on the news this morning. An ex member of the committee said rather than raising interrest rates .25% at a time, they should made it a substantial rise in the first place that would have instantly put the brakes on. This way, no brakes have been put on, we just keep downshifting.

[ricardo 7,396]

1 hour ago, keelansgrandad said:

Great point on the news this morning. An ex member of the committee said rather than raising interrest rates .25% at a time, they should made it a substantial rise in the first place that would have instantly put the brakes on. This way, no brakes have been put on, we just keep downshifting.

Rates were kept too low for too long. Savers have had virtually nothing back for the last decade.

[keelansgrandad 6,679]

1 hour ago, ricardo said:

Rates were kept too low for too long. Savers have had virtually nothing back for the last decade.

In terms of housing, they are just too expensive. They are at a false price. I paid £13K for my house. Now if someone wants to buy, Estate Agents tell me to ask for £300K. Has the ability to pay gone up at least 22 fold?

[How I Wrote Elastic Man 1,189]

12 minutes ago, keelansgrandad said:

In terms of housing, they are just too expensive. They are at a false price. I paid £13K for my house. Now if someone wants to buy, Estate Agents tell me to ask for £300K. Has the ability to pay gone up at least 22 fold?

May I ask when you bought your house?

I paid 131k for a small 2 bed terrace near Maidstone in 2003.

House prices are far too high, mostly due to the 1980's right to buy council housing, or specifically the lack of reinvesting in new housing to replace those sold. And the rise of professional landlords.

[ricardo 7,396]

14 minutes ago, keelansgrandad said:

In terms of housing, they are just too expensive. They are at a false price. I paid £13K for my house. Now if someone wants to buy, Estate Agents tell me to ask for £300K. Has the ability to pay gone up at least 22 fold?

Since the Bank of Englands inception pre 1700, the median interest rate has been 5%. 

A decade and a half of very low rates has encouraged people to borrow more than they would have had rates remained at the median level.

Every so often a house price crash occurs and people have to relearn that a house is somewhere to live and not a money box.

 

 

 

 

 

 

[SteveN8458 64]

Like many on here, I remember interest rates of 17%

When we bought our first house, all of my wifes sallary paid the mortgage, and mine was for everything else.

2 of our children are currently active first time buyers, one offer accepted & the other is into viewings.

While I feel for anyone with a mortgage, lets not forget that the interest rates of the recent past are not the norm, and as others have said 5% is closer to the norm.

 

A glimps into the past:

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[dylanisabaddog 4,970]

The only true comparison with house prices is to compare median or average salaries with the average house price. I bought a house in 1998 which cost around 2.5 times my salary. It went on the market recently at around 7 times my salary (or what my salary would have been if I hadn't retired). 

There are many reasons for that, one being a lack of housing compared to demand. 

One issue that is never mentioned is the increase in single occupancy houses and I'm guilty of that. In 1971 there were around 1m single person properties in the UK. That figure is now closer to 7m. A lot of that is due to the increasing divorce rate but whatever the reasons the result is that we have had to build around 3m houses in 50 years because people like me live on their own. 

@SteveN8458do your children desperately need to buy at the moment? As @ricardohas said, every so often prices tend to crash. I'm not expecting a huge crash but reports this morning say that asking prices dropped last month. I agree with ricardo that it's a home rather than an investment, but if you think your home will cost between 5 and 10% less in a year's time then it makes sense to wait if you can. 

[SteveN8458 64]

19 minutes ago, dylanisabaddog said:

@SteveN8458do your children desperately need to buy at the moment? As @ricardohas said, every so often prices tend to crash. I'm not expecting a huge crash but reports this morning say that asking prices dropped last month. I agree with ricardo that it's a home rather than an investment, but if you think your home will cost between 5 and 10% less in a year's time then it makes sense to wait if you can. 

Fair Question, my pinion on that is NO, but

All 3 went to uni & then came home.

The youngest (27) is now desprate to have her own space (in the process of buying a flat). She has a close group of freinds who take turns in having everyone round for meals/games nights etc etc which she can't do at home!

The middle son is looking for a house as he feels now is the right time for him. 5 viewings this weekend!

The eldest will move out when he gets his first job in his chosen career.

 

Dad can say/suggest now is not the best time to buy, wait a little bit longer. Some will listen & some will not. Either way dad will help anyway he can (some will mum 🙂)

[canarydan23 4,060]

10 hours ago, ricardo said:

A decade and a half of very low rates has encouraged people to borrow more than they would have had rates remained at the median level.

Yes and no. House prices have also encouraged/forced people to borrow more than they would have.

I've been saying it a while, probably earlier on this thread, but I genuinely don't see how this doesn't end with major economic consequences. I remortgated just 21 months ago at 0.91%. Work's gone well since that time and I've been fortunate enough to be able to overpay over 10% of my outstanding mortgage balance; however, I locked in a rate of 4.6% a few weeks ago (thank god I didn't wait) some come October, despite my loan amount dropping significantly (two years of repayments plus a 11% overpayment), my monthly payments are going to rise by nearly £200.

People who haven't been able to make overpayments (so probably most mortgage owners) and are having to take rates of around 6% are going to be facing the prospect of finding hundreds and hundreds of pounds each month. And the government can't realistically help; you can't chuck taxpayers money on people who own parts of their homes whilst so many others in society can't even contemplate getting on the property ladder.

[dylanisabaddog 4,970]

1 hour ago, SteveN8458 said:

Fair Question, my pinion on that is NO, but

All 3 went to uni & then came home.

The youngest (27) is now desprate to have her own space (in the process of buying a flat). She has a close group of freinds who take turns in having everyone round for meals/games nights etc etc which she can't do at home!

The middle son is looking for a house as he feels now is the right time for him. 5 viewings this weekend!

The eldest will move out when he gets his first job in his chosen career.

 

Dad can say/suggest now is not the best time to buy, wait a little bit longer. Some will listen & some will not. Either way dad will help anyway he can (some will mum 🙂)

You and they have my sympathy. On the plus side you got all 3 through University which is a job well done. 

[dylanisabaddog 4,970]

57 minutes ago, canarydan23 said:

Yes and no. House prices have also encouraged/forced people to borrow more than they would have.

I've been saying it a while, probably earlier on this thread, but I genuinely don't see how this doesn't end with major economic consequences. I remortgated just 21 months ago at 0.91%. Work's gone well since that time and I've been fortunate enough to be able to overpay over 10% of my outstanding mortgage balance; however, I locked in a rate of 4.6% a few weeks ago (thank god I didn't wait) some come October, despite my loan amount dropping significantly (two years of repayments plus a 11% overpayment), my monthly payments are going to rise by nearly £200.

People who haven't been able to make overpayments (so probably most mortgage owners) and are having to take rates of around 6% are going to be facing the prospect of finding hundreds and hundreds of pounds each month. And the government can't realistically help; you can't chuck taxpayers money on people who own parts of their homes whilst so many others in society can't even contemplate getting on the property ladder.

There already is an economic consequence. The young couple next to me are paying rent of £975 a month on a tiny 2 bed house. The true value is nearer £600 a month and similar social housing on the estate is £400 a month. 

If they had the additional £400 available to them they would spend it and that would produce additional direct and indirect tax. That is being replicated in huge numbers all over the country and it's damaging economic growth and significantly reducing the tax take. 

[SteveN8458 64]

1 minute ago, dylanisabaddog said:

You and they have my sympathy. On the plus side you got all 3 through University which is a job well done. 

Their part was harder than mine, they got their degrees 🙂

 

My daughter has/is getting a 40yr term mortgage to keep the repayments down so she can maintain her lifestyle.

This was never an option when we were first buying.

[keelansgrandad 6,679]

11 hours ago, How I Wrote Elastic Man said:

May I ask when you bought your house?

I paid 131k for a small 2 bed terrace near Maidstone in 2003.

House prices are far too high, mostly due to the 1980's right to buy council housing, or specifically the lack of reinvesting in new housing to replace those sold. And the rise of professional landlords.

Certainly I bought it in December 1980. I used an endowment mortgage because mortgage rates were nigh on 15%. I was lucky and had money over at the end.

My son is leaving the military after his 22 years. He came back down to Cornwall where he grew up and looked for houses. He gave up. They are far to overpriced for what you get, and then have to spend money on anyway. He has bought a four bedroomed detached in Lincolnshire with plenty of land and outbuildings for £100K less than my 3 bedroomed. he likes Norwich even though he has never lived there and looked for houses there but they were too much as well. He can be in Norwich within two hours from Lincolnshire.

[SteveN8458 64]

3 minutes ago, dylanisabaddog said:

There already is an economic consequence. The young couple next to me are paying rent of £975 a month on a tiny 2 bed house. The true value is nearer £600 a month and similar social housing on the estate is £400 a month. 

If they had the additional £400 available to them they would spend it and that would produce additional direct and indirect tax. That is being replicated in huge numbers all over the country and it's damaging economic growth and significantly reducing the tax take. 

You highlight an issue there that we came across when one of our children decided to stay after finishing their degree.

He had a full time job, but could not afford a mortgage due to the 'affordability tests' lenders are required perform.

He ended up renting, costing more than a mortgage on the same house!! (this was an option we investigated).

 

On your other point, we spent 3 years renovating our first terraced house. Every penny went on that, then we moved to our current home (1983) where we then spent 10yrs renovating. Nights out were few and far between. One car that was 10+ yrs old, and holidays were working on the house ALL day.

That does not appear to sit with current society.

[canarydan23 4,060]

27 minutes ago, dylanisabaddog said:

There already is an economic consequence. The young couple next to me are paying rent of £975 a month on a tiny 2 bed house. The true value is nearer £600 a month and similar social housing on the estate is £400 a month. 

If they had the additional £400 available to them they would spend it and that would produce additional direct and indirect tax. That is being replicated in huge numbers all over the country and it's damaging economic growth and significantly reducing the tax take. 

Exactly. I can't grumble at all because I got a payrise in April that will cover the increased mortgage payments. However, from now until October, that payrise is going on meals out, treats for the kids, and other luxuries, which like you say is a big help to the local economy and tax revenues. From October, that will all be cut back.

[Pyro Pete 1,915]

[keelansgrandad 6,679]

South East Water blames working from home for hosepipe ban

[KiwiScot 1,459]

17 hours ago, keelansgrandad said:

South East Water blames working from home for hosepipe ban

Next will be drink mineral water to take pressure off the system

[Creative Midfielder 2,001]

19 hours ago, keelansgrandad said:

South East Water blames working from home for hosepipe ban

Taking their lead from our current Government - turns out nothing is ever their fault either, even when things go t*ts up in areas that they are direcly responsible for.

These people do really take us for idiots, don't they?

[Herman 9,819]

1 hour ago, KiwiScot said:

Next will be drink mineral water to take pressure off the system

They'll sell it back to us under the Peckham Springs moniker. 

[littleyellowbirdie 2,576]

On 22/06/2023 at 23:21, keelansgrandad said:

In terms of housing, they are just too expensive. They are at a false price. I paid £13K for my house. Now if someone wants to buy, Estate Agents tell me to ask for £300K. Has the ability to pay gone up at least 22 fold?

Ability to pay? Not in cash terms. Ability to get ever larger income multipliers on mortgages? Yes.

[keelansgrandad 6,679]

10 hours ago, littleyellowbirdie said:

Ability to pay? Not in cash terms. Ability to get ever larger income multipliers on mortgages? Yes.

That was the main criteria for mortgages. The ability to pay and be able to pay for everything else in life. So you might get twice your yearly income and maybe your wife's income as well. So house prices had to reflect that and not be at an unachievable price. The two worked hand in hand.

Now its the price of the house only that dictates how much you have to borrow.

[littleyellowbirdie 2,576]

5 minutes ago, keelansgrandad said:

That was the main criteria for mortgages. The ability to pay and be able to pay for everything else in life. So you might get twice your yearly income and maybe your wife's income as well. So house prices had to reflect that and not be at an unachievable price. The two worked hand in hand.

Now its the price of the house only that dictates how much you have to borrow.

Sort of, but what I was getting at is that the UK always has demand for housing that outstrips supply, which tends to push prices up, but typically that's limited by how much people can afford. The growth of income multipliers is ultimately the biggest part of house prices rising.

Trouble is, if income multipliers hadn't gone up, it'd just mean lower prices with a  greater opportunity for cash buyers for buy to let. Maybe larger income multipliers should be reserved for first-time buyers, perhaps.

What were the income multipliers in the 80s? About three times as a top whack?

Edited June 26, 2023 by littleyellowbirdie

[TheGunnShow 5,985]

1 hour ago, littleyellowbirdie said:

Sort of, but what I was getting at is that the UK always has demand for housing that outstrips supply, which tends to push prices up, but typically that's limited by how much people can afford. The growth of income multipliers is ultimately the biggest part of house prices rising.

Trouble is, if income multipliers hadn't gone up, it'd just mean lower prices with a  greater opportunity for cash buyers for buy to let. Maybe larger income multipliers should be reserved for first-time buyers, perhaps.

What were the income multipliers in the 80s? About three times as a top whack?

Four times, IIRC. 

Then you get some observers complaining about why younger people are not getting on the housing ladder/having kids and it really is blatantly obvious to anyone with even the slightest bit of nouse - they can't afford it and they're nowhere near being able to do so.

At which point, some then say "but what about avocadoes/Netflix" without thinking about the proportion of income actually spent on rent in the first place. Not to mention mortgage payments are often cheaper than rent anyway!