If It Looks Like a Bubble...

I just saw this. Pretty nifty, eh? Rising house prices in over half of the country, and up 1.1% per month in London. But let's all consider the closing sentence:

"But he said the rising pressure was not blocking new buyers from the property market because of higher loan-to-value (LTV) lending."

I'll tell you all something - he's talking shit. Ok we might be able to get a 95% LTV mortgage, but let's suppose we're trying to buy a 3-bed mid-terraced house in Cam, for £250k (which I've well established is what all the non-crappy places are advertised at at a minimum, and you can check out this lovely stats page for all the housing options. Top tip; you can't afford a detached house, so don't even look). So we just need a £12,500 for a deposit. Woo! Yay, tick we've got that. Let's go ask a bank if they'll lend us £237,500.

Well first we'll do a bit of averaging of earnings. According to the ONS, for our age bracket we should be both earning £412 per week*, and supposing that holds for 52 weeks of the year, we'll put that at annual salaries of £21,424 each (ignoring that women still typically earn less, but that's for a whole other blog).

Plug the numbers into, oh let's go with the Nationwide's mortgage calculator (because they're "On Your Side" after all), and they'd be willing to lend us a grand total of... £187,100!

Just a £50k deficit, which is not enough to be covered by the government's Help to Buy scheme. So how are Jo and Joe Average going to get their dream (and by dream I mean it's roughly in the city, has some walls and windows and no major structural defects) 3-bed house to start a family. Cause yeah, wait, that £187,100 you can borrow is dependent on you not having any other outgoings except student loans. Don't you dare think you could get a mortgage like that if you have children!

*taken from here which I realise is a year out of date, but who's honestly had a substantial pay rise since then.

Offer!

We put in an offer yesterday on a nice 3-bed mid-terraced place. It already had the asking price, so we bid higher... Seems to be the kind of thing to do given our experience. If we don't get it with this we'll seriously have to consider what the hell we have to do because bids are going mental everywhere. Sigh. 

The estate agents was closed Saturday afternoon through to Monday morning, so we'll have to wait until tomorrow to hear anything back, or even to hear that they've received our offer. Seems kinda stupid to have a day full of viewings, but then be closed for nearly 48 hours so you can't take formal offers, although I bet that's tactical so it allows load of people to put in bids and then we can all fight it out later. Boy am I not looking forward to that.

New Builds

Apparently, new builds were meant to ease the problem of housing all the people in the country. You know, by making more houses us lot who don't own houses can buy, thus we're then owning a house and are sorted. Tick. I draw all of your attention to this section of an ad for a resale of a recent new build in Cambridge;

"***investment opportunity*** Convenient for Cambridge Science Park and the City Centre, this four bedroom, 3 storey town house, in Orchard Park Cambridge, has four bedrooms, fitted kitchen with built in appliances with a further two reception rooms. Being sold with tenants in situ. Investor info £4611 pre tax income: 4.69% of £98, 300 capital used."

It was build in 2009, and already is being rented out (hence likely just bought up from new build by a landlord), and now is being resold... to another landlord. Great. Thanks guys!

Sigh.

The new new-builds in Cam at the moment are either tiny one/two bed flats, or 4+ bed detached houses costing £400k+ Who the heck was needing these houses to be built! Certainly not FTBs. Although, I've just noted, on a Trumpington new build (4 bed for £495k), there's a little illustration about how Help to Buy works! Because I'm totally only able to come up with a 5% deposit but magically be able to afford a £371k mortgage. Facepalm.
A single option of a 3-bed is available, for £385k, but on the ground floor you only get one room as a kitchen/sitting/dining room combo. Not a bad size... but well above the national average for a 3-bed semi, and even epically above the price of some 3-bed semis much closer to Cambridge.

Seriously, who is buying these places and why aren't they building affordable homes, by which I mean at or below the local (or ideally) national average?