Overpriced houses

We live in rural Somerset. Bristol is an hour’s drive away, as is Bournmouth; Yeovil, hardly an economic powerhouse, is the closest town of any size. Yet when I look into estate agents’ windows there is no house, not even a two bedroom bungalow, that is below £170,000. Anything that resembles a family house is well north of £250,000. The average wage locally is around £23,000. The maximum loan-to-value for any mortgage is now 5:1 - if you’re lucky.

There seems to be a big disconnect here. Anyone not already in the property market must now be effectively disqualified unless they are the lucky recipient of a lottery win or an inheritance. The only buyers must be those swapping similar value properties or investors in the buy-to-let market.

It tells you that the mainstream property market in the UK is overpriced and probably only being held up by ultra-low interest rates and lending criteria that, unlike in the US, mean that you can’t hand back the keys to the bank without potentially risking personal bankruptcy. This last makes the market more stable – but mean that prices don’t adjust so fast to economic realities. Reality will catch up – it always does – but it just means that the time when our children will remotely be able to buy a house will be many years away.

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