House prices are close to affordable levels, reveals survey... BUY!! BUY!!! BUY!!!

chucky

Max_Headroom wrote: »

It's interesting to see how people have become conditioned to thinking £150K is "affordable for an average income family".

An average income is about £25K I think, based on that I'd say £100K is genuinely affordable (3.5 x £25K plus a 12% deposit).

Put it another way, I'm earning a reasonable amount over "average", and I wouldn't like to have to repay a six figure mortgage!

I feel that there is a lot of re-calibrating of expectations (both regarding what is really affordable, and what is really a sensible average house price) still to be done in this country.

these 2.5x income mutlipliers against mortgage have nearly been around for ever.
also i think that people live together more and can buy property with dual incomes.

i'd like to see the numbers of people 20 years ago that could buy a property on their single income. it would be very low - why shoulld they be entitled to it now!?

amongst other factors people seem to be working for longer in now so it may be time that people forget about these old school multipliers and look at revising their debt expectations over their working life.

debt is not a good thing but if managed it can get you what you would like out of life.

StevieJ

Max_Headroom wrote: »

It's interesting to see how people have become conditioned to thinking £150K is "affordable for an average income family".

An average income is about £25K I think, based on that I'd say £100K is genuinely affordable (3.5 x £25K plus a 12% deposit).

Put it another way, I'm earning a reasonable amount over "average", and I wouldn't like to have to repay a six figure mortgage!

I feel that there is a lot of re-calibrating of expectations (both regarding what is really affordable, and what is really a sensible average house price) still to be done in this country.

So if 25k is average salary 3 x married couple average salary (25+25) = 150k. Nice and tidy.

IveSeenTheLight

Max_Headroom wrote: »

It's interesting to see how people have become conditioned to thinking £150K is "affordable for an average income family".

An average income is about £25K I think, based on that I'd say £100K is genuinely affordable (3.5 x £25K plus a 12% deposit).

Put it another way, I'm earning a reasonable amount over "average", and I wouldn't like to have to repay a six figure mortgage!

I feel that there is a lot of re-calibrating of expectations (both regarding what is really affordable, and what is really a sensible average house price) still to be done in this country.

The important thing is to differentiate the average income form the average household income

While £25K is the UK average persons wage £38k is the average household income ( You could liken this to one full time (£25k) plus one part time (£12.5k) = £37.5K)

£38k x 3.5 = £133K + 12.5% = £149,625

In 2006 this report shows the gross average weekly household income was £642 per week (£642 * 52 = £33,384 per year), so its feasable in 2 years this is up to £38k

Interestingly, this link shows the UK average advertised job is £30,450, so you could see the average single income rising.

This link shows the average UK household income in 2007 was £33,706.
I read recently that the average mortgage multplie was to be reduced from 4.25 to 4.1.
£33,706 * 4.1 = £138,195 = 12% deposit = £155,469

Probably stands to reason why on average, people view £150k as an affordable average for the average household income.

Of course, if your household income is less than this, then it stands to reason that you cannot afford the average house.

It's also understandable that an average person on average wages should only be able to afford a property with 1 or 2 bedrooms and not an average family house for higher multiples

chucky

IveSeenTheLight wrote: »

Of course, if your household income is less than this, then it stands to reason that you cannot afford the average house.

It's also understandable that an average person on average wages should only be able to afford a property with 1 or 2 bedrooms and not an average family house for higher multiples

this is a very good point - many of the HPC guys expect to get a 4/5 bedroom house on their current salaries and what they think house prices will drop by - unfortunately for them this will obviously never happen and they will be still on this forum in 10/20 years time with the same old story telling us all house prices are too high!!

Max_Headroom_3

IveSeenTheLight wrote: »

The important thing is to differentiate the average income form the average household income

While £25K is the UK average persons wage £38k is the average household income ( You could liken this to one full time (£25k) plus one part time (£12.5k) = £37.5K)

£38k x 3.5 = £133K + 12.5% = £149,625

In 2006 this report shows the gross average weekly household income was £642 per week (£642 * 52 = £33,384 per year), so its feasable in 2 years this is up to £38k

Ok, so lets assume that this is the case, and that the wife continues to work right up to and immediately after having any kids (les statutory maternity) and there's no costs for child care for those kids...

Fine, £150K for an average family house then. Trouble is, £150K is currently buying a tiny FTB 2 bed shoe box, not an average home.

So till those shoe boxes drop to £100K and decent family homes drop to £150K we've still some way to go.

Interestingly, this link shows the UK average advertised job is £30,450, so you could see the average single income rising.

and just on this point. Do you believe that the average typical job out there is about £30K?

StevieJ

PasturesNew wrote: »

Quick, don't miss out! OMG, house prices are close to affordable. So my advice is buy tomorrow or Wednesday or you'll miss the boat.

Really, next weekend is too far away. Move now! Don't miss out! Don't miss the boat! OMG OMG

http://www.telegraph.co.uk/finance/economics/3227548/House-prices-are-close-to-affordable-levels-reveals-survey.html

*grabs coat*

This may just be the turning point where the HPCrashers start to link positive stories and try to ridicule rather than negative ones that will become harder to find.

BettiePage

Realy wrote: »

But you are saying a single person should be able to buy an average house?

Why not? Twenty, thirty etc.. years ago only the husbands income was taken into consideration.

scousethife

StevieJ wrote: »

This may just be the turning point where the HPCrashers start to link positive stories and try to ridicule rather than negative ones that will become harder to find.

I seriously doubt that sonshine

wymondham

Lots of potential homebuyers are single, so this makes things a tad more difficult!

musemad

I wonder if this is horseinahatman under another name!