The 70% club

IveSeenTheLight

RDB wrote: »

So is the general opinion 70% average drops country wide? including London?

Not from me
Quotes of 70% UK average drop make me laugh

According to Nationwide Oct 07 was £186,044
http://www.nationwide.co.uk/hpi/historical/oct_2007.pdf


70% drops would mean the nationwide figure would be £55,813
:rotfl: :rotfl: :rotfl:

RDB

Some are now saying that the UK will see her first 10 year period where house prices fall rather than rise before too long. I look at the stats, the massive rise we've seen, the general state of the economy, unemployment and credit not being offered and my brain says, yup, in 2017 house prices will probably be around the same, or a bit less than they were in 2007.

So taking into account everything 70% drops are likely, but it will take longer than most think.

Housing bubbles dont just go bang they deflate slowy, maybe this one will take 10yrs.

ukcarper

Can some one please tell me why people keep quoting 3.5 average salary as the average house price I have never manage to buy a house that was 3.5 times the average salary. I got my first house in 1972 and that was a terrace house not your average 3 bed detached and that was more than 4x the avenge salary. Mortgages were a lot harder to come by then and you had to have a substation deposit, also banks stuck quite rigidly to the 3 to 3.5x salary single salary multiplier. If you want to know about silly growth in 1972 the 3 bed terraced above went from £5,500 to £10.500 readajusting down slightly in 1973 by the way I paid £8000 in April. Even the £5500 was nearly 4x average income and they havnt been that cheap since. Out of interest similar house on market for £180,000 now

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ukcarper wrote: »

Can some one please tell me why people keep quoting 3.5 average salary as the average house price I have never manage to buy a house that was 3.5 times the average salary. I got my first house in 1972 and that was a terrace house not your average 3 bed detached and that was more than 4x the avenge salary. Mortgages were a lot harder to come by then and you had to have a substation deposit, also banks stuck quite rigidly to the 3 to 3.5x salary single salary multiplier. If you want to know about silly growth in 1972 the 3 bed terraced above went from £5,500 to £10.500 readajusting down slightly in 1973 by the way I paid £8000 in April. Even the £5500 was nearly 4x average income and they havnt been that cheap since. Out of interest similar house on market for £180,000 now

Perhaps in '72 you weren't on the average salary. The rest of your post is correct, and the reason we are in the s**t now is banks abandoned those principles. Lets hope they make swift return.

ukcarper

the trouble is house prices vary over the country by more than the minimum wage I had to move 20 miles from where i was living and working because house prices were much to expensive. The main trouble is people look at houses as an investment instead of somewhere to live. In 1972 you had no choice but to buy unless you were lucky enough to get a coucil house because private lets were few and far between.Even so no regrets in buying because even if my house does lose 70% of its value it's nearly paid for and I will soon be living rent-free if I hadn’t bought I would be paying in excess of £1000 per month rent.

dervish

I think common sense dictates that most people looking to buy a house now, seeing house prices fall, and credit hard to ibtain, will NOT want (or be able) to commit to more than 3.5x salary.

Therefore house prioces will normalise downwards to make this a self-fulfilling proopechy.

ukcarper

I agree that the only thing that was achieve by the bank going from 3.5 to 6x multilplier was in increase the price of ftb house and therefore all other houses by that ratio.

dervish I accept what you say but that surely applies to FTB property and then they are going to need a large deposite which will increase the value by that amount

dervish

ukcarper wrote: »

I agree that the only thing that was achieve by the bank going from 3.5 to 6x multilplier was in increase the price of ftb house and therefore all other houses by that ratio.

dervish I accept what you say but that surely applies to FTB property and then they are going to need a large deposite which will increase the value by that amount

not necessarily.

If average salary is around 20k then the sum is as follows.

3.5 x 20 = 70k + 10% deposit (7k) = 77k.

Not a huge deal difference between 70/77 k.

mizzbiz

ukcarper wrote: »

Mortgages were a lot harder to come by then and you had to have a substation deposit,

I like that a lot. You had to have a substation deposit before you could get a mortgage.

Does that mean that you had to have a substation as a deposit or you had to have enough of a deposit for a substation?

We'd have been laughing, OH designs them!

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dervish wrote: »

not necessarily.

If average salary is around 20k then the sum is as follows.

3.5 x 20 = 70k + 10% deposit (7k) = 77k.

Not a huge deal difference between 70/77 k.

It will be interesting if the banks do go back to these multiples (3.5x single, or 2.5x joint) of these average wages for an average house, with the average wage at 25k it would seem there are huge falls to come.

I've said it before, I have 3 sisters who married between '77 and '83, (they were 19,21 and 22 respectively when they married) they and their husbands were on very average salaries (I know this for a fact), yet they all bought 3 bed semis. In 2007, they would have struggled for a 1 bed flat.

This is not progress.