3.5

Thrugelmir

Without FTB's there is no support for house prices.

First-time buyer home affordability has improved significantly in 2008

This is the first Halifax review assessing the affordability of housing for first-time buyers (FTBs) across the UK. Updates will be issued at least quarterly. The benchmark used to assess affordability is the 20 year historical average house price to earnings ratio of 4.0*. The calculation is based on a single income and is, therefore, conservative.

• The house price to earnings ratio – a key affordability measure - has improved significantly over the past 18 months. The ratio has fallen from a peak of 5.84 in July 2007 to 4.56 in November 2008, taking it to its lowest level for more than five years (July 2003: 4.54).
• The proportion of local authorities (LAs) in the UK where housing is affordable for a first-time buyer (FTB) has more than trebled in 2008. In 2008, the average price paid by a FTB was affordable for someone on average earnings in 14% of LAs compared to just 4% in 2007*
• The number of LAs across the UK where the average property is affordable for a potential FTB on average earnings has increased from 18 in 2007 to 57 in 2008 out of a total of 406 LAs surveyed
• The affordability situation for FTBs has improved in seven of the 12 UK regions in 2008. The largest increases in the percentages of LAs that have become affordable for FTBs between 2007 and 2008 are in Yorkshire and the Humber (from 0% to 40%) and Scotland (from 30% to 67% of LAs)
• Similarly, housing is most affordable for FTBs in Scotland and Yorkshire and the Humber. Property prices are affordable for someone on average earnings in nearly two out of three LAs (67%) of in Scotland and four out of ten LAs Yorkshire and the Humber (40%)
• There have been no increases in the number of affordable LAs in London, South West, West Midlands, Wales and Northern Ireland where the average property bought by a FTB remains unaffordable for someone on average earnings in all the LAs surveyed.

The last paragraph illustrates that there areas of the country which appear to be overpriced still.

ukcarper

I'd like to know when it was possible for a FTB on average income to buy a house in London

mewbie_2

IveSeenTheLight wrote: »

Usual stats...

Dear ISTL. If you were on the Titanic, and the Captain said "get off now we're sinking", would you say "well actually this end isn't sinking yet, and according to my spreadsheets there's a 53.24% chance that we won't be sinking for a while."

No of course you wouldn't, and I have just tried to make a cheap, facetious and ill judged 'joke'. At least I don't have to press send. Whoops. Oh well.

ps. No offence meant. Honest.

chucky

ukcarper wrote: »

I'd like to know when it was possible for a FTB on average income to buy a house in London

average London Income is around £45k believe.

for a single person it would be dificult and have to be 4x income.
4x £45k = £180k + £18k deposit = £198k property

with a dual income it's much better - for example two earning £45k
joing income of £90k x 3.5 income = £315k + £31k deposit = £346k property

I've taken a 10% deposit instead of 20% or even 25% what I believe it should be.

ukcarper

I wonder if the average london income is still £45k with all these city types losing their Jobs

chucky

ukcarper wrote: »

I wonder if the average london income is still £45k with all these city types losing their Jobs

the City has been hit by redundancies but it isn't as bad as made out.
there has been an impact, my gut feel is there is about 5% less staff if that.

the job cuts that were announced in the last few months by banks are over a period of time (over the next two years for example) and wouldn't have been immediete.

dopester

I'm expecting a bigger crash in wage levels
and in the level of all types of benefits paid out,
than in property.

Fewer working days could soon be coming in to our future here,
with big hints dropped recently, although I'd anticipated as much.

Gorgeous_George

What is needed is a method of stabilising mortgage rates.

As well as a return to sensible lending multiples and solid evidence of affordability, a system that places a surcharge on mortgages when base rates are low and subsidises mortgages when base rates are higher, could provide a level playing field for all mortgage holders - regardless of when they were born.

GG

IveSeenTheLight

mewbie wrote: »

Dear ISTL. If you were on the Titanic, and the Captain said "get off now we're sinking", would you say "well actually this end isn't sinking yet, and according to my spreadsheets there's a 53.24% chance that we won't be sinking for a while."

No of course you wouldn't, and I have just tried to make a cheap, facetious and ill judged 'joke'. At least I don't have to press send. Whoops. Oh well.

ps. No offence meant. Honest.

What is the point in this anology?
In your anology, the boat is sinking due to irrepairable damage and there will definately be no turning point.

Housing market is quite a bit different to a sinking ship.

Time to find a better anolgy Mr Mewbie

patchwork_cat

When we remortgaged 18 months ago the affordability calculator actually wouldn't give us more than 3.5 x. I have never spotted these 5 and 6 x multiple mortgages. However around here house prices are already less than 4 x a FTB's fairly low salary. EG a 2 bed victorian terrace is 75K, quite affordable even considering the lower salaries around here compared to further South. Last recession we didn't see much of a drop from the peak, about 10%, but there was about 8 years of stagnation.

It is very hard to see what house prices are doing around here from personal research. Zoopla etc/ Halifax say that our houses has lost about 20% on peak, but I think that the peak was artificially inflated and was about 10/12 % too high compared to my observation of actual sale prices locally. There is nothing going in our area when I go on property bee there has been very little property sold in the last year, How much is our house worth at the moment well very little as houses just aren't selling.