House Prices up 4.2% in 3 months Nationwide

StevieJ

mp2 wrote: »

e.g house prices in 1980 would be 80k in todays money, prices in 1989 would be 115k in todays money.


the only reason why they shouldnt be 90k is if you think that there is a fundamantal shift in how much a house is worth compared to any previous history.

Surely it would be your perception of how much it would cost you to buy, not just the value of the house In 1989 the house was 115k (inflated) but interest rates were 15%, today a FTB can probably get a mortgage for 6% so monthly outgoings would be less even with a credit crunch on.

StevieJ

IveSeenTheLight wrote: »

I fear that you wont see BR + 2% until the base rate is higher i.e. 4%-5%.
Until then, the banks will want to ensure that the get a minimum return on money lent, otherwise it's probably not worth their risk.

So the first time buyer rates will not have increased even if the BR increases 8X

IveSeenTheLight

mp2 wrote: »

well if youre saying houses are worth more because times have changed then thats up to you i.e there is a fundamental shift in the market.

it maybe worth more, but that much more?

what i would say is that in 1989 the % of women in work was only slightly lower than it is today.

also does the market fundamentally shift in the space of 5 years? or did something else drive it....

1989 was 20 years ago, not 5

You think that house prices should be valued on average at £90k, well according to the National statistics, the male full time employee mean average was £35,122, the female mean average is £25,304, together that makes a mean joint income of £60,426.

Why use mean? Because average house prices are mean, not median.

Now I accept that its not ideal for families if both parents are working, however another poster on here mentioned a 1 1/2 household income family.

In that case the average part time female mean average is £9,911, therefore the mean household income of 1 full time male and 1 part time female is £45,033

So for house prices to be £90k on average, you are looking for a 2 x household income

It's therefore easy to associate that with a mortgage multiple of 3.5 x, the amount of mortgage attainable should be £157,615, not including any deposit put down.

If you want to use a 3 x multiplier, then mortgage availability would be £135,099. Add on a 10% deposit and house prices on a mean average should be £148,609.

I think this is why we are seeing a stabalising of house prices at the moment as the mean average person / family out there is starting to find it affordable

**NOTE** I am not trying to be sexist by posting male full time and female part time averages. It's my opinion that the majority (but not all) of parents who choose to stay at home with children will be female.

IveSeenTheLight

StevieJ wrote: »

So the first time buyer rates will not have increased even if the BR increases 8X

Jsut as the new mortgages on offer didn't drop at the rate of BoE drops, I beleieve and hope for future mortgage availability, that as the BoE rate increases, new mortgages available will tighten up the difference between the BoE rate that has opened up with the BoE historic low.

mp2

StevieJ wrote: »

Surely it would be your perception of how much it would cost you to buy, not just the value of the house In 1989 the house was 115k (inflated) but interest rates were 15%, today a FTB can probably get a mortgage for 6% so monthly outgoings would be less even with a credit crunch on.

yes, values rose because people could borrow more, a lot more. but was this a temporary shift or a fundamental shift?

todays high values can only be sustained if people tomorrow borrow a lot too.

if people tomorrow continue to borrow huge amounts of money then values will maintain their levels. theres no arguing with that.

however today people cant/wont/dont want to borrow so much money and take on so much debt anymore.

is the fact that people dont want to/arent allowed to borrow huge amounts of money, defined as abnormal, because the market has truly changed, and in which case house values should be at an extremely high level.

or is it quite normal, in which case values will fall back again.

chucky

mp2 wrote: »

however today people cant/wont/dont want to borrow so much money and take on so much debt anymore.

is the fact that people dont want to/arent allowed to borrow huge amounts of money abnormal, because the market has truly changed, and in which case house values should be at an extremely high level.

not exactly true - mortgage lending has increased for the 3rd month in a row.

The number of new mortgages approved for home buyers in the UK rose in April for the third month in a row, according to the Bank of England.

http://news.bbc.co.uk/2/hi/business/8078426.stm

davilown

chucky wrote: »

not exactly true - mortgage lending has increased for the 3rd month in a row.


http://news.bbc.co.uk/2/hi/business/8078426.stm

Not meaning to cause an argument or disagree, but surely the rate of mortgage lending couldn't have gotten any lower with the low rate of house purchases? Also what is the % borrowed on house price?

chucky

davilown wrote: »

Not meaning to cause an argument or disagree, but surely the rate of mortgage lending couldn't have gotten any lower with the low rate of house purchases? Also what is the % borrowed on house price?

i'm quoting generali here i believe but for 5% HPI there needs to be 70,000 mortgage approvals a month.

last month there were 43,000 compared to 32,000 in January and has increased every month- not a recovery in any way but it's a positive sign that more and more people are getting loans

pizzagirl

chucky wrote: »

last month there were 43,000 compared to 32,000 in January and has increased every month- not a recovery in any way but it's a positive sign that more and more people are getting loans

The figures always increase at this time of the year and then fall back. So those statistics mean diddly squat. It's the infamous 'spring bounce.' Wait another 3 months or wait until we get into the dark of winter and see how your figures stack up

lostinrates

chucky wrote: »

i'm quoting generali here i believe but for 5% HPI there needs to be 70,000 mortgage approvals a month.

I don't understand why really.

At risk of getting everyone excited again, 4.2 in a certain welsh town has happened without that volume. (I haven't read the link you gave me on that but I hve donloaded it to read )