House Prices up 4.2% in 3 months Nationwide

Generali

chucky wrote: »

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

It's a correlation. 70,000 completions/month correlate with house prices rising gently in real terms. Below that correlates with house prices falling in real terms, generally speaking.

It's a rule of thumb, not an immutable law. 9.81m/s^2 or something.

lostinrates

Generali wrote: »

It's a correlation. 70,000 completions/month correlate with house prices rising gently in real terms. Below that correlates with house prices falling in real terms, generally speaking.

It's a rule of thumb, not an immutable law. 9.81m/s^2 or something.

Dearest Gen, don't be cross with me for questions, I know this comes up over and ver, but why? Is it as a proportion of houses/people/the market..if there were more houses would the number be higher, or lower if there were fewer houses, or is it an unchanging number like pi but less exact?

Graham_Devon

IveSeenTheLight wrote: »

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.

I honestly know no one, bar GP's who earn this. Even my business manager does not earn 35k a year. The nurses are on about 24k a year.

I can honestly see what you are saying. But in good faith, can you say these wages are actually realistic?

chucky

Generali wrote: »

It's a correlation. 70,000 completions/month correlate with house prices rising gently in real terms. Below that correlates with house prices falling in real terms, generally speaking.

It's a rule of thumb, not an immutable law. 9.81m/s^2 or something.

but i also think that with the increased number of cash purchases and decreased LTV the number of approvals may need to be less. though historically, you would need in excess of 70k approvals per month

i found this to prove your point - during and coming out of the recession it doesn't seem to be as accurate though due to the cash purchase factor.

Degenerate

Graham_Devon wrote: »

I honestly know no one, bar GP's who earn this. Even my business manager does not earn 35k a year. The nurses are on about 24k a year.

Well, I assume you live in Devon. A water network technician in London earns more than your business manager. Affordability can be compared by comparing national averages, or more local measures. On the national averages, affordabilty is looking a lot better, on local measures it will vary, and maybe some areas have further to drop while others rise.

Graham_Devon

Degenerate wrote: »

Well, I assume you live in Devon. A water network technician in London earns more than your business manager. Affordability can be compared by comparing national averages, or more local measures. On the national averages, affordabilty is looking a lot better, on local measures it will vary, and maybe some areas have further to drop while others rise.

Exactly the reason to use median wages when talking about affordable house prices.

It is completely pointless to state that house prices are affordable because a water technician in london can afford the national average price.

1. because not everyone is on london wages
2. because that london water technician is not paying national prices, they are paying the highest in the country.

So water man in london cant afford a property and neither can business manager in devon. Though on paper, I'll admit, it looks good.

chucky

Degenerate wrote: »

Well, I assume you live in Devon. A water network technician in London earns more than your business manager. Affordability can be compared by comparing national averages, or more local measures. On the national averages, affordabilty is looking a lot better, on local measures it will vary, and maybe some areas have further to drop while others rise.

a man that drives a tube train earns more than that business manager - this is why it's impossible comparing two different regions

Degenerate

Graham_Devon wrote: »

2. because that london water technician is not paying national prices, they are paying the highest in the country.

There are still areas with prices close to the national average within commuting distance of central London. This is where the blue collar workers tend to live.

JonnyBravo

Graham_Devon wrote: »

I honestly know no one, bar GP's who earn this. Even my business manager does not earn 35k a year. The nurses are on about 24k a year.

I can honestly see what you are saying. But in good faith, can you say these wages are actually realistic?

So it varies not only region to region but business to business.

Most of my team earn more than your business manager and all of my peers certainly do. A good proportion of my friends (in other industries) do too.

I'd suggest however, that neither of us know enough people for it to be statistically significant by a long chalk.
I'd go with the stats rather than either yours, or my, experience of what people earn.

Graham_Devon

So the mean figure is the agreed figure to use? Not the median, i.e. what most people earn?

Am I right here? As it will stop a lot of confusion in the future.

I always thought it was much better to look at what the majority earn, therefore can afford, rather than what a select number earn and what they can afford, but if this is the reason for a lot of confusion leading to arguments about house prices, i'd rather know which is the "acceptable method". May need a new thread or a poll though!