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Debate House Prices
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At what figure do YOU think the average house price will hit rock bottom ?
Comments
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Graham_Devon wrote: »Lets face it, he's not considered the 40% tax that would be taken on the 350k profit (leaving him 210k) and the cost of running and maintaining the place, the interest paid on the mortgage, the council tax.
If this sort of complete delusion is what's running through bulls heads, is what's pulling us out of recession, god only knows what will happen when reality sets in.
CGT is 18% not 40%:rolleyes:
He would also have an allowance, currently at £10,100 but likely to rise in the coming 25 years.
Recently been raised 4-5 hundred per year in the last couple of years
So roughly estimating
£500k - £150k - £22,500 (Estimated allowance in 25 years) x 18%
That equals £58,950 in tax and £291,050 in profit:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
IveSeenTheLight wrote: »CGT is 18% not 40%:rolleyes:
He would also have an allowance, currently at £10,100 but likely to rise in the coming 25 years.
Recently been raised 4-5 hundred per year in the last couple of years
So roughly estimating
£500k - £150k - £22,500 (Estimated allowance in 25 years) x 18%
That equals £58,950 in tax and £291,050 in profit
Thats good maths, but I just don't agree on a average house been worth 500k in 25 years, and if it was, everything else would be relative to it, as only inflation in wages could take prices this high.
I still don't have an answer to the question I asked earlier, does anyone know the average wage in 2001 before the bubble took off, HPI from '96 through to '01 was quite manageable and sustainable it was only after this time when the banks got access to RMBS that bubble began.
This market now is pretty much closed, so the only way to get approvals upto 70,000+ is to have lower prices, and mortgage approvals are indeed increasing..... on the back of these lower prices, at the moment we have 40k ish with prices off by 20%, I wonder how much prices will have to fall for us to hit 70k approvals, it will be interesting.0 -
Graham_Devon wrote: »However, £32,779 is the average income for households with families in it (proof below) which was from 2006. However, this is sourced from the ONS, so I believe this is the mean figure, not the median which Iveseen puts at 45k, 13k over the amount in 2006, and it hasn't shot up 13k since then, as we have had inflation vs wage rise arguments for thepast 2 years.
http://news.bbc.co.uk/1/hi/uk/7071611.stm
Graham, take a moment to re-read what you write and ckeck the facts.
The ONS (Office National Statistics) is the same organisation I linked to showing the facts
http://www.statistics.gov.uk/downloa...08/tab1_7a.xls
So you can't quote a figure from the BBC and say you believe it is the mean without checking it out.
It's obvious from the actual source I put that that figure is likely to be the median, not the mean as I explained how the mean average figure is estimated at.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
Thats good maths, but I just don't agree on a average house been worth 500k in 25 years, and if it was, everything else would be relative to it, as only inflation in wages could take prices this high.
If this is true, then its understandable that property could be £500k in 25 years. It's only doubling every 13 - 14 yearsI still don't have an answer to the question I asked earlier, does anyone know the average wage in 2001 before the bubble took off, HPI from '96 through to '01 was quite manageable and sustainable it was only after this time when the banks got access to RMBS that bubble began.
from http://www.statistics.gov.uk/downloads/theme_labour/ASHE_2001/tab1_7a.xls
Full Time Male Mean Average = £26,841
Full Time Male Median Average = £21,762
Full Time Female Mean Average = £18,847
Full Time Female Median Average = £16,151
Part Time Male Mean Average = £8,311
Part Time Male Median Average = £5,615
Part Time Female Mean Average = £6,991
Part Time Female Median Average = £5,929This market now is pretty much closed, so the only way to get approvals upto 70,000+ is to have lower prices, and mortgage approvals are indeed increasing..... on the back of these lower prices, at the moment we have 40k ish with prices off by 20%, I wonder how much prices will have to fall for us to hit 70k approvals, it will be interesting.
Interesting way to portray that mortgage approvals is a direct result of lower prices, however by Nationwide and CML statistics, there was not an increase in mortgage approvals in the 15 so months from Sep 07 to Dec 08 while prices were going down.
Mortgage approvals have seemed to increase since the start of the year where pretty much the prices have stagnated or risen slightly according to Nationwide:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
Graham_Devon wrote: »Also iveseenthelight telling us all that the average house price in relation to average earnings is actually nearly £170k as the average family will have 20k stashed away and be bringing in 45k a year.
Correction
I simply stated that the mean average household income of 1 full time male and 1 part time female as data provided by the ONS is £45k per year.
I then applied YOUR 3.5x multiple to show that they should be able to get a mortgage for £157,500.
Adding on a 10% deposit required in the current climate and you were looking at they should be able to afford a property at £173,250
All facts provided by the ONS, which previously you wanted to use, but now are doubting:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
IveSeenTheLight wrote: »CGT is 18% not 40%:rolleyes:
He would also have an allowance, currently at £10,100 but likely to rise in the coming 25 years.
Recently been raised 4-5 hundred per year in the last couple of years
So roughly estimating
£500k - £150k - £22,500 (Estimated allowance in 25 years) x 18%
That equals £58,950 in tax and £291,050 in profit
To base an investment on no change in taxation rates in a 25 year period is sheer folly. Whilst the base might increase so may well the actual rate of tax. I would think an increase to say 25% in the next budget wouln't be unrealistic.
As for a property increasing in value from £150k to £500k in 25 years. That's a compound increase of around 5% per annum. Which in the current economic conditions is illusory. As a high % of the population are currently experiencing wage deflation plus disposable income will fall as income tax rates rise into the future.0 -
IveSeenTheLight wrote: »Interesting way to portray that mortgage approvals is a direct result of lower prices, however by Nationwide and CML statistics, there was not an increase in mortgage approvals in the 15 so months from Sep 07 to Dec 08 while prices were going down.
Mortgage approvals have seemed to increase since the start of the year where pretty much the prices have stagnated or risen slightly according to Nationwide
It would have been difficult for mortgage approvals to have increased during the 15th month period Sep 07 to Dec 08. As the lending market collapsed during that period as Banks and Institutions withdrew from the market due to the wholesale money markets drying up. Until the BOE\Tresury intervention last October did the banks stabilise again.
Since then we have seen a more stable market. As liquidity returned to the banks. Though recent interest rate rises suggest we have hit a ceiling for available wholesale funds. To increase the availability of mortgage funding might require further interest rate increases this will have the effect of decreasing property prices further.
You may call me a bear. But I'm of the personal opinion that we are merely witnessing the property market returning to sensible levels in all regards. Whether it be interest rates, LTV, disposable income. The bubble has yet to deflate further.0 -
Thrugelmir wrote: »To base an investment on no change in taxation rates in a 25 year period is sheer folly. Whilst the base might increase so may well the actual rate of tax. I would think an increase to say 25% in the next budget wouln't be unrealistic.
lol, You say to base an investment on no change in taxation in a 25 year period as shear folly, which I agree withbut then go on to predict what will be in the next budget :rotfl:
I was merely correcting the mathematics with the data known todayThrugelmir wrote: »As for a property increasing in value from £150k to £500k in 25 years. That's a compound increase of around 5% per annum. Which in the current economic conditions is illusory. As a high % of the population are currently experiencing wage deflation plus disposable income will fall as income tax rates rise into the future.
Agree'd a compound 4.95%, I stated this earlier.
Not my figures, once again just correcting poor mathematics in earlier posts:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
Thrugelmir wrote: »To base an investment on no change in taxation rates in a 25 year period is sheer folly. Whilst the base might increase so may well the actual rate of tax. I would think an increase to say 25% in the next budget wouln't be unrealistic.
As for a property increasing in value from £150k to £500k in 25 years. That's a compound increase of around 5% per annum. Which in the current economic conditions is illusory. As a high % of the population are currently experiencing wage deflation plus disposable income will fall as income tax rates rise into the future.
The £150k to £500k was just an example.
However, i do suspect if i carried out a little research over the last 50yrs at each yearly increment with 25yr spacings, i would think a 233% difference to be quite possible;) My folks bought their house for £40k in 1987 and 22yrs later it's valued at around £350k today. I make that out around an 800% increase, so my 233% looks a bit conservative.
Works out at just less than 5% pa, which i would say is more than attainable. Perhaps not this year, or even next but come 2011, we may well see 5-10% pa growth in the housing market. In some of the boom years we were experiencing 15-20% in single years so average of 5% over 25yrs i dont find illusory No.
I have a FSP already in place that will pay 40/60th of my final salary but who knows what's round the corner, that could easily be snatched away from me.
Housing over the long run is always going to be a good investment.
ISTL....I gave up on Graham last night. I think he had 1 too many as he was not making much sense at all. (I dont think he has Excel to view the government data, hence why he keeps harping on about that old BBC article)0 -
Thrugelmir wrote: »It would have been difficult for mortgage approvals to have increased during the 15th month period Sep 07 to Dec 08. As the lending market collapsed during that period as Banks and Institutions withdrew from the market due to the wholesale money markets drying up. Until the BOE\Tresury intervention last October did the banks stabilise again.
Since then we have seen a more stable market. As liquidity returned to the banks. Though recent interest rate rises suggest we have hit a ceiling for available wholesale funds. To increase the availability of mortgage funding might require further interest rate increases this will have the effect of decreasing property prices further.
You may call me a bear. But I'm of the personal opinion that we are merely witnessing the property market returning to sensible levels in all regards. Whether it be interest rates, LTV, disposable income. The bubble has yet to deflate further.
I prefer not to label people such as bears or bull's.
You are quite correct in a way, the market has corrected and I understand the need for that correction.
As you say the market is stabalising and what is being debated is if there is a need for a further correction.
I'm certainly not signing up to the 70% club
It's interesting that the market has stabalised around the long term house price growth. Is this an indicator?
I think that Britain has a desire to be a home owner which is far greater than seen in other economies. This increase demand will increase house prices. Maybe there needs to be a realisation that not everyone can afford to buy and maybe legislation and the government needs to consider change to make the desire to own less and non homeowners more secure.
I feel that with so much money generated for the government through house prices such as stamp duty and inheritance tax, that I don't foresee a change in the legislation.:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0
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