At what figure do YOU think the average house price will hit rock bottom ?

Neilhmtn

Dan: wrote: »

Oh God.....back to this sh!te again. :rolleyes:

I can't get nearlynew's original quote in there as well, but I'm curious to know what it was he said was "sh!te"?

Even if nearlynew was too precise in a 3.5 ratio, in the long run, the price of houses has to have some kind of relation to earnings, surely? What's happened in the last ten years or so, for example, has marked a massive divide between people who bought then (eg, me), and people who bought a couple of years ago - they pay more than twice as much as I do for an equivalent property in the same town.

Of course, it might just be there's something between Dan and nearlynew. I wouldn't know, I just lurk here from time to time.

Graham_Devon

Neilhmtn wrote: »

I can't get nearlynew's original quote in there as well, but I'm curious to know what it was he said was "sh!te"?

Even if nearlynew was too precise in a 3.5 ratio, in the long run, the price of houses has to have some kind of relation to earnings, surely? What's happened in the last ten years or so, for example, has marked a massive divide between people who bought then (eg, me), and people who bought a couple of years ago - they pay more than twice as much as I do for an equivalent property in the same town.

Of course, it might just be there's something between Dan and nearlynew. I wouldn't know, I just lurk here from time to time.

Some people do not believe it's the case that "affordable" means 3.5x wages. That's why they call it !!!!!!.

Affordable to some is still in the 5x wage area.

Not that I agree, but I think that's the point that Dan's making.

IveSeenTheLight

Thrugelmir wrote: »

Enlighten me as to an alternative basis of approximate valuation. While not precisely accurate its a good measure of affordability and therefore prices.

Affordability does not rest on income alone.
Affordability also needs to assess expenditure.

Only once Income minus expenditure is assessed can affordability be known.

i.e. two household incomes, earning £45k, one has car loan, credit card debt, no savings, three holidays a year , smokes, drinks, parties etc etc etc, the other has no debt on credit loans and built up a bit of savings.

These identical two household incomes have vastly different affordability

wolvoman

IveSeenTheLight wrote: »

Affordability does not rest on income alone.
Affordability also needs to assess expenditure.

Only once Income minus expenditure is assessed can affordability be known.

i.e. two household incomes, earning £45k, one has car loan, credit card debt, no savings, three holidays a year , smokes, drinks, parties etc etc etc, the other has no debt on credit loans and built up a bit of savings.

These identical two household incomes have vastly different affordability

That's far too rational a comment for these parts.
Remember the sensible have to be restricted in order to protect the idiots!!!

Thrugelmir

IveSeenTheLight wrote: »

Affordability does not rest on income alone.
Affordability also needs to assess expenditure.

Only once Income minus expenditure is assessed can affordability be known.

i.e. two household incomes, earning £45k, one has car loan, credit card debt, no savings, three holidays a year , smokes, drinks, parties etc etc etc, the other has no debt on credit loans and built up a bit of savings.

These identical two household incomes have vastly different affordability

The variables are endless if you are going to include spending patterns. . But you need a starting point that is clear to have as a base.

Building societies in the past used income multipliers as a way of rationing mortgage funds. This is more than likely the way forward for mortgage lending. As there is only a finite amount of money available to be borrowed.

IveSeenTheLight

Thrugelmir wrote: »

The variables are endless if you are going to include spending patterns. . But you need a starting point that is clear to have as a base.

Building societies in the past used income multipliers as a way of rationing mortgage funds. This is more than likely the way forward for mortgage lending. As there is only a finite amount of money available to be borrowed.

You hit the nail on the head by saying "in the past"
I know I have had to supply 3 months bank statements as well to proove income and expenditure.

Why restrict someone who has more disposable income than another person just because they have the same gross income?

It's time to assess on individuality, rather than blanket statement multiplier on income alone

JayScottGreenspan

nearlynew wrote: »

Average price will revert to the long time average of about
3.5 times average wage in any given area.

Either wages rise or prices fall, but eventually they will converge on this figure.

Dan: wrote: »

Oh God.....back to this sh!te again. :rolleyes:

IMO the only important missing variable here is interest rates.

As long as interest rates stay at historically low levels then there is a chance that they can remain a fair bit above the 3.5x average salary level.

If interest rates revert to historically typical behaviour, then 3.5x seems a fair guess.

Thrugelmir

IveSeenTheLight wrote: »

You hit the nail on the head by saying "in the past"
I know I have had to supply 3 months bank statements as well to proove income and expenditure.

Why restrict someone who has more disposable income than another person just because they have the same gross income?

It's time to assess on individuality, rather than blanket statement multiplier on income alone

At the top level. Because there is a finite amount of capital to lend.

As they say The King is dead. Long live the King.

Times are a changing. More than lightly back to more traditional banking models.

mitchaa

JayScottGreenspan wrote: »

If interest rates revert to historically typical behaviour, then 3.5x seems a fair guess.

Nonsense.

Average salary is £26k pa so you expect average house prices to drop by another £60k down to £90k to fit your criteria?

Average house and average wage should share no links.

Pee

I hope I'm wrong, but I don't see house prices falling any further. Shame as I would like to buy.