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

Graham_Devon

mitchaa wrote: »

So you believe Mr average on his £26k income and Mrs average on her £26k income should be able to afford 2 average priced homes? They sell their 2 average homes and buy what, a 6 bed countryside mini mansion?

This is an average couple, not a high earning couple. Average couples in UK all living in 6bed mini mansions seems a bit far fetched to me

Expand the scenario to 2 £40k middle income earners, then onto 2 x 75k high earners. Every middle incomed family would be living in mansions, every high incomed family living in castles and god knows what footballers would be buying? Islands perhaps?

If a single income of £26k is enough to buy a typical 3bed SD home, then the BTL world would expand 100 fold as every family with a decent income would be buying multiple properties.

Complete lunacy i think you'll agree;)

Your post? Your not wrong, we agree.

IveSeenTheLight wrote: »

Why use the median wage, when the LR reports Mean average house prices?
To compare adequately, Mean Average wages need to be compared

from http://www.statistics.gov.uk/downloads/theme_labour/ASHE_2008/tab1_7a.xls

Full Time Male Mean Average = £35,122
Full Time Female Mean Average = £25,304
Part Time Male Mean Average = £12,586
Part Time Female Mean Average = £9,911

I have come to the conclusion that you lot are just not living in the real world. The world where people have other things to pay for bar a house, the world where people want to enjoy themselves.

I am absolutely flabergasted by some of the posts on this thread. Mitch's have made me laugh, but yours, iveseen, well, it's just delusion. It really is. And I don't know why you pedal it when deep down, you must know yourself, the average family is NOT on 45k a year.

I cannot get my head around why you would post such stupid stuff.

Graham_Devon

Infact, just to nip this one in the bud...

http://www.statistics.gov.uk/cci/nugget.asp?id=334

No VI, no spin, just raw statistics.

Total family income of all families averages out at less than 30k in 2006/7.

The top fifth of the country have an average of just over 50k.

Yet you are saying the average is 45k!??!?!? You have over egged the figures by over a third.



So if you could kindly do your maths again, I would be grateful.

Also, when renting an average £550 a month house, paying around 10k in tax, paying another 1k in council tax, 1k in domestic fuel etc, the family is left with around 12k per year for everything.

We haven't looked at food, clothing, transport, nothing like that.

So can you re-do your assuption that people just have 20k sitting spare in deposit funds!!?

Thrugelmir

mitchaa wrote: »

Pension provisions.

Most pensions now are not worth the paper they are written on so many are choosing to opt out of pensions and into something far more rewarding.

Over the long term, property is always going to be a good investment. I can buy a house now for £150k and in 25yrs time it will probably be worth £500k. I sell the house, bank the £500k and live off the interest generated, or contine to let the house out and use that as an income.

40yrs to my retirement, that could be another 2 x 20 yr mortgages as investments for me for when i retire so on my 65th birthday, i have my own house plus 2 others.

Beats a pension, that's for sure

Most interesting post I've read for a while. You obviously believe that houses are the holy grail of investments without exception. So I won't try and debate with you. As you seem only focused in convincing yourself that you must be right. Though I suggest you do look closely at taxation issues when comparing BTL to other investments and not just pensions for that matter.

Every investment bubble has its day. The smart money has either been liquidated from BTL or is invested in good quality high yield property.

As you've 40 years to retirement guess you've yet to experience a melt down in an investment sector in your life. So take care.

Graham_Devon

Thrugelmir wrote: »

Most interesting post I've read for a while. You obviously believe that houses are the holy grail of investments without exception. So I won't try and debate with you. As you seem only focused in convincing yourself that you must be right. Though I suggest you do look closely at taxation issues when comparing BTL to other investments and not just pensions for that matter.

Every investment bubble has its day. The smart money has either been liquidated from BTL or is invested in good quality high yield property.

As you've 40 years to retirement guess you've yet to experience a melt down in an investment sector in your life. So take care.

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.

ad9898_3

Graham_Devon wrote: »

Infact, just to nip this one in the bud...

http://www.statistics.gov.uk/cci/nugget.asp?id=334

No VI, no spin, just raw statistics.

Total family income of all families averages out at less than 30k in 2006/7.

The top fifth of the country have an average of just over 50k.

Yet you are saying the average is 45k!??!?!? You have over egged the figures by over a third.



So if you could kindly do your maths again, I would be grateful.

Also, when renting an average £550 a month house, paying around 10k in tax, paying another 1k in council tax, 1k in domestic fuel etc, the family is left with around 12k per year for everything.

We haven't looked at food, clothing, transport, nothing like that.

So can you re-do your assuption that people just have 20k sitting spare in deposit funds!!?

Nice find Graham, I new that this '45k average family income' was utter crap, (how anyone could believe that's true is completely beyond me), but I couldn't be bothered to look to disprove it.

So looking at that graph, final income for the average household in the UK is about 28k. Which means at 4x household income (very dangerous if you ask me, if thats made up of 2 peoples income), brings the average house price in at 112k.

Thrugelmir

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.

I feel it demonstrates the lack of financial education that people receive these days. If it all goes wrong , its somebody elses fault too.

Reality is going to hit hard I'm afraid to say. Though I never wish anything bad on others.

bluey890

Many purchases are now made by BTL or with money given by parents so income multiple is not a good indicator.

Graham_Devon

ad9898 wrote: »

Nice find Graham, I new that this '45k average family income' was utter crap, (how anyone could believe that's true is completely beyond me), but I couldn't be bothered to look to disprove it.

So looking at that graph, final income for the average household in the UK is about 28k. Which means at 4x household income (very dangerous if you ask me, if thats made up of 2 peoples income), brings the average house price in at 112k.

Household income is just that, the amount coming into the household regardless of who lives in it.

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

lostinrates

bluey890 wrote: »

Many purchases are now made by BTL or with money given by parents so income multiple is not a good indicator.

What sort of loan can you get for BTL? how do lenders work out what is a viable/safe loan? (not a leading question, but an interest in how it is now and if its changed since crash). I'm interested how it copares to other types of business lending as well as potential impact on domestic market

Graham_Devon

bluey890 wrote: »

Many purchases are now made by BTL or with money given by parents so income multiple is not a good indicator.

But many many MANY more are purchased by working people.

A very small handful are BTL, and the money given by parents has absolutely no backup. The whole money given by parents is a farce anyway. They would have to get round tax to do that. You cannot just gift someone 150k for a house.

So this would be the parents buying the house, not the person wanting it, completely different scenario.