Steady increase in June house prices

StevieJ

Max_Headroom wrote: »

Well charts are lovely of course, but meanwhile in the real world in my (fairly typical) area, a typical young persons wage is £15-£20K.

And a tiny 2 bed shoebox starter home is £120K (was £150K). Or six to eight times salary.

Doesn't sound everso affordable to me.

Doing a quick calculation based on a couple both earning 20k, with a 10% deposit and and a interest rate of 6 %, I make that 26% of net salary not exactly onerous.

1984ReturnsForReal_2

PasturesNew wrote: »

I'd not call monthly published figures "news".

And why start a thread about this when we already have one running.

It's annoying.

I feel like I wandered into 1984.

Nope.


Not me you wonered into.....

Max_Headroom_3

StevieJ wrote: »

Doing a quick calculation based on a couple both earning 20k, with a 10% deposit and and a interest rate of 6 %, I make that 26% of net salary not exactly onerous.

Well, big assumption that they're both on £20K for a start (that'd be good going) and it also assumes that they must not have children as can't afford to drop a salary.

zappahey

StevieJ wrote: »

The Nationwide chart show affordability down below the long term average and way down on the peak in the late 80's early 90's 'so it must be affordable innit' we are now waiting for liquidity.

Maybe the term we're looking for is "ability to pay"

StevieJ

Max_Headroom wrote: »

Well, big assumption that they're both on £20K for a start (that'd be good going) and it also assumes that they must not have children as can't afford to drop a salary.

Oh I forgot the tax credits as well

MrDT

StevieJ wrote: »

The Nationwide chart show affordability down below the long term average and way down on the peak in the late 80's early 90's 'so it must be affordable innit' we are now waiting for liquidity.

If they need a mortgage to buy, and cannot borrow (a 10% deposit for the young low paid majority out there is huge, nevermind 25%+), then there is no effective demand. Someone who can 'afford' a theoretical mortgage they can't actually qualify for makes as much difference to demand as any of the other dreamers out there.

So, by "return to liquidity", do you mean a return to bonkers '07 100%+ lending? That's what's needed to boost your demand once the bulltrapped STRs are done splashing the cash.

Don't hold your breath.

chucky

MrDT wrote: »

If they need a mortgage to buy, and cannot borrow (a 10% deposit for the young low paid majority out there is huge, nevermind 25%+), then there is no effective demand. Someone who can 'afford' a theoretical mortgage they can't actually qualify for makes as much difference to demand as any of the other dreamers out there.

So, by "return to liquidity", do you mean a return to bonkers '07 100%+ lending? That's what's needed to boost your demand once the bulltrapped STRs are done splashing the cash.

Don't hold your breath.

i don't think they are splashing the cash - i appreciate lower volumes but there would be a much large differential between property transactions and mortgage approvals below if there were a large number of cash purchases. it's the reverse.

StevieJ

MrDT wrote: »

So, by "return to liquidity", do you mean a return to bonkers '07 100%+ lending? That's what's needed to boost your demand once the bulltrapped STRs are done splashing the cash.

Don't hold your breath.

No a return to 10% deposit at reasonable rates, as I show in the worked example I posted

Doing a quick calculation based on a couple both earning 20k, with a 10% deposit and and a interest rate of 6 %, I make that 26% of net salary not exactly onerous.

gjchester

Max_Headroom wrote: »

You're missing the one element in that theory that everyone else missed when they jumped on the "supply and demand innint, house prices can only go up" bandwagon prior to it crashing off the rails, and that is affordability.

It's all very well having long council waiting lists and thus plenty of theoretical demand, but if all those people cannot afford to buy at current prices and cannot afford a rent that justifies landlords buying at current prices then that "demand" does not (cannot) actually exist.

There's enough "demand" for second-hand Aston Martins compared to cars built for prices to increase to the stratosphere in theory, how many people would love an Aston compared to the number of cars out there? In practice they fell through the floor for a while as most of us may want one, but we can't afford one. So that theoretical "demand" is null and void. Same principle.

Ultimately houses (and second-hand Aston Martins) must be sold at a level that enough people who want them (and can afford them) can absorb the amount for sale.

We're some way off that yet (for houses anyway, low production of Aston Martins means they've probably balanced out and are apparently on their way back up now).

I can see your point but it's not quite true. Under investment in council housing means they are short of housing and long on applicants on lists. I agree supply and demand would in an open market mean prices would find a level to make them affordable.

But this is not an open market. If someone cannot afford housing the usual answer is the DHSS/council rents the house for them, either directly by direct payment to the LL, or indirectly through benefits. The market rent (or there abouts) is being paid, so there is no reason for demand to decrease, if anything it's a steady income from a source thats unlikely to default and is increasing the number of BTL properties.

Personally I think the problem started with the Tories letting people buy their own homes, or more precisely, not investing the money raised by that process to build new housing, rather spending it elsewhere, and hence reducing the council housing stock that has lead to the situation we are in. But that's another thread entirely.

ixwood

A classic dead cat bounce/suckers rally/bull trap.

I feel sorry for the mu... people that jump in now.