The big price falls are over.

System

IveSeenTheLight wrote: »

If you look at the Mortgage repayment as a percentage of income, it is below the long term average with the figures being at 09 Q1 30.56% against the long term average of 37.29%

Is that before or after tax do you know?

StevieJ

The_White_Horse wrote: »

rates are now 5-6% for fixed deals, with base at 0.5%

you could get 5-6% deals when base was at 4-5% a few years back.

At this rate, most mortgages will be 8-10% as soon as base starts rising. Then you will see a nuclear fall out.

And you will again, that is why I think the market can absorb reasonable interest rate rises.

IveSeenTheLight

Graham_Devon wrote: »

Another fact is that if you look at how the affordability is calculated above, it only counts males and also is done on the mean. Which pushes the average wage for their affordability multiples.

Couple of things Graham,

Can you highlight the link showing the methodology is only using male mean wages as stated by the ONS?

1) On this point, if it is true, it still is regardless as long as hte methodology is maintained, its comparing the same figures against previous figures and therefore the compairison is maintained instead of being adjusted during the timeframe. It's important to maintain the methodology rather than adjusting, else you would in effect be re-starting the comparison and previous data would be not worth comparing against.

2) It is quite possible the reason for this (if it is true), is because in generations of past, it generally was the male who was the bread winner and the female wages were of insignificance (not being sexist) when looking at income and mortgages.

3) It has been shown before, and can be done again, that the Full Time Male Mean wages has increased by the smallest percentage between 2001 and 2008 ASHE obtained ONS statistics. therefore if female and part time figures were also included, it would therefore show that now is even more affordable when compared to 2001

Graham_Devon

chucky wrote: »

instead of trying to twist things it would be good if you could reply to ISTL's point about affordability. it looks like you agree with it otherwise.

Just posting facts. If that's now twisting, so be it.

I do not agree with it, as I have said so many times.

There are many house price affordability index's out there, and it would be nice to use a middle of the road one, instead of cherry picked stuff talking of 36k being the average wage anbd ignoring half the populations wages, i.e. women.

IveSeenTheLight

Joeskeppi wrote: »

Is that before or after tax do you know?

Sorry, I do not know.
If I was to hazzard a guess, I would say it is gross income, not nett.

This will probably be worth something to some people as they will say the percentage is higher if compared with take home pay, but again, I stress the importance to keep the methodology the same throught the comparison perios, and the stats stand up to show that the mortgage payments to income ratio is below the long term average.

chucky

IveSeenTheLight wrote: »

Sorry, I do not know.
If I was to hazzard a guess, I would say it is gross income, not nett.

This will probably be worth something to some people as they will say the percentage is higher if compared with take home pay, but again, I stress the importance to keep the methodology the same throught the comparison perios, and the stats stand up to show that the mortgage payments to income ratio is below the long term average.

this gives more context to your point
http://www.lloydsbankinggroup.com/media/pdfs/halifax/270609Costofhousing.pdf
about 40% of OO's are on fixed rates but still gives you a good idea on affordability.

JonnyBravo

Graham_Devon wrote: »

Another fact is that if you look at how the affordability is calculated above, it only counts males and also is done on the mean. Which pushes the average wage for their affordability multiples.

Yeah yeah... heard it all before....

Surely you can see it has always been measured like this and so at least we can do a like for like comparison and see that is now lower... ie more affordable

Sure it has been lower still and I believe it will come down further but your argument on this is somewhat moot it would seem.

System

IveSeenTheLight wrote: »

Sorry, I do not know.
If I was to hazzard a guess, I would say it is gross income, not nett.

This will probably be worth something to some people as they will say the percentage is higher if compared with take home pay, but again, I stress the importance to keep the methodology the same throught the comparison perios, and the stats stand up to show that the mortgage payments to income ratio is below the long term average.

My mortgage payments are 19% net, or 14% gross Perhaps I should upgrade. Average of 30-40 seems realistic.

chucky

Graham_Devon wrote: »

There are many house price affordability index's out there, and it would be nice to use a middle of the road one, instead of cherry picked stuff talking of 36k being the average wage anbd ignoring half the populations wages, i.e. women.

i've explained this to you a number of times but you still don't get it
http://www.statistics.gov.uk/downloads/theme_labour/ASHE_2008/tab7_7a.xls

a middle of the road one doesn't tell you anything.

when you know who buys more property - male, female or even joint income purchases then you can start to use these male or female salary examples.

at the moment property seems to be purchased more with single male or joint income purchases than on a single womens income. i suggest you do calculations on these to get the info you need.

Harry_Powell

The_White_Horse wrote: »

No way. As soon as the base rate rises, the housing market will collapse.

People are only managing because of 0.5% base rate. as soon as it goes up, there will be a collapse.

Do you have any proof that 'people' are only managing because of 0.5% base rates?

While I'm with you on the sentiment (I'm hopeful for a further 20% drop), I'm not so sure that IR rises will be that disasterous. If rates went back to 5%, many people would simply be back to the rate they paid at the peak of the boom, and most people could afford their mortgage repayments then.

Many people are on fixed rate mortgages and many more seem to be fixing them over the next few months to grab the low rates we currently have (if the 'chatter' on the mortgage & house buying boards is anything to go by).

I've also seen reports that suggest a lot of people are taking advantage of the current rates and are paying down their mortgages and other debts. If the current low rates continue for an extended period, then I could imagine that a lot of endebted people (who managed to keep their jobs) will come out of the recession with their finances in better shape.

As I said, I'd like to see 20% further drops, but logically I just don't see where they're going to come from.