The Affordability scam explained

kabayiri

Using a minimum of duality existences, I aim to redress this balance between 70scouple and NowFamily , switching the focus onto 'risk'.

Mr 70s....sole breadwinner, true, but the era of 'job for life' still held true. His property was expensive to procure but the chances of completing payment were fairly good.

FamilyNow.....hmm, well they both have to work to afford WimpeyVille....double the chance of a severe reduction in income should they lose a job.

Mr70s had never heard of outsourcing. Lack of computerisation meant plenty of manual intensive work still.

NowFamily are all too aware of job relocation to 'centres of excellence' (euphemism for elsewhere). Job for life is not commonplace now.

Mr 70s and wife, tough going at times, but 'stay together' is still a theme.

NowFamily -much higher chance of splitting up...dysfunction is more common. The change in circumstance hits hard.

Mr70s is familiar with highish rates on his mortgage, including swings, and copes accordingly.

NowFamily rely on the era of cheap credit. The sheer level of investment required for their abode leaves them vulnerable to later swings in interest rates....especially if those nice Chinese people get uppity about bankrolling us on more cheap credit.

Is life and house and home more certain now? I am not so sure....

chucky

Thrugelmir wrote: »

You have to allow for capital repayment to be meaningful.

Have median wages increased in the same ratio as house prices in the same timeframe ? I suspect not, as the average household with a mortgage does not have a household income of £45k in2009 , compared to £15k in 1991.

that wasn't really the comparison - it was comparing rates and the total price of buying a house...

mbga9pgf

HAMISH_MCTAVISH wrote: »

Why is it a flawed comparison?

The whole argument through several threads now is that affordability of housing is about more than just the initial price paid.

If in 1990 it took 70% of someones disposable income to buy a house, and in 2007 it only took 45%, then it's obvious to anyone with half a brain that it was more affordable in 2007 than in 1990 in relative terms.

Forget about prices for a moment and answer one simple question.

Would you rather pay 70% of your disposable income for a house or 45%?

I would rather pay 70% for a few months rather than 45% for a lifetime'

baileysbattlebus

nearlynew wrote: »

Yes. I do.

And back then the announcement of its planned removal was the last throw of the HPI dice to get people to pile into property.

Months later, the whole thing crashed.

If I remeber correctly chancellor Lawson announced the abolition of each person getting an individual miras allowance, married couples had it between them, single people had it each - so if you lived together or bought with friends you each claimed miras. Lawson in his wisdom announced it in the April budget for an August implementation. And not surprisingly people went into a buying frenzy to beat the August deadline.

And as you say not long after - crash.

I knew people at work who bought together during this period - they were work colleagues - not in a relationship or anything - but bought so they could both take advantage of miras.

Thrugelmir

chucky wrote: »

that wasn't really the comparison - it was comparing rates and the total price of buying a house...

Merely an observation.

HAMISH_MCTAVISH

mbga9pgf wrote: »

I would rather pay 70% for a few months rather than 45% for a lifetime'

:rotfl:

OK, wait, you do realise that if it's 70% and then drops over 20 years to 45%, you're still paying more as a percentage of income, right?

We seriously need a better class of bear around here, this is getting too easy.:rotfl:

Graham_Devon

HAMISH_MCTAVISH wrote: »

:rotfl:

OK, wait, you do realise that if it's 70% and then drops over 20 years to 45%, you're still paying more as a percentage of income, right?

We seriously need a better class of bear around here, this is getting too easy.:rotfl:

No, you just need to go to specsavers.

They said "for a few months" which you have changed to "over 20 years" with a rolling head icon.

It's times like this where I wonder whether we do all see the same, or some people see something completely different.

HAMISH_MCTAVISH

Graham_Devon wrote: »

No, you just need to go to specsavers.

They said "for a few months" which you have changed to "over 20 years" with a rolling head icon.

It's times like this where I wonder whether we do all see the same, or some people see something completely different.

I think you're having trouble following threads...... again.

The percentage was 70% in 1990, and has declined to 39% today, but 45% in 2007 at peak and with 5%+ base rates.

70% for a few months didn't happen. Therefore it's not a viable option.

Graham_Devon

HAMISH_MCTAVISH wrote: »

I think you're having trouble following threads...... again.

The percentage was 70% in 1990, and has declined to 39% today, but 45% in 2007 at peak and with 5%+ base rates.

70% for a few months didn't happen. Therefore it's not a viable option.

Sorry, I have no idea what you just said.

mbga9pgf

Hey hamish, guess where this graph is going next?

Guess where prices are going bearing in mind most of the falls so far are down to lower rates?

I dont know where you get your figures from, but your 45% vs 70% (2007 vs 1990) figures look like total bollox when compared to the Nationwide FTB affordability index!
Figures are mortgage payments as a % of take home pay. You are, as I show below, talking complete and utter !!!!!! Hasnt a 40 year old got something better to do than argue with bears on the internet about home ownership?
Graph available here:

http://www.nationwide.co.uk/hpi/historical.htm