The Affordability scam explained

baileysbattlebus

LydiaJ wrote: »

I am interested in Hamish's figure of 70% home ownership. Does anyone know where we can find some reliable data about:

(a) how the percentages for owning, private renting and social renting have changed over time

(b) how the distribution of home owners by age has changed over time?

My impression is that 20 or 30 years ago people only bought if they were in a comparatively privileged socio-economic class, but the people in the home-owning class bought fairly young, so that home owners were fairly evenly distributed across all ages above 25 or so. Whereas now, the spread of socio-economic class is much wider, but the age distribution is heavily biased towards those over about 35, and getting older all the time. But that's a guess, and I would like to know if it's accurate or not. If it is accurate, then I think the situation is a lot more complicated than just "70% is a big proportion, therefore houses are affordable".

The article in the OP has some things to say about this kind of issue:

Communties and Local Gov't has a load of housing information - gathered from all over the place. Well worth a look
http://www.communities.gov.uk/corporate/


a) the change in housing tenure over time (from 1918)

http://www.communities.gov.uk/documents/housing/xls/141491.xls

b) age of first time buyers from 1990

http://www.communities.gov.uk/documents/housing/xls/141293.xls

c) average deposits by first time buyer and former owner occupiers

http://www.communities.gov.uk/documents/housing/xls/chart540.xls

d) Average incomes of borrower, average house price and average advance. First time buyers and former owner occupiers - interesting to see how large the average deposit is for FTB.

http://www.communities.gov.uk/documents/housing/xls/141284.xls

LydiaJ

Thanks baileysbattlebus

The first thing I notice is that the % of owner occupiers peaked in 2005 and is now falling. I'll look at the rest of the data later - I haven't time now.

HAMISH_MCTAVISH

Thrugelmir wrote: »

You say your around 40 in age. Therefore you were born in 1969, possibly not starting work until 1990. So.......
this doesn't stack up ? With your comments of living through the peak times. :rolleyes:
High inflation eroded the capital value of debt. Low inflation as now doesn't.
High interest rates , may increase the cost of servicing a debt, this is something that people adjust to. As the outstanding the capital balance falls so do the interest charges.

I started work in the 80's, bought in 1990, and our first interest rate on our mortgage was somewhere around 15%. It was extremely difficult to service the mortgage, and it took almost everything we earned. Yes, we had pay rises in the 80's and 90's, but they always lagged inflation.

I wasn't of working age in the 70's and early 80's, so perhaps things were different then, but from talking to my parents and older friends, I believe otherwise.

I don't dispute the fact that inflation erodes the value of debt over time. But I do dispute the claims of the bears that high intereest rates are managable in inflationary times because pay rises keep up with inflation. They don't. Pay rises lag inflation, so people are permanently skint.

You only have to look at the charts showing percentage of disposable income spent on mortgages then and now to see this for yourself.

At 15% rates, people were spending 70% of disposable income on mortgages, even though houses were far cheaper. At 5% rates, people were spending 45% of disposable income, even though houses had almost doubled in price.

It's pretty clear we are all far better off living in an inflation controlled environment with low rates, even if asset prices double.

HAMISH_MCTAVISH

LydiaJ wrote: »

Thanks baileysbattlebus

The first thing I notice is that the % of owner occupiers peaked in 2005 and is now falling. I'll look at the rest of the data later - I haven't time now.

I believe that is the case, although it's still close to 70% from memory. I personally think that particular measure has peaked though.

The expansion into sub-prime to get the last few percent obviously wasn't worth it, no matter what your views on equality of access to ownership.

As there are currently 2.5 households being formed for every 1 house being built, the implications for price and earnings driven rationing moving forwards are also clear.

mewbie_2

HAMISH_MCTAVISH wrote: »

Inflation theory

Oh Hamish.. where to begin. It's all wrong. I'll leave it there, just take my word for it. You need your head examined.

Graham_Devon

Hamish. From what you have said above, you must have been able to buy by the time you were 19/20?

And you would have started working at around 17 by the looks of things? I don't want to pretend you walked straight from school into an over average salary job.

So 2 years in the job market was enough to allow you to save a deposit and buy a home? I'm assuming you did this also on a single salary, not the two full time workers earning 70k a year between them analogy you push. I think you have referred to this house as a 3 bed also, something which you say should not be afforded today by those in the same position as you were unless they are well over average wage.

Maybe this is the reason you feel and preach that it is so easy to buy a home? Everyone has their own thoughts and their personal experiences determine those thoughts.

However, can I ask you, could you do the same today? Leave school at say 16, work and buy a house at 19?

Could you.....save enough of a deposit while actually living? Save up all the fee's etc?

I'm asking because I really do think a "back to basics" type thought path of where we are today may help you understand why your opinions on this board get so ridiculed.

EDIT: Can I also ask if buying at the absolute peak in 1990, and then buying again at the peak of this boom has anything to do with your thoughtpath? I'm starting to think really, you are just like the rest of us, like me for example who bought near peak....though maybe you don't want to admit that and get on with it. Just like me, you havent made a penny from HPI, but just like me, you COULD have made quite a few pennies, but didnt.

Sorry for the psycology, but I am really trying to understand where you are coming from, as your posts are really disjointed.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Hamish. From what you have said above, you must have been able to buy by the time you were 19/20?

And you would have started working at around 17 by the looks of things? I don't want to pretend you walked straight from school into an over average salary job.

So 2 years in the job market was enough to allow you to save a deposit and buy a home? I'm assuming you did this also on a single salary, not the two full time workers earning 70k a year between them analogy you push. I think you have referred to this house as a 3 bed also, something which you say should not be afforded today by those in the same position as you were unless they are well over average wage.

Maybe this is the reason you feel and preach that it is so easy to buy a home? Everyone has their own thoughts and their personal experiences determine those thoughts.

However, can I ask you, could you do the same today? Leave school at say 16, work and buy a house at 19?

Could you.....save enough of a deposit while actually living? Save up all the fee's etc?

I'm asking because I really do think a "back to basics" type thought path of where we are today may help you understand why your opinions on this board get so ridiculed.

This has all been gone through in length elsewhere. We both worked full time, and started early. We bought young and we went straight into a house, skipping the flat stage altogether.

We did have savings, after 3/4 years of two people working you can do that, but we were also helped with deposits from family. Had that not happened, there is no way we would have been able to afford a house, or anything other than a small flat. Thats the way it was then, and thats still the way it is today.

Strangely enough, thats also the way it was for my parents, who bought a house in the 60's. They both worked, were both degreed professionals, and although they bought a house, theres no way they could have afforded anything other than a flat without help from their parents with deposits, etc.

nearlynew

So there is a long standing tradition of HPI cheerleading debt-junkiness in your family McTittish?

That explains your fervour and devotion to the cause.

It's all become clear now.

thank you.

Graham_Devon

HAMISH_MCTAVISH wrote: »

We did have savings, after 3/4 years of two people working you can do that, but we were also helped with deposits from family. Had that not happened, there is no way we would have been able to afford a house, or anything other than a small flat. Thats the way it was then, and thats still the way it is today.

Thanks for the response. I have to either conclude your older than you say you are, didnt buy when you said you did, left school early, or something else . Theres no way you could have done everything you said at your age, and also work 3/4 years before buying, but also, experience the 1989/90 15% interest rates.

It is still the same today, you are correct. But I don't really think it's really fair for you to be going round saying its easy to buy, only 3.5x salary and hasn't gone over (normally missing out your talking about loan values) when you yourself got help from your parents to get you to where you were.

Not everyone gets help from their parents, in fact in my experience nobody apart from 1 person I know got help from their parents.

Can you understand how hard it actually is? And that not everyone had it quite how you did. I think when you can understand that, you may re-evaluate some of the things your saying.

I do realise I'm coming across holier than thou here, I don't mean too, it's just you can't actually type this kind of post on a forum without sounding that way.

HAMISH_MCTAVISH

Graham_Devon wrote: »

EDIT: Can I also ask if buying at the absolute peak in 1990, and then buying again at the peak of this boom has anything to do with your thoughtpath?

Absolutely, and I'll admit I do have an uncanny ability to buy near peak.:D

Maybe I should post next time I buy so everyone else can sell?:rotfl:

The point though, is that I bought when I needed a house the first time, and exactly the same the second time. Despite buying close to peak, twice, it has had no adverse impact on me at all, and I am still far better off buying than not buying.

I'm starting to think really, you are just like the rest of us, like me for example who bought near peak....though maybe you don't want to admit that and get on with it. Just like me, you havent made a penny from HPI, but just like me, you COULD have made quite a few pennies, but didnt.

I made a paper profit of 400% on the first house, despite buying at peak. Current prices in Aberdeen are the same today as they were in May 2007, so there or thereabouts on the second house too.

I didn't buy these houses to make a profit, I bought them because I needed them at the time, and as long as I own them I'll never extract a penny from them as I don't MEW, the opposite in fact, I pay down debt as quickly as possible.

I will be looking to sell both houses near the top of the next cycle though as I approach retirement age, and I'll be buying overseas somewhere warm and cheaper to live. I'll probably keep a small flat here though, so that will be the next purchase. Whether it's now or later on I'm not sure.