The Affordability scam explained

CluelessJock

HAMISH_MCTAVISH wrote:

And interestingly, the average loan multiple of actual house buyers according to CML is still only 3 times income for FTB's, and 2.75 for second buyers, and it never crossed 3.5 times income even at peak.

Something doesn't quite add up here; is it 3 x one salary, 3 x 2 salaries, or is it largely down to the average age of 1st time buyers being 5-10 yrs older and some career progression giving the average 1st time buyer a relatively higher salary than a 1990's 1st time buyer? Or maybe it is a combination of these and other factors.

It's too simplistic to quote stats and compare them to 20 ish year old stats. and I think you know that Hamish.

HAMISH_MCTAVISH

Graham_Devon wrote: »

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.

What can I say, I started young. I was working part time after school from 15, and making decent money by 18. I was making what I thought at the time was exceptional money by 20, and of course there were two of us working. Childhood sweetheart and all that, and still together today.

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.

Graham, I've NEVER said it's easy to buy. It wasn't easy then, and it's less easy now. Particularly now, post crash, with the insane deposit requirements.

Yes, we got help, but to be fair we also skipped the first couple of rungs on the ladder and thats why we needed the help.

We could have bought a flat without help. And today, a person in a similar situation could buy a flat in this area without help too.

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.

And for people willing to start at the bottom rung with a flat or bedsit, they still don't need to in most places.

We skipped that part, and to do so needed help. But even today, a young person with a few years work behind them that has saved up some money can afford to buy a basic place to live in most areas.

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.

:A

:rotfl:

CluelessJock

FallenAngel, he knows it's wrong to compare stats. in the way he did, it just suited his purpose.

Pobby

It was a lot easier to buy in the 70`s when we first did. Wage inflation pretty much wafted away the debt. The other thing that was different was you had to qualify to get a mortgage and prove you could save. Years of around 8% interest had kept houses to a reasonable level. Around 25% of our pre tax income covered the mortgage when we first bought. I think at one point IRs did hit nearly 20%.

Ah, this is interesting

http://news.bbc.co.uk/1/hi/business/7818717.stm

The graph is down at the bottom of the page.

It would suggest that over that period IRs were around an average of about 8%.

wageslave

PasturesNew wrote: »

I am banned from scribd.

PN, you cant just type that and not give us the gory details. You are being positively unkind.

chucky

Pobby wrote: »

It was a lot easier to buy in the 70`s when we first did. Wage inflation pretty much wafted away the debt. The other thing that was different was you had to qualify to get a mortgage and prove you could save. Years of around 8% interest had kept houses to a reasonable level. Around 25% of our pre tax income covered the mortgage when we first bought. I think at one point IRs did hit nearly 20%.

that doesn't make sense... if it was so easy to buy in the 70s why is it that the largest number of home owners was in 2007 at over 70% and only 50% in the 1970s?

surely it had been easier in 2007 otherwise there would have been the largest number of owner occupiers in history.

you could then argue that the availability of credit in the last few years is a good thing because more people could own there own homes rather than only 50% of the population in the 1970s... :rolleyes:

mewbie_2

chucky wrote: »

you could then argue that the availability of credit in the last few years is a good thing because more people could own there own homes rather than only 50% of the population in the 1970s... :rolleyes:

Is that your argument, that the credit boom was a good thing?

SingleSue

Graham Devon - We bought in 1990 (I was 20 years and 4 days old when the process completed), I left school in 1986 and we didn't have help from parents. The mortgage was based mainly on my salary as hubby earnt a third of what I did.

So it is possible.

But then ours was a 1 bedroom rabbit hutch.....

CluelessJock

chucky wrote: »

that doesn't make sense... if it was so easy to buy in the 70s why is it that the largest number of home owners was in 2007 at over 70% and only 50% in the 1970s?

surely it had been easier in 2007 otherwise there would have been the largest number of owner occupiers in history.

you could then argue that the availability of credit in the last few years is a good thing because more people could own there own homes rather than only 50% of the population in the 1970s... :rolleyes:

There is also the consideration of the right to buy, not only due to the cheap council property that was snapped up, but also the knock on effect on how home ownership was viewed as the result, and of course the more subjective issue of how the nation has evolved.

It might be an idea to stop trying to draw direct comparisons, as it cannot be done in a way that provides the answers you seek.

HAMISH_MCTAVISH

chucky wrote: »

that doesn't make sense... if it was so easy to buy in the 70s why is it that the largest number of home owners was in 2007 at over 70% and only 50% in the 1970s?

surely it had been easier in 2007 otherwise there would have been the largest number of owner occupiers in history.

Absolutely correct.

Theres a lot of people trying to revise history around here, but the numbers are clear. The last decade has seen both affordability and accessability to housing increase, despite prices being higher.

you could then argue that the availability of credit in the last few years is a good thing because more people could own there own homes rather than only 50% of the population in the 1970s... :rolleyes:

One of the side effects of this crash is that it will be a decade or more before the lower earners, the young, those with less than spotless credit, those who live in areas with high rental yields, who can't save huge deposits, etc, can again buy a house.

High deposit requirements hurt the poorest and youngest in society the most.

Ironically, many of the people most loudly complaining about house prices being too high, have seen those prices fall, only to be locked out of the market.