That old chesnut of the FTB house

Thrugelmir

When discussing FTB's its worth remembering the level of unemployment in the under 25's. A couple of examples in Swindon its around 18% and in the West Midlands 25%. Thats a whole generation that may never have a career path let alone a stable income to save a deposit for a house.

andykn

A few points that have gone awol:

1/ A lot of "FTBs" nowadays I think are split couples, divorcees and the like. They count as FTBs for CML stats.
2/ The Govt stats for "average" salaries are median figures - half the population earn more and half earn less. This is to stop high earners skewing the figures. "Average" house prices are mean, in other words skewed by a few very expensive houses. That's one reason you can't use "average" (median) salaries as a yarsstick for "average" (mean) house prices.

The other reason that you can't do this is that only 70% of houses are owner occupied, the other 30% are rented. It's a fair assumption, surely, that there is a good correlation between low earners and renters.

I was thinking of Graham's example of a Bus Driver as being "typical". Think of "On The Buses", even in an era of supposedly cheaper housing, a bus driver didn't have his own house.

chewmylegoff

arguing that london/SE salaries skew the average salary figures is a bit pointless in the context of this thread, because the same london/SE skew affects the average price of the properties they are buying.

if you want to try to strip the london salary effect from the earnings figures you need to take it out of the house price figures too and then you would be back where you started.

baileysbattlebus

chewmylegoff wrote: »

arguing that london/SE salaries skew the average salary figures is a bit pointless in the context of this thread, because the same london/SE skew affects the average price of the properties they are buying.

if you want to try to strip the london salary effect from the earnings figures you need to take it out of the house price figures too and then you would be back where you started.

I agree, you can't necessarily equate national average house price and wages to a specific area.

We live in the south east and in our neck of the woods there is little in the way of housing that is around the "average" house price. According to the LR the "average" house price for here is £255k

If you use the ONS stats for here the average male full time worker earns £37k

If he wanted to buy a property here he could - he could buy this I chose this because the area we live in is Wokingham - and the salary on ONS was applicable to Wokingham - if you go a couple of miles in the other direction you have Reading - where you could get a 2 bed flat for the same money.

http://www.rightmove.co.uk/property-for-sale/property-22977019.html?maxPrice=140000&pageNumber=1&fromSummary=true&backToListURL=%2Fproperty-for-sale%2Ffind.html%3FlocationIdentifier%3DREGION%255E1475%26maxPrice%3D140000

On the other hand my niece bought something like this on her own as an entry level civil servant - at the time salary about $16.5k, she had a decent deposit and has a mortgage of around £45k, the property price has fallen a bit over the last couple of years - she paid more than that but the flat, although in that area is not in that road. She was 25 at the time. She couldn't afford to buy where her parents live - but then again neither could her parents when they bought their first place - it was also a flat - very similar to the one she bought.

http://www.rightmove.co.uk/property-for-sale/property-12425277.html?locationIdentifier=REGION%5E83563&maxPrice=90000&maxBedrooms=2&displayPropertyType=flats&oldDisplayPropertyType=flats&pageNumber=2&fromSummary=true&backToListURL=%2Fproperty-for-sale%2Ffind.html%3FlocationIdentifier%3DREGION%255E83563%26maxPrice%3D90000%26maxBedrooms%3D2%26displayPropertyType%3Dflats%26oldDisplayPropertyType%3Dflats%26index%3D10

Needless to say an entry level civil servant couldn't afford to buy a property here.

IveSeenTheLight

Graham_Devon wrote: »

Y'see, this is what I cannot correlate with.

You are once again mistaking median average with mean average.
I'm not about to go through it all again with you.

The difference being is that house prices do not have to lower so that the median can afford.

While it would be nice, there are just not enough supply of houses that people want in order to drive the prices doewn to that levels.

This is why the higher average mean is utilised where the restriction in demand is supporting the affordability of house prices at present.

If you want house prices to be affordable to the median, there needs to be a hell of a lot more houses built or at least a much lowering in expectations on what people will accept.

Thrugelmir

IveSeenTheLight wrote: »

You are once again mistaking median average with mean average.
I'm not about to go through it all again with you.

The difference being is that house prices do not have to lower so that the median can afford.

While it would be nice, there are just not enough supply of houses that people want in order to drive the prices doewn to that levels.

This is why the higher average mean is utilised where the restriction in demand is supporting the affordability of house prices at present.

If you want house prices to be affordable to the median, there needs to be a hell of a lot more houses built or at least a much lowering in expectations on what people will accept.

The underlying driver of house prices is the availability of credit. Available credit currently and for the foreseeable future will contract. So there will be either fewer house sales at higher prices or more house sales at lower prices. As the available credit is finate and can only be borrowed once.

IveSeenTheLight

Thrugelmir wrote: »

The underlying driver of house prices is the availability of credit. Available credit currently and for the foreseeable future will contract. So there will be either fewer house sales at higher prices or more house sales at lower prices. As the available credit is finate and can only be borrowed once.

There has been enough credit for the current demand, hence prices have risen.

While credit availability will obviously have an impact, the impact is on the available demand, however as supply is also much lower, the current demand and supply are sustainable.

You are also aware that there are lenders reporting increasing credit availability, this obviously would be able to facilitate increased demand

Thrugelmir

IveSeenTheLight wrote: »

There has been enough credit for the current demand, hence prices have risen.

While credit availability will obviously have an impact, the impact is on the available demand, however as supply is also much lower, the current demand and supply are sustainable.

You are also aware that there are lenders reporting increasing credit availability, this obviously would be able to facilitate increased demand

There isn't enough "credit" in the system to support total lending. The Government has plugged the hole in the banks balance sheets for the time being.

These are small sums of money in the overall size of the mortgage market. Remember UK housing is valued at at around £3,400 billion pounds. So HSBC committing a gross £15 biliion to mortgage funding during 2009 is very small. Barclays has only increased total mortgage lending by £18 billion between the end of 2007 and September 2009.

Yet a 1.6% increase in house prices in one month. Represents an increase of £54 billion in the value of UK property. The numbers just don't stackup.

sticky23

phil_b wrote: »

Re: the point about FTB's needing parental help (and getting it), is that really so wrong?

You have kids, go through your life getting older, you build up your wealth then pass some of it on to your kids when they need it. they then do the same thing and so do their kids. the cycle goes on. Seems a perfectly reasonable thing to me. What would happen to that wealth otherwise?

What's wrong with it, is that you can only get on the ladder if your parents own a house, or are very wealthy.. Social mobility is already very low in this country, and to me it's a throw back to feudal times, when the aristocracy were the landowners, and the plebs were renting.

It would be much better for society if you could get a house if you worked hard, and saved up, not because Daddy owns a four bed detached in Surrey. Otherwise what's the point in working and trying to better yourself?

g_attrill

silvercar wrote: »

Is it too obvious to say that the average salary of a FTB is always going to be higher than the national average salary?

Or, that the average salary of any homeowner is going to be higher.