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Debate House Prices
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The real reason for the problem
Comments
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HAMISH_MCTAVISH wrote: »In 1990, the average mortgage consumed 68% of after tax income.
Today, the average mortgage consumes just 30% of after tax income.
The long term average is 38% of after tax income.
So basically everything you just wrote was a complete fabrication.:rolleyes:
Yes, but at least they had wage inflation to resolve this. Ie the payment went down over time. Now people are saddled with almost neverending debts.0 -
Yes, but at least they had wage inflation to resolve this. Ie the payment went down over time. Now people are saddled with almost neverending debts.
We still have wage inflation today.... Even in a recession. It's just smaller.
But we're starting off from a lower payment level to begin with.
Even a meagre 2% or 3% wage inflation per year will still take a hefty chunk out of a mortgage payment in real terms over 10 years.
And the debt is not neverending. It's 25 years. Less if you overpay. And in 25 years there will have been sufficient wage inflation to make todays prices seem cheap.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
yet another post i've had to correct today - what is wrong with you doomers today!?Yes, but at least they had wage inflation to resolve this. Ie the payment went down over time. Now [STRIKE]people[/STRIKE] sensible people are saddled with [STRIKE]almost neverending[/STRIKE] affordable debts.0 -
corrected?
No, the percentage of dual income households has not changed all that dramatically between 1990 and now. The change between 1970 and 1990 was far bigger.
The average income of women, particularly professional women, has increased significantly in that time though.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Surely a main cause of the problem was mortages being:
a) offered at too high multiple of salary e.g. 5x
b) offered at too high LTV ratios e.g. 110%
Without these, house prices would surely have risen slower?
Irresponsible lending, unchecked by poor regulation.
Simples.0 -
HAMISH_MCTAVISH wrote: »Even a meagre 2% or 3% wage inflation per year will still take a hefty chunk out of a mortgage payment in real terms over 10 years.
Meagre ? Its been the norm in the recent past due to the low inflation enviroment. For many its going to be zero or negative in real terms for some years to come.
The past is no guide to future performance.0 -
HAMISH_MCTAVISH wrote: »In 1990, the average mortgage consumed 68% of after tax income.
Today, the average mortgage consumes just 30% of after tax income.
The long term average is 38% of after tax income.
So basically everything you just wrote was a complete fabrication.:rolleyes:
Source?
And of course it's no coincidence that you are comparing a year of high interest rates with a year of record low interest rates.
The current percentage would be way above the long-term average if interest rates themselves were at long-term average. What was the percentage in 2007?0 -
Thrugelmir wrote: »Meagre ?
Yes, meagre, within the context of comparison to the high wage inflation previously that he was referring to.Its been the norm in the recent past due to the low inflation enviroment.
Agreed.For many its going to be zero or negative in real terms for some years to come.
.
If by "some" you mean several, I may agree. If by "some" you mean the 25 year lifespan of a mortgage, I would disagree.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
And of course it's no coincidence that you are comparing a year of high interest rates with a year of record low interest rates.
No coincidence at all. Amply illustrates the point that cheaper houses can cost you more in the long run.The current percentage would be way above the long-term average if interest rates themselves were at long-term average. What was the percentage in 2007?
From memory, it was slightly over 40% at peak and with 5.75% base rates.
The difference is not as big as you'd expect because bank margins have widened to take up the slack.
In other words, a buyer in 2007 was paying around 5.5%. A buyer today is still paying around 5%, because the banks are profiteering.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »In 1990, the average mortgage consumed 68% of after tax income.
Today, the average mortgage consumes just 30% of after tax income.
The long term average is 38% of after tax income.
So basically everything you just wrote was a complete fabrication.:rolleyes:
Using 1990 is rather dishonest. It is hardly representative.
Please can you cite, as I have asked before, where you get these figures from.
Thanks"There's no such thing as Macra. Macra do not exist."
"I could play all day in my Green Cathedral".
"The Centuries that divide me shall be undone."
"A dream? Really, Doctor. You'll be consulting the entrails of a sheep next. "0
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