Fantasy house prices

macaque_2

http://www.thisismoney.co.uk/mortgages-and-homes/house-prices/article.html?in_article_id=497308

Average incomes in the UK are around £25k and falling (due to rising unemployment and pay cuts in the private sector). The average income of a 'would be' first time buyer is probably only 60% of this, i.e. £15k.

Therefore, at £147,576, the average price of the first time home is 10X (or more) the income of young people looking to buy their first home. That is crazy.

The yawning gulf between price and affordability may satisfy the greed of some but it does so at the price of social division, deprivation and erosion of UK's competetive position.

House prices are patently unsustainable but buyers are still being suckered in with tantalisingly cheap short term deals. When normal rates return however, today's buyers will see their domestic finances torn to shreds and their house prices murdered. Think about this before you buy.

nitr02007

House prices will rally and then slip a little lower in cycles. Its caused by desperate, and ultimately futile, tactics to keep our failing economy afloat.

rictus123

I dont know how they come about stuff like this. I dont know how some people end up in such low paying jobs in life. Im sorry but if you are wanting to buy but cant because you only earn 15k then thats your problem, not everyone elses, you need to make yourself earn enough if you want it enough.

drc

What I don't understand is why if house prices rose 300% of whatever crazy figure it was in 10 years, there is not also the possibility that they could fall significantly too? Some people think prices only ever go up but evidently from places like Japan (which has a higher population density that the UK) that is not the case.

abaxas

'Keeping young hardworking families out of the housing market is the best thing to do for hardworking families' Gordon Brown.

BritRael

macaque wrote: »

...Average incomes in the UK are around £25k and falling (due to rising unemployment and pay cuts in the private sector). The average income of a 'would be' first time buyer is probably only 60% of this, i.e. £15k.

Therefore, at £147,576, the average price of the first time home is 10X (or more) the income of young people looking to buy their first home. That is crazy....

I can see where you're coming from, and I agree with your maths and your reasoning.

However, consider this: I like to sail. I would like to buy a yacht for around 150k, but I can't afford it. Does the fact that I (and many others) cannot afford it cause a national or world-wide slump in yacht prices? No, because there is a big enough pool of people who can afford it.

In the meantime...I charter from people who can afford it. In house-purchase terms, it's called 'renting'.

nitr02007

A lot of people fell into the trap of paying over-the-odds for a property because they thought it was an easy way to make money, and they had to jump on the bandwagon before it was too late.
To me now the overriding principle when looking to buy a property is value for money - rather than profit. If you buy an inner city flat for £250,000 ask yourself: is that really good value for money?

nollag2006

macaque wrote: »

Therefore, at £147,576, the average price of the first time home is 10X (or more) the income of young people looking to buy their first home..

According to my dear friends at HPC, the true income multiple for FTBs is actually closer to 4 times income:
http://www.housepricecrash.co.uk/graphs-ftb-average-house-price-to-earnings-ratio.php

But then again, much of their analysis is complete nonsense.

Pity so many of them missed the bottom of the market 12 months ago

:rotfl:

zygurat789

macaque wrote: »

http://www.thisismoney.co.uk/mortgages-and-homes/house-prices/article.html?in_article_id=497308

Average incomes in the UK are around £25k and falling (due to rising unemployment and pay cuts in the private sector). The average income of a 'would be' first time buyer is probably only 60% of this, i.e. £15k.

Therefore, at £147,576, the average price of the first time home is 10X (or more) the income of young people looking to buy their first home. That is crazy.

"would be" "probably"
Oh No this is not what you can base an argument on.
The only figures you can use are factual ones ie average earnings and average house prices which are readily available for a considerable period.
Lets face it children are "would be" house buyers have you included their pocket money?
If someone only has an income of £15,000 then they are not "would be" house buyers, just someone who would like to buy a house.

macaque_2

nollag2006 wrote: »

According to my dear friends at HPC, the true income multiple for FTBs is actually closer to 4 times income:
http://www.housepricecrash.co.uk/graphs-ftb-average-house-price-to-earnings-ratio.php
But then again, much of their analysis is complete nonsense.
Pity so many of them missed the bottom of the market 12 months ago

Have a think about this.

The average price paid by first time buyers was £147,576
(I presume you are not challenging me on this)

According to your sources, the true income multiple for FTBs is closer to 4 times income. (I am not challenging you on this)

Now divide £147,576 by 4 and you get £36,894.

In other words, a first time buyer today is on over £35k. That is why house prices are unsustainable.

DaddyBear

BritRael wrote: »

I can see where you're coming from, and I agree with your maths and your reasoning.

However, consider this: I like to sail. I would like to buy a yacht for around 150k, but I can't afford it. Does the fact that I (and many others) cannot afford it cause a national or world-wide slump in yacht prices? No, because there is a big enough pool of people who can afford it.

In the meantime...I charter from people who can afford it. In house-purchase terms, it's called 'renting'.

Then the bank comes along and says. It doesn't matter that you can't afford it. Yacht prices only ever go up. Fill in this form and if you tell us your salary is £50k you can sail out of here in a brand new yacht.