Fantasy house prices

stueyhants

You can't compare a student today to a student 20 years ago. Tutition fees of 3k a year and no grant. If both students spend the same and earn the same (students 20 years ago used to work as well) then the student of 20 years ago would be about 5 or 6k a year better off.

silvercar

abaxas wrote: »

So where is the money to have kids? Or must the woman work just after they are born.

Well if the couple have chosen to buy a home with a mortgage only sustainable on two incomes, and the couple have decided to have a child, then ...

yes, the woman needs to return to work.

Is that so complicated to work out? Affording a property bought on two incomes is only manageable if both partners work or one income increases substantially to compensate.

IveSeenTheLight

stueyhants wrote: »

Whereas if you do the calculation using median (prefered by the ONS) you get a ratio of about 6.1 (Income 27k - National Statistics, average house price 169k - Halifax).

But this calculation method wouldn't suit the bulls message so it's ignored

It's not about ignoring it, it;s about understanding that possibly the "median" can't afford and therefore the higher earning "mean" take preference

As an example, lets say there are 20 people with £10 in their pocket and 10 people with £20 in their pocket.
The median is £10, while the mean average is £13.33

A comedian is in town and the ticket costs £15, who gets to go see the show? Only those with more money than the mean. The median can't afford

It's not the best anology as the median in this example cannot club together to buy a ticket to share, but in the property world they can.

This means that the median in this example could club together for example if I was a median person, I could offer my money to my median wife so she could go with a firend.
Alternatively, our parents could offer to help by gifting us £10 so we both could go.

The point is in this story is that the mean are better placed to be able to afford on a personal front while the median may just not be able to afford or would need assistance to do so.

IveSeenTheLight

stueyhants wrote: »

You can't compare a student today to a student 20 years ago. Tutition fees of 3k a year and no grant. If both students spend the same and earn the same (students 20 years ago used to work as well) then the student of 20 years ago would be about 5 or 6k a year better off.

I gave an example where my brother is in Uni now

Other than that, you need to move on with the times with an air of acceptance.

My brother did and he's managing

chucky

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.

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.

it maybe Fantasy House Prices but it is reality house prices - people just need to accept it instead of sititng on the edge of the pier watching boats leaving and the sun disappearing into the distance

chucky

macaque wrote: »

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.

fail on your maths macaque and a fail for the article too

you need a deposit to buy a house - you subtract that from the initial house price first, you can then work out the multiplier from the borrowed amount

HAMISH_MCTAVISH

stueyhants wrote: »

Whereas if you do the calculation using median (prefered by the ONS) you get a ratio of about 6.1 (Income 27k - National Statistics, average house price 169k - Halifax).

But this calculation method wouldn't suit the bulls message so it's ignored

Not at all.

The point, which you managed to miss, yet again, is that house prices today are little changed in terms of income multiples from what they were in the early 1950's.

How you measure the income multiple is irrelevant, so long as you use the same measurement then and now.

IveSeenTheLight

chucky wrote: »

it maybe Fantasy House Prices but it is reality house prices - people just need to accept it instead of sititng on the edge of the pier watching boats leaving and the sun disappearing into the distance

For some on the pier, it's their fantasy that house prices will become affordable for them.

I say this not trying to gloat but pointing out that some need to accept the reality or go out and do something in their personal situation to change it.

stueyhants

IveSeenTheLight wrote: »

I gave an example where my brother is in Uni now

Other than that, you need to move on with the times with an air of acceptance.

My brother did and he's managing

I'm not saying student debt is bad or good. I was trying to make the point that this debt is delaying people getting on to the housing ladder. Consequently the time they have to pay down the mortgage before starting a family is shrinking.

stueyhants

HAMISH_MCTAVISH wrote: »

Not at all.

The point, which you managed to miss, yet again, is that house prices today are little changed in terms of income multiples from what they were in the early 1950's.

How you measure the income multiple is irrelevant, so long as you use the same measurement then and now.

But income distribution has become more unequal and skewed, so taking the mean is flawed.