58% of properties can be bought by "average income"

HAMISH_MCTAVISH

Perhaps the best prospects for buyers are well away from London and the southeast. Research for Zoopla, a property website, has found that affordability has been improved by an earlier fall in house prices and lower mortgage rates, so 58% of properties in the UK can be bought by average-income earners, compared with 34% in 2007.

The most affordable city in the UK is Bradford, where 82% of homes are in this category, followed by Hull (81%), Stoke (80%), Birmingham and Coventry (both on 78%). London comes a long way behind on just 32%. Go north, young man (and woman).

http://property.timesonline.co.uk/tol/life_and_style/property/buying_and_selling/article7060384.ece

And that figure is MUCH higher everywhere except the south east.

80% plus of houses in Northern cities can be bought by those on "average" income.

Seems the "affordability crisis" is just another urban myth for most of the UK.

kindofagilr

What is the average income?

brit1234

The Zoopla report is spinning figures and doesn't reflect reality. If you ask any member of the public if average earners can afford 58% of properties I sure they will say no.

If Zoopla are right then how come repossesions are high and predicted to rise further.

http://england.shelter.org.uk/news_and_blogs/february_2010/repossession_figures_unacceptable

Also why are the number of first time buyers low and falling. This is in an environment when interest rates are at record low and yet people can't afford them. What happens when rates go up to normal?

The fact is house prices are crashing back to normal values, nothing can stop this now.

I too would like to see what these so called average earners are on or do they man average earners at the Polo Club?

HAMISH_MCTAVISH

brit1234 wrote: »

Also why are the number of first time buyers low and falling.

Because deposit levels are too high.

brit1234

HAMISH_MCTAVISH wrote: »

Because deposit levels are too high.

Or house prices are too high.

Deposits are at level to protect from negative equity of these over valued homes, it removes the risk to the lender. Deposit levels are fine as a percentage.

Every one can see now property is far to high and going to drop in price.

DaddyBear

HAMISH_MCTAVISH wrote: »

Because deposit levels are too high.

Ah yes, those nasty banks. It's all their fault because they won't offer 125% mortgages at six times joint income :cool:.
As for the average income being able to buy 56% of properties, I don't know where they got their figures but that just does not seem accurate at all. They must have used a rediculously high average wage and had a very strange definition of affordable.
Anyway Hamish, aren't you of the belief that the average wage shouldn't be able to afford the average property? If this article is true then surely lending criteria are too lax!

HAMISH_MCTAVISH

DaddyBear wrote: »

Anyway Hamish, aren't you of the belief that the average wage shouldn't be able to afford the average property? If this article is true then surely lending criteria are too lax!

Or house prices are too cheap.....;)

Procrastinator333

Has anyone found a link to the actual info on the Zoopla website? Wanted to have a look in more detail at what they define as the average buyer. It may be correct, but the lack of further info makes me think it is tripe.

E.g. Is that a buyer with a 30% deposit and access to the very low tracker rates that are on offer and therefore able to afford a mortgage today?

58% of those people don't have a 30% deposit saved and ready to go

Those rates are an abnormality (granted one that may last for a year or 2 more, but not forever) and if the definition is basically saying they can stretch themselves and afford 3% interest, does it allow for 4,5,6% interest in the years that follow?

Not saying this is the case, just that without more detail, it is easy to see how criteria can be selected to paint what would be a very misleading picture.

HammerSmashedFace

58% of properties can be bought by "average income"

Whether this is true or not, the average property should be able to be purchased with the average income, end of.

Graham_Devon

Hmmm, I dunno. Just can't see it myself.

What the article is stating is "in theory" 58% of the average wage earners can buy a property. It's even used mortgage rates as a reason.

What it won't take into account is that, while in theory it works, in practice, it si probably very different.

For instance, take one of the people in that 58% who could in theory afford a property. Has that one person got enough of a deposit? No debts standing in the way of their loan amounts?

Has that 58% all got deposits sitting there ready to go? That's what they will need to take advantage of the mortgages the article uses to make it's calculation.

As the average savings amount of each household in the country is just £800, I don't think they will.

So on paper, this article is probably correct. The average wage can tick the boxes.

What it doesn't include is the need for the deposit, need for no debts etc. Once that is all factored in, I would imagine the number will drop dramatically.

stueyhants

Try this link
http://blog.zoopla.co.uk/2010/03/12/bradford-most-affordable-property-market-in-uk/

"We calculate the affordability rate using median incomes and average house prices in each geographic area along with prevailing mortgage rates. It judges a home to be ‘affordable’ if one-third of the median income is sufficient to cover mortgage repayments. In 2002 using one-third of income to meet mortgage repayments allowed a purchase of £118,934 whereas today, given the current low financing costs and increased incomes, the same proportion of income finances a purchase of £188,423."


With 0.5% base rates this analysis is mathematically correct, I just wouldn't want to base my long term affordability on historically low base rates.