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

kriss_boy

brit1234 wrote: »

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

I agree.

You take a look around at some of the asking prices and its a prison sentance of repaying a ridiculously high proportion of your salary on the mortgage for the rest of your days.

And Im talking about pretty average properties too.

spaceboy

House prices are still too high guys, and there's still a shortage of affordable homes in areas outside the South East - try Edinburgh for example! Rents are still too high as well - there's a HUGE discrepency between council house rents and the private sector. Absolutely massive.

Seems like a really badly done survey if you ask me.

Oh and people who currently own houses are obviously going to think house prices should stay high because they dont want to lose money. But they should have realised this would happen when they were deciding to buy.

chucky

brit1234 wrote: »

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?

no Brit you are confusing yourself again in your blind obsession on you not being able to afford to buy - don't try and confuse others.

there is a difference between being able to afford mortgage payments and being able to afford to buy a house.

the affording the mortgage payments is the easier part - getting the deposit for the right mortgage is the hard bit which most FTB's will struggle with.

ukcarper

HammerSmashedFace wrote: »

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.

is that average wage where house is or average wage

dazeruk

From the ONS website the gross median income in 2009 for the UK was £21,320.

From http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=15313

A mortgage of £188,423 is 8.8 times gross median income.

A gross income of £21,320 produces net income of around £16,635.

Estimated from http://i-resign.com/uk/financialcentre/tax_calculator.asp

A third of this income would be £5,545 per year or £462 per month.

This MSE link shows the average rate for someone with 25% deposit is 4.06% fixed for 2 years.

http://www.moneysavingexpert.com/news/mortgages/2010/01/fixed-mortgage-rates-fall

So in this case the individual would need to get together a deposit of £47,105. Not sure how long this would take to save on a net income of £16,635.

Taking this off the £188,423 gives a mortgage of £141,318 (which is 6.6 times income).

Feeding these figures into this mortgage calculator

http://www.cml.org.uk/cml/consumers/calculator/mortcalculator

(£141,318 at 4.06% for 25 years)

A repayment mortgage would cost £758.62 and interest only £478.12 a month.

So the figure is close to a third on an interest only mortgage where the buyer has a deposit of £47,105

For a repayment mortage it works out at (£758.62 * 12) / £16,635 = 55% of income.

ukcarper

I refer you to this posted in other thread

Cleaver wrote: »

I'm not disagreeing with the theme of the article, but the line "74% of properties cannot be bought by "average income"" isn't in the article is it? It stated that:

So again, I'm not disagreeing with article, just stating that this isn't about average wage vs average house so that we avoid the normal 37 pages of debating what the average wage is.

Me: It's about 26k isn't it?
Devon: But people have kids.
Someone Else: It's still the average wage.
Abaxas: The government lie, the average wage is £19k.
Mitchaa: The average wage is about £32k, with couples having about £64k.
Devon: Won't somebody please think of the children!
Someone Else: Does this include people who don't work?
Hamish: The average wage will get you a house in most areas of the country.
Carolt: That's rubbish Hamish and you know it is.
Me: So is it about £26k?
Devon: As I say, depends if you have children.
Mr Brown: Something witty.
Lostinrates: Something sensible.
Generali: Something economically sound.
Me: So is it about £26k? I think it is.
Devon: Depends on whether your average couple have children or not.

And so on.

brit1234

dazeruk wrote: »

From the ONS website the gross median income in 2009 for the UK was £21,320.

58% of properties can be bought by "average income" at 9 times salary.

Well down Zoopla, well done Hamish. I want no body to even mention to Hamish that tradional lending is 3-4 times salary and not 9 times salary, you might upset him.

Zoopla should start a propaganda/spin arm for other areas other than housing.

Zoopla new spokes person "houses are really cheap, honest"

HAMISH_MCTAVISH

dazeruk wrote: »

From the ONS website the gross median income in 2009 for the UK was £21,320..

No, the median wage for full time employees is £25,800.

I doubt they'd include part timers in the survey, as it would be pointless to include someone working 12 hours in a pub on the weekends as a potential house buyer..... And ridiculous to expect house prices to be affordable for such a person anyway.

dazeruk

From HAMISH_MCTAVISH the gross median income in 2009 for full-time employees in the UK was £25,800.

From http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=15313

A mortgage of £188,423 is 7.3 times gross median income.

A gross income of £25,800 produces net income of around £19,726.

Estimated from http://i-resign.com/uk/financialcentre/tax_calculator.asp

A third of this income would be £6,575 per year or £547 per month.

This MSE link shows the average rate for someone with 25% deposit is 4.06% fixed for 2 years.

http://www.moneysavingexpert.com/news/mortgages/2010/01/fixed-mortgage-rates-fall

So in this case the individual would need to get together a deposit of £47,105. Not sure how long this would take to save on a net income of £19,726.

Taking this off the £188,423 gives a mortgage of £141,318 (which is 5.4 times income).

Feeding these figures into this mortgage calculator

http://www.cml.org.uk/cml/consumers/calculator/mortcalculator

(£141,318 at 4.06% for 25 years)

A repayment mortgage would cost £758.62 and interest only £478.12 a month.

So the figure is lower than a third (30%) on an interest only mortgage where the buyer has a deposit of £47,105

For a repayment mortage it works out at (£758.62 * 12) / £19,726 = 46% of income.

HAMISH_MCTAVISH

dazeruk wrote: »

A mortgage of £188,423 is 7.3 times gross median income.

.

Why would you need a mortgage of £188,423?

The "average" house is only £167,000.....

The "average" house in areas outside London/SE is far less.

And presumably the 58% of properties that can be bought by the person on 25.8K per year (more like 80% of properties outside London/SE) are the ones below 150K..... 35K deposit and 4.5 times income is a stretch but doable.