House Prices, Interest Rates and Affordability

silvercar

ukcarper wrote: »

Just for information can't be 100% sure of average salsry figures can only find one ref

Average salary Average house price

1980: £5,720 £74k 12x
1985: £8,890 £77k 8.5x
1990: £13,760 £95k 7x
1995: £17,470 £72k 4x
1999: £20,800 £90k 4.5x
Now: £25,000 £164k 6.5x

I feel I'm in a loop.

The average salary doesn't compare to the average house price. You need to exclude the non-earners and the low paid. No-one expects a burger !!!!!! to buy his own home.

silvercar

lostinrates wrote: »

DH earns more than a nq doctor I think...why aren't we in the nicest streets? Hurumph.

I doubt NQ doctors buy in the nice streets; new consultants might, but that wouldn't be there first home.

Mr.Brown_4

silvercar wrote: »

No-one expects a burger !!!!!! to buy his own home.

Hmmm. Why not? Should a working person be able to afford a home if they save up, perhaps with a partner? After all, they have to live somewhere. So if they are renting because they can't afford to buy then there is another disconnect between rental values and house prices - which is arguably unsustainable.

This is where the endless HPI starts to come unstuck - when less and less people can afford to buy, then who is going to buy the things?

ukcarper

ukcarper wrote: »

Just for information can't be 100% sure of average salsry figures can only find one ref

Average salary Average house price

1980: £5,720 £74k 12x
1985: £8,890 £77k 8.5x
1990: £13,760 £95k 7x
1995: £17,470 £72k 4x
1999: £20,800 £90k 4.5x
Now: £25,000 £164k 6.5x

Sorry I've totally messed this up used inflation adjusted house prices

ukcarper

I think this is right

Average salary average house price

1980: £5,720 £24 4.2x
1985: £8,890 £32 3.5x
1990: £13,760 £60 4.4x
1995: £17,470 £65 3.7x
1999: £20,800 £93 4.5x
Now: £25,000 £164k 6.5x

HAMISH_MCTAVISH

Mr.Brown wrote: »

This is where the endless HPI starts to come unstuck - when less and less people can afford to buy, then who is going to buy the things?

I don't think it is significantly less people though.

A smaller percentage perhaps, (and the numbers agree, O/O is now 67% of population versus 70% a few years ago) but this is made up for by a growing population and lower housing density through divorce, etc. The absolute number of O/O houses has grown afaik.

And IMO the percentage of higher paying jobs broadly speaking stays stable in line with population growth. Even if the percentage falls slightly, the absolute numbers of people doing these higher paying jobs can still grow. 9% of 70 million people is more than 10% of 60 million people, for example.

I don't have the stats to hand, but I'd be prepared to bet there are far more people earning 100K a year in real (inflation adjusted) terms today in 2010 than there were in 2000.

You pretty much need twice as many doctors to service 200,000 people as you do 100,000 people, for example. Perhaps not quite, but it's certainly not the case that all population growth results only in minimum wage job growth, as is often portrayed on here.

And as the bears so often say, pricing is set at the margins. When we only build 30% of the houses required, then only 35% need to afford them for prices to rise. The market will ration shortages by price. It always has done. The existing population of owners will have equity that will rise in line with prices set at the margins, by the additional population, competing for the limited stock available.

FATBALLZ

silvercar wrote: »

I feel I'm in a loop.

The average salary doesn't compare to the average house price. You need to exclude the non-earners and the low paid. No-one expects a burger !!!!!! to buy his own home.

Why doesn't it compare? Why shouldn't they be included? The low paid are important in what the price comes out as, as the higher earners need to pay an amount that the low paid can't afford in order to secure the properties.

ukcarper

In 1973 average wage was about £1800 average house £9.9k =5.5x

ukcarper

A quick question what is an average house used in Land Reg figures is it the average cost of all houses sold or is it the cost of what they consider an average house to be.

FATBALLZ

ukcarper wrote: »

In 1973 average wage was about £1800 average house £9.9k =5.5x

Inflation was also sky high so the debt wouldn't have been high for very long.