House Prices, Interest Rates and Affordability

mbga9pgf

Other thing to bear in mind; the nationwide FTB average age index includes over 50% of people who arent FTBs.... They are returning buyers but because of the way nationwide work out who classes as an FTB, there is a significant skewing of the data. They dont point this out by the way.

Heard on wake up to money that compared to 2000, the true FTB market is one sixth, yes one sixth today.

If that doesnt tell you that the housing market is completely and utterly F*cked then I dont know what does.

phil_b_2

kriss_boy wrote: »

Take a look around, if people like us cannot begin to think about buying those properties then what proportion can?

Well they must be out there because those properties are selling, albeit not in as many numbers as a few years ago.

Are you based in the South?

ukcarper

kriss_boy wrote: »

My dad was on a decent wage when he entered the work place and bought a flat that was 2.5x his income.

Fast forward 30 years and my FTB whilst in a better paid job than his once was cost me 6x.

House prices will continue to fall because you have young couples like my girlfriend and I who are on good wages for our age and career stages yet we couldnt dream of buying the kinds of properties our parents own.

Take a look around, if people like us cannot begin to think about buying those properties then what proportion can?

People are settling down later and to me that alone fundamentally stands to jeopardise house prices.

That is much to simplistic I bought my first house in boom of 1972 it was a new build road of identical houses. At the beginning of the year they were about 3.5x average income I managed to buy mid year at 5.3x average and by the end of year they where 7x average so as you can see it’s all about when you buy.

kriss_boy

marc-h wrote: »

What about the monthly mortgage payment as a % of monthly income?

Well, it depends.

When we first moved in it was 23%. With the recession and the drop in interest rates we decided to over pay it to maintain that 25%.

I know what your thinking, its reasonably low... but you have to factor in that it was a first time buy thats had about 5K spent on it, furniture to go in it and we've both had to buy new cars to commute to work in. (cheap cars I must add).

At present we are putting away a bit each month in the unlikely event of one of us losing our jobs.

marc-h_2

If interest rates didn't change but house prices were cut in half my partner and I would be able to afford a nice 4 bed detached house with a huge garden in the best part of town at 26 years old on a well below average income. That seems even crazier than the situation now. People will always buy what they can afford, that might not be a good idea but in general it is what people will do.

I've said it a couple of times but the situation most be so different across the country. I live in a pretty average northern city with house prices broadly the same as most places in the north.

kriss_boy

Put it this way,

I probably have the best part of 100 friends/acquaintances like me in their 20s. Colleagues, friends I drink with, play pool and snooker with, my girlfriends close friends and my brothers circle of friends whom I frequently see.

I think the reality is that of my 100 sample only about 30% have a property, only 2 people (couples I might add) have anything bigger than a flat.

I think people are settling down later these days. Spending their money on other things.

On that basis its simply impossible for house prices to be sustained when you have a generation of FTBs coming through that in their late 20s, many single and with a greater importance laid upon cars and clubbing!!!

mbga9pgf

phil_b wrote: »

Well they must be out there because those properties are selling, albeit not in as many numbers as a few years ago.

Are you based in the South?

Feb Non seasonal adjusted transaction levels were the worst since the Credit cruch started.

If owners thinking about selling werent being so gay, we would see the real value of housing.

You cant do it off national transaction levels at 58,000 a month like they were last month.

Other thing to point out, I think the stats are being further skewed as a result of sales variations within sales subgroups in the Halifax and Nationwide HP indicies. The skews they apply will not correct for this fact.

ukcarper

marc-h wrote: »

What about the monthly mortgage payment as a % of monthly income?

It was a long time ago but if I remember rightly my first mortgage was not based on income multiples but affordability in so much as my monthly repayment had to be less than my weekly salary before stoppages. So I suppose my payments must have been about 30% of my income. This was 1972

Just to show it wasn’t as simple then as people seem to think back then you could either take Miras as an addition to your tax code or off the monthly payment as I took it of the monthly payment, that payment reduced and they leant me more.

Blacklight

kriss_boy wrote: »

On that basis its simply impossible for house prices to be sustained when you have a generation of FTBs coming through that in their late 20s, many single and with a greater importance laid upon cars and clubbing!!!

So nobody is in their 30's just 20somethings and old people? [edit] The more I think about it, the more profound a statement it is about younger peoples perception.

mbga9pgf

Blacklight wrote: »

So nobody is in their 30's just 20somethings and old people? [edit] The more I think about it, the more profound a statement it is about younger peoples perception.

Nobody in their 30s that I know will be off out looking for a 1 bed shoebox slave flat to live in. Even if they are a FTB.