Get ready for the storm

92203

chucky wrote: »

looks like you're a couple of years two late with this post sunshine

Interestingly, you aren't really countering the OP's argument. You are only quoting the median trend in house prices, which has been skewed by 10 years of unprecidented house price inflation, driven by a deregulated credit market, and a crippled pension sector leading to increased investment in property as a source of income for retirement.

What you have neglected to state, is that the same organisation who provided the figures you quoted has stated that the average house price is now almost 5.5 times the national average wage, whereas the long term average earning - house price ratio is 4:1

chucky

92203 wrote: »

Interestingly, you are only quoting the median trend in house prices, which has been skewed by 10 years of unprecidented house price inflation, driven by a deregulated credit market, and a crippled pension sector leading to increased investment in property as a source of income for retirement.

i think you haven't realised the graph goes back 30 years or you don't understand averages.

if the last 10 years were skewed upwards what happened in the previous 20 years?
the answer is that houses must have been cheap... the law of averages doesn't lie...

92203

chucky wrote: »

i think you haven't realised the graph goes back 30 years or you don't understand averages.

if the last 10 years were skewed upwards what happened in the previous 20 years?
the answer is that houses must have been cheap... the law of averages doesn't lie...

Are you arguing that had we not seen a major uncontrolled booms over the past decade, that the trajectory of the trend would not have been different?

Irrespective of the trend, one unavoidable fact is that home ownership is becoming unaffordable for many young people.

The statistics you quoted were completely irrelevant and pointless in countering the OP's argument that generally, house prices are completely out of kilter with earnings.

chucky

92203 wrote: »

Are you arguing that had we not seen a major uncontrolled booms over the past decade, that the trajectory of the trend would not have been different?

Irrespective of the trend, one unavoidable fact is that home ownership is becoming unaffordable for many young people.

The statistics you quoted were completely irrelevant and pointless in countering the OP's argument that generally, house prices are completely out of kilter with earnings.

nope - i'm just arguing there won't be a storm tomorrow or next week.

the storm has been here. it will come again but not for a while yet.

The-mouth-of-the-south

Chucky nice graphs. Back in the real world houses are unaffordable. Unfortunately your mind is already set and you can’t see the clouds brewing ahead.

Sweey_as_a_nut

The conservatives are back in. The only way they know how to govern is to have a large percentage of unemployed people. So between a lot of things house prices are set to fall.

HAMISH_MCTAVISH

92203 wrote: »

What you have neglected to state, is that the same organisation who provided the figures you quoted has stated that the average house price is now almost 5.5 times the national average wage, whereas the long term average earning - house price ratio is 4:1

And according to the Halifax the long term average is 4.0 times male mean full time salary, and the current average is around 4.8 times male mean average salary.

But neither of these things take into account the fact that mortgage interest rates were 10% to 15% when house prices were 3.5 times income, but are around 5% today.

So the true test of affordability is the percentage of after tax income spent on mortgage payments.

Which today is around 31% on average, versus a long term average of 37% and a peak of 68% in 1990.

Houses are more affordable today than they were two decades ago for the average mortgage payer. And that is an indisputable fact.

Procrastinator333

The problem with that second graph is that either

a) house prices aren't in a bubble and the increased gradient is as a result of a shift in fundamentals or

b) house prices are still in a bubble and in order to get today's long term norm position you should actually extend the gradient as it stands when the line crosses what would have been the average back in 01/02. E.g say the value started at 0, and rose to 10, 1 point for every 1 time period. After 10 time periods, the gradient is 1 point per time period. If however it then falls back to say 1, again over 1 point per time cycle, the gradient is actually then 1 point per 19 time periods.

The graph itself can't tell you if a or b is true. That is opinion. But it isn't valid to use the graph to support either opinion.

Procrastinator333

Hamish, do you have a link for the 31 and 37%? just curious how they arrive at the numbers.

E.g do they just take average wage, average house price and average mortgage interest rate? Or does it take some sample of homeowners, ask them their salary and mortgage payments.

92203

And according to the Halifax the long term average is 4.0 times male mean full time salary, and the current average is around 4.8 times male mean average salary.

But neither of these things take into account the fact that mortgage interest rates were 10% to 15% when house prices were 3.5 times income, but are around 5% today.

According to the latest Nationwide figures the current house prices are in excess of 5.5 the average wage.

I disagree with your assetion that low house prices were offset by high interest rates. In 2002 the average house price was £116k, it was possible to pick up houses in a grotty area of Lincoln (my home city) for £35 k back then. The base rate was only set at 4% back then.

These same houses were selling for in excess of £80 k back in 06.