What would happen if house’s dropped to the magic 3.5 times average income?

buglawton

toby3000 wrote: »

While in truth mediaeval planning lawas were minimal (want a house? go cut down a tree and build one), I think that we all know what s/he meant when they said 'mediaeval planning laws'

What I meant was laws that have not changed to keep up with the times and are out of date. Most people probably got the idea. But forums are well know for attracting semantics pedants.

GDB2222

chucky wrote: »

definately - times have changed.

buying property on one income is rare and won't be happening again as the norm.

The thing is that the advance/income ratio has gone up 50% whilst the income now generally includes two incomes.

chucky

GDB2222 wrote: »

The thing is that the advance/income ratio has gone up 50% whilst the income now generally includes two incomes.

there was obviously spare capacity in there for people to pay more for property - hence the need for two incomes. if there is more spare capacity in there i don't know.

dare i say it but that would mean that property must have been undervalued then... the last cycle has made it overvalued and you know the rest

GDB2222

buglawton wrote: »

What I meant was laws that have not changed to keep up with the times and are out of date. Most people probably got the idea. But forums are well know for attracting semantics pedants.

Everybody got the gist of the point you were making first time around. I am afraid that the comments were a wind-up, which may have whooooshed past you, or you may just enjoy an argument.

buglawton

Lets get a sense of perspective: I bought my 1st house in the early 80s. Price was exactly 3 times my gross earnings (and this was also the banks' lending limit at the time, deposit had to be 5%). UK Interest rates at that time were around 11%. Around half net earnings went on the mortgage. For the 1st year I had a 14" black & while tv. I had lodgers/mates renting rooms from day 1 for the 1st 4 years. I was running a 700cc used car with a big dent in it. I used to brew my own beer.

Today's first time buyers can hardly conceive of starting out with such a strictly controlled standard of living - the well loaded car with aircon, flat screen tv with Sky and foreign holidays are taken as an axiom nowadays. And THEN people complain, why can't I afford to buy my own house? OK, lifestyles have changed a lot post-Thatcher. But people do take a lot for granted. It isn't.

Also: Can we imagine interest rates being 11% again? THAT might bring the lending multiple down below 3.5 times a single gross salary.

Emy1501

One thing which will be interesting is the effect of lenders taking childcare into account now when offering mortgages. People who have to pay childcare are looking at 20-25% less of the max they could borrow 6-12 months ago when many lenders just used a lending multilpier.

tonyhamm

This is the I had it even worse in my day argument. No you never.

UK interest rates where 11% as you say, but wages at the time were going up over 11% pa.

Between 1983 when avg wages where 7k and 1986 avg wages has jumped to 10.5k - a massive increase - most of it, an real increase in real buying power and living standards - not inflation. I guess you would have ditched the B+W TV by then for a bigger one. You also could take mortgage payments from your gross wages via MIRAS which was still in effect.

There was no mass immigration, lending multiples over 4 time single earnings, no stamp duty, no leagues of BTL investors outbidding you because the tenancy laws where much more in favour of the tenant, making it a dodgy proposition to buy to let.

If a single wage earner like yourself on the avg wage of 26k bought today, he would face 5 times earnings, a massive deposit needed not 5%, and it would be basically unaffordable. It's not going to get better though I agree. The new Tory government is full of 'outrage' at the crisis in housing, but is not doing anything to stop the status quo from continuing. I notice the highest immigration figures ever have just been recorded http://www.dailymail.co.uk/news/article-1311037/How-Britain-attracts-migrants-France-AND-Germany.html?ito=feeds-newsxml

HAMISH_MCTAVISH

tonyhamm wrote: »

This is the I had it even worse in my day argument. No you never.

Umm, yes they did.

UK inflation rates from 1970 to 1990.

1990 7.00%
1989 5.20%
1988 4.90%
1987 4.20%
1986 3.40%
1985 6.10%
1984 5.00%
1983 4.60%
1982 8.60%
1981 11.90%
1980 18.00%
1979 13.40%
1978 8.30%
1977 15.80%
1976 16.50%
1975 24.20%
1974 16.00%
1973 9.20%
1972 7.10%
1971 9.40%
1970 6.40%


UK interest rates history.

buglawton

tonyhamm wrote: »

This is the I had it even worse in my day argument. No you never...

Worse? With no debt apart from mortgage and little social pressure to buy gadgets and lifestyle statements I felt very well off.

zarazara

yippee hurray, my kids could then buy a place of their own. Houses are homes,or should be,not money making vehicles. The worlds gone mad.