Why is property unaffordable for even the relatively well-off among the population?

Graham_Devon

GDB2222 wrote: »

But the mid-70s were a time of massive inflation. 12% in 73, 20% in 74 and 23% in 75. Earnings were going up a lot faster than that.

33% increase in wages in 1974. So, compare that to a 40% increase in house prices in 1973 and it's not so ridiculous. Also, the 40% was overdone and followed by several years of falls in house prices relative to wages and prices.

For example Q1 1975 HPI was 5% whereas earnings rose 30%.

There's no point looking at HPI on its own, without looking at inflation generally.

But but but, all that should be ignored.

The internet has a lot to answer for.

GDB2222

ukcarper wrote: »

Can you give link showing average wage was £349 a week £18k a year in 1986 because I don’t think it was.

http://www.statistics.gov.uk/statbase/ssdataset.asp?vlnk=4428&B4=View+Dataset

longtimelurker_2

MrPThomas wrote: »

Why is property still unaffordable for even the relatively well-off among the population?

My question is really as the global crisis gets worse and worse, why are UK house prices not following the rest of the world and crashing?

The USA, Ireland and other places are seeing half price houses why not the UK yet?

Are we talking FTBs here? Under 30s?

As smugly as another member pointed out ( ) if you hopped on at the right time, even with a low income it seems housing wasn't unaffordable.

My OH's gran told us how 'horrified' (actual word used!) she was at the rent we pay for a one bedroom flat. As she's lived in a large detached 5 bedroom house mortgage free for decades she has no idea - and both sets of parents who have paid off their mortgage were only paying a couple of hundred pounds a month before then.

chucky

GDB2222 wrote: »

But the mid-70s were a time of massive inflation. 12% in 73, 20% in 74 and 23% in 75. Earnings were going up a lot faster than that.

33% increase in wages in 1974. So, compare that to a 40% increase in house prices in 1973 and it's not so ridiculous. Also, the 40% was overdone and followed by several years of falls in house prices relative to wages and prices.

For example Q1 1975 HPI was 5% whereas earnings rose 30%.

There's no point looking at HPI on its own, without looking at inflation generally.

no point at all... no wait

how many people could get a mortgage in the 1970s or even early 1980s... not as many as the last 10 years...

so house prices were not only rising at 40% but only those that could get a mortgage were making money from HPI... that reminds of recent events...

but, but, but, all that should be ignored.

the internet has a lot to answer for.

ukcarper

GDB2222 wrote: »

http://www.statistics.gov.uk/statbase/ssdataset.asp?vlnk=4428&B4=View+Dataset

Those figure are adjusted to 2000 prices not real levels.

ukcarper

http://www.statistics.gov.uk/downloads/theme_labour/ASHE_1997/1997_all_employees.pdf

Try this link it shows that it was £312 in 1997 let alone 1986 which they don’t seem to have figures for.

Brallaqueen

I managed it?

Losing_the_way

Over the last fifteen years housing costs have inflated as a direct result of lacks lending and a plentiful supply of credit. The supply onto the market could only have been supported by this. Also the last government used rising houses prices to create a false sense of wealth.

John Prescott’s Pathfinder project led to 10,200 houses being demolished, 1,000 built and 37,000 falling derelict. A whole raft of other initiatives either supported the money supply to fund the market or restricted supply to falsely force the market higher. Note how many MPs were rampantly filliping homes to avoid CGT, which they also reduced.
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ukcarper

Lillie_Munchkin wrote: »

When buying a house in 1986 my husband and I had below the average income (which was £349 pw for a man according to the ONS). My husband was earning approx £11000 and I was earning just under £9000. We were ALLOWED to borrow 2.5 times his salary, plus 1 x mine. We borrowed a total of £34,500 and with the £15,000 equity on our flat bought our average house we still live in for £49,500. By the way, this seemed like a lot of money at the time AND interest rates were just about to rise to 15.5%. That same house has recently been valued at between £420,000 and £450,000. Lucky us, but that's not my point. An average couple in 2010 with a similar (below) average income would not be able to purchase the same property.

Applying the same rules, the average man (earning £27,612) and woman (earning £22,152 2009 - ONS) would be able to borrow a total of £91,182. Adding on a similar slice of equity equal to that in 1986 would give you approx. £132,000.

I suppose I'm illustrating the point well made above, that linking house prices to average earnings and borrowings is a good indicator as to what average people can afford to buy, or not, as the case may be. Rest assured, we would NOT be able to afford to buy this house today and we are lucky enough to earn above average salaries.

House prices are over inflated and with a bit of luck they will drop significantly over the next few years.

Funny that I bought my house in 1985 for £60k and would be lucky to get £300k for it and before you say it must be in some undesirable place it’s in Surrey.

chucky

Losing_the_way wrote: »

Over the last fifteen years housing costs have inflated as a direct result of lacks lending and a plentiful supply of credit. The supply onto the market could only have been supported by this. Also the last government used rising houses prices to create a false sense of wealth.

John Prescott’s Pathfinder project led to 10,200 houses being demolished, 1,000 built and 37,000 falling derelict. A whole raft of other initiatives either supported the money supply to fund the market or restricted supply to falsely force the market higher. Note how many MPs were rampantly filliping homes to avoid CGT, which they also reduced.

so why did they rise by 40% a year in the 1970s?

there wasn't lax lending or even a plentiful supply of credit then...