Telegraph: Lending main obstacle for buyers, causing Brits to "give up"

HAMISH_MCTAVISH

Mrs_Arcanum wrote: »

so not exactly tripled but well over double in 8 years.

You're not taking into account interest rates reducing over the last couple of decades.

The cost of homeownership involves two equally important factors.

1. The sticker price of the house.

2. The cost of funds for the mortgage.

The proof of this is that mortgages for FTB's, as a percentage of after tax income, are now just 29%, versus an all time high of 68% in 1990, and 45% briefly at the peak in 2007.

The total cost of buying a house is dramatically cheaper today than it was when I first bought in 1990... Even though the sticker price of the house is higher.

Thing is, wages have not doubled in that time.

Wages have increased by inflation plus 2% on average for the last few decades. House prices by inflation plus 2.8%.

However the cost of other things has fallen dramatically. Food used to be 20% or 30% of a families income. Now it's just 9%. Clothing and electronics are also vastly cheaper than they used to be. etc.

kabayiri

HAMISH_MCTAVISH wrote: »

No they haven't.

It isn't total home ownership costs which create the issue here, more the initial cost of entry into housing ownership.

If the price of a FTB property doubles in a decade then the initial deposit also doubles, if deposit percentages stay the same.

That's a tough ask if wage levels don't rise by a similar amount.

HAMISH_MCTAVISH

ultrawomble wrote: »

OK. Houseprices have doubled and wages have gone up also. The house price : earning ratio has gone up from ~3 to ~4.5 and mortgage repayments as a %age of income are about the same - but on the back of a 0.5% base rate.

I'll thank you for it as it's close enough.....;)

Actually the long term average house price is 4.0 times male (mean) full time salary, according to Halifax.

The average house price today is 4.5 times male (mean) full time salary....

But the previous long term average of 4.0 was heavily skewed by the three decades when interest rates were the highest in history.... WIth actual mortgage rates often at 15% or higher.

But I've yet to see where I can get a 0.5% mortgage today....;)

HAMISH_MCTAVISH

kabayiri wrote: »

It isn't total home ownership costs which create the issue here, more the initial cost of entry into housing ownership.

If the price of a FTB property doubles in a decade then the initial deposit also doubles, if deposit percentages stay the same.

That's a tough ask if wage levels don't rise by a similar amount.

Well you'll certainly not see me arguing with the fact that deposits are the biggest barrier to homeownership nowadays.

Of course, that wasn't a problem pre-2007.

Mrs_Arcanum

HAMISH_MCTAVISH wrote: »

You're not taking into account interest rates reducing over the last couple of decades.

The cost of homeownership involves two equally important factors.

1. The sticker price of the house.

2. The cost of funds for the mortgage.

The proof of this is that mortgages for FTB's, as a percentage of after tax income, are now just 29%, versus an all time high of 68% in 1990, and 45% briefly at the peak in 2007.

The total cost of buying a house is dramatically cheaper today than it was when I first bought in 1990... Even though the sticker price of the house is higher.



Wages have increased by inflation plus 2% on average for the last few decades. House prices by inflation plus 2.8%.

However the cost of other things has fallen dramatically. Food used to be 20% or 30% of a families income. Now it's just 9%. Clothing and electronics are also vastly cheaper than they used to be. etc.

I wouldn't say £400,000 in 8 years is only 2.8% more than £165,000. Yes many things are cheaper but not water, fuel, utilities & Council Tax. Compared to 20 years ago our utilities alone have tripled. Petrol costs have gone through the roof. We no longer have holidays and our standard of living has dropped significantly. 12 to 15 years ago I was home with my children as we could afford that. Now despite DH getting a promotion we both need to work.

So please explain where the money is?

HAMISH_MCTAVISH

Mrs_Arcanum wrote: »

I wouldn't say £400,000 in 8 years is only 2.8% more than £165,000. Yes many things are cheaper but not water, fuel, utilities & Council Tax. Compared to 20 years ago our utilities alone have tripled. Petrol costs have gone through the roof. We no longer have holidays and our standard of living has dropped significantly. 12 to 15 years ago I was home with my children as we could afford that. Now despite DH getting a promotion we both need to work.

You're confusing a lot of issues there.....

Nominal versus real price rises, personal versus index inflation, average versus individual wage increases, etc.

So it's not really a question that can be answered.

System

ultrawomble wrote: »

It could be argued that the peak was caused by the 100-125% mortgages - if so, those 75%ish owner-occupier levels may never be repeated again given that such lax lending is unlikely to be repeated in the near future.

I'm inclined to agree, I think it's time to accept that owner-occupier rates are going to fall a fair bit, unless I'm mistake we're at a much higher level than the majority of other euro countries.

the_flying_pig

HAMISH_MCTAVISH wrote: »

...This mortgage famine is ruining the prospects of an entire generation...

:rotfl:

:beer:

Graham_Devon

HAMISH_MCTAVISH wrote: »

Of course, that wasn't a problem pre-2007.

Missing your cheap credit binge Hamish?

Deposits may not have been a problem pre-2007, for a few years, but look at the problems that have stemmed from it.

Oh I forgot, the massive problems were only a problem because lenders reduced credit in Hamish's little world. If they had just kept lending and lending forever more, we wouldn't have had problems.

HAMISH_MCTAVISH

the_flying_pig wrote: »

:rotfl:

Quite bizarre that you celebrate young FTB's being locked out of the market through mortgage rationing.