We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
Debate House Prices
In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Cheapest Houses since 1999
Comments
-
HAMISH_MCTAVISH wrote: »Piffle.
You won't get away with that nonsense here.
Average real house price 2003 = 130,000
Average real house price 2011 = 165,000
Average mortgage rate 2003 = 5.25%
Average mortgage rate 2011 = 3.5%
Average mortgage payment for FTB as % of income 2003 = 38%
Average mortgage payment for FTB as % of income 2011 = 28%
It's obviously cheaper today than 2003.
I’m afraid you have provided a bit of a half-baked analysis here.
Firstly, you began by saying that house prices are at their cheapest since 1999, then attempted to demonstrate this by looking at affordability (but for some reason then used 2003 details - and still got it wrong). Let’s have a closer look.
Average house price Q2 1999 (adjusted for inflation) = £99,000
Say 80% LTV. Mortgage required = £79200
Average mortgage interest rate Q2 1999 = 6.55%, BUT MIRAS relief was given at basic rate (23%) on first £30K (£42,500 now in real terms).
Taking into account the capital repayments required on a £79,200 mortgage over 25 years the monthly repayment would be £445 (in real terms).
With average house prices now £165,000 and average mortgage interest rates 3.5%, the monthly repayments on a £132,000 (80% LTV) 25 year repayment mortgage would be £660.
Not quite as affordable as 1999 – in fact almost 50% more!
It seems that house prices would need to fall significantly (30%+) to be as affordable as in 1999."When the people fear the government there is tyranny, when the government fears the people there is liberty." - Thomas Jefferson0 -
MacMickster wrote: »I’m afraid you have provided a bit of a half-baked analysis here.
Firstly, you began by saying that house prices are at their cheapest since 1999, then attempted to demonstrate this by looking at affordability (but for some reason then used 2003 details - and still got it wrong). Let’s have a closer look.
Average house price Q2 1999 (adjusted for inflation) = £99,000
Say 80% LTV. Mortgage required = £79200
Average mortgage interest rate Q2 1999 = 6.55%, BUT MIRAS relief was given at basic rate (23%) on first £30K (£42,500 now in real terms).
Taking into account the capital repayments required on a £79,200 mortgage over 25 years the monthly repayment would be £445 (in real terms).
With average house prices now £165,000 and average mortgage interest rates 3.5%, the monthly repayments on a £132,000 (80% LTV) 25 year repayment mortgage would be £660.
Not quite as affordable as 1999 – in fact almost 50% more!
Oh oh!
0 -
MacMickster wrote: »I’m afraid you have provided a bit of a half-baked analysis here.
Firstly, you began by saying that house prices are at their cheapest since 1999, then attempted to demonstrate this by looking at affordability (but for some reason then used 2003 details - and still got it wrong). Let’s have a closer look.
.
He used 2003 because he was responding to this, maybe he should have used 2002
I bought my house 9 years ago, If I bought the same house today the mortgage would be 4 times what it was 9 years ago'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
MacMickster wrote: »
Average mortgage interest rate Q2 1999 = 6.55%, BUT MIRAS relief was given at basic rate (23%) on first £30K (£42,500 now in real terms).
9.
Don't think that is true is it?'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
He used 2003 because he was responding to this, maybe he should have used 2002
And used what it cost then, instead of basing it on what it costs inflation adjusted today?
Just a thought. I'd have expected more from the person who embarks on arguing with anyone who suggests real terms house prices are worth looking at. But then, Hamish wanted to make a point, so I guess it's ok to revert on everything he says!0 -
Don't think that is true is it?
You're quite right - my mistake. MIRAS relief had been reduced to 10% by 1999 before being abolished in 2000. Roughly this would equate to around £30 per month extra in real terms on the average mortgage.
Still a big difference in affordability between 1999 and today."When the people fear the government there is tyranny, when the government fears the people there is liberty." - Thomas Jefferson0 -
MacMickster wrote: »Still a big difference in affordability between 1999 and today.
Affordability in the case of the the Halifax statements in the OP is defined as mortgage as a percentage of disposable income.
You've demonstrated that mortgage payments in nominal terms have risen.
But not that they are less affordable.
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
MacMickster wrote: »It seems that house prices would need to fall significantly (30%+) to be as affordable as in 1999.
Only if wages and tax remained the same today as in 1999.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Personally I wouldn't like to base my mortgage affordability decisions on an interest low as low as they are now. Seems IRs are due to stay low for another 6 months or longer, but there are many people who are buying property thinking £400 per month is affordable who are going to get a very nasty shock in 2-5 years time. My mistake - there aren't many people buying property even at the current low rates.0
-
Personally I wouldn't like to base my mortgage affordability decisions on an interest low as low as they are now. Seems IRs are due to stay low for another 6 months or longer, but there are many people who are buying property thinking £400 per month is affordable who are going to get a very nasty shock in 2-5 years time. My mistake - there aren't many people buying property even at the current low rates.
I was paying more than that in 1988-1990 for a FTB property :eek:'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.2K Banking & Borrowing
- 253.6K Reduce Debt & Boost Income
- 454.3K Spending & Discounts
- 245.2K Work, Benefits & Business
- 600.9K Mortgages, Homes & Bills
- 177.5K Life & Family
- 259K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards