Cheapest Houses since 1999

MacMickster

HAMISH_MCTAVISH wrote: »

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 figures used are all quoted in real terms - eg the actual average house price in Q2 1999 was £70,000.

Quoting housing costs as a percentage of disposable income is a bit of a nonsense. Disposable income has increased significantly - largely due to a reduction in income tax rates, increased personal allowances etc, but this has been compensated for by increases in other taxes (VAT, fuel duties, council tax etc) paid from disposable income. The overall percentage tax take has not fallen.

HAMISH_MCTAVISH

myhouse wrote: »

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,

If by "low" you mean base rates of 5% or less, it's entirely possible they won't exceed that in the term of any mortgage taken out today.

And I very much doubt we'll see 3% base rates in the next 5 years.

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.

You can get a 10 year fix for 3.9%.

What does that tell you about how quickly the banks think base rates will rise?

Pimperne1

myhouse wrote: »

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'm always happy to help anyone out.

If you make a mistake on these new fangled computer things you just need to go back and delete the offending data and replace it with the right words.

If you submit the post then realise there is a mistake then you can just go into the edit menu and change it as described above (although if someone quotes you in the meantime then your error is there to stay in their post).

Hope that helps.

Loughton_Monkey

Le_Chuck wrote: »

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

Like Hamish, I agree this is misleading.

Unlike Hamish, I can reconcile it.

For example:

9 Years ago, you buy a house worth £200,000 on a £50K mortgage at 5%. That's £2,500 a year.

Today, the house has gone up. If mortgage rate is now 4%, then a £250,000 at 4% mortgage would cost £10,000. So with the same £150,000 deposit, the total house price (today) is £500,000.

That's just made up on the back of the envelope, but you can see what [Irish] so-called 'logic' might lie behind the assertion.

macaque_2

HAMISH_MCTAVISH wrote: »

And that's with real world mortgage rates, NOT the mythical 0.5% rates the bears like to claim are available, when we all know they aren't.
So much for the nonsense about a "priced out" generation.
The cost of buying has almost never been cheaper.
The younger generation would have it MUCH easier than our generation, if of course they could get a mortgage, which most can't thanks to mortgage rationing.
That's the main difference. Our generation had more expensive mortgage payments, paid more of our income for housing, but at least we weren't excluded from ownership by absurd deposit requirements.

Hamish, I am slightly frustrated with your OP. I came here to shoot clay pidgeons and you keep putting barn doors in front of us.

In a survey, 94 per cent of people said they were spending on average a quarter less of their income on their mortgage payments.

On the face of it, this sounds quite impressive but have a think about it. The population sample of this survey refers to people with mortgages. Many of them bought their houses when house prices were much cheaper whilst others locked into deals that are not available to new borrowers.

So what is the real % for new borrowers?

Price of an average home £228,095 (and please don't argue that a 37 year old can move his family into a starter flat).
http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/html/houses.stm

Interest rate for a first time borrower is 5.79% (RBS)
http://www.money.co.uk/mortgages/90-mortgages.htm

That means that the interest charges are £13,207.

The average salary of a UK permanent employee is £24,293 (if you include part time, it is much lower).

http://career-advice.monster.co.uk/salary-benefits/pay-salary-advice/uk-average-salary-graphs/article.aspx

The take home pay for someone on an average salary is £18,881

http://www.thesalarycalculator.co.uk/salary.php

That means that a person on average salary is paying £70% of their take home pay if they buy an average home today. If interest rates return to normal, that will rise to 130% of take home pay.

HAMISH_MCTAVISH

Macaque, you naughty, naughty monkey you......

Pulling together disparate data sources to prove a non existent point.

Anyway....

1) Average house price varies enormously according to the index you pick, mean, median, etc, but most people acknowledge that the three main indices have it at around £165K. That isn't a flat, by the way, but the "typical" three bed house. A starter flat would obviously be less.

2) Average income of all people is lower than average income of actual house buyers, and always has been. Owner Occupation never reached more than 70% no matter how cheap houses were. So the bottom earning 30% have never been able to afford a house, and the average income of the top earning 70% is significantly higher.

3) The Halifax affordability data is for new buyers, not existing mortgage holders that bought in 1995.

4) A 37 year old has no business being an FTB. They have failed to buy when there were the cheapest house prices relative to income in history in the mid-late 90's, failed to buy when they had access to cheap houses and good mortgages in the early 2000's, and failed to buy when they had access to the best mortgage deals likely to be seen in the next few decades in the mid 2000's.

But regardless, Halifax have already done all the work for you. You just don't want to believe it.

Buying a home is now more affordable than at any time in the past 12 years, according to the Halifax Bank.

That is, as long as a buyer is not looking for somewhere in London or other popular locations in the South East.

Home buyers spent 28% of their income on mortgage payments between April and June - down from 48% in 2007, the Halifax says.

Scotland is most affordable area of the UK, with home owners spending 22% of their income on mortgage payments.

But, at 75%, property within the Kensington and Chelsea district of London is the most expensive place to live.

"Lower house prices and reduced mortgage rates have resulted in a substantial improvement in housing affordability since the peak of the housing market in 2007," said Halifax economist Martin Ellis.

"The improvement in affordability has been an important factor supporting housing demand this year.

"These affordability gains together with a slowly improving economy should help support demand in the face of pressures from weak earnings growth, relatively high inflation and higher taxes."

Mortgage payments account for the lowest proportion of disposable income in Scotland, where they come in at 22%. It is closely followed by Yorkshire, the Humber and the North West where the figure rises to 23%.

Six of the 10 most affordable districts are in Scotland. East Ayrshire is the most affordable in the UK, with mortgage payments accounting for just 17.7% of local average earnings.

Eight of the 10 areas that have experienced the biggest improvements in affordability since 2007 are in Northern Ireland.

Pimperne1

A 37 year old has no business being an FTB. They have failed to buy when there were the cheapest house prices relative to income in history in the mid-late 90's, failed to buy when they had access to cheap houses and good mortgages in the early 2000's, and failed to buy when they had access to the best mortgage deals likely to be seen in the next few decades in the mid 2000's.

That's gonna hurt a few people (although one less than usual).

Loughton_Monkey

macaque wrote: »

Hamish, I am slightly frustrated with your OP. I came here to shoot clay pidgeons and you keep putting barn doors in front of us.

You should be ashamed of yourself. I am a member of the Clay Pigeon Preservation Trust which campaigns tirelessly against cruelty to clay pigeons. We hope to lobby Parliament and get this disgusting habit stopped.

macaque wrote: »

So what is the real % for new borrowers?

Price of an average home £228,095 (and please don't argue that a 37 year old can move his family into a starter flat).

Now, now. Don't be naughty. If you want to know an average house prices, don't go to a BBC calculator with fudged data already fed in. This calculator uses land registry figures. And if you go to the organ grinder (the Land Registry) and not the monkey, you will discover that average house price is £163,000 - a few months lagged from Nationwide at around £166,000.

Deliberately using figures 37% higher than the truth is rather biased, don't you think?

macaque wrote: »

Interest rate for a first time borrower is 5.79% (RBS)

That means that the interest charges are £13,207.

So why didn't you read the chart which you gave us the link to? This expensive RBS mortgage is available only to existing customers and therefore couldn't apply to a FTB could it? Even if it did, what idiot FTB would choose this instead of glancing at the attractive 4.89% Post Office Tracker?

On a rather stranger note, I see that you believe that someone buying a £228K house on a 90% mortgage at 5.79% would pay interest of £13,207. I'll let you into a secret. Mortgage lenders only charge interest on what you borrow and not on the full price of the house. This might help you if ever you get the urge to buy a house.

So let's recalculate. Average house at £166,000 on a 90% mortgage at 4.89% comes to about £7,305.

Boy! We're getting it down here, aren't we?

macaque wrote: »

The average salary of a UK permanent employee is £24,293 (if you include part time, it is much lower).

The take home pay for someone on an average salary is £18,881

Isn't it a shame that they don't show the average salary of the working population above, say, the bottom 20th percentile? After all, the lowest of the low don't buy houses do they?

Sorry, but we have to guess this one. I'm going to say £30,000, which gives me £22,762 net. It's my wife who only earns £24,000, so she only takes home £18,682.

So we barely have £40K between us. I'm terrified as to how on earth we can afford £7.3K in mortgage interest. I guess we'll get by. About 18% of income I reckon.

macaque wrote: »

That means that a person on average salary is paying £70% of their take home pay if they buy an average home today. If interest rates return to normal, that will rise to 130% of take home pay.

Right. Let me get this straight. What we have, here, is someone (obviously without partner) earning £24,293 and obtaining a mortgage of 90% of £228K. If you have the name of the little guy at RBS who assured you that they give '8.4 Times Salary' mortgages, I'd like to get in touch.

And just to finish off the lesson, let's do some more maths shall we?

Let's assume maximum mortgage is 3X Salary
Let's assume take home pay of 75% gross
Let's assume 100 units of income.

So take home pay 75 units
Mortgage is 300
130% of take home pay = 97.5 units
Hence mortgage rate needs to be 97.5/300=32.5%

So which is it? (a) you think 32.5% is a 'normal' mortgage interest rate?, or (b) you may have a few flaws in your logic - as explained above?

Or maybe you think Hamish will simply accept your logic, and retire defeated?

heathcote123

Pimperne1 wrote: »

Oh oh!

Assume the position pimps, there could be a crash on the way! (not sure which year though)

Thrugelmir

HAMISH_MCTAVISH wrote: »

The younger generation would have it MUCH easier than our generation, if of course they could get a mortgage, which most can't thanks to mortgage rationing.

With 20% of under 25's seeking work. A job is most likely their number one priority.

Remember this is the generation that one day will need to buy ( or rent) your house in order to sustain property prices.