Cheapest Houses since 1999

myhouse_2

HAMISH_MCTAVISH wrote: »

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

Yes, you can get 3.9% for 10 years - if you have a 25% deposit and don't plan to repay any capital.
If everyone was sitting on such long term fixed rates I'd be much happier about the eventual outcome. However most are sitting on the (currently cheap) bank variable rates. I suspect there are limited funds available for this deal as it would leave the bank open to serious problems in the future.

Anyway, what you or me or the bank thinks is beside the point. None of us can predict interest rates with any long term certainty. If inflation hits 6% in a few months time, the whole argument that rates will remain low will fall apart instantly. Likewise if the economy starts booming again.

The fact remains - many people are very exposed in their current mortgages.

Le_Chuck

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 was talking about my own personal circumstances, The bottom end house where I live most have trebbled in price in the last 10 years.

You also have to remember you only get decent rates if you have a decent deposit, which is now much harder to achieve due to the increase in property prices. My deposit was about 30%, Today I'd be struggling to get 10%

ukcarper

Thrugelmir wrote: »

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.

That still leaves 80% and at the moment only 70% own.

HAMISH_MCTAVISH

ukcarper wrote: »

That still leaves 80% and at the moment only 70% own.

Indeed it does.

But regardless, youth unemployment was just as bad or worse in previous recessions. They don't stay unemployed forever.

And of course, with a massive and worsening housing shortage and population growth accelerating, the simple facts are that a lower percentage of people will own in the future, and more will have to live in houses of multiple occupation.

It is now virtually impossible for the UK to build the houses we need to keep up, we couldn't do it in the boom years with nearly unlimited funds available for housing, so there's zero chance we'll do it now with the crash and credit crunch forcing house building to the lowest rates in over a century.

Home ownership will inevitably then be concentrated in the hands of an increasingly wealthy segment of the population. It used to be the case that only the top earning 70% of households needed to be able to afford to buy for prices to rise. Far less will need to do so in the future.

macaque_2

HAMISH

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

Disparate data? Err hardly! Just plain facts.

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.

I agree and this cuts both ways.

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.

If I had included non full time workers the numbers would have been even more alarming.

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

Even if this is true (and the link I have seen is far from clear), it is bound to be a skewed sample. Think about it. If the average mortgage payment is only 28% of recent buyers, there can only be three reasons:

1. High incomes or
2. Big deposits or
3. Time bomb mortgages

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.

Success or failure can be judged in different ways: good family life, career, hobbies, contribution to the community etc. Home ownership is not exactly a good yardstick for judging success or failure.

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

Because the information suits you, this does not make it right. If common sense metrics are applied, houses have never been less affordable.

Thrugelmir

HAMISH_MCTAVISH wrote: »

But regardless, youth unemployment was just as bad or worse in previous recessions. They don't stay unemployed forever.

The number of jobs created is growing. However insufficient to meet the growing available workforce.

A steadily rising pension age is merely going to compound the problem.

The obvious answer is that wage levels will fall in real terms. This creates more jobs and improves competitiveness of UK plc.

Scully38

I don't know how the thread title can be correct??

I bought my first house in 1999 for £39,995 with a 5% down and my remortgage payments were 281 per month based on that.

That same house is currently on the market now some 12 years later for £109k that's triple what I paid for it, so how can it be cheaper now than in 1999?

I certainly wouldn't be able to afford it now based on my current wages (had I not been made redundant).

So from my experience, the rates are cheaper, but certainly not the houses.

Turnbull2000

With interest rates of 2-3% set to become the new norm, there's scope for another major upward adjustment in prices. The same happened with prices adjusting to 4-5% rates and two full-time incomes, which is why the old salary multiple benchmark is obsolete.

So rather than the 3.5x medium income often referred to, affordability criteria combined with ultra low rates and two incomes should establish future prices at around 6x median income. We just need a return to 95-100% mortgages, which I'm sure the government is well aware of.

HAMISH_MCTAVISH

Scully38 wrote: »

I don't know how the thread title can be correct??.

Well if you read the thread you'll find out.....

To summarise, although house prices are higher, so are wages, and both mortgage interest rates and taxes are lower.

So the percentage of the average after tax income spent on buying the average house is now the same as it was in 1999.

Le_Chuck

HAMISH_MCTAVISH wrote: »

Well if you read the thread you'll find out.....

To summarise, although house prices are higher, so are wages, and both mortgage interest rates and taxes are lower.

So the percentage of the average after tax income spent on buying the average house is now the same as it was in 1999.

or maybe people are being more realistic in what they can afford, and buying cheaper houses, rather than over stretching themselves