Private Rents in England "Unaffordable"

IveSeenTheLight

geneer wrote: »

I would like you to give your own take on those questions please.

Well given Graham has yet to choose to respond, here are my viewpoints.

IveSeenTheLight wrote:

Why do you think property should be affordable at 4 times an average single income (not mean male which is what the indexes are usually based against)?
It has been discussed before that part time, low income earners are generally not house buyers

I don't necessessarily believe that property should be that affordable.
Certainly in the last couple of decades, potential homeowners have had the best opportunity.

I also clarified above that the 4 times earnings are skewed down because low income / part time workers are not generally home buyers

IveSeenTheLight wrote:

What do you think needs to happen to ensure that house prices do drop 40%? and do you think that is likely?

I think there need to be a sufficient increase in supply or reduction in demand.
Demand of course is desire and ability, which we have seen the ability reduce in the last few years as a result of deposit requirements

The fundamentals of the household has also changed, meaning that as a household a higher income is generally available.

Likelyhood of there being sufficient properties built for all to be able to own - extremely unlikely.

Likelyhood of demand dropping - Although this is happening, it will merely ensure that only those with higher earning potential have the opportunity to buy whilst the rest either rent or wait to inherit.

IveSeenTheLight wrote:

If prices were to drop 40%, how do you think that would impact current home owners (on average)?

There is a large section where it would not affect at all.
For others it would push them into negative equity, simply meaning less likely the properties would become available for purchase unless the owners were forced out of their home.
Yes it means those owners may have to stay put for longer, but then again, I believe in years gone past people would have the same home for much longer than todays society.

IveSeenTheLight wrote:

What is the likely outcome for a government that oversea a 40% reduction in property prices?

Simple one, the general public would vote them out, hence why governments are keen to protect their position, regardless of party.

IveSeenTheLight wrote:

Finally and yes I am talking historically and hypothetically, how much x income has house prices on average been throughout the time that peole have paid for home ownership i.e. not self built from own sourced materials

I'm not sure on this one, but go back a century ago, and I would hazard a guess, property was far greater than 4 times the UK average income


Care to add your thoughts

IveSeenTheLight

geneer wrote: »

I'm willing to bet that once the current economic emergency reduces, average interest rates will be significantly higher than the last decade.

Surely this will mean that the cost of borrowing would be much higher and likely price out even more potential homeowners.

Doesn;t it therefore make sense to buy and pay off a mortgage whilst the rates are lower rather than wait for them to rise?

nembot

reweird wrote: »

And how would you know? Oh yes you don't, you just made it up just like all your other 'statistics'.

Hardly, they said they bought when they did.

Fair play to be honest, for being straight up.

nembot

IveSeenTheLight wrote: »

Surely this will mean that the cost of borrowing would be much higher and likely price out even more potential homeowners.

Doesn;t it therefore make sense to buy and pay off a mortgage whilst the rates are lower rather than wait for them to rise?

Not if prices are more realistic ISTL?

IveSeenTheLight

nembot wrote: »

Not if prices are more realistic ISTL?

Talking realistically and in context with this conversation, how realistic is it to believe that there will be 40% reduction in house prices?

geneer

robmatic wrote: »

Yes, the banks should be free to make that kind of distinction. One way to do this would be by using some form of 'affordability' criteria rather than a simplistic salary multiple.

Because it transpires that this idea of "affordability" can be quite problematic when it comes to holding the global economy together.
It is profoundely naive to advocate a discredited concept that has previously been shown to be ruinous.

Besides, you ignored a part of my question. Why shouldn't gay couples be able to have kids. Or be unemployed. Or get ill.

robmatic wrote: »

Social change has been gradual and inescapable.

And as I have stated It can also be driven by debt rather than the
driver of debt.

In any event, to reitterate my point, which again you have elected to ignore, you appear to be suggesting that the massive social change to double incomes has taken place since the last house price crash. This is incorrect.

robmatic wrote: »

I guess it was all much simpler and easier when men worked and women stayed at home but those days are gone.

Yet again you are attempting to create a straw man argument.
No one has advocated a return to "those days".

In any event it does appear as if the inevitable backswing to more sustainable housing costs is in progress. Socially, this is a good thing.

robmatic wrote: »

It's funny, then, that the proportion of owner-occupiers increased when lending criteria weren't based on archaic salary multiples and that it is now decreasing

Thats somewhat obvious. loose lending led to an increase in owner-occupier numbers. It also let to the collapse of the western economic systems.

This however has nothing to do with my point. I was of course refering to before the worst excesses of the recent bubble.
You might have been able to tell this from the way I used the words...

The fact is that salary multiples existed prior to the latest bubble

I was also referring to landlords. You can tell by the way I used the words...

yet historically your theorised landlord explosion simply didn't happen

. Yet you've elected to discuss Owner-occupiers. Very strange.

robmatic wrote: »

It will give people with capital an advantage other those without.

I can't quite see how this relates to the point you're responding to.

robmatic wrote: »

Personally, I have a mortgage and have a pretty clear idea of what the impact might be of nominal base rate increases on me - less than you seem to think.

Statistical samples of one aren't all that useful. It has been shown how nominal increases in base rate will have a profound effect on homeowners, particularly those who overstretched themselves near the top of the bubble.


Finally you have elected to ignore a quite important point.
I will reitterate....

Needless to say reality is more complex than the simplistic model you have chosen to put forward. There are numerous measures society (read government) can put in place to counteract.

HAMISH_MCTAVISH

geneer wrote: »

Because it transpires that this idea of "affordability" can be quite problematic when it comes to holding the global economy together.
It is profoundely naive to advocate a discredited concept that has previously been shown to be ruinous.

You don't half talk some utter nonsense geneer.

There is precisely zero evidence to show that "affordability" is either "discredited" or "problematic to holding the global economy together".

Jimmy_31

leveller2911 wrote: »

geneer wrote: »

Timber in modern housing is of very poor quality, it twists,warps and cracks easily.Lathe and plaster walls in older properties is in fact more forgiving because in may instances they added Lime putty which as anyone with experience will tell you it allows for a certain amount of movement.

Modern workmanship is poor because its nearly always pricework so they don't actually care if joints etc are tight, they can just fill the gaps.Timber windows in the old days would last decades longer than now mainly due to modern timber is fast grown,cut early and kiln dried which is not good.Slow grown ,air dried timber will always last longer. I could go on for pages but I doubt it would be appreciated..Give me a pre 1940's house any day.We are talking build quality here and not insulation levels .


Having had over 25yrs of experience as a Carpenter & Joiner ,most of which has been on renovating older properties I bow to your superior knowledge.......

Yep ive done plenty of new builds on a price in my time and i would never ever buy one.

All that nice and shiney stuff wont stay shiney for long people.

Also dont look under your kitchen units:)

geneer

HAMISH_MCTAVISH wrote: »

You don't half talk some utter nonsense geneer.

There is precisely zero evidence to show that "affordability" is either "discredited" or "problematic to holding the global economy together".

Absolute nonsense.

"affordability" was the spurious justification by which banks increased lending multiples to those who could not afford it.
It was the spin put on the excesive risk taking that brought down the economy.


The fact that you cannot admit this simple fact is astonishing.

geneer

Jimmy_31 wrote: »

leveller2911 wrote: »

Yep ive done plenty of new builds on a price in my time and i would never ever buy one.

All that nice and shiney stuff wont stay shiney for long people.

Also dont look under your kitchen units:)

And what do you find if you look under your kitchen units in a 100 year old tenement building I wonder. :rotfl: