Private Rents in England "Unaffordable"

Cleaver

HAMISH_MCTAVISH wrote: »

The biggest decline has been the lack of building for the private sector, and that is primarily because of the mortgage famine.

The only way significantly more homes will get built is if lending improves, be that lending to BTL or lending to FTB-s.

There is another way, and that's if house prices fell. If house prices fell, more people would meet the requirements for deposits, more people would be able to get a mortgage and more people would be able to buy houses.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Somewhere around 100,000 houses were built last year, and the vast majority of that was social housing.

The biggest decline has been the lack of building for the private sector, and that is primarily because of the mortgage famine.

The only way significantly more homes will get built is if lending improves, be that lending to BTL or lending to FTB-s.

Builders won't build what they can't sell....

Or prices reduce to become more aligned with incomes, and therefore more people can get the mortgages.

I'm sure this is about the 38th time you've said what you have said, and the 38th time I've said what I said in response.

Your belief that there is a magic pot of never ending money laying somewhere under the rainbow to be lent out to whoever wants it is what lets your argument down each time.

HAMISH_MCTAVISH

Cleaver wrote: »

If house prices fell, more people would meet the requirements for deposits, more people would be able to get a mortgage and more people would be able to buy houses.

Sorry Cleaver but that's simply not going to make much difference, or at least, not if they fell by an amount that's conceivable in the real world.

Banks are lending 100% of the funds available to them to lend.

A 10% fall in prices results in 10% more mortgages being issued for the same total funds, a 20% fall in prices results in 20% more mortgages.

But we need lending to more than double, just to keep up with current housing need, let alone get far enough ahead that rents or prices would drop sustainably for the long term.

And if a 10% or 20% fall in prices resulted in too many people applying (which it almost certainly would), banks would simply move the goal posts around deposit requirements yet again to shrink the pool of borrowers to match the available pool of lending.

Falling prices have led to fewer homes being built as builders switch away from less profitable smaller units and into more profitable but less efficient family houses, and falling prices in 2008/9 led to the number of listings on Rightmove dropping from 1.1 million to just 600k.

Remind me again why "it's different this time"?

Graham_Devon

Hamish, a 40% reduction in prices, from today (nominal) would mean the average earner could get a 4x average income mortgage.

I'm not talking about the male full time highest average wage possible, I'm talking about what people actually earn on average.

I'm not talking two full time wages, as people cannot earn two full time wages and raise a family in general, so there is no point in going there.

I'm talking borrowing 4 x standard 1 wage income. Which is how it used to be. 40% would certainly help, but this is all based on national averages, so isn't all that useful.

I'm not saying that 40% falls will, or should happen. However, I am describing to you the neutrality point where houses become "do-able" with hard work for the average family, and also allows to save for pensions / a holiday with the kids, and a slightly, just slightly, better standard of living, which helps the country massively. It's no good suggesting people should live 8 to a house. All you are suggesting is we reduce our quality of life, to prevent house prices from falling.....thats just plain stupid.

ukcarper

I thought they have always used average full time male.

Graham_Devon

ukcarper wrote: »

I thought they have always used average full time male.

Halifax do.

But I'm not using it because it's pointless and suggests the average wage is 38k.

Which its not.

Hence, pointless. Though if you want to make a plea for higher house prices I suppose it makes sense to use that measure.

Nationwide suggest house prices are still above 5.5x earnings.

IveSeenTheLight

Cleaver wrote: »

There is another way, and that's if house prices fell. If house prices fell, more people would meet the requirements for deposits, more people would be able to get a mortgage and more people would be able to buy houses.

Isn't there a flaw in your thinking from a business perspective.

Your increasing quantity, so need more resources and are increasing risks for no change in profit.

ukcarper

Graham_Devon wrote: »

Halifax do.

But I'm not using it because it's pointless and suggests the average wage is 38k.

Which its not.

Hence, pointless. Though if you want to make a plea for higher house prices I suppose it makes sense to use that measure.

Nationwide suggest house prices are still above 5.5x earnings.

But they have a different long term average Halifax 3.5x Nationwide 4x. So using those figures you get a figure of about £130 for average house price which means prices would have to drop about 20% to get to long term average which I think is about right.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Halifax do.

But I'm not using it because it's pointless

You're not using it because it doesn't support your argument.

What it does do is provide a consistent benchmark over the long term, which shows house prices today versus full time male salary are around 10% higher than the long term average, versus full time male salary.

Which is not to say house prices are affordable for everyone.

If you are a part time female, house prices are pretty unaffordable today. But then again they have been at plenty of times in the past too.

What people like Graham try to do is paint a picture where the cheapest times in history to buy houses, like the late 90's, are the only times in history where house prices are the right price.

This is clearly nonsense, as house prices are set at the level where supply and demand meet at any time, but it doesn't stop them trying.;)

Graham_Devon

HAMISH_MCTAVISH wrote: »

You're not using it because it doesn't support your argument.

No, I'm not using it as the average person does NOT earn 36-38k.

Were going to get stuck at the same juncture I fear. You wish to use the highest possible figure, I wish to use what people actually earn.

No point in discussing really is there, as I'm not painting any picture. If anyone is, it's you, as I have not mentioned the decades you have decided to tell me I am actually talking bout.

Just chose to use the more realistic figure. Sorry. I really don't see the pointin using anything else. I'm not trying to measure against the past, I'm simply looking at today and suggesting house prices are about 30-40% overvalued compared to incomes.