Private Rents in England "Unaffordable"

herpderpingstein

35% sounds great, being a recent graduate (2 years working) in London means more like 50% plus bills/travel. With no nearby family to fall back on it really kind of wipes any future home ownership hopes completely off the map.

julieq

Graham_Devon wrote: »

Do you realise how silly you look when you type these sorts of things?

We know you want silly money being lent again, but look at the state of Europe Hamish.

Which bit of Europe? In most of it there are far lower rates of home ownership. The trouble in Europe wasn't caused by a housing boom, it was caused by excessive public debt.

Also I'm curious to know why average earnings aren't average earnings. Is that because it's not what you and your mates earn Graham?

That may be true - in fact likely I suspect - but it means nothing anyway because all you need to sustain prices is enough people wanting to buy. That includes couples and excludes the lower 30% anyway. So you need to average the net household income of the top 70% of households to figure out what is being used as a baseline for affordability. And it also includes investors for whom BTL is essentially a one way bet now, thanks to the FSA who have essentially excluded a generation from ownership by over zealous regulation.

It shouldn't come as a surprise that rents are increasing, because Hamish and I were predicting that some time ago, to the usual sneering. The ONLY solution, as everyone except the bears here are starting to twig is, well, guess what? What we've been explaining for about two years: build more houses.

HAMISH_MCTAVISH

Graham_Devon wrote: »

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

An average earner can get a 4 x average income mortgage today. They don't need houses to fall 40%.

It won't buy them the Nationwide or Halifax "typical average house" for £160K or so, which is a 3 bedroom, 2 bathroom semi or terrace. Or at least, it won't buy it for them in around half the country. It will in the other half.

But in most areas, combined with a deposit, it will buy them a 2 or 3 bedroom place of some description.

In order for the Haliwide "typical house" to be affordable for the average earner without previous equity and a minimal deposit on a national average basis, house prices would as you point out need to fall by 40% or so from here.

And if they did so, they'd be pretty much the cheapest they've ever been in history relative to income.

Because contrary to popular bear myth the "average earner" has almost never been able to buy the "average house" in UK house price history. Only at the very bottom of crashes, for relatively short periods of time, has that been close to true.

And given the perfect storm has been created for house prices and been ongoing now for several years, recession, global financial crisis, high unemployment, increased repossessions, withdrawal of 70% of mortgage lending, ongoing mortgage rationing and terrible consumer confidence...... yet prices are just 10% below peak whilst rents soar instead, it's obvious that the housing shortage is just SO severe there's absolutely no prospect of prices falling another 40% from here.

So your "point" seems a bit "pointless".

If you want sustainably cheaper house prices or rents for the long term, there is only one solution.

Build more houses.

Jimmy_31

nearlynew wrote: »

If building firms can't build at the moment because they can't sell their houses, fine.

They can stop building, go bust, release their landbanks and let someone step in that can build and sell at a price which is affordable.

Problem solved and no need for any financial wizardry or loose lending to fund the sale of an overpriced house.

I would be quite happy to build you a house for the cost of materials plus a half decent wage every week.

I know plenty of tradesmen who are willing to do this but cant because the massive house building company gets in the way.

Jimmy_31

julieq wrote: »

Which bit of Europe? In most of it there are far lower rates of home ownership. The trouble in Europe wasn't caused by a housing boom, it was caused by excessive public debt.

Also I'm curious to know why average earnings aren't average earnings. Is that because it's not what you and your mates earn Graham?

That may be true - in fact likely I suspect - but it means nothing anyway because all you need to sustain prices is enough people wanting to buy. That includes couples and excludes the lower 30% anyway. So you need to average the net household income of the top 70% of households to figure out what is being used as a baseline for affordability. And it also includes investors for whom BTL is essentially a one way bet now, thanks to the FSA who have essentially excluded a generation from ownership by over zealous regulation.

It shouldn't come as a surprise that rents are increasing, because Hamish and I were predicting that some time ago, to the usual sneering. The ONLY solution, as everyone except the bears here are starting to twig is, well, guess what? What we've been explaining for about two years: build more houses.

Are you cleavers missus ?

Road_Hog

Private landlords provide a necessary service. They provide easy short term rented accommodation, that allows people on the move (jobs etc.) to find somewhere to live.

The problem is that in 13 years of NuLabour they built not one single council house. Council houses are necessary for the low paid to get out of private rented accommodation, either to be permanently rented or as a stepping stone to purchase a property later in life when the financial situation is better.

Private rented is not meant to be a long term solution. Social housing is a complete crock of schit. It means that someone can buy a house cheaply and then after 3/5 years sell it on for a huge profit and that house has been subsidised by taxpayers and other house buyers.

What's the point of building cheap houses for people only for them to sell on for a huge profit, why are we not building cheap council houses that will be used again and again.

Private rented for short term, council housing for medium to long term and if financial circumstances allow, then the purchase of your own home.

bristol_pilot

35% is a ridiculous criterion for 'unaffordable'. Around 50% would be typical for my area.

IveSeenTheLight

Graham_Devon wrote: »

I really don't understand what needs conrfirming, clarifying, or how I'm making references to long term averages.

All I stated was...

I also gave my reasoning for that.

What are you trying to make out of this? You always seem confused over anything I say as you try to twist it so much. I daren't really disagree with you as you'll simply go down the route of claiming I beat women again.

Thank you Graham, I wasn't sure what statement you were.

I would like to ask some further questions: -

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

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

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

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

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

bristol_pilot

Guys....house prices HAVE dropped 40% - its just that out dear currency dropped 30% also. UK houses priced in swiss francs are looking cheap right now.

IveSeenTheLight

bristol_pilot wrote: »

Guys....house prices HAVE dropped 40% - its just that out dear currency dropped 30% also. UK houses priced in swiss francs are looking cheap right now.

If only I had Swiss Francs for the property I wish to invest in