House prices need to drop 40% to be affordable discussion

robmatic

shortchanged wrote: »

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

Well these are some figures for average wages throughout the UK.

Now multiply say a single income of 3.5 and a joint income of 2.5 (historically traditional income multiplier pre boom) and see what figures you get.

There is a major shortfall there somewhere.

(2.5 x (average male + average female)) + 25% deposit = approx. £180k for an average family home

(3.5 x average male) + 25% deposit = approx. £144k for a bachelor pad

Current deposit requirements are high but average prices don't seem too out of whack by this reasoning.

Graham_Devon

robmatic wrote: »

(2.5 x (average male + average female)) + 25% deposit = approx. £180k for an average family home

(3.5 x average male) + 25% deposit = approx. £144k for a bachelor pad

Current deposit requirements are high but average prices don't seem too out of whack by this reasoning.

True.

I was wondering what to do with the 50k sloshing around.

Rinoa

Graham_Devon wrote: »

I've already told you I won't be answering your questions on the previous thread.

You thought he started this thread specifically for you?

Too full of your own self importance Graham.

Thrugelmir

HAMISH_MCTAVISH wrote: »

Fascinating.

Now back on topic, can you tell us how many of the mortgages in NE are interest only, and how many of those I/O mortgages in NE are in NE to the tune of more than say 5% or so?

Also how many of them have payment vehicles set up or some other form of payment arranged for later in the mortgage?

And finally, how many just plan to hold it on I/O for 25 years and then sell up and pay off the original (and by this point tiny thanks to inflation) mortgage?

With NRAM still holding an £85 billion mortgage book. At an average LTV of over 75%. With many good customers have remortgaging away, and some transferred over to the new Northern Rock. Will take some years to see how this unwinds.

There's around 250,000 interest only BTL mortgages on NRAM's books. Be interesting to see these being sold off to clear the balance owed. As they all come to a contractual end in a relatively short time frame.

Going4TheDream

nearlynew wrote: »

I love it when people with IO mortgages are portrayed as being "savvy" - when in reality they only have IO mortgages because that's all they can afford.

It really makes me laugh

Maybe it is true for some, but its horses for courses. If you plan to move on in only a few years and prices are going up which they historically do over time you get to live in a house rather cheaply and make a few quid in the bargain... you pay so little off of your mortgage principal in the early years why pay the extra from your wages when the value of your house going up does it for you?

badrobot76

A house is only ever going to be worth what the market wishes to pay, a valuation is exactly that someone’s opinion and frankly someone’s best often misguided guess.

As a buyer at the moment the market is in your favour, 40% is not unreasonable, its realistic, just put your offer in as I doubt anyone else is despite what EA’s are saying.

I could put my house on the market for £300k, that’s my value reality is though the market says its price is closer to 100k.

geneer

Rinoa wrote: »

You thought he started this thread specifically for you?

Thats funny. Having witnessed Light and GDs original discussion, thats exactly what I thought too.

Rinoa

geneer wrote: »

Thats funny. Having witnessed Light and GDs original discussion, thats exactly what I thought too.

You may remember the original discussion was repeatedly taken off topic by your persistent trolling. That's why Light started this new topic specifically asking for 'on topic points'

IveSeenTheLight wrote: »

I would appreciate anyone who has an on topic point to add to this discussion.

IveSeenTheLight

Graham_Devon wrote: »

As these "some" people is actually me

Graham, There are more than just you who think prices need / will drop by 40%. My OP on this thread clearly has tried to open up the discussion to the wider audience, hence why I didn't specify specific posters

Graham_Devon wrote: »

I feel it's only fair to have a look at what I ACTUALLY said, rather than your version, which has twisted it, and added the words "need to".

Not twisting, your post refered that that a 40% reduction would bring house prices to a 4 x multiplier which would make them "do-able", therefore I used the word need in that context i.e. house prices need to drop 40% to reach a 4 x wage multiplier.

Let's not derail a thread with pedantry.

Graham_Devon wrote: »

I do wish you would stop playing the context game, and discuss whats said, instead of starting a thread with your own version of what I said, which quote clearly, you have made up.

I didn't mention you, quote you or anything else to do with you, I simply hoped to open up intelligent discussion on the topic.

Graham_Devon wrote: »

I've already told you I won't be answering your questions on the previous thread. Why start a whole new thread requesting I answer what I have already told you I won't be answering as you keep twisting my words?

I am not asking you to answer the questions posed, you clearly have said you don't wish to.

If you don;t want to contribute, then you don't have to respond.

Let's please try to keep threads on topic.

Graham_Devon

Oh ok.

So who are you asking then?

Who are these other posters that said 40%? You like direct answers remember

All very well inviting "these people". But who are they?