The only problem with the housing market – houses cost too much

paulmapp8306

IveSeenTheLight wrote: »

Your figures are all over the place.

5% of $180k is £9k per year or £750 per month.
Of course your probably meaning a repayment mortgage which would come to just over £1000 per month.

But your £180k is the mortgage, hence your talking about £200k property with a 10% discount.

This is not the average house price which IIRC LR had it about £162k.

Then on to wages, you cite £24k per year, but this is not the average house purchaser wage.
The long term average wage which has been used to calculate against house prices is the full time mean male average which according to ONS is £35,814. Even the median is £28,091
http://www.ons.gov.uk/ons/publications/re-reference-tables.html?edition=tcm%3A77-200444 (See table 1.7a)

so in essence you've over egged the average house price and under egged the average wage.

Of course I was talking about a repayment mortgage. Its by far the most common, and if you have interest only youd need extra to cover the value anyway.

Yes - I realised I hadnt taken the deposit off the value - and the £180k was the value of the house in the post I was commenting on.

Also -
Since when has "average house buyer" come into it? That will of course raise the price - and is party the point. it should be the average wage earner. Even more so now as rent is actually more expensive. In the past the rich(er) bought and those that couldnt afford to buy rented. Now if you cant afford to buy you certainly cant afford to rent - its more expensive. How do people live? HB - which is government subsidisation.

The poitn Im trying to make, is that accomodation needs to be affordable - without any government subsidy. That can only be done by increasing supply of housing.

If its giovernment built, governmnet owned then rents will come down. fine house prices could stay where they are or go up BUT BTL would no longer be viable - which would lead to more houses on the market and lower prices as a side effect.

If its NOT government owned (which seems unlikely at present) the only way rents will come down is for house prices to come down.

Either way - accomodation neesd to be more plentiful, and cheaper for the masses. However that is achieved, it will lead to house price falls.

paulmapp8306

Oh - missed the bit about wages.

Of course median not mean averages should be used, or your slewing the figures by the very wealthy. Quite how you can calculate a long term wage, with no pay rises for many and below inflation ones for most at present, with the job market the way it is - AND you cant pay a mortgage now with what you may be earning 10 or 15 years down the line.

Its all statistics, and a way to show that things are what they arnt.

Ultimatley, you need to take the median wage and use that as a figure against todays house prices. The figures dont make that adffordable at present.

I also dont see why your using the MALE wage. That would be descrimination against single female buyers surly? Im sure I read the average was 24k, but that could have been me taking the lower female average. £26k may be about right across the board.

IveSeenTheLight

paulmapp8306 wrote: »

accomodation needs to be affordable - without any government subsidy. That can only be done by increasing supply of housing.

If its giovernment built, governmnet owned then rents will come down. fine house prices could stay where they are or go up BUT BTL would no longer be viable - which would lead to more houses on the market and lower prices as a side effect.

If its NOT government owned (which seems unlikely at present) the only way rents will come down is for house prices to come down.

Either way - accomodation neesd to be more plentiful, and cheaper for the masses. However that is achieved, it will lead to house price falls.

I agree with you that a substantial increase in properties would help to reduce both prices and rentals. this is unfortunately just wishful thinking of an ideal world.

In the real world, it's unlikely to happen.
As I understand it, there's been recent reports that they're still looking to offload council housing.

Even if they decided to flood the market with new properties, where will they get the funds from?

paulmapp8306

Oh.

I do want to say, I have no real "side" to take here.

i have rented Forces accomodation (the only area that falls into the historis subsidised accomodation from work thats left) and saved for a home for when I leave. i will have a big deposit, and will buy as its cheaper than renting. I can even do this just on my Army pension for the houses Im looking at (way below average at £120k tops - but can do that in Nottingham. Not NICE ones - there around £200k).

Ill do this whether prices fall, or rise. And i wont be bothered which way they go once Ive bought either. If you have secured the home you want then negative equity means absolutely nothing. Its only an issue if your relying on increased values for an "interest only" mortgage POV, as an investment, or if your downscaling to free up capital in your later years.

Flight2quality

andybenw wrote: »

Disagree if you are talking nominal terms. The government has managed to control prices so far and as far as I can tell they are quite happy with nominal stagnation and real term falls. Shapps has pretty much said this is their desire.

The price will come down in real terms but it will be a drawn out process probably wit a long period of below inflation nominal rises included. Thats why the express article being promoted by Sibley although wrongly presented will I feel be pretty much correct.

Price means nothing, value means everything. With inflation 5.2% only the uneducated think about price and these ones lose big time until they understand currency debasement.

Get-real-buy-real

paulmapp8306 wrote: »

Ill do this whether prices fall, or rise. .

Not many think prices will rise next few yrs, only the last few delusional bulls along with Hamish left.

Flight2quality

IveSeenTheLight wrote: »

I agree with you that a substantial increase in properties would help to reduce both prices and rentals. this is unfortunately just wishful thinking of an ideal world.

In the real world, it's unlikely to happen.
As I understand it, there's been recent reports that they're still looking to offload council housing.

Even if they decided to flood the market with new properties, where will they get the funds from?

They are going to build 1 new house for every council house they sell. These council houses have never been on the available market before now. So its actually 2 houses added to supply for every one council house they sell.

Its a bit like the silver bullion held by private investors, its not on the available market until said investors decide to put it up for sale.

Jimmy_31

MrRee wrote: »

Paulmapp8306 - I agree with some of your points ... but feel you are way off in others.

I don't believe for one moment that a 3 bed semi is a FTB property, even 50 years ago it was a 2 up/2 down property!

Today's FTB has to be able to afford a 1 bed Studio or apartment, the more wealthy a 2 bed apartment, older and wealthier still a 2 bed semi. That's just how it is, I'm afraid (and how it always has been).

When I bought my first few houses, the mortgage always took half of my take home pay ... on the first three houses. Taking your take home pay as £1600 - that means it would be £800 today .... I would guess that is enough for a 1 bed Apartment/Studio.

Nothing has changed over the decades - but money is a LOT cheaper than it was, I remember a 15% Mortgage Rate!! Now, that was scary!

I may end up buying a 3 bed semi as my first home.

Lots more FTBs may end up doing the same. This is due to lots of FTBs sitting out the boom and saving up instead, thats what i did.

House prices are crashing in my area to a level where a FTB with a large deposit can now skip the flat/apartment/2 bed terrace option and buy a 3 bed semi instead.

Decisions Decisions;)

Jack_Johnson_the_acorn

Jimmy_31 wrote: »

I may end up buying a 3 bed semi as my first home.

Lots more FTBs may end up doing the same. This is due to lots of FTBs sitting out the boom and saving up instead, thats what i did.

House prices are crashing in my area to a level where a FTB with a large deposit can now skip the flat/apartment/2 bed terrace option and buy a 3 bed semi instead.

Decisions Decisions;)

3 Bed in a hell hole(£40k in your area you've said), 2 bed apartment somewhere more affluent????

Decisions Decisions........ Never buy in the most deprived places, always a bad move IMO.:beer:

IveSeenTheLight

Flight2quality wrote: »

They are going to build 1 new house for every council house they sell. These council houses have never been on the available market before now. So its actually 2 houses added to supply for every one council house they sell.

I believe you've made this claim before and your error was explained