Youth unemployment and owning a home

DaddyBear

ukcarper wrote: »

Here are a couple of houses within 3 miles of Bath don’t know area but they look ok to me.

http://www.rightmove.co.uk/property-for-sale/property-31617094.html

http://www.rightmove.co.uk/property-for-sale/property-32755147.htm

They are ok. Wouldn't live there myself but the main point is that they are over 10 times the average salary for the area and would take 2 full time workers, each earning almost double the local average wage to get a mortgage for them.

Derivative

ukcarper wrote: »

Not only that the same people makes claims that it was so easy to buy in the past. When I first bought I worked and lived in outer London in a job that paid a lot more than the average shop worker and I had to move to what is now 20 miles outside the M25 to be able to buy. I accept that it would be better if house prices hadn’t boomed as much as they did in the 2000s but people like DaddyBear are almost as bad as the likes of MrRee.

Indeed.
Have house prices risen? Yes, by a ridiculous amount. Are they set for a fall in real terms, or at least a leveling off in nominal terms? Probably.

But neither of those makes owning a home 'unaffordable'. You just have to be a bit more choosy about where to live.



A fairly old image from 2003, so the ratios are off now (2x salary for a home in Yorkshire? Yes please!).

But the obvious point from the image is that Greater London and the South command twice the salary of the North, and ~30% more than the national average.

A table from 2011, this one on average terrace prices, so not starter homes:

BBC wrote:

AREA AV PRICE QUARTER ANNUAL SALES
Greater London £479,684 3.3% 1.1% 7,530
South East £208,272 1.9% -1.1% 12,383
South West £178,348 1.8% -4.7% 5,822
East Anglia £158,673 6.1% -0.9% 2,323
West Midlands £126,725 1.1% -4.1% 4,238
Yorks & Humber £116,920 1.3% -2.7% 4,711
East Midlands £113,532 0.3% -1.0% 3,586
Wales £111,985 3.7% -1.9% 2,650
North £107,174 -2.1% -8.7% 3,158
North West £106,509 2.2% -3.0% 5,874
Northern Ireland £90,408 -16.8% -15.8% N/A
Scotland N/A N/A N/A N/A

Again, you can see that average prices in the North are half that in the South. There is a bit of hand waving here, as Greater London is clearly skewed by the richer boroughs, but it gets the point across.

And if you're going to tell me that the entire North of England is a ghetto, then you're basically confirming what I said earlier - poor people live with poor people. If you don't want to live with poor people, don't be poor. Not rocket science.

Derivative

DaddyBear wrote: »

They are ok. Wouldn't live there myself but the main point is that they are over 10 times the average salary for the area and would take 2 full time workers, each earning almost double the local average wage to get a mortgage for them.

And they are detached 4 bed houses. Hardly starter homes.
"Ok"?
I suspect you're just trolling. They look bloody magnificent to me.

ukcarper

DaddyBear wrote: »

They are ok. Wouldn't live there myself but the main point is that they are over 10 times the average salary for the area and would take 2 full time workers, each earning almost double the local average wage to get a mortgage for them.

The second is a 3 bed Semi for £180k average full time salary in Bath is £26k for a male it’s is £35k.

drc

I was thinking about this today too. In 20 or 30 years (when the baby boomers and BTL owners are old or dead) there is going to be a huge swathe of the population that is very poor, being forced to rent at extortionate levels and priced out of the housing market, being latter day serfs. The quality of life for a lot of people is going to reduce significantly, especially as jobs move to the East. Also, there will be fewer and few people who can afford to buy property (or pay the rent) as prices go stratospheric, so a lot of the baby boomers who hoped to fund their old age by selling their pokey terrace for £1 million to some naive £24k-er is going to have to think again. It's a disastrous situation.

AndyGuil

drc wrote: »

I was thinking about this today too. In 20 or 30 years (when the baby boomers and BTL owners are old or dead) there is going to be a huge swathe of the population that is very poor, being forced to rent at extortionate levels and priced out of the housing market, being latter day serfs. The quality of life for a lot of people is going to reduce significantly, especially as jobs move to the East. Also, there will be fewer and few people who can afford to buy property (or pay the rent) as prices go stratospheric, so a lot of the baby boomers who hoped to fund their old age by selling their pokey terrace for £1 million to some naive £24k-er is going to have to think again. It's a disastrous situation.

Credit on the scale seen previously will not be available in future, the regulation and control in this industry prevents this. There will be no more boom in the housing market, it is not sustainable as we are seeing.

Itismehonest

Angry_Bear wrote: »

Hm, I've heard a lot of debate on both sides of this fence so finally decided to do a (tiny) bit of googling:

1975 average house price: 10k, average salary 2,291: ratio 4.3x salary.

2010 average house price 213,116, average salary 23,504: ratio 9x salary.

I accept that using averages is problematic (as is trusting a 5-minute google), but those figures certainly give food for thought.

Those prices may be about right. I bought my first home in 1975 in SE England so it was above the average.
Back then, mortgages were calculated on 3x the main earner's annual wage or 2.5x +.5x the couple's annual wages. Yes, 100% mortgages were available which helped many people but they were usually taken out for 25 years.
What changed across the years (& what I think has led to a lot of the current problems) is that, somewhere in the more recent past people suddenly became able to borrow enormous amounts on mortages. Some were borrowing much higher multiples of their income & even (& I will never understand why) taking mortgages out for in excess of 100%.
Borrowed money became far too easy to get & that, in turn, has pushed house prices through the roof.

Just my take on it.

As a baby boomer who has lived in the same house for over 25 years the majority of people who seem to have been playing the system around where I live are in their 40s-50s. There aren't so many over 50s & certainly not as many 60s+. So bashing the boomers may be picking on the wrong people entirely.

ukcarper

Itismehonest wrote: »

Those prices may be about right. I bought my first home in 1975 in SE England so it was above the average.
Back then, mortgages were calculated on 3x the main earner's annual wage or 2.5x +.5x the couple's annual wages. Yes, 100% mortgages were available which helped many people.
What changed across the years (& what I think has led to a lot of the current problems) is that, somewhere in the more recent past people suddenly became able to borrow enormous amounts on mortages. Some were borrowing much higher multiples of their income & even (& I will never understand why) taking mortgages out for in excess of 100%.
Borrowed money became far too easy to get & that, in turn, has pushed house prices through the roof.

Just my take on it.

As a baby boomer who has lived in the same house for over 25 years the majority of people who seem to have been playing the system around where I live are in their 40s-50s. There aren't so many over 50s & certainly not as many 60s+. So bashing the boomers may be picking on the wrong people entirely.

The house price for 1975 is about right Nationwide records are available for that period and they show the price to be £10.3k at the beginning of year and £11.3k at the end the current Nationwide figure is £166.2k. But it is very difficult to find a reliable source for wages prior to 1995 if someone has a link I would be grateful if they could post it.

The graphs I linked to are both produced by Nationwide and are the most reliable I can find.

I’m not sure that the so-called liar loans had as much effect as some would have you believe. But in the boom years you could borrow a lot more in relation to your income than you could in the 70s and 80s and that must have had an effect.


I’m not sure what the age make up of BTL landlords etc are but as you say I think it you are very short-sighted if you believe they are all babyboomers.

Percy1983

ukcarper wrote: »

I’m not sure what the age make up of BTL landlords etc are but as you say I think it you are very short-sighted if you believe they are all babyboomers.

I will agree not all BTL landlords are boomers, with that the boomers have had the biggest rise in equity which they have done nothing to earn, enabling them to buy BTLs quite easily in many cases, much easier than it would be for me. (I will add I don't want to be a landlord or have anything to do with the 'industry').

ukcarper

Percy1983 wrote: »

I will agree not all BTL landlords are boomers, with that the boomers have had the biggest rise in equity which they have done nothing to earn, enabling them to buy BTLs quite easily in many cases, much easier than it would be for me. (I will add I don't want to be a landlord or have anything to do with the 'industry').

But how many have done it? I don't know anyone who has. If you live in a house and pay a mortgage for 20 or 30 years you have obviously have more equity that someone who has only just bought. If you look at the graphs I have posted it is easy to see that you could have bought later and benefited more from hpi than some one who bought earlier.