Home ownership back to 1988 levels.....

ukcarper

Jimmy_31 wrote: »

Why cant i relate to that.

Im talking about the areas i live and work in.

Isnt that what you just did.

That’s fair enough but we are talking about the whole country and the situation is different everywhere.

If you can buy a nice house in your area for £50k I don’t see house prices as being to high as two people on the minimum wage could afford to buy. The problem as I see it although I might be wrong as I don’t live there is lack of work.

CRASH_BANG_WALLOP

HAMISH_MCTAVISH wrote: »

Home ownership has fallen to 66%, a level last seen in 1988.

A staggering statistic.

Two decades of progress with home ownership levels wiped out in just a few years, mostly as a result of the credit crunch and associated mortgage rationing.

An entire generation of potential FTB-s forced to enrich their landlords instead of themselves.

Thanks to the banks mortgage rationing, FTB buyers this year are projected to be around one third of the the number that were able to buy in 2007, when both prices and interest rates were far higher.

And as a result, rents have risen so that they are more expensive than a mortgage payment in 90% of the UK, further reducing the ability of FTB-s to save the exorbitant deposits now required.

While of course, house prices have fallen just 13% (land registry), despite 65% of mortgage funding being removed from the market. Proof indeed that there never was a speculative bubble in UK house prices, just a severe shortage of housing driving up prices through a good old fashioned supply/demand imbalance....

An imbalance that is getting worse and sowing the seeds of the next boom, as thanks to the credit famine house building shrinks to levels last seen 100 years ago, while population growth and new household formation soar to record highs.

If this country does not find a way to get mortgage lending back to historically sensible, normal, and prudent levels where a 5% deposit and a stable employment history were enough to get a mortgage at a non-punitive rate, then house building will continue to be short 150,000 a year of the levels needed, and we will be storing up a monumental housing crisis for future generations.

what a load of crap dude! no housing bubble!!! :rotfl:

HAMISH_MCTAVISH

shortchanged wrote: »

Look Hamish both points of view we share are right, it's just how do you solve the current problem.

Build more houses.

Which won't happen until lending increases.

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

Yes you can go down your road of continuing to lend large income multiples and have small deposits to continue to keep house prices as they are and yes I'm sure there would be an increase in sales.

If we increase lending, two things will happen.

1) The million or so houses that have been converted from owner occupation to rented since 2006 will go back to owner occupation, as accidental landlords are able to sell, and buyers are able to buy.

2) More houses will get built as builders are able to sell houses again to buyers able to access finance.

You keep lending tight (by this I mean 10%+ deposits are fine but no IO mortgages and strict income multiples) so house prices eventually have to fall to fill the void where the gap between how much the banks will lend to match up with the price of houses.
This will eventually affect BTL's because I can't imagine many BTL'ers wanting to enter the market with it in decline and not much prospect of high HPI. This for me is obviously a better long term plan for the UK housing market.

And if you do that, the following things will happen:

1) Enough housing will not get built as buyers are unable to access sufficient finance,

2) the million extra renters stuck in rented will stay there,

3) owner occupation numbers will continue to fall,

4) landlords will continue to be enriched by the generation stuck renting,

5) rents will continue to rise as house building fails to keep up with population growth, so more earners are forced to live in each house, thus increasing the amount they can afford to spend on rent.

6) Eventually, rising yields on those assets will attract investment capital and drive up asset prices anyway.

Graham_Devon

HAMISH_MCTAVISH wrote: »

If this country does not find a way to get mortgage lending back to historically sensible, normal, and prudent levels where a 5% deposit and a stable employment history were enough to get a mortgage at a non-punitive rate, then house building will continue to be short 150,000 a year of the levels needed, and we will be storing up a monumental housing crisis for future generations.

The ONS released payrise and salary statistics the other day. The average was was £24,414.

Taking the average house price of £160,000, and a 5% deposit, that means you need to find lending for £152,000.

A mortgage on the average house of £152,000, is 6.22x the average wage.

Or to put it another way.....a £152,000 mortgage would eat up £990 (at JUST 6%) of the £1,580 gross income of the average worker, leaving just £590 for all other bills and taxes. At 10% mortgage rates, the homeowner would literally be broke and unable to pay council tax, let alone live.

Now, I know you will suggest that people should therefore buy as a couple. But that still makes it very difficult if one of the couple loses their job / income for a few months. Let alone has a baby.

It's alright suggesting you want to see mortgages given out at such rates, but honestly, please, tell me.... in practice Hamish, could you get those figures to work?

Or will you simply revert back to the case that the average worker shouldn't be able to afford the average house? I don't know when that excuse came about, but it seems a bit of a bizzare one, as you rule out owning for a larger percentage of the population, leaving only a select few able to buy the average house. Which, again, in practice, can't work as there won't be enough buyers for the average and above houses.

the_flying_pig

HAMISH_MCTAVISH wrote: »

Home ownership has fallen to 66%, a level last seen in 1988.

A staggering statistic.

Two decades of progress with home ownership levels wiped out in just a few years, mostly as a result of the credit crunch and associated mortgage rationing.

An entire generation of potential FTB-s forced to enrich their landlords instead of themselves.

Thanks to the banks mortgage rationing, FTB buyers this year are projected to be around one third of the the number that were able to buy in 2007, when both prices and interest rates were far higher.

And as a result, rents have risen so that they are more expensive than a mortgage payment in 90% of the UK, further reducing the ability of FTB-s to save the exorbitant deposits now required.

While of course, house prices have fallen just 13% (land registry), despite 65% of mortgage funding being removed from the market. Proof indeed that there never was a speculative bubble in UK house prices, just a severe shortage of housing driving up prices through a good old fashioned supply/demand imbalance....

An imbalance that is getting worse and sowing the seeds of the next boom, as thanks to the credit famine house building shrinks to levels last seen 100 years ago, while population growth and new household formation soar to record highs.

If this country does not find a way to get mortgage lending back to historically sensible, normal, and prudent levels where a 5% deposit and a stable employment history were enough to get a mortgage at a non-punitive rate, then house building will continue to be short 150,000 a year of the levels needed, and we will be storing up a monumental housing crisis for future generations.

you've not half talked some rubbish there, H. :spam:.

olly300

nickj wrote: »

what will happen to all the people who are renting now and will never be able to afford their own home , when they retire , they are not going to be able to afford £1000pcm or whatever the price is , in another 20 or 30 years time

Older people are more likely to vote than younger people and the number of older people is increasing - so unfortunately for the government in 30-40* years time they will be in a pickle.

*The retirement age will be increasing.

HAMISH_MCTAVISH

Graham_Devon wrote: »

The ONS released payrise and salary statistics the other day. The average was was £24,414.

Taking the average house price of £160,000, and a 5% deposit, that means you need to find lending for £152,000.

You'll never get home ownership to 100%, so taking the average wage of 100% of people is pointless.

Assuming we want to get home ownership back up to it's peak of 70% or so, then that still leaves 30% who cannot buy. Obviously, the lowest paid 30% on the whole will be the ones not buying.

The average wage of the top earning 70% is closer to 35K than 25K.

And the average FTB house is 130K, not 160K.

So the average FTB-er buying the average FTB house with no equity from previous ownership and a 5% deposit will be buying at just 3.7 times single income, not 6.2 times income.

After a decade or so, they can sell the starter flat and move up to a larger "average house" with a bit of equity behind them, and maintain a similar ratio of loan to income.

Just like previous generations had to.

Graham_Devon

HAMISH_MCTAVISH wrote: »

The average wage of the top earning 70% is closer to 35K than 25K.

And the average FTB house is 130K, not 160K.

So basically you are simply suggesting that only people on 35k can afford a starter home. And thats perfectly acceptable to you? I've got that right, correct? (Before I pull this argument to absolute bits).

HAMISH_MCTAVISH

Graham_Devon wrote: »

So basically you are simply suggesting that only people on 35k can afford a starter home. And thats perfectly acceptable to you? I've got that right, correct? (Before I pull this argument to absolute bits).

Don't be daft Graham.

I'm stating facts by noting that the average income of actual FTB's will be higher than the average income of all people.

Because the lowest earning 30% don't tend to buy houses, hence why home ownership never crossed much above 70%.

It's a fact then that the average FTB will be on closer to 35K than 25K, and the average FTB house is more like 130K than 165K.

But that doesn't mean only people on 35K can buy a house.

Within an hour of me you can buy a starter flat for under 50K. Heck, you can buy a small terrace for under 50K in large parts of the country.

So there are many areas where you can buy an FTB house on a single income of 20K or less.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Don't be daft Graham.

I'm stating facts by noting that the average income of actual FTB's will be higher than the average income of all people.

Because the lowest earning 30% don't tend to buy houses, hence why home ownership never crossed much above 70%.

It's a fact then that the average FTB will be on closer to 35K than 25K, and the average FTB house is more like 130K than 165K.

But that doesn't mean only people on 35K can buy a house.

Within an hour of me you can buy a starter flat for under 50K. Heck, you can buy a small terrace for under 50K in large parts of the country.

So there are many areas where you can buy an FTB house on a single income of 20K or less.

I'm now struggling to see what your argument actually is.

You yourself couldn't do it without you parents, but seem to talk down to everyone else and suggest others had to do it the hard way.

My question to you was about more lending. I'm asking how that is achieveable.

You have stated more people need to be leant money. Which is what I questioned you on.

But now, you have turned your argument around to suggest only certain people will be able to afford the properties. These people are already getting the lending.

So who are you suggesting extra lending should be give to? The people who, in your own words, can't afford it?