Home ownership back to 1988 levels.....

ukcarper

shortchanged wrote: »

Well wouldn't that be the best case scenario?

As an owner-occupier I think that would have been best. Unfortunately that is not where we are and I don’t think a crash in nominal terms is the way to solve problem I think a fall in Real terms will be the best.

IveSeenTheLight

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.

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

Graham,
I'm sure you've considered things such as: -

1. Joint income applications
2. Your average includes part time workers, skewing the average downards
3. Historically, the mean average is used as opposed to your median average.
4. Historically, the average has bee caluclated on the mean male average, as opposed to the full average. Whilst your proposal is probably better, it does not give you the historical context.
5. This simple calculation does not consider the average household income of property buyers . i.e. without disrespect, an engineer and teacher household will be able to outbid a kwik fit fitter and part time cleaner household. Some households just simply will never be able to afford with currently supply / demand ratios.

IveSeenTheLight wrote: »

According to Annual Survey of Hours and Earning, 2011 (Provisional Results) (See table 8.7a) the Median salary of all employees was £21,326 whilst the Mean average was £26,871

There are further tabs on these spreadsheets which break down the data further by gender and full / part time

Did you see that the male full-time mean average was 36,511?
This reflects a £160k property with only a 5% deposit as 4.16 x salary.

Not far away from the HBOS affordability spreadsheet which shows house price to earnings ratio being 4.3 (against a 28 year average of 4.07) and mortgage repayments as a percentage of income being 26.6% ((against a 28 year average of 36.5%)

http://www.lloydsbankinggroup.com/media/excel/2012/AffordabiltyQ42011.xls

Derivative

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.

The issue with the above is while all of the statistics you post are probably correct (I don't care enough to check, averages are not something that generally concern me), you have to be very careful about the conclusions drawn.

Average house price is probably a mean figure. Greater London average is £400k. Oxfordshire is about £300k. Isolated examples, but they definitely skew the average.

Median home price would be a better figure to look at for affordability.

But even then, what do we class as the 'average house'? Homes right in the middle of the price spectrum are not being bought from a base of zero - I would wager that they mostly go to second or third buyers.

Starter house prices are far more reasonable. And those really, while expensive, are nowhere near as much as people like to make out. If you want to live up North it's £50-60k, if you want to live in Greater London you can get homes for less than £150k. I haven't looked in all the regions, but those must be fairly close to the ends of the spectrum.