Take cover! The housing market is heading for a bloody and protracted crash!

Bigdeflationfirst

Thrugelmir wrote: »

Deceptive figure to quote.

Majority will earn nearer £20k.

Exactly, so 3x earnings average property prices should be around £60K, not £160K.

Property is still very overvalues in the UK compared to the long term norm.

moneyinmypocket

end of day people have to live somewhere - if your situation and will allow - buy if not rent

ukcarper

Bigdeflationfirst wrote: »

Exactly, so 3x earnings average property prices should be around £60K, not £160K.

Property is still very overvalues in the UK compared to the long term norm.

The long time average is 4x fulll time male earnings.

Graham_Devon

ukcarper wrote: »

Exactly and that is what is stopping most people from buying.

Yes, because it's unaffordable. Whichever way you look at it.

shortchanged_2

ukcarper wrote: »

The long time average is 4x fulll time male earnings.

The problem with this now is that the wealth gap is becoming bigger all the time so the mean male earnings which is what I assume they use, is becoming more and more distorted by the high earners.

ukcarper

shortchanged wrote: »

The problem with this now is that the wealth gap is becoming bigger all the time so the mean male earnings which is what I assume they use, is becoming more and more distorted by the high earners.

Nationwide was 4x in 2002 average price was about £110k mean average wage was £27k median was £22.4k. ratios 4.1 and 4.9.

Now average house price £163k wages in 2011 (latest ONS figures) £36.5k mean £28.4k median ratios now 4.5 and 5.7 which which gives average price of about £140k. whichever you use.

I agree prices are high but they don’t need to drop to £60k to be at the long-term average.

ukcarper

Graham_Devon wrote: »

Yes, because it's unaffordable. Whichever way you look at it.

I agree prices are high and for some people property is unaffordable but that doesn’t alter the fact that some people who could afford repayments are prevented from buying because of large deposit required.

Graham_Devon

ukcarper wrote: »

I agree prices are high and for some people property is unaffordable but that doesn’t alter the fact that some people who could afford repayments are prevented from buying because of large deposit required.

Which means they are prevented because they can't afford the property.

As I say, whichever way you look at it, it's unaffordable.

Many seem to like to look at the problem from a lending point of view, and suggest it's only lending stopping people buying.

This is true, to a point. If lending keeps getting increased, obviously many more people will be able to use the resources available to get into property. You'll notice I'm careful to suggest "resources" here, as that's all lending is, a resource.

If the resources are cut back, you are reliant more and more on your own resources, and the true picture starts to play out.

Affordability is a function that involves a few layers, lending is just one of them. But at the end of the day, if you don't have the requirements of the lending, simply put, you can't afford it, regardless of whether or not on paper, you could afford the repayments based on todays resources.

Lending and prices go hand in hand, and lending isn't the only function that can vary. Prices can too. Theres a gravitational pull on both where they will meet somewhere in the middle. Over previous years, the price has had more of a gravitational pull. That doesn't mean that's just the way it is. and always will be. Afterall, we hit the lending buffers.

ukcarper

Graham_Devon wrote: »

Which means they are prevented because they can't afford the property.

As I say, whichever way you look at it, it's unaffordable.

Many seem to like to look at the problem from a lending point of view, and suggest it's only lending stopping people buying.

This is true, to a point. If lending keeps getting increased, obviously many more people will be able to use the resources available to get into property. You'll notice I'm careful to suggest "resources" here, as that's all lending is, a resource.

If the resources are cut back, you are reliant more and more on your own resources, and the true picture starts to play out.

Affordability is a function that involves a few layers, lending is just one of them. But at the end of the day, if you don't have the requirements of the lending, simply put, you can't afford it, regardless of whether or not on paper, you could afford the repayments based on todays resources.

Lending and prices go hand in hand, and lending isn't the only function that can vary. Prices can too. Theres a gravitational pull on both where they will meet somewhere in the middle. Over previous years, the price has had more of a gravitational pull. That doesn't mean that's just the way it is. and always will be. Afterall, we hit the lending buffers.

True so you think it's ok that somebody has to rent because they haven’t got the £25k deposit even though they could afford the mortgage repayments. I don’t want to see prices rocket but I get the impression you don’t want lower deposit because you are afraid that if there were available it would increase prices. But if the wage multipliers are keeps at a reasonable level will that happen.

shortchanged_2

ukcarper wrote: »

True so you think it's ok that somebody has to rent because they haven’t got the £25k deposit even though they could afford the mortgage repayments. I don’t want to see prices rocket but I get the impression you don’t want lower deposit because you are afraid that if there were available it would increase prices. But if the wage multipliers are keeps at a reasonable level will that happen.

I agree that income multiples are one of the best ways of curtailing house prices, however there seems to be more argument for affordability calculators. I feel however these are just another way which will end up being manipulated by creative lenders and borrowers, more so borrowers and increase the risk of rampant HPI again.