Average house prices nearly 7x average earnings

ukcarper

If I was in the same position I was in when I first bought in 1972 I could still buy the same house all be it with a bigger mortgage in relation to earnings. That was before prices reached their peak in the early 70s in fact I couldn't have bought that house a couple of months later.

ash28

ukcarper wrote: »

I suppose it depends where you look average house price 1997 (Nationwide) £55k to £62k average earnings ONS £16.3k = 3.4x to 3.8x.

Now £172k and £26.6k = 6.4x

You should also bear in mine that 1997 in relation to earnings house prices were at the lowest they have been since at least 1950.

Can't understand why they didn't use 1988/9......

According to the Halifax....uses mean male full time salary - don't ask me why they use that but they always have. I used the Halifax data because it's all in one place....

1989 average house price = 4.95 x earnings
repayments as a percentage of earnings = 65% (the base rate was 14%)
average salary £14.1k
Average house price £70k

1997 average house price = 3.14 x earnings
repayments as a percentage of earnings = 27% (base rate was 6.25%)
average salary £21k
average house price £66k

2013 average house price = 4.58 x earnings
repayments as a percentage of earnings = 27%
average salary £36k
average house price £170k

We bought in 1982 (Scotland), sold and bought again in 1986 (moved to south east) sold and bought again in 1987 (south east...oops) and sold and bought again in 1993 (south east..lost almost £40k on the house we sold but got the house we bought for a lot less than peak).........and sold and bought again in 2011.

If you were buying in the early to late-ish 1990s especially if you were a FTB you were laughing...it was those who bought in the late 1980s that suffered with negative equity - probably a bit like Northern Ireland at the moment, though not on the same scale.

Prothet_of_Doom

In the north west of England, I am sure that you can find houses at twice the average income.

Turnbull2000

7x is not unaffordable.

Two full times incomes, 30 years mortgage term, 3.5% interest rate, 10% deposit. Assuming two earners on £25k, monthly repayments on a £175,000 house are quite affordable.

shortchanged_2

Turnbull2000 wrote: »

7x is not unaffordable.

Two full times incomes, 30 years mortgage term, 3.5% interest rate, 10% deposit. Assuming two earners on £25k, monthly repayments on a £175,000 house are quite affordable.

What about longer term though turnbull?

Mortgage interest rates will not remain at 3.5% forever.

Turnbull2000

shortchanged wrote: »

What about longer term though turnbull?

Mortgage interest rates will not remain at 3.5% forever.

Longer term is not a consideration when it comes to 'policy' setting and the housing market.

Furthermore, as ultra cheap borrowing becomes ever more entrenched into mortgage borrowing and property prices, a future government will step in to suppress rates should the market become threatened. There's simply no way politicians will allow average mortage rates to hit 5-6% within the next decade.

shortchanged_2

Turnbull2000 wrote: »

Longer term is not a consideration when it comes to 'policy' setting and the housing market.

Furthermore, as ultra cheap borrowing becomes ever more entrenched into mortgage borrowing and property prices, a future government will step in to suppress rates should the market become threatened. There's simply no way politicians will allow average mortage rates to hit 5-6% within the next decade.

Why?

Are you admitting that houses are overpriced because people wouldn't be able to afford their mortgages at 5-6%?

chucky

shortchanged wrote: »

Why?

Are you admitting that houses are overpriced because people wouldn't be able to afford their mortgages at 5-6%?

I struggle to understand how the salary of a person in Halifax has to do with a property in Kensington and Chelsea.

You do realise how averages works don't you...

[Deleted User]

And we all know there's no such thing as an average person, or an average house

The distribution of wealth is skewed, so the mean will be skewed against the median



House prices follow a similar skewed trend. Using the mean for either will give you a higher value than the median; which is a fairer representation of the population of both.

Different areas of the country will experience differing skews for both too

shortchanged_2

chucky wrote: »

I struggle to understand how the salary of a person in Halifax has to do with a property in Kensington and Chelsea.

You do realise how averages works don't you...

What does this have to do with my comment?

I was responding to turnbulls statement in his words 'that there was no way the government would let average mortgage interest rates go to 5-6%.'

I don't really get where you are bringing the 'averages' part into this argument.