Average house prices nearly 7x average earnings

JencParker

Loughton_Monkey wrote: »

This is a very moot point.

What we had, here, was a system in which each house sale consisted of (a) the requirement for the local authority to provide susbsidised housing reduced by 1 house, and (b) 1 extra house in the private sector, now housing a previously subsidised family being maintained at no cost to the taxpayer.

Some would argue that technically speaking, this transaction was 'neutral' in house supply terms. Any requirement (or not) to build more social housing was a totally seperate matter and nothing whatsoever to do with the selling of a council house.

The reason it ended up as a fiasco is quite seperate and logical. It was families 'cashing in'. Children would club together and buy the house for parents. Good for parents (free rent) and Good for children who make a large profit selling the house when parents die. In the absence of the sale, the house would have been available to the council to re-let to another family.

The tax payer is subsidising many on housing benefit but the real beneficiaries are the BTL LLs.

Loughton_Monkey

JencParker wrote: »

The tax payer is subsidising many on housing benefit but the real beneficiaries are the BTL LLs.

This is a valid view but - as in my post - doesn't relate directly to council house sales.

But let's just take a simple, single example of a family on HB. Could be anyone. What would you rather our "bankrupt" government do:

(a) Pay a landlord (say) £6,000 per annum rent. He probably has a house worth, say, £120K, with a £100K mortgage costing him £4K a year interest. So he's happy. Let's assume the tenant is. Only the taxpayer needs to worry about the ongoing £6K cost.

(b) Spend £120K out of cash we don't have to build a new house, and let this family live there free. Once you add up the interest cost of the £120K, the additional maintainence/insurance costs on the house, then the annual revenue cost would possibly be only marginally lower than paying the landlord. You might need to add on the cost of housing the family somewhere else while the new house is being built anyway. Pay a housing association to do the same thing is worse, because either they want the taxpayer to lend the money anyway, or they will borrow on the open market at much higher cost and it will therefore cost us more than paying the landlord.

I wouldn't disagree that option (b) could be argued as technically 'better' as a long term proposition. But I would be scared to do the mathematics of X families on HB multiplied by £120K capital cost = the amount of extra borrowing over and above an already unsustainable £1,400 billion national debt.

It's like having a mouthful of hot food. Whatever you do next is wrong.

I would much rather reconsider the concept where we keep feeding the infinite appetite for 'welfare' in which a corollary of Parkinson's law clearly operates. Claimants will expand to fill the resources we are soft enough to offer.

Perelandra

gazzabboi wrote: »

Back when mars bars were 20p

Where did you live?

Mars Bars were 13p in my local Post Office in 1982.

:P

Perelandra

Loughton_Monkey wrote: »

I wouldn't disagree that option (b) could be argued as technically 'better' as a long term proposition. But I would be scared to do the mathematics of X families on HB multiplied by £120K capital cost = the amount of extra borrowing over and above an already unsustainable £1,400 billion national debt.

How about we bring this down a bit, by using the "make them work for their benefits" scheme to cover the labourers costs in building the houses?

:beer:

... no, I'm not really suggesting this would be a good idea..!

Blacklight

The average person can't afford the average house on an average wage which increases by the average pay rise indefinitely. Nor should they be able to.

Like I said, it's comments like this that are the reason they keep kids in school an extra couple of years these days.

Loughton_Monkey

Perelandra wrote: »

How about we bring this down a bit, by using the "make them work for their benefits" scheme to cover the labourers costs in building the houses?

:beer:

... no, I'm not really suggesting this would be a good idea..!

Exactly. All those little boxes with four walls. Far too expensive. Let them build workhouses instead. High rise. Low quality. Roof over their heads. warmth. Free meals. Guaranteed 8 hours work a day. No cash. What more do they need?

Tancred

ringo_24601 wrote: »

UK average is pointless. The north is still cheap, and quite manageable pricewise. I did a quick look, and found a whole load of 2 bed houses for £100k around where I use to live in Lancashire.

Pop those houses down to where I live now and you'd be paying a minimum of £220k for them

Where are the £50k+ earners up north?

purch

chucky wrote: »

I think he means looking at it differently as in what percentage of income is 7x salary.

I'm sure he does, but that doesn't make the idea that a 30 year mortgage at seven times your current salary is affordable, any less ludicrous.

It is a shame that debate on these subjects on this forum becomes so polarised.

Blacklight

Hmmm, actually looking at the numbers - if house prices were 3.5x average income, say, then I could probably afford repayments on three houses at current interest rates.

I could buy six BTL properties on the risk that only 50% would be vacant at any one time. At the rate house prices are going up it wouldn't be a bad investment.

I might have changed my mind a bit.

Loughton_Monkey

purch wrote: »

I'm sure he does, but that doesn't make the idea that a 30 year mortgage at seven times your current salary is affordable, any less ludicrous.

It is a shame that debate on these subjects on this forum becomes so polarised.

The only way you'd ever get to this position is something like being married, on, say, £40K each, and getting mortgage of 3.5X so £280K between you. Then you get divorced, and one partner is left with the whole mortgage at 7X salary.

A 30 year 4% mortgage is £1,350 a month. That's £16,200 a year. A £40K salary is around £30K net after tax & NI these days. So you're talking of spending 54% on net salary on mortgage.

I seem to recall a time (early 80's?) when pretty much most people with a reasonably new mortgage were having to pay around 50% of net income.