Average house prices nearly 7x average earnings

purch

A 30 year mortgage at 8% would be slightly more :eek:

Things change, incomes rise and fall as do interest rates, so knowing or trying to predict what might happen over a 25-30 year span is impossible, which makes the initial claim even more foolish.

Risk is always relative, but entering into a 30 year commitment based on what may just be affordable currently, due to a large extent to historically low interest rates, is a risk that I would not endorse.

[Deleted User]

Tancred wrote: »

Where are the £50k+ earners up north?

I work for a firm based in Bolton and I make that much.. so, me? I am a 'home' worker, so I actually live down South.

I do often player the rightmove 'could I buy if I moved back to Bury' game. It's saddening.

Anyhoo, if two people shacked up, you'd only need them to earn 25k between them to be able to be first time buyers with a £100k home. Ideally, you'd hope for 1 single 25k earner (which isn't that much of a stretch in the north I'd hope) so that they could survive on one salary should a baby pop out)

purch

Loughton_Monkey wrote: »

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.

In 1982 I had my first mortgage of £ 28,000 @ 12 3/4% to buy a nice little 3 bedder in Billericay for £32,500

I was earning £ 11,250 and ex-HID was on about £ 5,500.

purch

Loughton_Monkey wrote: »

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.

I bought my ex-wife's grandparents council flat in West Ham (pronounced Westaam) for them for £ 19,000 in 1988 or 9..........now somebody has made a large profit selling it on but unfortunately not me (forgot all about it when we got divorced :eek:)

chucky

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.

You are of course right.

However, I don't think just taking a salary/mortgage multiplier as a good indicator of affordability. It needs to take into account these other calculations.

Blacklight

purch wrote: »

A 30 year mortgage at 8% would be slightly more :eek:

Things change, incomes rise and fall as do interest rates, so knowing or trying to predict what might happen over a 25-30 year span is impossible, which makes the initial claim even more foolish.

Risk is always relative, but entering into a 30 year commitment based on what may just be affordable currently, due to a large extent to historically low interest rates, is a risk that I would not endorse.

Which is why others get ahead all the time. If you're basing your risk profile on interest rates going up by more that 100% immediately and your earnings not rising at all, including promotions, ever then I'm glad you don't work for me.

It's not really a case of 'he who dares', more like 'he who finds an excuse not to bother'.

Loughton_Monkey

Blacklight wrote: »

......It's not really a case of 'he who dares', more like 'he who finds an excuse not to bother'.

Yes. It reminds me of one of those sayings that you will never hear.

Mr & Mrs Bloggs, on the day of their retirement, sit down and say "You know what? I'm glad we never bought a house."

purch

Blacklight wrote: »

Which is why others get ahead all the time. If you're basing your risk profile on interest rates going up by more that 100% immediately and your earnings not rising at all, including promotions, ever then I'm glad you don't work for me.

It's not really a case of 'he who dares', more like 'he who finds an excuse not to bother'.

Err, no. I am basing it on things maybe changing ever so slightly that could make borrowing at 7X income unaffordable.

I think you have a total misunderstanding of risk.

He who dares does win, but if you think borrowing on 7X income is risk free then be my guest. I have plenty of properties in my portfolio I could sell to you (assuming you earn in excess of £100K)

ukcarper

purch wrote: »

Err, no. I am basing it on things maybe changing ever so slightly that could make borrowing at 7X income unaffordable.

I think you have a total misunderstanding of risk.

He who dares does win, but if you think borrowing on 7X income is risk free then be my guest. I have plenty of properties in my portfolio I could sell to you (assuming you earn in excess of £100K)

I'm not sure why you are going on about borrowing at 7x income no one will be able to do that.

Just because the average house price is 7x average income (debateable) it doesn't mean people will be borrowing at 7x income.

purch

ukcarper wrote: »

I'm not sure why you are going on about borrowing at 7x income no one will be able to do that.

Maybe you should bother to read the entire thread, then you would understand.

It would have saved you from wasting a post.