Average house prices nearly 7x average earnings

ukcarper

purch wrote: »

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

It would have saved you from wasting a post.

I have read entire post and the post by turnball you replied to clearly stated two incomes and 7x and I'm sure he wasn’t referring to 7x salary multiply mortgages.


A 25 year £166k mortgage at 4.99% will be £980 a month take home pay on £25k is £1650

So with 2 incomes £3300 a month if second earner was on minimum wage they would still have £2600 a month.



If mortgage goes to 8% repayments wouldbe £1300.

Turnbull2000

ukcarper has got it right.

Benchmarking UK house prices against the average single salary is obsolete and irrelevant. When mortgages were based on a single earner, 7% interest rates and a 25 year repayment term 20 years ago, then yes, house prices at 6-7x average salary would have been cripplingly expensive.

This is no longer the case. House buying is now based on the expectation of two full-time earners, interest rates are around 3-4%, and mortgage terms 30 years. Thus two average earners can now afford property prices at 7x single average salary.

[Deleted User]

You are missing the point. The relative affordability of houses has decreased sharply. Yes, a working couple can still get a house, but once upon a time single earners could afford them as well. The boomers claim things are no worse now and they were when they were young, but they very clearly are.

So what would your advice to a single person who needs £170k to buy a flat be? Might just happen to be single, might be divorced, partner might be dead or incapacitated for some reason. Assume it's a legit reason instead of taking the easy Daily Mail route out and blaming them for being scum and provide some practical advice.

ukcarper

DELETED USER wrote:

You are missing the point. The relative affordability of houses has decreased sharply. Yes, a working couple can still get a house, but once upon a time single earners could afford them as well. The boomers claim things are no worse now and they were when they were young, but they very clearly are.

So what would your advice to a single person who needs £170k to buy a flat be? Might just happen to be single, might be divorced, partner might be dead or incapacitated for some reason. Assume it's a legit reason instead of taking the easy Daily Mail route out and blaming them for being scum and provide some practical advice.

I know you don't want to believe it but prices were high in the 70s reaching almost 5x earnings compared to just over 5x now (Nationwide). Very few single people bought property in the 70s.

I accept prices are high and it is difficult but in the 1990s prices were very low and some people seem to think that was the norm.

Turnbull2000

DELETED USER wrote:

You are missing the point. The relative affordability of houses has decreased sharply. Yes, a working couple can still get a house, but once upon a time single earners could afford them as well. The boomers claim things are no worse now and they were when they were young, but they very clearly are.

So what would your advice to a single person who needs £170k to buy a flat be? Might just happen to be single, might be divorced, partner might be dead or incapacitated for some reason. Assume it's a legit reason instead of taking the easy Daily Mail route out and blaming them for being scum and provide some practical advice.

Single people may have to accept long-term renting, or perhaps wait for an inheritance in their 40's.

Mind you, housing wealth inheritance is set to become relatively prevalent for the first time over the next 10-20 years, and may provide a substantial boost to values. House prices at 8-9x average salary may become common in many areas.

ukcarper

Turnbull2000 wrote: »

Single people may have to accept long-term renting, or perhaps wait for an inheritance in their 40's.

Mind you, housing wealth inheritance is set to become relatively prevalent for the first time over the next 10-20 years, and may provide a substantial boost to values. House prices at 8-9x average salary may become common in many areas.

I'm not sure it's the case now where I am you can buy a 1 bed flat for £110k this is in the south east commuting distance from London.

spock007

Blacklight wrote: »

Interest rates were 14 times higher in 1997 than they are now.

I think this is one of the reasons that kids have to stay in school a bit longer these days.

Interest rates weren't high for 25 years (the term of a mortgage) whereas these high prices have to be paid off over the whole 25 years. Honestly, sick of hearing about high interest rates you had to pay off for several years at best.

Loughton_Monkey

spock007 wrote: »

Interest rates weren't high for 25 years (the term of a mortgage) whereas these high prices have to be paid off over the whole 25 years. Honestly, sick of hearing about high interest rates you had to pay off for several years at best.

Well since they are at an all time low at the moment, I think you'll get sick and tired of paying the 'norm' of 6% to 15% during the next 25 years. Unless, of course, you're a renter.

spock007

I'm one of those people the rampers hate, not paying outrageous rent and saving a small fortune. I'd rather emigrate than buy into this market of madness lol