'We've reached a tipping point' Signs of house price weakness

HAMISH_MCTAVISH

Actually, I'm going to ask a couple more questions of our new HPC visitor while I'm here....

- What is the average income of house buyers?

- How does this compare to the average income of all people?

- What is the (mean) average house price?

- What percentage of houses sell for less than this amount?

- What is the (mean) average FTB house price?

- What percentage of FTB purchases are made at less than this amount?

hpc_troll

CLAPTON wrote: »

I don't recognise that as the cause of the financial meltdown

I've always understood the causation as being a little more involved than you propose - but in particular the idea that MEW 'drove the economy' is not same as the idea that the abeyance of MEW was the 'cause of the meltdown'. However, you could argue that excessive extension of mortgage credit, including mortgage equity withdrawal, is an important part of the financial crisis which is with us to today as evidenced by the fact that the Bank of England has £375bn of gilts on its balance sheet and we've had "emergency" 0.5% rates since March 2009.

The importance of MEW to the UK economy is set out clearly in Engelen et al After the Great Complacence (Oxford University Press, 2011). Stick that into google books and the read pages 208 and 209 paying particular attention to Figure 7.2 and Table 7.1, but make sure you're not drinking a hot beverage. It was all I could do to avoid spitting out my beer the first time I saw it. If you can't be bothered, the long and short of it is that during the Blair years the amount of MEW exceeded total GDP growth, which is vaguely alarming.

hpc_troll

HAMISH_MCTAVISH wrote: »

And if you're willing to have that debate based on objective facts and reasoned argument I think you'll find many on here are delighted to do so.... Despite your somewhat entertaining username.;)

Let's start with a few facts.....

The CML reports that the average FTB in May 2014:

- had a deposit of 16%

- took on a mortgage for 3.43 times income

- are spending 11.7% of income on interest payments

- are spending 19.5% of income on capital and interest repayments combined.

So in your opinion, which of these measures leads you to believe that buying a house is unaffordable?

Link please.

HAMISH_MCTAVISH

hpc_troll wrote: »

Link please.

http://www.cml.org.uk/cml/media/press/3953

hpc_troll

HAMISH_MCTAVISH wrote: »

Actually, I'm going to ask a couple more questions of our new HPC visitor while I'm here....

- What is the average income of house buyers?

- How does this compare to the average income of all people?

- What is the (mean) average house price?

- What percentage of houses sell for less than this amount?

- What is the (mean) average FTB house price?

- What percentage of FTB purchases are made at less than this amount?

Why is it a debate if you ask me lots of question? And why are the questions in bold?

You seem to wish to appoint me as your data gathering lackey, which seems a little inhospitable.

If you could clarify the point you are trying to make with this barrage of questions, I'll do my best to respond.

Jack_Johnson_the_acorn

hpc_troll wrote: »

Why is it a debate if you ask me lots of question? And why are the questions in bold?

You seem to wish to appoint me as your data gathering lackey, which seems a little inhospitable.

If you could clarify the point you are trying to make with this barrage of questions, I'll do my best to respond.

You're the one making a claim, therefore the burden on proof rests with you. So far you have asserted opinions without the necessary evidence.

HAMISH_MCTAVISH

hpc_troll wrote: »

If you could clarify the point you are trying to make with this barrage of questions, I'll do my best to respond.

I'm pre-empting the usual fallacious arguments about house price to income ratios that all our visitors from HPC try to make. Even though they've been discredited on multiple threads in the past.

I will give you your first 'thanks' on the board though..... For the use of 'data gathering lackey'.

Anyway, back on topic, based on the CML data how are house prices unaffordable?

You have claimed house prices are too high, can you support that by answering some or all of the following questions?

- What is the average income of house buyers?

- How does this compare to the average income of all people?

- What is the (mean) average house price?

- What percentage of houses sell for less than this amount?

- What is the (mean) average FTB house price?

- What percentage of FTB purchases are made at less than this amount?

hpc_troll

HAMISH_MCTAVISH wrote: »

And if you're willing to have that debate based on objective facts and reasoned argument I think you'll find many on here are delighted to do so.... Despite your somewhat entertaining username.;)

Let's start with a few facts.....

The CML reports that the average FTB in May 2014:

- had a deposit of 16%

- took on a mortgage for 3.43 times income

- are spending 11.7% of income on interest payments

- are spending 19.5% of income on capital and interest repayments combined.

So in your opinion, which of these measures leads you to believe that buying a house is unaffordable?

Well, it seems self-evident to me that the people actually buying houses will be those who can afford to so - hence when you look at the new lending, you'll find the figures you give. Without being intentionally obtuse, I can't really see your point. You seem to be arguing that if I do some market research outside a Ferrari garage and determine that all the purchasers could afford Ferraris then it followed that Ferraris were affordable in general. You are making a generalisation about the whole market from a self-selected sample. That is an error of reasoning.

Jack_Johnson_the_acorn

hpc_troll wrote: »

Well, it seems self-evident to me that the people actually buying houses will be those who can afford to so - hence when you look at the new lending, you'll find the figures you give. Without being intentionally obtuse, I can't really see your point. You seem to be arguing that if I do some market research outside a Ferrari garage and determine that all the purchasers could afford Ferraris that it followed that Ferraris were affordable in general. You are making a generalisation about the whole market from a self-selected sample. That is an error of reasoning.

Supply and demand dictates who can afford to buy.

Not everyone can afford to purchase a house. This has always been the case. Are you claiming that the average house buyer is now having to earn more in real terms than previously?

ukcarper

Surely if there only sufficient properties for sale for say 50% of the people that want to buy it's only the earnings of that 50% that matter.