Radio5 - houses to rise 40% in 4 years.

andipandi_2

no matter what is said there is a major crisis in housing in the uk,people need a decent home at a price they can afford,nuff said

[Deleted User]

I have to disagree with the word "need". People dont need to own a home they can rent a room for as cheap as 40 quid a week in some places. Do people that live in the outback of africa own there own homes? nope, do they care? not if they have access to water and the means to grow food. The world is a free place, so squat somewhere that a speculator has bought and left fallow, why not get your mates round have an or** and forget about the niff naff and triva the press is putting on your brains.

I hate the way the press tells us all that we should be worried about this that and the other. Why doesnt everyone just turn round and say "I cant be arsed worrying" and the world would be a better place. Buy if you can afford too, if you can and have a roof over your head then dont worry. Have you seen the documentrys on tramps, they look a hell of lot happier then people that read the press all the time and they grow to love the street.

Melissa177

I think what will happen to some extent is that people will decide that moving out of the South East and to the North makes economic sense because housing/commuting costs are so high. Some of my friends who are settling down are looking at this already.

I do think that will slow housing growth in the South East, but I still don't see house prices falling or stagnating whilst there is increasing demand for property. 3 million houses is fine, but it is projected that another 3.9 million households will be created by 2021, so up go the prices..

tomstickland

You can compare average prices with average incomes if you like. It only means what it means.

Of course, individual ratios for every sale would be interesting too. You could then look at the mean, standard deviation, and perhaps mode of that set of data.

All the same, assuming that the extremities are not signficant enough to skew the results by an unacceptable amount, then average house price over average income is a useful index.

Melissa177

Talking about the average is meaningless if you don't know the mean. Very very high City incomes, and very very expensive houses completely skew the scale.

It would be much more instructive to look at the median house price and the median wage for a start.

tomstickland

The mean is the most commonly assumed measure of average and the measure I was referring to.
I said that the influence of the extremities needs to be checked to ensure that it's small enough to only make a small difference to the mean. I'd expect the extremities to only make a small difference to the mean, given the proportion that they make up of the total.

You can choose whatever method and measure you like. A study of the distributions would be helpful. I'd start by looking to see how the mean compares with the centre of the mid 50%. ie: find the price points at the 1st and 3rd quartiles and take the mid point of this.

Very often the various measures of mean don't disagree by much.

Jim_B_3

The pre-school idea of supply and demand does not apply to the housing market. Houses, for various sections of the population at various times on the back of a housing boom, become like Veblen goods. We've all seen people become more desperate or eager to buy as the price goes up. Whether it's fear of never buying one, or greed, or whatever, the increasing price encourages them to buy, rather than discourages.

tomstickland

Figures from HM Revenue and Customs (HMRC) show that 1,859,000 flats, houses and commercial properties were sold in 2006-07.

Let's imagine that 2000 of these were city bonus buys at £1m each.
So we split the data set into 1,857,000 properties at an average of, say, £180K. And then there are 2,000 at an average of £1m.
Adding the 2000 properies in skews the average up to £180.088K.

RHemmings

tomstickland wrote: »

Let's imagine that 2000 of these were city bonus buys at £1m each.
So we split the data set into 1,857,000 properties at an average of, say, £180K. And then there are 2,000 at an average of £1m.
Adding the 2000 properies in skews the average up to £180.088K.

If it were just 0.1% of house prices that were "out of whack", and the rest were evenly distributed, then the mean and median would track very closely. But house prices follow a left truncated right skewed distribution, and the difference between the median and the mean is much more than your unrealistic example suggests.

tomstickland

It'd be nice to see the distribution.
I don't think that the median is particularly meaningful either though.
I'd say that the mode, or maybe the mid point of a zone that encompasses the mid 50% of house sales.
My original point was that the mean is not "incorrect", it's just a measure and means what it means.