Radio5 - houses to rise 40% in 4 years.

RHemmings

tomstickland wrote: »

An average is always an attempt to turn a set of data into a single figure. A full understanding of what's really happen will require further analysis of the data.

In terms of what it means if you take average house price over average income, it gives a rough idea of how expensive houses are relative to incomes. You can't draw huge conclusions from it changing from 6.8 to 7.4, for example, but if it changes from 2 to 12 over five years then it's telling you something about the price of houses.

All this is assuming that the distributions are approximately similar in shape.

The point that I and others are making is that the median is a better statistic (a single figure from a set of data) than the average/mean. If you have to turn house prices and wages into a single figure, why not use the median? The median is much less affected by truncation and skew in distributions.

Martinslovechild

RHemmings wrote: »

Are these figures compared to local average earnings, or to the average across the entire country. I suspect the latter as there's no way that the average house price where I live is only 4.4 times average local earnings.

The second tab of the spreadsheet says the following:-

• Calculated as the ratio of Nationwide FTB house price to mean gross earnings in each region
• Earnings data is from the ONS Annual Survey of Hours & Earnings, and pre-1998 the New Earnings Survey; NES data has been adjusted to create a consistent series
• Mean earnings for a full time worker on adult rates are used
• Quarterly earnings data calculated using straight line interpolation; points after last annual observation extrapolated using average growth rates and hence subject to revision

From the first point, I would deduce that the regional average wage is the one used in regional calculations.

Martinslovechild

dunnomate wrote: »

This is complete rubbish !!!!!!!!!!!!!!! We are witnessing the tipping point with interest rates on the way up & so are repossessions !!! I feel a housing market correction coming on !!!!

Not quite yet - it's too early. Interest Rates are creeping up, but we're not nearly at breaking point yet for Mr Average.

Another way of rationalising data is to quantify where such a breaking point may be.

Interest rates hit 15% at the peak of the last housing market crash. At the time, salary multiples were 3 times earnings and first-time buyer affordability in the UK hit a peak of 3.9 times average earnings.

Now, roll forward to 2007. Salary multiples are now 5 times earnings and first-time buyer affordability for the UK is currently 5.3 times average earnings.

Therefore - the assumed breaking point could be defined as 15 / (5/3) = 9%.

We're currently quite a way off 9% interest rates of course, but here's an interesting set of 'what ifs'.

• What if the price of a barrel of oil hits $100?. Two years ago, this was pure fiction. Now, with oil in the mid-$70's, it's not so unrealistic.
• What if house prices continue to climb? The Bank Of England, while not focusing all its efforts to curb property inflation, cannot ignore it altogether.
• What if there are much deeper-rooted problems in equities than is currently understood? The current 'credit crisis' and sub-prime problems in the States have already spread to equities, hitting both the FTSE & DOW in recent weeks and are now banging at the door of the near-prime mortgage markets. It won't be too long before we encounter similar crises in the UK - as you've already said, repossessions are indeed up - but believe me, you ain't seen nothing yet.

The impending 'buy-to-lose' blow-out will, I believe, be the catalyst that causes the property bubble to burst, but there's always one final push in any bubble, whether it be equities, property or whatever, which we haven't seen yet in property. We're yet to see the final ascent in the housing market, but it will cause just about every spectator to sit back and comment about the 'rise and rise of the UK housing market' (I don't know why they say that, there's a property crash just about every 18 years!). Once housing hits its peak in 2010, there will be very large price drops indeed. Certainly, if I was a first-time buyer now, I would choose renting over buying unless I planned to sell in 2 years time.

[Deleted User]

Plus if interest rates hit 9% that would translate into mortgages as high as 11-13% for some subprime homeowners and buy to letters. Do you think that Joe schmoe can afford to pay 1500/month in rent or on his mortgage? Nope hes gonna want to move back with mummy even if it meant being unemployed as his wage would be meaningless..

kingkano

What if the price of a barrel of oil hits $100?. Two years ago, this was pure fiction. Now, with oil in the mid-$70's, it's not so unrealistic.

Although its currently in a state of constant flux. Also sure because of the growing strength of £ vs $ oil is costing us alot less now anyways? 2yrs ago it was $1.75 to £ now its $2. (although that was a drop from the regular level of about $1.90)

pinkshoes

Turnbull2000 wrote: »

Just a couple of points pinkshoes;

1. New Zealand is experiencing a property price bubble of proportions just as great as the UK. However, they have no land-shortage (which is a myth over here), neither do they have a housing shortage and there is no high immigration. And unless the average life-span has jumped to 100 within the the last few years, then "living longer" isn't a reason either. Why do you suppose this is?

I don't know; I've never been to New Zealand. Perhaps lots of greedy people who want to buy multiple properties and rent them out because in the long run they believe it will make them money?

Turnbull2000 wrote: »

2. There is a lot wrong with our youth renting in the long term. If these BTLs are sweeping up every FTB property in sight to secure their retirement, how do you suppose the FTBs themselves will survive? They'll neither have a decent pension nor a BTL - let alone their own mortgage free home. They'll be forced to continue paying rent throughout retirement.

Renting works on the continent because it's cheap and highly secure. Not so over here. It's expensive and you have no security of tenure. Why the hell should FTBs fund the retirement of one generation at the expense of thier own, all whilst sacrificing a secure home for themselves and their children?

But I do agree that they shouldn't whinge. They should f*cking riot.

Let me ask you pinkshoes; Are you facing the same dire predicament?

I saved hard for 3 years for a deposit, and my partner and I have bought a flat that is affordable for us. We were offered alot more money to borrow, but borrowed what we could easily afford and didn't overstretch ourselves, so no, I am not personally facing the same dire predicament.

Life is a competition, and Yes it sucks that alot of people can't afford to buy and never will at this rate, but that IS life. I have a sibling and many friends in the same boat, but you can't just go handing life out on a plate like alot of people thinks they should. I agree that renting is very insecure in this country, and this ought to be changed. Those renting should be given more rights, assurances that they can stay as long as they wish in a property with no over inflation rent increases (on the provision they're reasonable tenants who pay rent and cause no trouble). I certainly didn't buy my flat as a short term profit. I mainly bought because of the insecurity of renting, and the prospect of a very crappy pension that will probably need boosting. Yeah I'm lucky to be able to afford to buy a home, but we both work v hard to pay for it. I choose my career because it paid well, and although i would enjoy other jobs alot more, owning a property was also important to me, so I sacrificed job satisfaction over more money.

We shouldn't be whinging about not being able to afford houses and wishing property crashes on those that have bought. We should be fighting for better pensions, better rights for tenants, and doing more plausable and realistic things to help people in this current market/life/world.

pickles110564

pinkshoes wrote: »

I agree that renting is very insecure in this country, and this ought to be changed. Those renting should be given more rights, assurances that they can stay as long as they wish in a property with no over inflation rent increases (on the provision they're reasonable tenants who pay rent and cause no trouble)..

You hit the nail on the head, if tenant's pay on time are no hassle to their neighbours they can stay for as long as they like.

However most are lying cheating lazy sods

olly300

pickles110564 wrote: »

You hit the nail on the head, if tenant's pay on time are no hassle to their neighbours they can stay for as long as they like.

However most are lying cheating lazy sods

No- the tenants you chose are lying cheating sods.

Maybe you are too nice a person to be a landlord and don't have that firm streak you need to do well in the business.

neverdespairgirl

Melissa177 wrote: »

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.

Less than a year ago, and oh so wrong.....

Snooze

spurs_nut wrote: »

Only slightly more credible than those fools who think house prices will crash by 30%.

It's ok numpties, You just hang in there....... It will come, eventually.

Lol

Anoraks.

:rotfl:

Someone just resurrected this thread from August last year and look what I just found! Where's the egg-on-face smiley???

:rotfl:

Rob