Debate House Prices


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Majority of houses more affordable than in 1997

Homes in the majority of places in England and Wales are now more affordable than they were in 1997 thanks to falling inflation, low interest rates and rising wages.

For the average householder their ability to buy a home has improved over the last 18 years, according to research from Hamptons International.

The estate agent’s Ability to Buy index showed afforability increasing from 133.2 points in 1997, the year in which the study started, to 135.5 points in the first three months of 2015, meaning that more people are finding it easier to purchase their first home or move up the ladder, and have more money left over after their mortgage payments.

http://www.telegraph.co.uk/finance/property/11779093/Affordable-homes-crisis-What-affordable-homes-crisis.html

Needless to say, this hasn't gone down well on another 'certain' website!
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Comments

  • missyrichards
    missyrichards Posts: 1,148 Forumite
    It says that it deteriorated in London, the East, the South East and the South West, it's lucky that nobody wants to live, work and buy a place in those areas!
  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    edited 3 August 2015 at 5:59PM
    Sometimes you look at a statistic and you just know there is something up with it.

    In this case, it's pretty simple. They are basing the affordability of buying a house on those who have already bought and have a mortgage. This calculation simply ignores the growing number who cannot afford to buy.....

    In 1997, interest rates were 6.25 - 7.25%. Today that are 0.5%. (For the pedantic ankle biters, I know thats now mortgage rates).

    Really their research should state it's easier to service the mortgage at a time of record low rates if you can get one....

    ....and really, who'd have thunk it?

    The very fact affordability has got worse in the South, even with record low rates (13 x lower than in 1997) on this calculation should have alarm bells ringing.
  • ukcarper
    ukcarper Posts: 17,337 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Is 1997 the best time to compare to property was extremely cheap then.
  • ukcarper
    ukcarper Posts: 17,337 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 3 August 2015 at 6:21PM
    According to Land Reg average price for a semi is £171k and £137k fro a terrace.
    Full time mean male earnings are £29k and part time woman's is about £9k so a four time mortgage would be £152k. A 25 year mortgage of £152k at 4% would be about £800 a month a couple earning above would take home £2800 a month. Affordable I would say.
  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    ukcarper wrote: »
    Is 1997 the best time to compare to property was extremely cheap then.

    That's the point. They are saying it's more affordable to buy today than when houses were, as you put it "really cheap".
  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    http://www.telegraph.co.uk/finance/property/11779093/Affordable-homes-crisis-What-affordable-homes-crisis.html

    Needless to say, this hasn't gone down well on another 'certain' website!

    Define "hasn't gone down well" as you appear to be making things up?

    The thread is here...

    http://www.housepricecrash.co.uk/forum/index.php?/topic/205883-crisis-what-crisis-majority-of-houses-more-affordable-than-in-1997/

    ....Can't see anyone having even a minor meltdown.
  • HAMISH_MCTAVISH
    HAMISH_MCTAVISH Posts: 28,592 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Sometimes you look at a statistic and you just know there is something up with it.

    In this case, it's pretty simple. They are basing the affordability of buying a house on those who have already bought and have a mortgage. This calculation simply ignores the growing number who cannot afford to buy.....
    .

    Wrong, wrong, wrong.....

    The article is based on the HI "Ability To Buy" index. (The clue is in the name)

    It uses average incomes, FTB house prices, and mortgage rates available today, then breaks it down by region.

    So this is not restricting it to those who have already bought at all Graham..... Do try reading the article next time. ;)
    “The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.

    Belief in myths allows the comfort of opinion without the discomfort of thought.”

    -- President John F. Kennedy”
  • ukcarper
    ukcarper Posts: 17,337 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    That's the point. They are saying it's more affordable to buy today than when houses were, as you put it "really cheap".
    And it probably is in most of the country .
  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    ukcarper wrote: »
    And it probably is in most of the country .

    So by definition you are happy to state houses are now cheaper to buy than they were in 1997, when they were, in your own words, "extremely cheap"?
  • ukcarper
    ukcarper Posts: 17,337 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    So by definition you are happy to state houses are now cheaper to buy than they were in 1997, when they were, in your own words, "extremely cheap"?
    Cheap to buy and more affordable are to different things.
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