Majority of houses more affordable than in 1997

HAMISH_MCTAVISH

Graham_Devon wrote: »

create a new username, with the sole intention of making me look silly.

Calm down old boy....

That sounds like complete nonsense.

Graham_Devon

ukcarper wrote: »

Not according to the land registry it's 2.8x earning have increased 1.6x, so considering interest Rates are lower and earnings have increased more than inflation I would say it's far from nonsense.

It's nonsense because if and when interest rate rise, it's going to make houses become "unaffordable" overnight.

Now, if I'd have come along and linked to an article suggesting that, you'd be all over it stating it was complete nonsense and that house prices won't crash overnight.

But you are backing this, which, if interest rates quadrupled (which isn't hard), would show housing is unaffordable to swathes more people overnight.

That, it why it's utter nonsense. If interest rates go to 2% I doubt it would stop anyone who could have afforded the house a month prior to the rise from now buying in.....but these statistics would say it would.

MARTYM8`

HAMISH_MCTAVISH wrote: »

Excellent.

Perhaps you can provide the data.

Here's what the (economist that works for the estate agent) has included in their fairly comprehensive analysis.....

- Wages
- Interest rates
- Costs of essentials
- Purchase prices
- Running costs

I look forward to seeing your worked examples as to why they are wrong, broken down by region, of course....

Maybe I just compare average house prices to average wages - because in order to actually get a mortgage in the first place you do actually have to bear that calculation in mind as well as the deposit required to buy that home.

As has been said - the survey is based on those who are able to buy and ignores those excluded. And it also assumes that those buying now - who I presume the estate agents are after - will face the current low interest rate environment for 25 years (we shall see).

Maybe all those young people on average earnings bemoaning the cost of buying homes relative to their earnings are just stupid.

HAMISH_MCTAVISH

MARTYM8` wrote: »

As has been said - the survey is based on those who are able to buy and ignores those excluded.

Nope, afraid not, the survey specifically compares wages in each region to the average FTB house price in each region and takes into account mortgage rates, costs of living, house running costs, etc.

It is absolutely not a survey of those who have bought a house.

The clue really is in the name......

An "Ability To Buy" Index.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Nope, afraid not, the survey specifically compares wages in each region to the average FTB house price in each region and takes into account mortgage rates, costs of living, house running costs, etc.

It is absolutely not a survey of those who have bought a house.

It is exactly what it says it is....

An "Ability To Buy" Index.

Splitting hairs, but it actually compares the mean household income. Not wages.

Mean rather than median earnings from ASHE are used as a more representative measure of the income of households likely to buy their own homes

I don't know how they then drill that down and categorise it into those "likely" to buy their own homes.

Either way, it has some serious weightage applied on the income side.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Splitting hairs, but it actually compares the mean household income. Not wages.

It takes the average wages from the ASHE series and then provides data for a range of different households with adjustments for costs as well.

Single earner, dual earner, kids, no kids, etc.

Not sure how it works in your household Dev, but in Casa McTavish I can assure you that household income is used to pay for things.

Otherwise known as....

"What's mine is hers and what's hers is hers too"....:D

Graham_Devon

HAMISH_MCTAVISH wrote: »

It takes the average wages from the ASHE series and then provides data for a range of different households with adjustments for costs as well.

Single earner, dual earner, kids, no kids, etc.

Not sure how it works in your household Dev, but in Casa McTavish I can assure you that household income is used to pay for things.

Otherwise known as....

"What's mine is hers and what's hers is hers too"....:D

Yer, and look at the results.

Apparently if you are part of a couple with children where one works full time and one works part time you have more money left over than a couple with no kids who both work full time..... (what?!)

Again, this must be something to do with the "those likely to buy a house" reference. What are they doing here exactly to get this "subset" of people?

The whole thing simply doesn't stack up.

If you can shed some light on why those working less hours, WITH children have more money left over than those couples both working full time with no children...... please, feel free. That is precisely what it says on page 2 here: http://www.hamptons.co.uk/media/444160/a2b-q12015-appendix.pdf

ukcarper

Graham_Devon wrote: »

Sometimes you look at a statistic and you just know there is something up with it.

Graham_Devon wrote: »

It's nonsense because if and when interest rate rise, it's going to make houses become "unaffordable" overnight.

Now, if I'd have come along and linked to an article suggesting that, you'd be all over it stating it was complete nonsense and that house prices won't crash overnight.

But you are backing this, which, if interest rates quadrupled (which isn't hard), would show housing is unaffordable to swathes more people overnight.

That, it why it's utter nonsense. If interest rates go to 2% I doubt it would stop anyone who could have afforded the house a month prior to the rise from now buying in.....but these statistics would say it would.

It's comparing 1997 to now not in the future.

Loughton_Monkey

HAMISH_MCTAVISH wrote: »

Otherwise known as....

"What's mine is hers and what's hers is hers too"....:D

You need to nip that one in the bud, Hamish.

When Mrs LM was earning [a fraction of my income] I ensured that all hers went on the groceries etc., less a small allowance. Then eventually she stopped working, but now brings in state pension plus a small FS one. She sends just over 50% of that to me, using the rest for her own modest needs and to pay for household things.

She does, in fact, have significant funds in her own name [tax reasons, you know]. If only she knew passwords and things, she would be able to access some of it. But she doesn't, so it's safe.

She 'wants' for nothing, and would not have a clue how to manage such a complex set of funds, so I take that weight off her, being the kind loving husband I am.

It's probably different up there with kilts and things, but down this neck of the woods, I definitely wear the trousers [although Mrs LM tells me which ones to wear.]

You should work towards a similar strategy.

cells

If you look at the cost of buying a house with a 25 year fixed mortgage now, and back in 1997. It may well be cheaper now in real terms for most places in the UK (Except maybe London and perhaps the SE)

Even though house prices are higher in real terms, cost of finance is much lower to balance or more than offset this

However this is a silly comparison because the person who bought in 1997 was not stuck with 1997 interest rates forever. They re-mortgaged to better rates maybe every 2-3-5 years.

So there is little chance someone can buy today and be as well off as someone who did in 1997 as their 2.2% interest rate mortgage is not going to go down by 5% like someone buying in 1997 might have seen their mortgage do down from 8% to 3%