Homes in the UK still very cheap/affordable

ukcarper

GreatApe wrote: »

Read the table it says it is affordable for a couple working full time, not to a singleton.

How many of Londons average terrace homes should be dedicated to single men?

I don't think any should be but even 2 full time males would not be able to get a big enough mortgage. £400k if they could get a 5x joint unlikely more like 4x £320k

ukcarper

GreatApe wrote: »

if a man cant find a partner to share housing costs with then he can not expect to live in the capital, and certainly not a terrace in the capital and certainly not the average terrace which is likely to be 3 bedrooms.

people crying that a single man can not have a whole 3 bed terrace to himself in the capital are bonkers. If said man wants a whole house to himself he can go buy one in the midlands or north. We simply do not have the capacity in London to fill the housing stock with single loners else the population would need to shrink to 3.5 million to have 1 person per house.

I'm not crying just pointing out you are posting rubbish.

GreatApe

ukcarper wrote: »

I don't think any should be but even 2 full time males would not be able to get a big enough mortgage. £400k if they could get a 5x joint unlikely more like 4x £320k

then that is a problem with mortgage multiples not of affordability

What if mortgage multiples were 1x income and bank did not offer more than that, would that then mean £150k is far too high a price?

ukcarper

GreatApe wrote: »

then that is a problem with mortgage multiples not of affordability

What if mortgage multiples were 1x income and bank did not offer more than that, would that then mean £150k is far too high a price?

You could be right but you also have to take into account interest rates, the likely hood of interest rates rising, is 2.5% achievable.

I think your chart does show there is not a problem in some areas, but you have to take into account the world as it is and as it is 4x earnings is likely to be the biggest mortgage you will get.

Windofchange

economic wrote: »

you are thinking of it the wrong way which is why you are always baffled why YOU think prices are too high. its about the marginal buyer who can afford to buy. so average is meaningless. even median is meaningless and you should only look at those who are in the market to buy.

I've not made any comment at all within that reply with regards to prices being too high, I've merely (again) pointed out flaws in your data. Look, put emotions aside for a minute. I'm right, you're right, just forget all that for now.

This is what riled me the most from the last thread we were on. You don't critique what you are putting up. You find something that agrees with your sentiment and you just present it as fact along with a statement along the lines of haha look at this and weep.

Answer me three questions with regards to that table - forget the house price argument.

1) Has the author tried to present a more favourable argument for affordability by using a 30 year mortgage as opposed to the normal 25 year? i.e. has he spread out the cost of the mortgage by an extra 5 years in order to lower the monthly payments figure?

2) If you go to the ONS website and look at 2016 provisional data, you can see that people in the North East are taking home in the region of £450 - £499 per week Gross, so lets split the difference and say £475 per week.

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2016provisionalresults#regional-earnings

£475 x 4 = £1900.
£1900 x 12 = £22800
This tallies up pretty well with the table the OP presented.

However, to reverse engineer this, the mean and the median give two very different pictures.

To keep it simple, if I had an economy in the NE with 10 people. If we assume they earned as follows (Gross pay)

1) £9,000
2) £9,000
3) £10,500
4) £11,000
5) £12,000
6) £34,000
7) £34,800
8) £35,000
9) £36,000
10) £36,700

Total £228,000 per annum

The average wage for all these people would be £22,800 as above, but the median wage would be persons 5 and 6 divided by 2 which is £23,000. The median is what your table is based upon. Instead of taking the average, the author has used median which boosts earnings to make things appear more affordable than they are in reality. Do you accept that the table you have presented is flawed in this sense?

3) If average and median are meaningless, why have you dug up a thread from last year with a table on it that is based on a median?

Before this descends into pots of gold and wild guesses, please answer the three questions above.

Windofchange

ukcarper wrote: »

I believe he used median earnings from ONS it which case if his figures are correct 50% of male full time earners in the north east earn more than £2343 a month.

No it doesn't. Look up the definition of median along with worked examples, or you can look at point number 2 in my post above (reply to great ape).

ukcarper

Windofchange wrote: »

No it doesn't. Look up the definition of median along with worked examples, or you can look at point number 2 in my post above (reply to great ape).

Yes 50% above and 50% bellow. Median if number of numbers is odd median is middle number, If even its the mean of middle two. In your example (5+6)/2 £17,400

Jack_Johnson_the_acorn

Windofchange wrote: »

1) Has the author tried to present a more favourable argument for affordability by using a 30 year mortgage as opposed to the normal 25 year? i.e. has he spread out the cost of the mortgage by an extra 5 years in order to lower the monthly payments figure?

Before this descends into pots of gold and wild guesses, please answer the three questions above.

Why is it so bad that a 30 yr mortgage is used, people are living and working longer, thus mortgages will also become longer.

All my friends (under 30) have bought property and 1 couple have bought 3 properties.
All earning an avg salary. Jobs vary from nurse, police, plumbers, civil servants, hairdressers. No-one on more than £35k. The singletons bought a flat or a tiny 2 bed semi.

Areas vary from very expensive to very reasonable. There's no problem oop North.

Even those on min wage can buy a studio flat above a shop for £40k.

Windofchange

ukcarper wrote: »

Yes 50% above and 50% bellow. Median if number of numbers is odd median is middle number, If even its the mean of middle two. In your example (5+6)/2 £17,400

Yup, you were right, drunk maths. I have amended my example.

The median does not mean that 50% of the N.E must be earning above average however. To take a silly example, if we had 5 people as below:

1) £3,000
2) £3,000
3) £3,000
4) £3,000
5) £1,000,000

The Average would be £202,400, but the median would be £3,000.

Only one person is earning above the median. You are assuming an even 50 / 50 split by saying that 50% must be earning above the average.

To take a more relevant and larger dataset have a look at the table for 2014/15 at the following link (opens as a pdf):

https://www.gov.uk/government/statistics/distribution-of-median-and-mean-income-and-tax-by-age-range-and-gender-2010-to-2011

Take 40 - 44 year olds.

The median income is £27,500
The mean (average) income is £39,600

Therefore there are high earners that skew the data to the right to boost the average. It won't be 50% of people earning under £27,500 and 50% of people earning above £27,500.

You are right to say that the median is the halfway point in a set of data, it is, it is the middle number. However the figure it gives will not be the average. Therefore if you have figures that are skewed to the left or the right you will get a very different result.

My problem with that table is that the median figure for earnings is more favourable than the average which is why the author, who is presumably pursuing an affordability argument, has chosen to use the median rather than the mean.

Windofchange

Jack_Johnson_the_acorn wrote: »

Why is it so bad that a 30 yr mortgage is used, people are living and working longer, thus mortgages will also become longer.

All my friends (under 30) have bought property and 1 couple have bought 3 properties.
All earning an avg salary. Jobs vary from nurse, police, plumbers, civil servants, hairdressers. No-one on more than £35k. The singletons bought a flat or a tiny 2 bed semi.

Areas vary from very expensive to very reasonable. There's no problem oop North.

Even those on min wage can buy a studio flat above a shop for £40k.

As I said, leave the finances and examples of friends, millionaire parents etc etc out of it. I am purely commenting on the data that has been used, and putting it to great ape that it has been skewed to present a more favourable argument for affordability by two variables - mortgage length and using median. If you are suggesting that more and more people have 30 year mortgages, doesn't that actually prove a point that people are too stretched with a traditional 25 year mortgage and therefore need an extra 5 years to make it affordable to them? In other words, you have basically said that housing is becoming less affordable within your social circle.

If I were to say let's re-run that table with a 20 year mortgage, would you pull me up on it and say hang on, you're inflating the repayments to suit your argument of un-affordability?