Homes in the UK still very cheap/affordable

ukcarper

GreatApe wrote: »

Believe me five years ago I would be singing from the same sheet as you

However I now realize there is no real housing crisis or shortage, property is very affordable as shown by the data and debate in this thread. The only exception is London and then only inner London and inner London is what perhaps 6% of the country? There does need to be mass redevelopment of inner London to make it a lot more dense knock most the estates down and rebuild at 3x the density it is happening but it can only go so fast.

the 'problem' is that there has been a great expansion in private renting, however this has happened up and down the country from everywhere like inner London where prices have boomed and so has population but also in middlesborough where population has fallen house prices have fallen and renting has despite this not fallen but risen. So it is not a price problem the problem is two main parts on is a mortgage availibity problem primarily the removal of self cert kicking the balck and grey market out of owning and the second 'problem' (PS its not a problem in my view its an explanation) is the sheer growth in the number of EU citizen over the last decade. 3-4 million more EU citizens and I suspect most of them at least for a time will have to rent so that means 1-1.5 million more rentals were needed for them and thats part of the reason renting has increased.

I can see what you are getting at if people can afford the rent they can afford the mortgage and if we could transfer the properties from landlords to tenants by allowing them to borrow more then more people would be able to buy. That would require landlords to sell but we could slow down the fall of home ownership by allowing tenants to compete with landlords.

GreatApe

Windofchange wrote: »

http://forums.moneysavingexpert.com/showpost.php?p=72233754&postcount=146

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.

£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.

First of all you did not post that to me in the first instance but economic, however I will attempt to answer it anyway.

1: I do not think it is a discussion worthy factor. When you cry homes are unaffordable I do not ever recall you crying 'homes are not affordable using a 25 year mortgage'. However if you think it is important I will expect you from now on to clearly state homes are affordable in London using a 30 year mortgage. Are you willing to do this? Also it does not change things that much especially if you update the 2.5% used for the mortgage to something closer to 1.7% today. If you so wish please go redo the OP table using a 25 year mortgage and 1.7% rate and the current house prices for the regions and the current median full time male + femal wages excluding children/kidaults and pensioners all of whom earn less and are not expected to be house buyers

2. Clearly showing for the 10th time you do not understand that the median is the lower average of wages not the higher, irrespective of hose many silly examples you come up with. Withdraw that as a question for your own good

3. They are not meaningless, economic said simple averages are meaningless but what he meant by that was that you should try to refine them further to get a better understand of the subject. So you should for example remove children and part time workers for the median average. You also also try to factor in other considerations for example 17% of all the homes are social so if the average worker is going to buy the average for sale home then who are we going to put in the poor stock? leave it empty? burn it down? clearly the poor will go in the poor stock so their wages should be knocked out of any discussions about property buyers and their wages. etc etc


Now I have a question for you

1: Do you accept that in 8 regions of the UK buying the average terrace for the median full time working couple is not only affordable but cheap

2: Do you accept the median full time, non kid, non retired, couple in the SE and London if they could get a mortgage could service it without much trouble?

GreatApe

ukcarper wrote: »

I can see what you are getting at if people can afford the rent they can afford the mortgage and if we could transfer the properties from landlords to tenants by allowing them to borrow more then more people would be able to buy. That would require landlords to sell but we could slow down the fall of home ownership by allowing tenants to compete with landlords.

It is not about price, even the cheapest parts of the country have seen renting increase.
The reason renting has increased is, at the risk of repeating myself a hundred times,

1: starting the reading from the lowest point
2: lots more EU citizens have arrived over the decade and many are transient (as evidence by high migration out as well as in)
3: mortgage regulations

Bring back 100% LTV mortgages and renting would take a dive, bring back self cert and renting would dive again, get rid of transient migrants and renting would dive once more.

ukcarper

GreatApe wrote: »

It is not about price, even the cheapest parts of the country have seen renting increase.
The reason renting has increased is, at the risk of repeating myself a hundred times,

1: starting the reading from the lowest point
2: lots more EU citizens have arrived over the decade and many are transient (as evidence by high migration out as well as in)
3: mortgage regulations

Bring back 100% LTV mortgages and renting would take a dive, bring back self cert and renting would dive again, get rid of transient migrants and renting would dive once more.

I think 100% mortgages would enable more people to buy in the areas where you have shown property is affordable that is all that would be needed.

I think in all areas cells showd as cheap or very cheap a couple with one on male median earnings and the other in full time employment would get a big enough mortgage under present rules.

GreatApe

Windofchange wrote: »

Which is why I have said forget all that - I'm not suggesting there are millionaires in every high street, stop imagining things. I am trying to make a point regarding the original table and the fact that it is pretty easy to pick holes with regards to the data.

As another example, why not use single females as opposed to males in the original table? Is that because single females earn less due to socio-economic circumstances, and therefore it doesn't fit the affordability argument?

I'm simply asking for some critical debate of what is presented. I'm not pushing an agenda.

or you could be a nice chap and redo the table using assumptions you think are more reasonable. It would have probably taken you less time than to try and confirmation bias explain it away

The OP did not use 2 males, he used 1 male wage + 90% again (ie lower) as the female wage to do the 'joint' calculation

you are pushing an agenda one to try and discredit the OP post

Now be a good man, go put in some effort like the OP did and bring back a better improved version 2 table


Ideally I would like the following please do it

1: improve upon the median full time wage by stripping out children and kidaults (I would say strip out the wages of all those under 25) and also strip out the wages of those 65 and older they are retired and not house buyers. You probably wont be able to find regional data on this, use the national data to see what the national median is versus the national median minus the groups above and then for instance if the figure you get is +10% just apply it stright to the regional data it will be close enough

2: update the terrace house prices as a year has passed since OP.

3: Do a second table for flats which will be more affordable

do those and add some value rather than downplaying and dismissing others

ukcarper

GreatApe wrote: »

or you could be a nice chap and redo the table using assumptions you think are more reasonable. It would have probably taken you less time than to try and confirmation bias explain it away

The OP did not use 2 males, he used 1 male wage + 90% again (ie lower) as the female wage to do the 'joint' calculation

you are pushing an agenda one to try and discredit the OP post

Now be a good man, go put in some effort like the OP did and bring back a better improved version 2 table


Ideally I would like the following please do it

1: improve upon the median full time wage by stripping out children and kidaults (I would say strip out the wages of all those under 25) and also strip out the wages of those 65 and older they are retired and not house buyers. You probably wont be able to find regional data on this, use the national data to see what the national median is versus the national median minus the groups above and then for instance if the figure you get is +10% just apply it stright to the regional data it will be close enough

2: update the terrace house prices as a year has passed since OP.

3: Do a second table for flats which will be more affordable

do those and add some value rather than downplaying and dismissing others

Aren't you the OP quite a few of us thought you were

GreatApe

ukcarper wrote: »

I think 100% mortgages would enable more people to buy in the areas where you have shown property is affordable that is all that would be needed.

self cert would have a bigger impact to push renting down

two friends might rent a place together, one of them might want to buy but not together. alone they might not meet the criteria unless they had access to self cert not fake payslip mortgages just tick a box saying i am confident i can service the mortgage. They can then buy and keep their friend as a lodger or take in a lodger and it would be a lot cheaper for them to do that than to rent. pre 2008 that was possible it is not anymore.

Windofchange

GreatApe wrote: »

First of all you did not post that to me in the first instance but economic, however I will attempt to answer it anyway.

1: I do not think it is a discussion worthy factor. When you cry homes are unaffordable I do not ever recall you crying 'homes are not affordable using a 25 year mortgage'. However if you think it is important I will expect you from now on to clearly state homes are affordable in London using a 30 year mortgage. Are you willing to do this? Also it does not change things that much especially if you update the 2.5% used for the mortgage to something closer to 1.7% today. If you so wish please go redo the OP table using a 25 year mortgage and 1.7% rate and the current house prices for the regions and the current median full time male + femal wages excluding children/kidaults and pensioners all of whom earn less and are not expected to be house buyers

2. Clearly showing for the 10th time you do not understand that the median is the lower average of wages not the higher, irrespective of hose many silly examples you come up with. Withdraw that as a question for your own good

3. They are not meaningless, economic said simple averages are meaningless but what he meant by that was that you should try to refine them further to get a better understand of the subject. So you should for example remove children and part time workers for the median average. You also also try to factor in other considerations for example 17% of all the homes are social so if the average worker is going to buy the average for sale home then who are we going to put in the poor stock? leave it empty? burn it down? clearly the poor will go in the poor stock so their wages should be knocked out of any discussions about property buyers and their wages. etc etc


Now I have a question for you

1: Do you accept that in 8 regions of the UK buying the average terrace for the median full time working couple is not only affordable but cheap

2: Do you accept the median full time, non kid, non retired, couple in the SE and London if they could get a mortgage could service it without much trouble?

There we go, a discussion.

1) I'm not crying anything. I'm making a simple observation that by using a 30 year term the numbers are going to be lower than if using a 25 year term. This just a simple fact. No debate. This is what I mean. I am examining the data and trying to present limitations.

2) I gave an example of where median could skew data to a certain side. I will concede in relation to uk carpers point that with wages the median is lower than the mean. However. Take the North East in that table. The figure presented for monthly gross pay comes out at £28,116. The latest data from Dec 2016 shows an average in the UK of £507 per week. This is £2,028 per month which is £24,336. Your table has conveniently left out the part timers included in the ONS data.

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours

Infact all of the areas show the monthly salary to be higher than the average of the UK. The data is being skewed here to fit a point. In the above example you are nearly 4 grand short of what the actual average pay is for the UK.

3) You said that means and medians were meaningless a few pages back. Now you are saying they are not? Make up your mind.

As for your questions:

1) I am assuming you mean the top 8 rows of the table - basically not London and surrounds? Yes. I've not to my knowledge here said that I didn't? I am simply querying the data. Prices outside of London and the surrounds haven't moved all that much. I have stated on previous threads I would love to get out of London for this exact reason. I have stated on other threads that for parts of the country, help to buy as an example makes sense as you can realistically hope to pay back 100 - 200k over 25 years.

2) The answer to this is dependent upon the reliability of the table, which is dubious. House prices in the capital from this article in November 2016 are 14.2 times salary.

http://www.telegraph.co.uk/property/house-prices/house-price-affordability-london-reaches-new-low/

Let that sink in for a minute. 14.2 times the salary and this is sustainable? How? 20 x salary for 2020?

I just don't believe the figures presented in that table. Have a read of the below:

http://www.whatmortgage.co.uk/news/homeowners-one-three-uk-areas-earn-property-going-work/

"Average house prices have increased by more than total average employees’ net earnings in a third of local authority districts across the UK in the past two years..."

What is the average pay rise in the UK? A percent a year for the NHS as an example. Yet your house has increased in a year by more than your yearly take home salary - what is that, 50%, 60%? This can go on? How?

Seeing as you want to draw me to a side, I will give you an opinion. We are headed for a major collapse in London. I don't know this, I accept I could be wrong, but if I am then we have found the holy grail of capitalism - something that never crashes. Never has booms and busts. Point me to an example of this? People are driven by greed - myself included, and this is what drives booms, and it is what when reversed will drive a bust - I want more of a discount etc etc.

It is happening already with prime central London - millions knocked off zone 1, 10's of thousands of unsold new builds. It is happening around me in zone 2, and it will ripple out. What will happen to Zone 6 if Zone 2 becomes affordable again?

You don't know anymore than I do where prices are going to go. We have our opinions, we live our lives by them and we suffer the ups and downs as a result. If you're right and property goes up further I think we're all !!!!ed.

I would urge you however not to dismiss the other side of the argument without taking the time to read and understand it. Nobody is right 100% of the time, not me, not you. I am not so hell bent on winning the internet I can't cede some points. Can you?

economic

wont anyone think of the poor nurses???

GreatApe

Windofchange wrote: »

I would urge you however not to dismiss the other side of the argument without taking the time to read and understand it. Nobody is right 100% of the time, not me, not you. I am not so hell bent on winning the internet I can't cede some points. Can you?

I do not dismiss anyone especially on this which is a simple topic of finding out a few pieces of data. You are the one that dismisses the Data I posted because it goes against your strong held belief and hope that things are crazy expensive

So once more, go look up the land registry house prices for the regions of the uk.
Look up the male and female full time non child non retired median wage
Do the simple math to show how much it would cost of their post tax income to service a 30 year repayment mortgage on say 85% LTV terms

Post up the data here for everyone to see
It would only take you half an hour to an hour tops

Instead of searching a billion webpages to find articles that agree with your confirmation bias, go to the base data do what I have just asked and report back

You will see quite clearly that 8 of the regions are down right cheap
The SE and outer London are affordable and inner London is expensive however inner London terraces are not purchased by dual incomes they are purchased by capital

Its not a conspiracy its not a bubble

Let the data kill your confirmation bias, you are so close