Homes in the UK still very cheap/affordable

ukcarper

economic wrote: »

yeh so thats possible after 10 years saving. is 60k combined the median?

i even think median wages dont matter. its all about marginal buyer. i do agree things are not fair but by no means is this a bubble. inequality has gone up. i worked in banking nearly 10yrs average income gross 100k. i own an average 2 bed flat in a nice area. i could afford more but i choose not to. dont need the space.

£10k a year for ten years is doable but it's unreasonable long in my opinion.

I don't think there is a bubble as you say prices are determined by those who can afford to buy, like you don't think it's fair but I don't see things changing snytime soon.

economic

ukcarper wrote: »

£10k a year for ten years is doable but it's unreasonable long in my opinion.

I don't think there is a bubble as you say prices are determined by those who can afford to buy, like you don't think it's fair but I don't see things changing snytime soon.

welcome to a world that is unfair. no one said it would be fair. i agree it wont change anytime soon.

i bought my first place when i was 31. i could have afforded it before but i didnt buy. waiting ten years is not too long. no ones entitled to buying property let alone a property when they are young.

maybe its better for those wannabe FTB to invest their money in stocks and crucially themselves to gain more skills and better paying jobs. build up a stock portfolio and use the income from that to pay rent.

ukcarper

economic wrote: »

welcome to a world that is unfair. no one said it would be fair. i agree it wont change anytime soon.

i bought my first place when i was 31. i could have afforded it before but i didnt buy. waiting ten years is not too long. no ones entitled to buying property let alone a property when they are young.

maybe its better for those wannabe FTB to invest their money in stocks and crucially themselves to gain more skills and better paying jobs. build up a stock portfolio and use the income from that to pay rent.

I've been around long enough to know life isn't fair.

It's not just the price of buying property, it's the cost of rent and security that I see as the problem. I think that for a society to function properly adaquate housing needs to available for all levels of society at a price they can afford. This is not the case in large parts of the country as evident by the housing benefit bill. The trouble is I see no easy/painless solution.

Windofchange

Take into consideration however that people don't generally start on a good salary. People need to work their way up from entry level posts to the point where they are earning the median wage. Plenty of people may not meet their wife / husband until later in their 20's / 30's / 40's, so again the point in time that someone might start their 10 year save for a deposit is pushed back. You and your 100k a year job are very much the exception not the rule.

For instance, putting your £100k a year into the below calculator puts you in the top 1% of the country for earnings:

https://www.ifs.org.uk/wheredoyoufitin/

If you put £26k into that calculator it states you are in the 25th percentile. You are better off than 47.6 million individuals.

What do you envisage your marginal buyer earns? The nurse who is priced out is better off than 75% of the population. Can you not see that median wages and marginal buyers are intrinsically linked? Why say they are separate?

If housing is affordable in London / the S.E, can you explain why home ownership is plummeting amongst those under 44? Can you explain why people are leaving the capital in their 10's of thousands? Can you explain why house prices in relation to earnings currently sit at around 14.2 times in the capital, and why this multiple doesn't represent a bubble when they were around 8 times salary in 2009? Why do young people need a 40% equity loan from the government? Why do young people need shared ownership? Why if I in the 98th percentile of earners in the country were trying to buy a studio up the road from me, I would struggle even with a 40% bung from the government?

The signs are everywhere that this is unravelling. It's a matter of by how much and when rather than if.

GreatApe

Windofchange wrote: »

So if our nurse has a £200,000 deposit she should be able to borrow £800,000 meaning that she will default immediately on her first repayment of 6k or whatever it is?

The bank then needs to start the repossession process, presumably instruct lawyers, pay court costs, lose all the interest payments on their 800k. This drags out what, 9 - 12 months, I dunno, never been through it. Nurse in the meantime trashes the place or (heaven forbid) property in the area stalls / declines / interest rates rise.

Your repayment vehicle is based on the fact that she might get married later in life or rent out a room or two. I'm lost for words. You have basically described pretty much what happened before the 2008 financial crisis - lending vast sums of money to people who had no hope of paying it back. Banks being instructed to give out loans that they knew were dodgy. Did you mention you worked in finance?

why would any sane person put down £200k and spend £50k on taxes and costs to then go a trash a place? Who burns £250k willingly?

The risk of a house price crash is minimal, how many times in your life have you seen a 20% crash? the crash of 2008 was about 10% down. Also these are repayment mortgage so it gets less and less risky. Not to mention a 20% crash would only harm someone who bought in the peak month, if someone buys in say 2012 in London a half million pound home with a 20% down self cert mortgage, in 2017 its worth a million and the mortgage on it is £400k. The crash would have to be more than 60% for the banks to take a hit in that example

GreatApe

ukcarper wrote: »

Home ownership was falling before latest mortgage regulations.

is it a coincidence that 2004-2008 saw a slowly increasing rental stock? Is 2004 not the year of the start of the mass polish migration?

GreatApe

ukcarper wrote: »

What would you consider a reasonable amount of money left over after paying mortgage. Considering earnings are rising very slowly at the moment and it is possible that interests could rise. Also what is a reasonable amount for someone on median earnings to save for a deposit.

Your questions are easily answered without even having to directly answer them.

Renting is always more expensive than owning as renting adds overheads

With that in mind then if deposits are a problem solve the deposits problem with 100% LTV mortgages

Reasonable amount left over after paying a mortgage? well its going to be more left over than renting assuming the regulation warriors dont stop you getting a mortgage they say you cant afford even though its cheaper than your rent

economic

GreatApe wrote: »

Your questions are easily answered without even having to directly answer them.

Renting is always more expensive than owning as renting adds overheads

With that in mind then if deposits are a problem solve the deposits problem with 100% LTV mortgages

Reasonable amount left over after paying a mortgage? well its going to be more left over than renting assuming the regulation warriors dont stop you getting a mortgage they say you cant afford even though its cheaper than your rent

iif they do raise the multiples surely this would mean prices rise further?

Windofchange

GreatApe wrote: »

why would any sane person put down £200k and spend £50k on taxes and costs to then go a trash a place? Who burns £250k willingly?

The risk of a house price crash is minimal, how many times in your life have you seen a 20% crash? the crash of 2008 was about 10% down. Also these are repayment mortgage so it gets less and less risky. Not to mention a 20% crash would only harm someone who bought in the peak month, if someone buys in say 2012 in London a half million pound home with a 20% down self cert mortgage, in 2017 its worth a million and the mortgage on it is £400k. The crash would have to be more than 60% for the banks to take a hit in that example

And in order to prevent the crash of 2008 going deeper interest rates were cut from 5.25% in 2008 to 0.5% in 2009. They have stayed at emergency levels ever since - well they have fallen another 0.25%. I agree there are certainly people who are quite protected against anything but a catastrophic crash due to their equity, but ask yourself what the person owning a million pound house would do if there was a sustained pressure on house prices? We are seeing this already in central London - people want out. You might not have to move, but if your million pound flat was now worth 900k and the forecast looked gloomy, would you not want to cash in your chips and bank the profit?

The trouble with your arguments is you are assuming house prices continue to grow at the same rate that they have done, when the reality is they could flat line or come down. This is why mortgage regulations are there. A couple with 500k equity likely could get a million pound house. It's the new business that any ladder needs that is the risk. Allowing youngsters to get into increasingly unmanageable amounts of debt to fuel the housing boom in London / the S.E is just wrong on so many levels. I talked in another thread about 2 friends of mine at work who have each 'brought' a flat in East London for north of £500,000. They earn around £35,000 each. They are both in their mid to late 20's. This is the level of insanity we have reached where a first time buyer flat is some 14 - 15 times salary. And you think that prices will go up by another how much in the next 5 years or so? You think there is a minimal risk of any sort of crash?

GreatApe

ukcarper wrote: »

I've been around long enough to know life isn't fair.

It's not just the price of buying property, it's the cost of rent and security that I see as the problem. I think that for a society to function properly adaquate housing needs to available for all levels of society at a price they can afford. This is not the case in large parts of the country as evident by the housing benefit bill. The trouble is I see no easy/painless solution.

you cant just go back to your confirmation bias when you have confirmed multiple times on this thread that property is down right cheap in most the country

The housing benefit bill largely pays for people who could not buy if houses cost 1/10th of what they did. Its like saying food is far too expensive and in a bubble when x% of the population relies on state handouts to buy food. Its true that a very large number of people receive benefits to buy food with but that does not mean food is overpriced or unaffordable. You are confusing yourself with this sillyness