"Housing Market Slumps"

economic

BikingBud wrote: »

Pathetic and insensitive:(

how am i being insensitive? im merely showing everyone that there are some things we dont have a control over, including being able to afford to buy a property.

GreatApe

BikingBud wrote: »

So the problem doesn't exist in London?

What problem?
House prices are high in London but not unaffordable

So tell me why there are people travelling 400 miles per week to get to work

I dont think there are many who do that but clearly the trade off is quality/size of property vs location. Its also not a price issue. If house prices were half of today would some people still be travailing long distances well definitely yes and how do we know? well were people commuting 5 years ago? yes they were even though prices were a lot cheaper.

Draw the curve between zero and 2017 house price contribution for the 9 million people in London, let's see what it looks like. Top end heavy? Mid heavy? Then compare those points with multiples of median London wage.

24% of London is social housing, you need a min 10% of housing as rental that means 34% of London households can never own even if house prices were half of what they are. So knock out the bottom 34% of households from your viewpoint. It is not that the median household should be able to buy the median house. It is that the top 65% of households the median in that group should be able to buy the median for sale home.

However even that is wrong if you just look at incomes and ignore the huge sums of gifts inheritances and non earned wage capital like business sales.

I would say disregard the top 20% of homes in London for the capital rich. Looking at the 80% that remains, the median of this 65% including gifts and inheritances should be able to afford and they can.

The fact is that low interest is masking the affordability gap.

That sentence does not make sense. I am guessing what you mean is that low interest rates make things look more affordable? Sure low interest rates help but what has that got to do with this? You are assuming that what we have today is abnormal rather than normal. I am many others think interest rates today are fine that in fact real rates of return will be zero or even negative in the long term. But that is another story

Seems you want the serfs to live elsewhere shall we put some ghettos up for them?

You are just being childish
There are lots of places in London I can not afford to buy a house of my liking
However it does not then mean that those places are inhumane or a bubble or that the system needs changing. It simply means richer people than myself exist and that I either have to accept I can not live where they live or I can try to get as rich as them. I accept I can not live in a house of my liking in the more expensive London boroughs its as simple as that.

GreatApe

Out,_Vile_Jelly wrote: »

http://www.bbc.co.uk/news/uk-england-london-30988883

I have mentioned this several times before; I work at a top London university where there is a specific problem being discussed at the highest level. This is academics in their 30s/40s leaving for less prestigious institutions where they can afford a family house within reasonable commuting distance (often in Germany). It is also a problem in Oxford and Cambridge apparently. A sustainable research group needs a range of ages and experiences; not just recent postdocs in their mid-20s and senior professors approaching retirement.

That is a problem for your university it does not then translate into a general problem

If your university is finding it difficult to keep staff they will have to pay more. If they can not pay more they will have to move to where the same pay is attractive. If they can not do either which I expect is the case they will have to recruit from a pool willing/able to live in London.

GreatApe

BikingBud wrote: »

Who said anything about crash wishing? I stated that houses are fundamentally overpriced. And still people think that is great.

yes thats the problem you just state without thinking

Homes are not expensive in at least 8 of the regions they are cheap
So cheap that it costs less to buy a house on a 30 repayment mortgage than to rent from the local social landlord for 30 years. Not only that but you also have a house at the end of it mortgage free and something to pass onto the kids while the social rent in 30 years has nothing. So how can you call homes fundamentally overpriced if they are cheaper than social housing. To do so you would have to cry social homes are also fundamentally very overpriced but how can you do that when you know its a zero profit system?

As a basic principle what percentage of your wage is it reasonable to pay for housing?

Pick any number between 0% and 100%?

There is no clear answer to this as it will depending on the individual and their situation. However if you look at the image I posted a few posts back it shows that for 8 regions buying a house costs less than 15% of their joint income which is clearly cheap

But anyway let me pick a number just for arguments sake 30% (its just a random figure)
Your problem is that you feel you need to change the local housing stock to fit this figure when the reality is that you need to move and find a place/home that fits this 30%

GreatApe

People who say life is unfair do not mean life is unfair shut up and accept your lot. We live in a social welfare state and its probably a net good. However its a simple truth to say life is unfair we are not born equal nor to equal opportunities.

Its nice to think we could set up a system where chance of birth (both biology and parenting) was exactly equal but the problem is the only way to do that is to drag everyone down rather than up.

Also economically we simply do not want and no one has been able to show that pure parity will work. A society where everyone is paid the same and has the same and works the same hours has never existed and probably never will.

Having said all this the goods news is as progress marches forward we can afford to be more and more social and distribute more and more to the less fortunate.

ukcarper

GreatApe wrote: »

As per another thread on this forum. 8 of the 12 regions a REPAYMENT mortgage is cheaper than renting similar social housing which clearly shows that homes in those regions are very CHEAP

You keep postng that useless spread sheet. Average London terrace £500k with 20% deposit £400k mortgage you would need a combined income of £100k to get that mortgage so what percentage of people can get the mortgage.

economic

ukcarper wrote: »

You keep postng that useless spread sheet. Average London terrace £500k with 20% deposit £400k mortgage you would need a combined income of £100k to get that mortgage so what percentage of people can get the mortgage.

many people. a couple of joint income of 100k is quite common.

ukcarper

economic wrote: »

many people. a couple of joint income of 100k is quite common.

Define common median household income London is about £40k. Median full time earnings is £34k.

economic

i have two friends. both friends have parents who are all doctors. one friend bought a house worth 2.3m few years back and is now worth 3m. the other bought a house recently for 1.3m.

this is after both parents for each of my friends being GPs and having their own practice. this is obviously on the upper end of the pay distribution for london. however it is their savings that have enabled them to buy (they both have no more then 50% ltv).

key thing is not just the income but the amount you save. both sets of parents have upsized despite being in their 60s. this is contrary to what most people think that the old downsize.

the point is that income alone should not be looked at when you look at affordability. its also how much savings you have accumulated and also how much gifts/inheritances you are to receive. both my friends will receive very large amounts and so can buy their own place or even stay at their parents place.

do not underestimate this impact. if you say well you dont know anyone with rich parents with that kind of money well you simply are not looking hard enough. there is a large amount of wealth being accumulated. by people who appear to be just liek you but they are a lot wealthier then you can imagine.

economic

ukcarper wrote: »

Define common median household income London is about £40k. Median full time earnings is £34k.

thats not fair to look at the median household income. you need to get rid of the following:
- those who are in london temporary on work visa
- those who have already bought and dont require a large income so work part time or less demanding/paying job
- those who have bought regardless of their income
- those who are happy with renting and dont ever want to own a home

then you are probably are left with people in the market to buy. then you should probably have a median but also include gits/inheritances/other sources of income like investments that may not be included in household income. that will give a true reflection of the current affordability / or "how fair life is" in london.