Home Ownership at Lowest Level for 30 Years

davomcdave

HAMISH_MCTAVISH wrote: »

You have decreased the stock of rented houses by 100, and increased the stock of owner occupied houses by 100.

And you've decreased the pool of renters by 100, and increased the pool of buyers by 100.

Therefore house prices and rents haven't changed at all - the balance of supply and demand has remained the same - and it's supply and demand which set prices and rents.

Assuming the 100 people would rather buy than rent, i.e. they're like most people, then they will be the 100 people that are next able, but less able than current buyers, to buy thus they will demand houses at a slightly lower price than the market price.

If the sellers are forced sellers then they will sell at the new market price.

ukcarper

davomcdave wrote: »

Assuming the 100 people would rather buy than rent, i.e. they're like most people, then they will be the 100 people that are next able, but less able than current buyers, to buy thus they will demand houses at a slightly lower price than the market price.

If the sellers are forced sellers then they will sell at the new market price.

I'd agree with that but I don't think the effect would be dramatic.

LydiaJ

HAMISH_MCTAVISH wrote: »

I disagree.

...

We need 3 million new houses in the next 10 years.

It'll take the combined efforts of owner occupiers, landlords, social housing providers, and government, if we're to stand any chance of delivering them.

I entirely agree that we need more housing stock. The way I see it, there are two distinct but linked problems:
1) There are not enough homes, so that some people who want a home do not have anywhere suitable to live. This can only be solved by building more homes. It wouldn't hurt to have incentive structures that encourage empty nesters to downsize, and discourage LLs from allowing residential properties to lie empty.
2) Too many people who would prefer to buy are stuck in long term private rented homes. This is bad for various reasons. Firstly, obviously it's bad for the families it affects. Secondly, it's bad for stability - as a teacher I find the aspect of this that springs to mind immediately is the disruption to education if families have to move at an inconvenient time in a young person's schooling, but there are other considerations too. Thirdly, it's bad for the taxpayer. OOs who pay off their mortgages by the time they retire are better able to cope with a reduced income in retirement, and have an asset to sell to fund care home fees if they become necessary. The more retired people are living in private rented homes, the bigger the bill for the taxpayer to pick up in HB (or whatever it's calling itself now) and social care for the very old.

Thus, although, as I say, I agree that we have a housing crisis that needs to be addressed by building more houses, I also think that even if the housing stock stayed static, a net movement of houses from private renting to owner occupying would be an objective good for the country as a whole.

ukcarper wrote: »

I'd agree with that but I don't think the effect would be dramatic.

The wording of my post "the market would adjust until the houses thus released were bought by the households currently just below the level of being able to buy" was deliberated phrased in terms of who would be buying the houses rather than how much the prices would change. I don't claim to know enough to work out what sort of price adjustment would happen.

ukcarper

LydiaJ wrote: »

I entirely agree that we need more housing stock. The way I see it, there are two distinct but linked problems:
1) There are not enough homes, so that some people who want a home do not have anywhere suitable to live. This can only be solved by building more homes. It wouldn't hurt to have incentive structures that encourage empty nesters to downsize, and discourage LLs from allowing residential properties to lie empty.
2) Too many people who would prefer to buy are stuck in long term private rented homes. This is bad for various reasons. Firstly, obviously it's bad for the families it affects. Secondly, it's bad for stability - as a teacher I find the aspect of this that springs to mind immediately is the disruption to education if families have to move at an inconvenient time in a young person's schooling, but there are other considerations too. Thirdly, it's bad for the taxpayer. OOs who pay off their mortgages by the time they retire are better able to cope with a reduced income in retirement, and have an asset to sell to fund care home fees if they become necessary. The more retired people are living in private rented homes, the bigger the bill for the taxpayer to pick up in HB (or whatever it's calling itself now) and social care for the very old.

Thus, although, as I say, I agree that we have a housing crisis that needs to be addressed by building more houses, I also think that even if the housing stock stayed static, a net movement of houses from private renting to owner occupying would be an objective good for the country as a whole.



The wording of my post "the market would adjust until the houses thus released were bought by the households currently just below the level of being able to buy" was deliberated phrased in terms of who would be buying the houses rather than how much the prices would change. I don't claim to know enough to work out what sort of price adjustment would happen.

The main reason I hear on here that is preventing people buying is the inability to save a deposit, I'm not sure how fewer rental properties would impact on that.

Crashy_Time

GreatApe wrote: »

This is total nonsense, in more than half the country the interest on a mortgage on a starter home is LESS than the rent you would pay to rent the local average social stock.

Also in some parts of the country the average terrace costs not much more than 1x the average full time male+female earnings. I am thinking of stoke-on-trent as one such place

HB pays your rent though in social housing, and you don`t lose your shirt/home when rates rise or market crashes.

ruperts

GreatApe wrote: »

The average sold terrace in stoke is £82k according to the land registry

The average full time male wage in Stoke according to the ONS £25,272 and for women £23,244 so combined £48,516 or 1.7 x joint income to buy the average terrace.

Here is the link http://www.neighbourhood.statistics.gov.uk/HTMLDocs/dvc126/


Also the median price is lower than the mean, at least that is the case in scotland where the scottish version of the land registry lists both the mean and median averages but even without considering that the prices are 1.7 x joint income.


Also it is not alone in being under 2x income. Plenty more places here are two more as examples
Middlesborugh it is £79k for the terrace and £51.6k joint income so = 1.5 x joint income
DArlington £98k, Joint income £51.4k so = 1.9 x joint income

We'll have to disagree on the wage statistics as I took my figures direct from the ONS' excel data for 2016 rather than a third party's interpretation of the 2015 data as you have.


Don't forget that the data doesn't include for unemployed or, if looking at full time only as you are, underemployed people or the people who can't for various reasons work full time.


Even giving you the benefit of the doubt over everything contentious your original point that houses in Stoke-on-Trent are close to 1x average male + female full time earnings is still wrong.

ukcarper

ruperts wrote: »

We'll have to disagree on the wage statistics as I took my figures direct from the ONS' excel data for 2016 rather than a third party's interpretation of the 2015 data as you have.


Don't forget that the data doesn't include for unemployed or, if looking at full time only as you are, underemployed people or the people who can't for various reasons work full time.


Even giving you the benefit of the doubt over everything contentious your original point that houses in Stoke-on-Trent are close to 1x average male + female full time earnings is still wrong.

Yes provisional 2016 results show median full time worker as £22,826. so two earners £45,652 so 4x mortgage = £182K.

Part time median is just over £10k so one part time and 1 full time £33k, 4x mortgage = £132K.

http://www.rightmove.co.uk/property-for-sale/property-61604252.html

or if you fancy something older http://www.rightmove.co.uk/property-for-sale/property-46594992.html

ruperts

ukcarper wrote: »

Yes provisional 2016 results show median full time worker as £22,826. so two earners £45,652 so 4x mortgage = £182K.

Part time median is just over £10k so one part time and 1 full time £33k, 4x mortgage = £132K.

http://www.rightmove.co.uk/property-for-sale/property-61604252.html

or if you fancy something older http://www.rightmove.co.uk/property-for-sale/property-46594992.html

They're nice. So now they just need to save £28k for a deposit. Don't forget you're quoting average wages across all age groups while we're realistically looking at younger people here who, even if they earn the average for their age group, actually earn about 15% less than the overall average. So all things considered they might be looking at a joint take home of around £2k per month with typical expenses as follows.


Rent on a bottom end one bed flat - £500 per month
Council Tax - £90 per month
Electricity, Gas and Water - £120 per month
Essential communication tools, Internet and phones - £70 per month
One car purchased, maintained and fueled - £300 per month
One public transport season ticket - £100 per month
Basic food rations - £350 per month
Essential items, toiletries, clothes etc - £150 per month
Health related activities, sports club, gym etc - £70 per month
The bare minimum social life required to avoid mental health issues - £180 per month
One solitary weeks holiday at a bargain basement £400 each = £66 per month


Total = £1,996 per month.


So they'll be able to save a whacking £4 per month towards their £28k target and should achieve their aim in roughly in 583 years. Great stuff.

ukcarper

ruperts wrote: »

They're nice. So now they just need to save £28k for a deposit. Don't forget you're quoting average wages across all age groups while we're realistically looking at younger people here who, even if they earn the average for their age group, actually earn about 15% less than the overall average. So all things considered they might be looking at a joint take home of around £2k per month with typical expenses as follows.


Rent on a bottom end one bed flat - £500 per month
Council Tax - £90 per month
Electricity, Gas and Water - £120 per month
Essential communication tools, Internet and phones - £70 per month
One car purchased, maintained and fueled - £300 per month
One public transport season ticket - £100 per month
Basic food rations - £350 per month
Essential items, toiletries, clothes etc - £150 per month
Health related activities, sports club, gym etc - £70 per month
The bare minimum social life required to avoid mental health issues - £180 per month
One solitary weeks holiday at a bargain basement £400 each = £66 per month


Total = £1,996 per month.


So they'll be able to save a whacking £4 per month towards their £28k target and should achieve their aim in roughly in 583 years. Great stuff.

If you want a house you have to make sacrifices living in a house share while you save or better still live with parents if possible, I try not to come up with the normal wasting money on IPhones etc then you come up with this, I take it it's a joke.

Two people on minimum wage would be able to buy one of the £80k houses.

ruperts

ukcarper wrote: »

If you want a house you have to make sacrifices living in a house share while you save or better still live with parents if possible, I try not to come up with the normal wasting money on IPhones etc then you come up with this, I take it it's a joke.

Two people on minimum wage would be able to buy one of the £80k houses.

Most house shares don't allow couples and if they do it's no cheaper than renting a bottom-end flat so most will go for the latter. The figures I gave are for a couple sharing a flat.


You won't get one iPhone never mind two with my essential communications budget. That includes for a basic internet connection (no tv package) and a basic mobile phone each, both of which are essential items.


Even if they go for the £80k house they are looking at having to save £8k as a realistic bare minimum deposit and even that would take a good 166 years at £4 per month.