UK Affordability still very good

ukcarper

GreatApe wrote: »

Peak ownership was in 2004 at 70-71%

Fast forward to 2011 census and it shows UK born ownership at 68.8% so not much of a fall

If FTB conditions are so dire why has ownership only nudged down 1-2% points over a 7 year period?

It took 10 years to increase a couple of points in the 90s

ukcarper

Where I am median full time earnings £30k cheapest flat £175k not affordable.

Cheapest 2 bed terrace £280k so two single people earning median full time median income could get a big enough mortgage but the median household income is less £60k.

Looking at fulltime earnings by age peak earnings are in 40-49 age group with 20-29 age group averaging 20% less than overall and 30-39 year olds averaging 5% above so all 20-29 year olds earn less than overall median and assuming a uniform rate of increase with age under 35 year olds will earn less than overall.

Windofchange

In my SW London borough the median gross take home is £27,029

The cheapest property is a £265,000 studio.
The cheapest 1 bed flat weighs in at £295,000.

The studio is 9.8 x salary, the flat is 10.91 x salary. This is before tax comes along and increases the multiple even higher. A couple both earning the median (good) salary would need about a years wages deposit (50k ish) to get the cheapest studio flat. And they save of course whilst paying rent, bills, travel cards, a few beers here and there etc etc. How many years will that take?

Your table on page 1 says this is affordable. You say, this is affordable. Everyone other than yourself and Economic can quite clearly see it isn't.

GreatApe

Windofchange wrote: »

In my SW London borough the median gross take home is £27,029

The cheapest property is a £265,000 studio.
The cheapest 1 bed flat weighs in at £295,000.

The studio is 9.8 x salary, the flat is 10.91 x salary. This is before tax comes along and increases the multiple even higher. A couple both earning the median (good) salary would need about a years wages deposit (50k ish) to get the cheapest studio flat. And they save of course whilst paying rent, bills, travel cards, a few beers here and there etc etc. How many years will that take?

Your table on page 1 says this is affordable. You say, this is affordable. Everyone other than yourself and Economic can quite clearly see it isn't.

10.9 x single income becomes a 4.36 x joint income mortgage with a 20% deposit. At the risk of repeating myself gifts and inheritances exist I know lots of people who have been gifted London homes or the deposits for London homes and I know many more who will inherit sums equal to or greater than a average London home. If your parents and grandparents are owners (the majority of UK born youngsters parents and grand parents are indeed owners) then its likely you will get a property via inheritances/gifts. You will jump in and claim all the old will give it to the nursing home but the stats on inheritances don't bear that out with some £200 billion annually given from old to young (and typically figures are higher in London than elsewhere).

London is obviously the most expensive region. Do you however agree that 7-8 UK regions are clearly very affordable and arguably cheap sovheap that a repayment mortgage monthly sum is lower than the mkbtjly rent on a social property.

GreatApe

ukcarper wrote: »

Where I am median full time earnings £30k cheapest flat £175k not affordable.

Cheapest 2 bed terrace £280k so two single people earning median full time median income could get a big enough mortgage but the median household income is less £60k.

Looking at fulltime earnings by age peak earnings are in 40-49 age group with 20-29 age group averaging 20% less than overall and 30-39 year olds averaging 5% above so all 20-29 year olds earn less than overall median and assuming a uniform rate of increase with age under 35 year olds will earn less than overall.

A realistic model needs to take into account the £200 billion annual flow from old to young especially for London and the SE

Also London is home to many more migrants than the average figures and London has more social homes than the UK average these factors mean London has and has had and will always have lower ownership rates than the rUK which means its fine/reasonable for fewer people to be able to afford to buy in London.

Its clear the crash cheerleaders model of 'average wage should be able to buy the average for sale Property else it's a bubble' is a crap model. And their crap model has been giving them crap predictions about future directions of house prices for nearly two decades yet they still quote that crap model every day.

ukcarper

GreatApe wrote: »

A realistic model needs to take into account the £200 billion annual flow from old to young especially for London and the SE

Also London is home to many more migrants than the average figures and London has more social homes than the UK average these factors mean London has and has had and will always have lower ownership rates than the rUK which means its fine/reasonable for fewer people to be able to afford to buy in London.

Its clear the crash cheerleaders model of 'average wage should be able to buy the average for sale Property else it's a bubble' is a crap model. And their crap model has been giving them crap predictions about future directions of house prices for nearly two decades yet they still quote that crap model every day.

I'm not a crash leader I have never said there will be a crash. But I do live in the real world and am not or never have been in the higher percentiles of earnings. So I know the problems facing median earners and people who are know facing them. If a couple earning median household income cannot buy the cheapest house in an area I consider it to be unaffordable and if people need an inheritanc or gift to buy, that they probably won't get ithat doesn't alter the fact.

economic

ukcarper wrote: »

I'm not a crash leader I have never said there will be a crash. But I do live in the real world and am not or never have been in the higher percentiles of earnings. So I know the problems facing median earners and people who are know facing them. If a couple earning median household income cannot buy the cheapest house in an area I consider it to be unaffordable and if people need an inheritanc or gift to buy, that they probably won't get ithat doesn't alter the fact.

yet you still bought a home despite never being in the higher percentiles of earnings.


we have shown a couple earning median income can buy the cheapest home in their area, even in London. they just need to save enough each year rather then splash out on vegas!!

Windofchange

GreatApe wrote: »

10.9 x single income becomes a 4.36 x joint income mortgage with a 20% deposit. At the risk of repeating myself gifts and inheritances exist I know lots of people who have been gifted London homes or the deposits for London homes and I know many more who will inherit sums equal to or greater than a average London home. If your parents and grandparents are owners (the majority of UK born youngsters parents and grand parents are indeed owners) then its likely you will get a property via inheritances/gifts. You will jump in and claim all the old will give it to the nursing home but the stats on inheritances don't bear that out with some £200 billion annually given from old to young (and typically figures are higher in London than elsewhere).

London is obviously the most expensive region. Do you however agree that 7-8 UK regions are clearly very affordable and arguably cheap sovheap that a repayment mortgage monthly sum is lower than the mkbtjly rent on a social property.

The problem with all your arguments about how cheap everything is is that the underlying numbers don't back you up. Home ownership amongst the young and even the middle aged is plummeting. First time buyer numbers are plummeting. Mortgage rates are plummeting in a bid to get new custom. Sales volumes are plummeting as nobody can afford to move, or people just decide it's too expensive to buy. All this whilst interest rates are held at the lowest they have ever been, and it has never been so cheap to pay a mortgage.

Question 1) Why is home ownership falling so fast if everything is cheap and easy? Would everyone not prefer to own rather than rent, and therefore how do you make the link that there isn't a rather large problem with UK property?

The government is lending you 40% of a property value in London or 20% outside because it's too expensive otherwise. You have banks like Barclays developing family mortgages so BOMAD can help their offspring. You have unsecured debt hitting heights that it has never hit before - presumably not just people buying cars, but people also using the credit cards to buy food etc. Help to buy ISA's, Shared ownership, the list of support for house purchasing is endless.

Question 2) If property is so affordable, why do the government need to get involved at all? Why is help to buy needed? Does the very term "Help to buy" not suggest there is a problem?

No, property is not cheap across 7 - 8 local authorities. As UkCarper alludes to, you are in your own little bubble where with a bit of saving and hey presto, house deposit. I've posted the City AM article a number of times which shows that the vast majority of local authorities are too expensive - this is based on real figures before you start down your road of newspapers don't trust them etc.

Question 3) If out of 345 UK local authorities, only in 46 of these is housing at 3 - 5 x salary, how can you claim that 7 - 8 regions have cheap housing?

All your figures look at the ideal situation where there are two full time earners who don't have children, don't have this, don't have that. They then get a 30 year mortgage on record low interest rates, and happen to have a 20% deposit to hand. You are looking at a small proportion of the population, and yes, some couples with the criteria you have outlined can save / do buy a property.

Question 4) What is the source of your table - I still don't know where the numbers you have put in post 1 of this thread came from.

£80k for a flat may seem cheap to you - I could go out tomorrow and buy one, as could you perhaps, but everything is relative. As for the "pots of gold" argument - we have done this one to death on another thread.

From the ONS 2013:

1.6 million adults (3.6%) had received an inheritance valued at £1,000 or more in the two years preceding being surveyed. Although half of inheritors received less than £10,000, one in ten inherited £125,000 or more.

http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/dcp171776_333036.pdf

From a 2011 LSE report:

"As can be seen from the statistics of this table inheritances are extremely concentrated: the top 1 per cent of inheritors received about 15 per cent of the total inherited wealth, while the top 5 and 10 per cent received 43 and 66 per cent of the total respectively."

http://sticerd.lse.ac.uk/dps/case/cp/CASEpaper148.pdf

Question 5) Given the two articles cited above (ONS and London School of Economics) show that inheritance is concentrated in very small bands, can you expand upon your assertion that millions of people in the UK every year are inheriting significant 'pots of gold'? 1 in 10 people inherit a figure over £125,000. 50% of inheritances are less than £10,000. How does this support your argument that the housing market can be kept afloat in part by this? As I covered at great length on one of your other threads, wealth is concentrated in the upper echelons of society - the top 10%. Your £200 billion a year is not evenly distributed, and therefore for the vast majority of people does not come into play when discussing house purchasing. It might just about cover the wake and a good knees up at the local pub for 50% of the population.

economic

Windofchange wrote: »

The problem with all your arguments about how cheap everything is is that the underlying numbers don't back you up. Home ownership amongst the young and even the middle aged is plummeting. First time buyer numbers are plummeting. Mortgage rates are plummeting in a bid to get new custom. Sales volumes are plummeting as nobody can afford to move, or people just decide it's too expensive to buy. All this whilst interest rates are held at the lowest they have ever been, and it has never been so cheap to pay a mortgage.

Question 1) Why is home ownership falling so fast if everything is cheap and easy? Would everyone not prefer to own rather than rent, and therefore how do you make the link that there isn't a rather large problem with UK property?

The government is lending you 40% of a property value in London or 20% outside because it's too expensive otherwise. You have banks like Barclays developing family mortgages so BOMAD can help their offspring. You have unsecured debt hitting heights that it has never hit before - presumably not just people buying cars, but people also using the credit cards to buy food etc. Help to buy ISA's, Shared ownership, the list of support for house purchasing is endless.

Question 2) If property is so affordable, why do the government need to get involved at all? Why is help to buy needed? Does the very term "Help to buy" not suggest there is a problem?

No, property is not cheap across 7 - 8 local authorities. As UkCarper alludes to, you are in your own little bubble where with a bit of saving and hey presto, house deposit. I've posted the City AM article a number of times which shows that the vast majority of local authorities are too expensive - this is based on real figures before you start down your road of newspapers don't trust them etc.

Question 3) If out of 345 UK local authorities, only in 46 of these is housing at 3 - 5 x salary, how can you claim that 7 - 8 regions have cheap housing?

All your figures look at the ideal situation where there are two full time earners who don't have children, don't have this, don't have that. They then get a 30 year mortgage on record low interest rates, and happen to have a 20% deposit to hand. You are looking at a small proportion of the population, and yes, some couples with the criteria you have outlined can save / do buy a property.

Question 4) What is the source of your table - I still don't know where the numbers you have put in post 1 of this thread came from.

£80k for a flat may seem cheap to you - I could go out tomorrow and buy one, as could you perhaps, but everything is relative. As for the "pots of gold" argument - we have done this one to death on another thread.

From the ONS 2013:

1.6 million adults (3.6%) had received an inheritance valued at £1,000 or more in the two years preceding being surveyed. Although half of inheritors received less than £10,000, one in ten inherited £125,000 or more.

http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/dcp171776_333036.pdf

From a 2011 LSE report:

"As can be seen from the statistics of this table inheritances are extremely concentrated: the top 1 per cent of inheritors received about 15 per cent of the total inherited wealth, while the top 5 and 10 per cent received 43 and 66 per cent of the total respectively."

http://sticerd.lse.ac.uk/dps/case/cp/CASEpaper148.pdf

Question 5) Given the two articles cited above (ONS and London School of Economics) show that inheritance is concentrated in very small bands, can you expand upon your assertion that millions of people in the UK every year are inheriting significant 'pots of gold'? 1 in 10 people inherit a figure over £125,000. 50% of inheritances are less than £10,000. How does this support your argument that the housing market can be kept afloat in part by this? As I covered at great length on one of your other threads, wealth is concentrated in the upper echelons of society - the top 10%. Your £200 billion a year is not evenly distributed, and therefore for the vast majority of people does not come into play when discussing house purchasing. It might just about cover the wake and a good knees up at the local pub for 50% of the population.

what a load of waffle.

economic

can we all just accept that even if houses are more difficult to buy vs decades ago, that it is because London has become more desirable, more people demand it and this is why prices are what they are.


if people can not afford it, they need to work harder or smarter to be able to buy. its as simple as that.