UK Affordability still very good

ukcarper

westernpromise wrote: »

So that sounds like about £18kpa each? In that case 4x joint salary would get you a loan of £144k. Natwest will do 90% LTV over 5 years at 3.68%, so if you had £15k to put down you could buy this

http://www.rightmove.co.uk/property-for-sale/property-47813013.html

for £689 a month.

So the challenge is raising the necessary £15k between two people whose take home is £2500 a month. I may be missing something but surely that's less than 2 years at £600 a month? Is that truly not possible?

The thing is that whatever era you bought it there were obstacles. In the early 70s mortgages were rationed, and you had to save for years and have a nice clean bank account record for the manager to approve your loan of 3.5x the man's salary (wives were taxed as chattels so more or less ignored). By the 80s mortgage lending had been liberalised so prices duly doubled until we had 15% base rates and a huge bust. Now we have more people, no more houses, joint salary mortgages and base rates of roughly zero. It has always been difficult but just in different ways.

If you take his lower figure and the both earn the same they could be on £14,500 a year each so £29k total, looking at right move prices in Doncaster start really low and thier are new houses fo just over £100k. Sounds affordable to me and with them both in parents house shouldn't take long to save £10k.

Thrugelmir

GreatApe wrote: »

So getting back on topic, houses are so cheap in 8 regions of the uk that it costs less to buy a house on a repayment mortgage than it does to rent the council poor stock. Only 2 regions are expensive yet still affordable

Yet mortgage approvals fell for the second month running. Despite lenders offering even lower rates........

WengerIn

westernpromise wrote: »

So that sounds like about £18kpa each? In that case 4x joint salary would get you a loan of £144k. Natwest will do 90% LTV over 5 years at 3.68%, so if you had £15k to put down you could buy this

http://www.rightmove.co.uk/property-for-sale/property-47813013.html

for £689 a month.

So the challenge is raising the necessary £15k between two people whose take home is £2500 a month. I may be missing something but surely that's less than 2 years at £600 a month? Is that truly not possible?

The thing is that whatever era you bought it there were obstacles. In the early 70s mortgages were rationed, and you had to save for years and have a nice clean bank account record for the manager to approve your loan of 3.5x the man's salary (wives were taxed as chattels so more or less ignored). By the 80s mortgage lending had been liberalised so prices duly doubled until we had 15% base rates and a huge bust. Now we have more people, no more houses, joint salary mortgages and base rates of roughly zero. It has always been difficult but just in different ways.

Yes you can buy if you earn more than average, nobody disputes that. However if you are at the average, per the OP, then you can't. Don't forget if one half of your couple lose their jobs then the mortgage is going to be about half of the remaining workers' wage.

You are assuming that the couple earn well in excess of the median household income when the median individual wage is about 8k below that for the UK as a whole.

ukcarper

WengerIn wrote: »

Yes you can buy if you earn more than average, nobody disputes that. However if you are at the average, per the OP, then you can't. Don't forget if one half of your couple lose their jobs then the mortgage is going to be about half of the remaining workers' wage.

You are assuming that the couple earn well in excess of the median household income when the median individual wage is about 8k below that for the UK as a whole.

ukcarper wrote: »

If you take his lower figure and the both earn the same they could be on £14,500 a year each so £29k total, looking at right move prices in Doncaster start really low and thier are new houses fo just over £100k. Sounds affordable to me and with them both in parents house shouldn't take long to save £10k.

http://www.rightmove.co.uk/property-for-sale/property-62607011.html

I don't see why he can't afford this, £29k assumes both earn same chances are they don't.

WengerIn

ukcarper wrote: »

http://www.rightmove.co.uk/property-for-sale/property-62607011.html

I don't see why he can't afford this, £29k assumes both earn same chances are they don't.

Congratulations on your mastery of the Rightmove website.

The problem is that there are hardly any houses for £29k, certainly not enough to resolve the problems with housing in the UK.

ukcarper

WengerIn wrote: »

Congratulations on your mastery of the Rightmove website.

The problem is that there are hardly any houses for £29k, certainly not enough to resolve the problems with housing in the UK.

You obviously didn't read link that house is £110k and a new 3bed affordable on thier minimum pay of £29k. There are over 700 properties below £110k in Doncaster and 63 under £50k.

ukcarper

GreatApe wrote: »

One important factor when looking at this table is that at the end of the mortgage term our buyers are not in the same position. While the London buyer pays more of their income than the North East buyer he ends up with a house worth £400,000 more. So its not just housing they are paying for (the interest element of the mortgage) but also a savings account (the capital repayment part)

I think a better approach is how much they would need to earn to get a 4x earnings mortgage

I've redone figures
NI £19,400
NE £22,400
Wales £25,200
Scotland £25,650
NW £26,250
Y&H £27,300
EM £29,950
WM £32,000
SW £45k
E £53,100
SE £58,500
London £108,500

GreatApe

ukcarper wrote: »

I think a better approach is how much they would need to earn to get a 4x earnings mortgage

Rough figures
£20k NI
£22k NE
£25k Wales
£26k Scotland
£28k NW
£30k Y&H
£32k SW
£45k E
£53k SE
£110k London

Yes and it shows again that 7 regions the median property is affordable for a single median full time wage. The east of England is affordable for a full time + part time wage and the SE is affordable for two full time median wages. Only London is unaffordable for two full time median wages and then that's partly down to very expensive areas pushing the average prices up.

I would not use the median property if looking at FTBs because if FTB were buying the median property then second time buyers would also need to buy the median property and not move up. I would say looking at the 25th Percentile would be a better indicator and that is of course a lower price property than the median often 25% less.

ukcarper

GreatApe wrote: »

Yes and it shows again that 7 regions the median property is affordable for a single median full time wage. The east of England is affordable for a full time + part time wage and the SE is affordable for two full time median wages. Only London is unaffordable for two full time median wages and then that's partly down to very expensive areas pushing the average prices up.

I would not use the median property if looking at FTBs because if FTB were buying the median property then second time buyers would also need to buy the median property and not move up. I would say looking at the 25th Percentile would be a better indicator and that is of course a lower price property than the median often 25% less.

Not sure I agree with 7 regions and you have already use terrace not average property.

GreatApe

A median terrace is probably better than the average property. I think it's a reasonable model to say the bottom 1/3rd are for FTBs the middle 1/3rd for second time buyers and the top 1/3rd for those who have generational Inheritences/gifts or historic housing wealth.