For those who think we had it easy...

hgllgh

The most significant measure of affordability is the price to earnings ratio which is over 6 times average salary for the UK as a whole and up to 12,13 and beyond in certain parts of London .... in other words it has never been more difficult to buy a property. There has never been a worse time in British history to buy a property..... If there is then please enlighten us
( and please no quotes about IR going to 15% for one day. The average IR over that period was around 12% and it wasn't that high for that long )

Running_Horse

hgllgh wrote: »

The most significant measure of affordability is the price to earnings ratio which is over 6 times average salary for the UK as a whole and up to 12,13 and beyond in certain parts of London .... in other words it has never been more difficult to buy a property. There has never been a worse time in British history to buy a property..... If there is then please enlighten us
( and please no quotes about IR going to 15% for one day. The average IR over that period was around 12% and it wasn't that high for that long )

Worse time? How about 1991 just before the crash? I know people who lost literally everything. Or 1900 to 1950 s when the overwhelming majority would never even have been able to consider property ownership. The expectation for most people to be able to buy is a quite recent thing.

And if now really is the worst time in history to buy, then don't buy. Save your deposit and prepare to go in for the kill in a couple of years. Of course, if prices don't drop...

To a certain extent the multiplier is out of date. Borrowers are more likely to look at your overall credit worthiness, and disposable income. So with no debts and credit cards cleared every month, I was offered well over 5 times my income, but chose not to borrow that much.

carolt

Running_Horse wrote: »

Worse time? How about 1991 just before the crash? I know people who lost literally everything. Or 1900 to 1950 s when the overwhelming majority would never even have been able to consider property ownership. The expectation for most people to be able to buy is a quite recent thing.

And if now really is the worst time in history to buy, then don't buy. Save your deposit and prepare to go in for the kill in a couple of years. Of course, if prices don't drop...

To a certain extent the multiplier is out of date. Borrowers are more likely to look at your overall credit worthiness, and disposable income. So with no debts and credit cards cleared every month, I was offered well over 5 times my income, but chose not to borrow that much.

Again I think you make the argument against buying now, at the peak, very strongly.

The references to far earlier periods are not totally accurate however - my parents bought their first place (a 3 bed semi in a nice area) in the 1950's on one small multiple of one manual worker's wage - not difficult at all. Equivalent house price today - about 500K. Drawing historical parallels like that also brings to mind the reason why so many of the posters on here are so agitated and desperate to buy - in earlier times, tenants had good legal protection and people could expect to live in one rented property all their lives (and I'm not talking about council property here). My parents, for example, both lived in the same rented homes for 20 years+ before they bought, and could have gone on living there indefinitely. Rents were fixed by law and with security of tenure, there was no need to buy. At some point in the 80's I think(?) that was removed - all today's young people want is a secure roof over their head - and that I think, should be a right in a civilised society (unlike the right to own, which I'd agree is not a right as such, though an advantage that ordinary people did have until recently).

Re the reference to mortgages based on income multipliers being out of date, I think the credit crunch is likely, for better or worse, to see a return to this, as lenders take fright. If prices start to fall, expect to see the amounts lent fall sharply as lenders cover their backsides..... It's already happening with new-build flats, where lenders now require deposits of 25% as a result of falls/predicted falls in the sector.

To go back to the first point, yes I absolutely agree that buying just before a crash is VERY PAINFUL INDEED and you do indeed stand to lose 'literally everything'.

Think on it.

hgllgh

Running_Horse wrote: »

Worse time? How about 1991 just before the crash? I know people who lost literally everything. Or 1900 to 1950 s when the overwhelming majority would never even have been able to consider property ownership. The expectation for most people to be able to buy is a quite recent thing.

And if now really is the worst time in history to buy, then don't buy. Save your deposit and prepare to go in for the kill in a couple of years. Of course, if prices don't drop...

To a certain extent the multiplier is out of date. Borrowers are more likely to look at your overall credit worthiness, and disposable income. So with no debts and credit cards cleared every month, I was offered well over 5 times my income, but chose not to borrow that much.

But even before the last crash the HP/earnings was 5 ... the current boom has dwarfed that one .... we all know the graphic ... hpc.co.uk, so how much more damaging could this one be?

HP/earnings has been going since houses were sold. Regardless of credit worthiness and changing lending practices (ahem) it is THE de facto measure of property valuation. The problem is that retail banks have increased their share of the mortgage market using your belief that the HP/earnings is out of date leading to the whole mess we seeing now in the UK and US. But, they are the banks that are now exposed. HSBC could be the next norther Rock and even Barclays after that.

undercoat11

TTMCMschine wrote: »

Firstly, 15% on a house price of £60K was better than 5% on a house priced at £200K today.

Yes, but I only earned £5000 (give or take the odd hundred) then - the same job now earns around £35,000 - 7 times more. Is 200,000 7 times more than 60,000?

I don't think so.

If you go back to the early 60s, my parents bought their house for only £2,500 on the wage of just one person. This was a large 5 bedroomed detached house with stabling - wowser - they were only about 28 at the time. Incredible when I think about it now, but people weren't into house buying in the same way that they are today - my parents house was described as a millstone by their parents!

However, I don't blame them for the fact that I wasn't able to buy a house of the same type at age 28. It wasn't their fault - that is just silly. All this blaming "baby boomers" annoys me - these people are your parents and they are probably as worried about young people's housing costs/debts as you are.

sm9ai

The trouble with argueing about rates is...

If rates hit 15% or similar then they are more likely to go down.

If rates are at their current levels they are more likely to go up at some point.

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Personally I don't think anyones really had it easy. But some people have had it a lot harder than others. I would say the current generation of say those in their 20's have had it easier than those aged 40's+. But those aged 30's had it a lot easier than those in their 20's.

However for those in the 20's the future looks bleaker than ever and things will probably get progressively worse for them unless some drastic changes happen.

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And on a final point - don't any dare bring a bloody ipod into the equation. A £150 ipod has not, does not and never will prevent anyone buying a house. That is the worst arguement ever created!

carolt

The average job in 1980, I happen to know, paid £5000. The average salary in 2007 is, I believe, in the £25000 mark (precise figures welcome). Whatever job you do/did has obviously fared well relative to average salaries!

You didn't need 60K to buy the average house in 1980 - earlier in this thread another poster described how she bought her place in the mid-1980's at 19Kish, I think. My brother bought his first house, in the mid-80's for 45K - equivalent cost today about 350K. And in 1980 it would have been cheaper still. Someone has posted a helpful inflation adjusted graph above which proves how much cheaper it was to buy at all points in the past bar immediately before the last crash - please see (if you can find it...).

I don't think the issue is about blame - people have a right to be upset that they don't have a secure roof over their heads, though that doesn't mean a whole generation (the baby boomers) is complicit in this any more than it means that a whole generation (the young) are lazy, whining !!!!!!!s either. On the contrary, as this thread has shown, there are plenty of people like Pobby who appreciate how hard it is for the current generation of would-be FTB'S. Unfortunately, there are a minority of baby boomers, or younger, who seem to imagine that they are somehow uniquely hard-working (or financially savvy) compared to today's would be FTB'S.

Not surprisingly, given that they are already enjoying the security of large sums of equity in their prices earned largely by rising prices, at the same time as their identical younger counterparts are priced out of the market, it does seem a bit like rubbing salt into the wound.....

Pobby

Carolt, I feel no way complicit in all of this,It`s just what has happened and I think you understand that I cannot believe the madness of it all.As it happens I downsized in the late 90s going from a 4 bedroom to a 2/3 bedroom house getting rid of a mortgage and responding to the fact that now there are only 2 of us living there.Ok,it happens to be in an area that was always very cheap yet quite desirable as it is a major city my the sea that has had loads of inward investment and provides a lot of jobs.

So, our property has increased by 300%% in less than 10 years.Big deal.The price has risen but not the value apart from different improvements that we have made.I prefer to look at any increase in the values of our pension funds,savings and investments as they can``buy`` things we may require,that is the real money as far as I am concerned.It`s that liquidity that i monitor on a regular basis not how much I might get if I sold my home.

Once again i feel sorry that we in this day and age have thrown so many back into the hands of private landlords.I am sure old Thatch did think that getting rid of social housing was a good idea,well clearly not.Seems to me that for many youngsters things look bleak.

Well for my money,I am not sure how it will go,I already know of some that cannot afford the mortgage they are saddled with.Sure is going to be far more difficult to obtain a mortgage as the dumb !!! bankers now realise they have bought into ``sub prime`` deals.Lending will get tighter,I have no idea who will buy the 1 bedroom new builds at 164k where I live.

Got to be honest here,something big is going to change,can`t say when, but to buy now

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no way.

Running_Horse

Forget all the arguments about who had it worse, it doesn't matter. Want to know the future? She was on Homes Under The Hammer this morning. Russian woman bought a dump in London and renovated it for £70,000 profit. While we argue over 3, 4, or 5 times income, and are prices going to rise or fall, she is smiling and saying this country is a great opportunity. And you know what? She has the guts to go for it, and is welcome to the future. Good luck to her.

Turnbull2000

Running_Horse wrote: »

Forget all the arguments about who had it worse, it doesn't matter. Want to know the future? She was on Homes Under The Hammer this morning. Russian woman bought a dump in London and renovated it for £70,000 profit. While we argue over 3, 4, or 5 times income, and are prices going to rise or fall, she is smiling and saying this country is a great opportunity. And you know what? She has the guts to go for it, and is welcome to the future. Good luck to her.

Of course it bloody matters, that's what this entire thread is about. JC

If foreign investors speculating and self-perpetuating a rising market using sizeable capital and income, with no true commitment to the stability and prosperity of this country is your favoured market, then so be it. At least you've shown your true colours.

And if this is a sly dig at FTBs because a foreign speculator "has the guts", well, you've truly embarrassed yourself..