Why are house prices still so high?

Zero_Sum

I wonder if GreatApe is one of these millenials with unrealistic expectations on inheritance referred to in this report, going by his posts on this thread?

https://www.bbc.co.uk/news/business-48213333

MaryM1950

i do not believe that most people in this country are earning £27k a year...my granddaughters are earning around £17k and £20k a year...one is renting and one has a mortgage...but that was an inherited house so we sold it to her for cheap...i think that people need help getting the deposit together...rather than paying the mortgage !! my friend was telling me that her daughter was paying £600 a month rent which is more than a mortgage around here !! i think the government should help people get their deposit together... new build houses are being sold at much more than they're worth !!

Malthusian

MaryM1950 wrote: »

i do not believe that most people in this country are earning £27k a year...

That's the median income so you would be right - half the people in this country do, so just short of most.

my granddaughters are earning around £17k and £20k a year

In a predominantly knowledge based economy, earning potential is correlated with age. If your username indicates your date of birth it sounds likely they are millennials or younger. Without knowing what they do and where, there is no particular reason to think they should be in the top 50% already.

...one is renting and one has a mortgage...but that was an inherited house so we sold it to her for cheap...i think that people need help getting the deposit together...rather than paying the mortgage !!

True. But why should those who are not well off enough to ever buy a house subsidise the eventual inheritances of people like your granddaughters?

my friend was telling me that her daughter was paying £600 a month rent which is more than a mortgage around here !!

With low interest rates it would be a surprise if the opposite was true, assuming they are not living in a ghost town with almost no rental demand. Rents won't double if interest rates go up dramatically as they have done in the past.

MaryM1950

Malthusian wrote: »

That's the median income so you would be right - half the people in this country do, so just short of most.

In a predominantly knowledge based economy, earning potential is correlated with age. If your username indicates your date of birth it sounds likely they are millennials or younger. Without knowing what they do and where, there is no particular reason to think they should be in the top 50% already.



True. But why should those who are not well off enough to ever buy a house subsidise the eventual inheritances of people like your granddaughters?

With low interest rates it would be a surprise if the opposite was true, assuming they are not living in a ghost town with almost no rental demand. Rents won't double if interest rates go up dramatically as they have done in the past.

sadly it is true...never said it was double but you can rent a 1 bed around here for less than £400 !! the average mortgage is less than that... i have seen mortgages for £380 a month with a £10k desposit...it is just greedy landlords knowing that people will struggle to get a depsoit together so they have no choice but to rent... my granddaughter pays £400 a month for her 1 bed rented house...she is lucky

westernpromise

MaryM1950 wrote: »

it is just greedy landlords knowing that people will struggle to get a depsoit together so they have no choice but to rent...

Lucky there are places to rent, then.

Zero_Sum

MaryM1950 wrote: »

i do not believe that most people in this country are earning £27k a year...my granddaughters are earning around £17k and £20k a year...one is renting and one has a mortgage...but that was an inherited house so we sold it to her for cheap...i think that people need help getting the deposit together...rather than paying the mortgage !! my friend was telling me that her daughter was paying £600 a month rent which is more than a mortgage around here !! i think the government should help people get their deposit together... new build houses are being sold at much more than they're worth !!

I was told on here that the average was £40k (which was clearly nonsense, might be average in inner London)

westernpromise

The median wage of all earners has historically not been the median wage of housebuyers. At most, the top 70% of earners bought so the correct typical wage is the median (or mean, whatever) of that.

phillw

MaryM1950 wrote: »

i do not believe that most people in this country are earning £27k a year...

No, most people aren't earning £27k. All the people earning less than £27k are balanced by all the people earning more than £27k.

There are a lot of people earning more than £27k, so there will be a lot of people earning less.

GreatApe

westernpromise wrote: »

The median wage of all earners has historically not been the median wage of housebuyers. At most, the top 70% of earners bought so the correct typical wage is the median (or mean, whatever) of that.

It is even more complicated (or rather simple) than that.

Not only should you, roughly speaking, ignore the bottom 20% of earners as they are put into social housing. But you should also split the housing market into at least 3 distinct segments

You have the FTBs who typically buy the bottom 1/3rd of housing.

You have the second time buyers who typically buy the mid 1/3rd of housing (with previous equity + income)

And you have 'the rich' who buy the top 1/3rd of housing mostly with equity or non job income wealth (eg business sales, stock market, inheritances, etc)

If you do this, you find that housing is affordable at each segment for the relevant people.



The couple on min wage can and do buy the bottom 1/3rd of housing in say the midlands for £100k

The couple in the SE who bought 25 years ago and are looking to trade up, they have 1 house worth of equity plus a mortgage to bid with so maybe £300k equity + another £200k mortgages gives them £500k to play with

And the couple in London who bought 20 years ago are are looking to trade up having just sold a business or inherited £1m might have £2m to play with

Each segment is affordable to the buyers for that segment



But of course the crash cheerleaders stick to their wrong formula of average house in all areas should be affordable to the average man on kids wages because if it isnt that clearly is a bubble about to pop in the next few months!!1!!

GreatApe

phillw wrote: »

No, most people aren't earning £27k. All the people earning less than £27k are balanced by all the people earning more than £27k.

There are a lot of people earning more than £27k, so there will be a lot of people earning less.

UK 'income' is much much higher than most people imagine

Most uk born brits with uk born parents and a uk born partner will inherit the capital equivalent to about 2 houses

There is also about £600 billion annually received in non salary income. These are dividends, rents from BTLs, rents from land, rents from shops and offices, patent payments, and a lot more