House prices peaked 2Q07 and bottomed 3Q12 and a currently 4.7x average earnings versus average since 80s of 4x.
But versus cost of mortgages, affordability remains well below the average. It's the cost of borrowing that is the issue. It's too low as we have to bail out the over-indebted.
Demand > Supply and IR held artificially below the natural rate => rise in house prices. Which bit is the shock?
Its not rocket science, is it? The banks are chucking silly money about again, as if the last 5 years never happened,*on the back of Gideons absolutely moronic Help to Buy scheme
I predict that whoever wins it, the Bank of England willwait until approximately 10 minutes after the next election, before raising interest rates. At which point its all going to go spectacularly tits up for those presently mortgaging themselves to the hilt to buy insanely-priced property
* Thinking about it … from their point of view, I don't suppose it actually has happened really. Theres been no consequences for them at all.
Less than 15% of the UK population is foreign born, so while immigration is indeed a factor in population growth it is only one factor. People living longer has far more to do with it.
But even that misses the point; government policy of right to buy while at the same time not pushing hard enough on private companies or allowing housing authorities to build more houses is the key problem. It's not really a shortage of space overall that's the problem, its policy.
appeal to greed and selfishness
I thought it was to buy an election....
http://en.wikipedia.org/wiki/Homes_for_votes_scandal
Any figures to show how much is spent on fares/tax portion for transport from local taxes and income tax in those regions? The real figure to look at is the percentage over or under once the costs/profits/tax paid are taken into account.
I wonder if the areas with low population densities and low salaries(income tax) get a higher transport subsidy that those more densely populated with higher income?
Interestingly I just had a mortgage call as I'm hoping to move house. They were offering me twice as much money as I'd be comfortable paying. That would be well over 50% of our total take home pay. I thought that they were being sensible now
Do you mean they were offering 2X your take-home as a mortgage?
If that is the case, it sounds low to me if anything - otherwise a couple with one average and one less (say 35k total after tax) could only get a 70k mortgage, that wont even get a house in the crap hole around here!
Quick online mortgage calculator states a 40k (gross) couple could loan 155k with 450pm other outgoings...
The banks are not chucking silly money about yet.
But you are correct that there is a large segment if the population that is very vulnerable to a rise in interest rates.
A swath of low- to middle-income households are exposed. Nearly a third of mortgage debt is held by households that have borrowed more than four times their income; and a sixth of it is held by those who have less than £200 a month left after spending on essentials.
Not pretty when rates rise.
To what extent is buy-to-let an issue? I mean, clearly it takes housing out of the buy-to-live market, and the entire concept is based on renting out for more than the cost of the mortgage so that also pushes up the rental costs... Apparently fully 13% of new mortgages are for buy-to-let, obviously it makes good financial sense for the banks and the letter but it seems like bad news for everyone else... Just not sure to what extent.
Makes me wonder, why are we penalising people who have 1 more bedroom than they need, but not people who own several more houses than they need...
I was in that there London at the weekend, was chatting with my friends about housing there. Its completely mad, both of them have good jobs so have managed to scrape onto the property ladder but the money they have paid for a small two bedroom house would get me a 4/5 bedroom detached house in Glasgow.
The thing is basic supply and demand means that prices in the SE are only going to go in one direction. Housing is a limited resource and its not being increased rapidly enough to take into account rising populations. So upward pressure on prices isn't going to go away
Makes me wonder, why are we penalising people who have 1 more bedroom than they need, but not people who own several more houses than they need...
I think you'll find it's about making the poor suffer, for the sin of being poor, rather than actually serving any purpose...
[b]ti_pin_man - Member [/b]
home ownership is a modern invention, as a nation we've taken a step back to a time when home ownership was a luxury. simples. now we all moan cos we expect it, it wasnt this way until recent times. get a grip.
Yes let's go back to feudalism and people not having any land to live on and renting from the [u]man[/u]. Yeah that was really great.
Do you mean they were offering 2X your take-home as a mortgage?
No 🙂
They were offering me a mortgage that would have cost me more than 50% of combined income per month of me plus Mrs Clubber which is considerably more than I would consider sensible. By my quick maths thats over 4x combined salary borrowing.
"Do you mean they were offering 2X your take-home as a mortgage?"
no
he means what he wrote
he means the banks are offering him twice what he would be happy borrowing - which would mean that 50% of his total monthly intake would be going on a mortgage.
2grand a month is nearly a 400k mortgage with 5%down ..... and the banks are lending that......
dont know about you but right now - i could service that debt . on twin incomes. if we had a kid and went to single income or twin income+childcare - we couldnt even come close to servicing that.
Paying 50% of income on mortgage repayments is normally in the "perilous" zone. Recommendations to do so, should be ignored IMO.
% of income on monthly repayments is a bit of a useless figure unless we know the income involved.
Someone earning £150k net will still be comfortable spending 50% of income on their mortgage, however the same can't be said for someone on £15k net.
Unless you're simply talking from a rate hike perspective?
£350,000 to £400,000 buys you a detached farm house with 4/5 beds in Calderdale and the mountain biking here is great.
Think I know where I'll be staying.
peter - the key for me is . 50% of one income when there are 2 incomes - no issue ....
50% of combined/single income - dodgy ground.
Aye, I agree with that TR.
All of our bills are based on a comfortable level against my income alone. Not only does it add some protection, but it ensures a bit of perspective too!
peterfile - Member
% of income on monthly repayments is a bit of a useless figure unless we know the income involved.Someone earning £150k net will still be comfortable spending 50% of income on their mortgage, however the same can't be said for someone on £15k net.
Unless you're simply talking from a rate hike perspective?
Valid point but I'm not earning £150k and neither are most people. It's a very large percentage and much more than I think sensible or prudent, especially when you consider that's on a fixed for 2,3 or 5 years, which are likely to end with rates being considerably higher than at the moment while salaries are unlikely to rise to match.
If you're not paying silly money to the banks for your mortgage, you're paying silly money to your landlord for your rent.
Property inflation effects everyone, not just those who can "afford" to buy a home.
The "help to buy" scheme may well be helping some people buy half a million pound houses, but it will also be pushing up the rent of others who can only dream of such things.
To what extent is buy-to-let an issue?
Buy to let versus bedroom tax is an interesting discussion.
Private rents are pushed up by the availability of housing benefits and soft touch regulation of the rental market combined with the increasing cost of homes meaning traditional first time buyers are forced to rent for longer.
Housing benefit essentially becomes a subsidy for private landlords, in some areas there is even evidence that housing benefit tenants are charged more than tenants that cover their own costs. But rather than look at this through rent control or taxation on second homes the government goes after council tenants in houses which are "too big" despite having no alternative accommodation available.
Meanwhile people already on the property ladder can use the equity they have built up to buy a second property and rent it out to the council tenants who having been forced to move out of the 3 bed council house they have lived in for 20 years and are now looking for a 1 bed flat.
This costs more to rent than the 3 bed council house but is covered by housing benefit anyway and not subject to the "bedroom tax"
Meanwhile a young couple looking to buy their first home are priced out of the market by the spike in demand from buy-to-let purchasers who know that a guaranteed rental market exists for 1 and 2 bedroom houses. The young couple rents instead and watches as house prices continue to rise well above earnings
And just when you thought housing policy couldn't possibly be [url= http://www.theguardian.com/society/2013/nov/10/bedrooom-tax-affordable-homes-face-demolition ]more bonkers![/url]
Makes me wonder, why are we penalising people who have 1 more bedroom than they need, but not people who own several more houses than they need...
Well we're only penalising people in council houses - given the lack of smaller places for them to move into this seems a terrible thing. We should encourage private owners to sell large houses when older and not needing the space, perhaps reducing stamp duty here would help? Actually stamp duty causes all sorts of problems, messes up the market.
As for owners of 2nd homes, well full council tax for them would be a good thing - not sure if it is now as it wasn't the case. Not sure how much impact foreign owners investing here has but if we responded to all these little issues the result could be significant.
I remember looking at houses in 2000, when we bought our first home, and thinking it was madness that the 3-bed new builds were £90k 🙂
I am very glad that we bought then. Though, with hindsight, we should have bought two houses and then sold one of them after 5 years or so. Instead, we were sensible and bought based on just one of us working, which gave me the flexibility to go back to uni for a year and for my wife to take time off when the kids were smaller.
I have a colleague who wanted a bigger house, but their previous home was in negative equity so they switched it to buy-to-let mortgage and bought a new house. Given how the market locally has changed, I suspect that they're now in negative equity on two houses.
Cambridge is a special case, anyone with property in the area is doing well on it these days. Personally went for a village about 6 miles out, connected by the guided busway. House was not above national averages for a 2 bed semi, was ex MOD so once inside you actually have space to move, have a garage, off road parking and lovely neighbours. Admit I can't walk to a pub in the city from my front door - but I can live with that.
We were also offered far more than I'd have been happy borrowing (£100k more) with the sage words from the lender to my wife: "It's alright love you can talk him up when you get home ..." Lucky, she's far from stupid and we can comfortably afford our re-payments.
I've lived in Ely for a year and I can't believe how much prices have gone up in that time. Mainly because people can no longer afford Cambridge.
It's an extra 15 minutes on the train to London which isn't bad but getting anywhere further afield to the South or West is tortuous due to the poor road network.
It takes my wife 60-90 minutes to commute the 15 miles by car into Cambridge. She's a social worker so must use her car.
The house price thing is such a big issue in this country and I can't see how it can be sorted easily. I have little sympathy for the buy to let landlords but then again many have only done so due to not trusting pensions.
its not bad for everyone though
http://www.mirror.co.uk/news/uk-news/george-osborne-rbc-mortgage-chancellor-3062406#.UuZ6WxDFKUl
Millionaire in 'doing better than the rest of us' shocker......
GO isn't exactly getting a "deal for the super rich" on his interest rate - at 2% he's paying twice as much as we're paying on our Santander mortgage.
Well you wouldn't get that if looking now - wonder what he was getting before though. Doubt I'll touch my base rate + 0.49% offset tracker for a while.
Osborne's most welcome to take advantage of the opportunities available to the rich- he's not abusing his position after all. It's only really relevant because it proves once again what a total **** he was for saying "we're all in this together"
