andrewducker (![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png)
andrewducker) wrote2009-01-26 08:15 am
andrewducker) wrote2009-01-26 08:15 am
House Price Poll
From
You'll note that the ratio is still well above the maximums of the bubbles in the 1970s and the 1990s.
[Poll #1337633]
From
You'll note that the ratio is still well above the maximums of the bubbles in the 1970s and the 1990s.
[Poll #1337633]
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For the rest, assume between 30 and 40%. If you have an average income of around £22k, then the "Y" figure is about £14k.
Over "recent" historial times, that approximate percentage has been fairly steady (a few percent either way) so the income to house price multiplier will be pretty much identical, just the entire lne shifted up or down a little, in my estimation anyway.
Of course you could look at the fact that "Median earnings of full-time male employees was £521 per week in April 2008; for women the median was £412."
http://www.statistics.gov.uk/cci/nugget.asp?id=285
and come up with an interesting graph of male & female income over the years vs house prices ... not sure what it would "prove" but it would be interesting!
And of course none of those income graphs show the direct effect of housing ladder uplifts ("I bought at 100k and 3 years later I sold at £180k") ... which pushes house prices up mostly through requiring larger mortgages (or so I'd claim) and thus requiring higher multiples and riskier mortgages, until the whole thing collapses.
When I bought my house eleven years ago, I bought at three times salary. Ten years later it was "worth" 2.5x what I'd paid, but my salary had only risen about 30%, so that I would not have been able to afford my house at FIVE times my increased salary. Even with the recent drops, it's still looking like I should be able to expect a buyer (if there was one) to pay twice what I paid for the house, which is still more than three times my salary (still more than four times my salary in fact!)
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And that's what I'm questioning - whether people really can expect that, or if it's an illusion and we're all going to have to wait for prices to drop significantly.
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And of course if house prices do start to drop down to where my house comes back to three times my current salary, I'll be in about 60k of negative equity (which is *way* more than a year's salary before or after tax!) and a large number of other people will find themselves in a similar state (I'm guessing potentially millions of people, though it might only be tens or hundreds of thousands) thereby exposing banks (and now the British taxpayer) to even more risk.
Sure it makes it easier for people to buy, but it makes it harder on those of us who have already bought. And yes, it's my own fault for getting into debt and spending money I thought I "had", I'll admit that. I'm not asking other people to pay for that (well, if I could I would, but I can't!)
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And of course the "benefit" of a tighter mortgage market at the moment is that it means it's harder to get a mortgage as you need a sizeable deposit, so there are more people needing to rent, so I should be able to find someone to rent my house :-) (fingers crossed!)
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