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Ash4781

Uk Housing Still Unaffordable Despite Falls

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http://www.ft.com/cms/s/0/2d6cc8be-6b4d-11...144feabdc0.html

Housing remains unaffordable for too many buyers, particularly those seeking to buy for the first time, despite the sharp fall in UK house prices, according to an influential government advisory group.

The National Housing and Planning Advice Unit, in a report to be issued on Wednesday, concludes that Britain’s housing shortage is actually becoming more acute, despite falling prices that imply falling demand.

“The recession has not solved the problem of housing becoming increasingly unaffordable,†the report says. “Recessions do not have a big impact on the number of households wanting homes but they do lead to a sharp drop in the number of homes being built.

“The net result is that the mismatch between supply and demand is getting worse.â€

Moreover, first-time buyers have not benefited from the fall in house prices because tighter mortgage lending criteria have made it harder for them to scrape together the substantial downpayment required.

Pre-recession, a couple earning £30,000 ($48,000) who obtained a 95 per cent mortgage for a £100,000 property typically needed a downpayment of £5,000, equal to two months’ gross income. By this year, the value of the same property might have fallen 20 per cent to £80,000, but if the only mortgage available was for 75 per cent of the price, the couple would need a deposit of £20,000 – equal to eight months’ gross income.

House price appreciation was particularly acute in the UK, rising on average 2.7 per cent more than inflation every year between 1957 and 2007.

The lack of new housing contributed to the sharp rise in prices, the NHAPU said. As a result, homes were now more likely to be “overcrowdedâ€, defined by the number of bedrooms available per housing unit. In London more than one in five children live in overcrowded conditions.

In addition, one in 16 residences now includes extra families or individuals, and about 1.3m people over the age of 25 were living with their parents in 2007-08.

In 2008, nearly a third of men and a fifth of women aged 20 to 24 lived with their parents, although a desire to continue education as well as rising youth unemployment may also be factors.

Oh dear fewer sellers, and few buyers so effectively transactions have stabilised at record lows. FTB's no better off Oh this QE programme is working really well ;)

Edited by Ash4781

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http://www.ft.com/cms/s/0/2d6cc8be-6b4d-11...144feabdc0.html

Oh dear fewer sellers, and few buyers so effectively transactions have stabilised at record lows. FTB's no better off Oh this QE programme is working really well ;)

I wish I could take reports like this to Downing Street and shove them down that fat fook's throat. I hate Labour, particularly Gordon Brown, and the waste time of the last ten years so much it hurts. The anger swells up inside and then I feel like crying.

If I hear one more person speak of the housing market "returning to normal" I swear I will explode.

Apologies for my outburst. I feel better now.

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I wish I could take reports like this to Downing Street and shove them down that fat fook's throat. I hate Labour, particularly Gordon Brown, and the waste time of the last ten years so much it hurts. The anger swells up inside and then I feel like crying.

If I hear one more person speak of the housing market "returning to normal" I swear I will explode.

Apologies for my outburst. I feel better now.

Vive la revolution - I'm with you!

though not quite so sure I need to pin it on just Gordon brown. Any half wit that things "housing is returning to normal, " at anything but 50% off peak deserves the same treatment. It's only normal as defined by the last decade as opposed to the entire rest of history.

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The National Housing and Planning Advice Unit, in a report to be issued on Wednesday, concludes that Britain’s housing shortage is actually becoming more acute, despite falling prices that imply falling demand.

Ah, yes, the original "National Institute for Pressing The Equals Button A Lot".

Complete twats the lot of 'em.

House price appreciation was particularly acute in the UK, rising on average 2.7 per cent more than inflation every year between 1957 and 2007.

Lies, damn lies, and statistics. End the same at 2007 and compare to wage inflation then see what it comes out at...

In addition, one in 16 residences now includes extra families or individuals, and about 1.3m people over the age of 25 were living with their parents in 2007-08.

1 in 16? That's nothing. If you take out those caring for parents, the unemployed, those in need of parental care, and those who're living with parents because they actually want to, it would no doubt look even less.

In 2008, nearly a third of men and a fifth of women aged 20 to 24 lived with their parents, although a desire to continue education as well as rising youth unemployment may also be factors.

You've got to love this. It even admits to the primary reasons.

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....

If I hear one more person speak of the housing market "returning to normal" I swear I will explode.

....

The housing market is returning to normal.

Normal is 3.5 times income and dull, dull, dull MEW free purchasing of somewhere to live.

As to Gordon, he's just a scapegoat. Stop crediting him with the power or planning to have been anything to do with it. The finance industry made this crisis, them and greedy people that specuated and lost on housing, just like all the wanabees on here that are annoyed they didn't make a packet last time and want it to happen again so they can.

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Intersting CML release today essentially saying the only way FTBs can buy is with parents help. Not sure what happens to the parents' pension though.

I did the maths yesterday and as a FTB I would need 40-50K deposit to get a mortgage on a 2 bed flat. The supply issue (lack of forced sellers) means there's little to choose from. No supply, and no demand what a mess the market is in!

And they aren't planning to expand QE beyond the original remit.

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The housing market is returning to normal.

Normal is 3.5 times income

That depends.

For most of the 19th century "normal" was about 1.2x income in rural areas and 1.5x income in cities. But even that didn't allow owner occupancy to get above 11%.

Or looked at from the perspective of continental Europe today, and they'd say there was nothing "normal" about our current 70% owner occupancy rates. 55-60% would be "normal" to them, in other words not much more than half of the population would be living in their own homes.

This is the level of owner occupancy we'll probably drift back to, which in turn calls into the question the validity of the "average income to average house price" ratio, for the simple reason that the average wage earner would no longer be aspiring to buy the average house. At more "normal" levels of owner occupancy the average house is only available for purchase by someone on an above average income.

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