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Is This Really The Worst Time Ever To Get A Foot On The Property Ladder?

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Hopeful first-time buyers face sky-high house prices, having to save for huge deposits and tough credit checks by banks. But are they any worse off than their parents? Last week, a new report told of the hardship faced by today’s first-time buyers. Just days ago, the National Housing Federation branded our property market ‘totally dysfunctional’. It fears home ownership levels will plummet to the lowest level since the mid-Eighties unless more new buyers can be encouraged into the market.

The average house price in England and Wales is £131,731, according to Land Registry. This increases to £298,729 in London and £139,447 in Scotland, according to Nationwide Building Society;

Despite recent falls, researchers at forecasters Oxford Economics predict prices could rise by 21 per cent in the next five years, pushing more homes out of reach;

The average deposit has almost doubled in four years to £26,346;

Buyers need at least a 20 per cent deposit to get the cheapest interest rates for mortgages;

Saving for a deposit is getting harder. Rents are at a record high and they are expected to increase by 19.8 per cent over the next five years, according to Oxford Economics;

There is a chronic shortage of homes. Last year, only 105,000 were built — the lowest total since the Twenties. Immigration and family breakdowns are expected to create about 232,000 new households every year until 2033.

House prices have risen twice as fast as wages

Yet today’s youngsters can pay an interest rate of as little as 2.99 per cent for their mortgage, if they can raise a hefty deposit, while buyers in the mid-Eighties might have paid an average 13 per cent. The most startling differences are in the size of the deposit today’s buyers need to put down. While the average house price in 1985 was £20,117, double the average household income, today the average is £131,731 — almost four times the average household income.

And while a typical buyer’s salary has tripled in the last 16 years, house prices have grown at more than twice this rate. This means that even those who can save enough for a deposit are often then refused a loan because repayments for the amount of money they need to borrow would be too great for their income.Unsurprisingly, this has led to a 70 per cent fall in the number of first-time buyers — there were more than 278,000 between January and June 1985, and just 84,000 in the first six months of this year. My link

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Wow that's quite a ramp! First, create a preception of scarcity:

There is a chronic shortage of homes. Last year, only 105,000 were built — the lowest total since the Twenties. Immigration and family breakdowns are expected to create about 232,000 new households every year until 2033.

Add in a big dollop of fear:

researchers at forecasters Oxford Economics predict prices could rise by 21 per cent in the next five years, pushing more homes out of reach;
Rents are at a record high and they are expected to increase by 19.8 per cent over the next five years, according to Oxford Economics

Season with greed:

House prices have risen twice as fast as wages

Add a pinch of lies:

average house price in England and Wales is £131,731, according to Land Registry

One freshly baked ramp pie - nom, nom!

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Despite recent falls, researchers at forecasters Oxford Economics predict prices could rise by 21 per cent in the next five years, pushing more homes out of reach;

IIRC Oxford Economics are the clowns who developed a model using demographic factors to explain the boom in house prices up to 2007 (and predict further price rises at a similar rate) but then excluded rents from their model on the grounds that "we can't find any data".

That is possibly the most laughable statement I've ever seen from someone pretending to be a serious economist.

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The most startling differences are in the size of the deposit today’s buyers need to put down. While the average house price in 1985 was £20,117, double the average household income, today the average is £131,731 — almost four times the average household income.

I wish. The average house price in Brighton is £274,734 - whilst the average wage for residents in the city is below the national average.

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Wow that's quite a ramp! First, create a preception of scarcity:

Add in a big dollop of fear:

Season with greed:

Add a pinch of lies:

One freshly baked ramp pie - nom, nom!

Yup, they're at it again, 2011 is the new 2009. See my sig ;).

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Hopeful first-time buyers face sky-high house prices, having to save for huge deposits and tough credit checks by banks. But are they any worse off than their parents? Last week, a new report told of the hardship faced by today's first-time buyers. Just days ago, the National Housing Federation branded our property market 'totally dysfunctional'. It fears home ownership levels will plummet to the lowest level since the mid-Eighties unless more new buyers can be encouraged into the market.

The average house price in England and Wales is £131,731, according to Land Registry. This increases to £298,729 in London and £139,447 in Scotland, according to Nationwide Building Society;

Despite recent falls, researchers at forecasters Oxford Economics predict prices could rise by 21 per cent in the next five years, pushing more homes out of reach;

The average deposit has almost doubled in four years to £26,346;

Buyers need at least a 20 per cent deposit to get the cheapest interest rates for mortgages;

Saving for a deposit is getting harder. Rents are at a record high and they are expected to increase by 19.8 per cent over the next five years, according to Oxford Economics;

There is a chronic shortage of homes. Last year, only 105,000 were built — the lowest total since the Twenties. Immigration and family breakdowns are expected to create about 232,000 new households every year until 2033.

House prices have risen twice as fast as wages

Yet today's youngsters can pay an interest rate of as little as 2.99 per cent for their mortgage, if they can raise a hefty deposit, while buyers in the mid-Eighties might have paid an average 13 per cent. The most startling differences are in the size of the deposit today's buyers need to put down. While the average house price in 1985 was £20,117, double the average household income, today the average is £131,731 — almost four times the average household income.

And while a typical buyer's salary has tripled in the last 16 years, house prices have grown at more than twice this rate. This means that even those who can save enough for a deposit are often then refused a loan because repayments for the amount of money they need to borrow would be too great for their income.Unsurprisingly, this has led to a 70 per cent fall in the number of first-time buyers — there were more than 278,000 between January and June 1985, and just 84,000 in the first six months of this year. My link

What they meant to say was "banks fear that people paying loans back to banks, or taking out new loans from banks will plummet to the lowest level since banks began" :lol::lol::lol:

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Hopeful first-time buyers face sky-high house prices

The median salary in the UK has risen by only 6.5K from 1996 to 2006 as house prices trebled.

**************************************************************************************************************

In 1997, according to the Office of National Statistics, the national average wage was £16,666.

According to the Nationwide Building Society the Average House price in 1997 was £55k.

£16,666/£55,000 = 3.3x salary [mortgage]

********************************

The Average First Timer Buyer mortgage in 1997 was just £41.5k [Council Mortgage Lenders]

And the Average FTB mortgage multiple in 1997 was in a range of 2.3x - 2.5x salary. [Firstrung]

************************************************

By 2007, at the peak of the boom [according to the Office of National Statistics] the national average wage had risen to £23.5k

The Average House Price in 2007 was £185k. [Nationwide Figures. Halifax had estimated AHP higher than £185k]

£185,000/£23.5k = 7.8x salary [mortgage]

************************************************

2011 Average House Price £166,764 [Nationwide]

2011 Average Wage £25k

£166,764/£25k = £6.6x salary [mortgage]

*******************************************

[There have been countless examples of 300% increases from 1997-2007 in my area. And Many are still priced at that]

What about the sharp increase in Utilities, and Household Bills we have seen during the last 12 years?

The average household bill is now higher than the average salary

**[According to the ONS, over two thirds of taxpayers in the UK earn LESS than average wage]

ONE WAY OF LOOKING AT IT, WOULD BE IF THE BANK BAILOUTS HAD NOT OCCURED, THE AVERAGE HOUSE PRICE WOULD HAVE MERELY FALLEN BACK IN LINE WITH THE LONG TERM HISTORIC AVERAGE RATIO OF AFFORDABILITY, WHICH WOULD MEAN OVER 50% FALLS FROM PEAK.

House prices are utterly unsustainable. and there are MANY vested interests attempting to sucker ftb's into a lifetime of debt, which is not theirs. In effect the banks and Shapps, are doing everything possible to keep the bubble inflated, and transfer banks toxic mortgage debt onto FTB'ers......

Edited by Milton

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Milton, who are you arguing with?

Mmmm, good question.

Duly edited........

Edited by Milton

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Is this the worst time ever?

Obviously not, since prices and long-term mortgage rates are considerably lower than in 2007/8.

Is it a good time?

For most people no, although if you want a family home and have a stable job and a good deposit their are options to fix low for a long time.

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If you were a bank, would you:

1. Be concerned about the fall in the number of mortgages in the short term, since it means less business, or

2. Look to the longer term, because the way things are shaping up, interest only mortgages will be the only way for new buyers to enter the market in addition to a growing number of people switching to IO mortgages from repayment. So you get a cash stream for 25 years and on top of that, you get to keep the asset at the end as well - cheap leveraged money gets you in the position of being both (in effect) the homeowner and the landlord at the same time.

Which one pays more? (Rhetorical question, I don't know the answer)

In direct answer to the thread title, I suspect that the one factor which would sway it hugely is a debt jubilee of the type being mooted in both the US and Ireland whereby the debtor gets to escape a portion of the debt. And I suspect that won't be being granted to the people who bought prudently who can repay. It will be granted to those who bought imprudently who have struggled to pay.

If that happened (which would basically mean the taxpayer subsidising the banks again by paying off a percentage of the struggling debtors' morgtages thus socialising the bank's loss and helping them with point 1 above) then the dynamics of the question, which imply common sense may prevail, are rather changed.

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Is This Really The Worst Time Ever To Get A Foot On The Property Ladder?

It depends what is about to happen.

1930s - interest rates at record lows for 5 years

1970s - interest rates double figures, house prices skyrocket

1990s Japan - house prices have nominal falls for 16 years

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  • 336 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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