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First-Time Buyers Need To Earn £77,000 A Year To Live In London

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Call for long-term strategy as studies find widening gap between earnings and mortgages, lack of affordable housing and 64% increase in ‘risky’ lending. Across the UK, a first-time buyer needs a minimum income of £41,000, according to the report from KPMG. It also shows that affordable housing has become an issue for all but the above-average earners and those coming into inheritances.

With the election just a few days away, the consultancy is calling for an apolitical long-term housing strategy to tackle the worsening housing crisis.

The research by KPMG comes as analysis pointed to a 64% increase since 2010 in new mortgage lending that would be viewed as risky by the Bank of England. According to the accountancy firm Moore Stephens around 88,817 mortgages were lent at 4.5 times salary or abovelast year. In 2010 the figure was 54,023. http://www.theguardian.com/business/2015/may/04/first-time-buyers-need-to-earn-77000-a-year-to-live-in-london

379f6f99-8159-4a0c-b2b4-aff083a2dc78-620

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Call for long-term strategy as studies find widening gap between earnings and mortgages, lack of affordable housing and 64% increase in ‘risky’ lending. Across the UK, a first-time buyer needs a minimum income of £41,000, according to the report from KPMG. It also shows that affordable housing has become an issue for all but the above-average earners and those coming into inheritances.

With the election just a few days away, the consultancy is calling for an apolitical long-term housing strategy to tackle the worsening housing crisis.

The research by KPMG comes as analysis pointed to a 64% increase since 2010 in new mortgage lending that would be viewed as risky by the Bank of England. According to the accountancy firm Moore Stephens around 88,817 mortgages were lent at 4.5 times salary or abovelast year. In 2010 the figure was 54,023. http://www.theguardian.com/business/2015/may/04/first-time-buyers-need-to-earn-77000-a-year-to-live-in-london

379f6f99-8159-4a0c-b2b4-aff083a2dc78-620

They don't need to earn £77k to live in London IMHO. Here's an alternative and similar to what I've been up to. Rent in a location and of a size that is well below your means while taking the bigger London salary. Make sure it's well insulated. Save the difference then in a few years b*gger off somewhere more pleasant.

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What that table tells us is that there are some seriously rich FTBs in London.

Some of them will be the global super-rich. A relatively small number of £25million houses drags the average up.

Oh, and note the use of "average" vs "median" in different columns. I guess readers aren't supposed to notice the difference.

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They don't need to earn £77k to live in London IMHO. Here's an alternative and similar to what I've been up to. Rent in a location and of a size that is well below your means while taking the bigger London salary. Make sure it's well insulated. Save the difference then in a few years b*gger off somewhere more pleasant.

If you can do that, things have improved a lot since I suffered and fled London.

Make sure you save tax-efficiently. Too many years paying taxes to price yourself out of what you'd like could turn you bitter and cynical.

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...

Make sure you save tax-efficiently. Too many years paying taxes to price yourself out of what you'd like could turn you bitter and cynical.

Minimising investment expenses and taxes are two things I work hard at. I prefer the return in my pocket rather than handing it over for bankers/politicians follies.

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What that table tells us is that there are some seriously rich FTBs in London.

Some of them will be the global super-rich. A relatively small number of £25million houses drags the average up.

Oh, and note the use of "average" vs "median" in different columns. I guess readers aren't supposed to notice the difference.

+1

Sheeple do not know the difference, but also they do not care about it. Just get the mortgage/remortgage and be done with it.

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For a wage of 40k (pre tax?), spending 202k i.e. 5 years pre tax income on a starter home seems a little excessive.

+1. They seem to be quoting 4.5 x salary with a 10% deposit, which is a crazy (and risky) multiple. I would also question the use of median income - if this is a median of all incomes, surely we would expect FTB's to be somewhere at the lower end of the range, which would make these multiples even more ridiculous. How long can it go on? I guess for as long as the govt keeps facilitating sub-prime through HTB and BTL keeps taking up the slack. So maybe a while.

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+1. They seem to be quoting 4.5 x salary with a 10% deposit, which is a crazy (and risky) multiple. I would also question the use of median income - if this is a median of all incomes, surely we would expect FTB's to be somewhere at the lower end of the range, which would make these multiples even more ridiculous.

Are you talking about the FTBs of 20 years ago, or the FTBs of today? Average age of FTB today is very roughly 35 (taking into consideration those who get BOMAD help and those who don't), so hopefully they're considerably further on in their career.

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Are you talking about the FTBs of 20 years ago, or the FTBs of today? Average age of FTB today is very roughly 35 (taking into consideration those who get BOMAD help and those who don't), so hopefully they're considerably further on in their career.

I suppose that is true now, and peak earnings are on average 42 (I think?) so not as much difference as there used to be.. a subtle shifting of the goalposts in some ways, as FTB's used to be mid-late twenties, often a year or two out of university. In fact, expected rapid wage increases after purchase of first home was a very significant supporter of the housing "ladder" and that is now all but gone.

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Minimising investment expenses and taxes are two things I work hard at. I prefer the return in my pocket rather than handing it over for bankers/politicians follies.

Is there an idiots guide to get started doing this? am 36 this week, woo hoo, but concerned that despite significant savings (in my mind) I don't know where to start with getting pensions/tax free savings.

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Are you talking about the FTBs of 20 years ago, or the FTBs of today? Average age of FTB today is very roughly 35 (taking into consideration those who get BOMAD help and those who don't), so hopefully they're considerably further on in their career.

In another twenty years it'll be 55 :lol:

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That table says it all --- AND it's being VERY generous with "average" incomes...... We all know the REALITY is FAR worse than that....

And - WHAT was the ROOT CAUSE of all this????

Answer: PREDATORY LIAR LOANS

Which were DELIBERATELY PLANNED, ORGANISED, ORCHESTRATED AND INSTIGATED BY THE VESTED INTERESTS.

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No longer about earnings all to do about wealth, being in the right place at the right time, family wealth, being born to the right people.......income only pays a small part when it comes to buying a home in many places.......income has to be earned though hard work, wealth is a given. ;)

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Is there an idiots guide to get started doing this? am 36 this week, woo hoo, but concerned that despite significant savings (in my mind) I don't know where to start with getting pensions/tax free savings.

I've plotted my journey warts and all since 2009 on my blog - Retirement Investing Today. From nowhere in 2007 I've now accrued 85% of the wealth I'll need for Early Retirement. I'm on target for that to occur by age 43 and I started only a couple of years earlier than yourself at age 34. The blog is all about Saving Hard and Investing Wisely for Early Retirement. 7 years in the most interesting thing for me on this journey has been that every year bar one the biggest wealth gain came from saving rather than investing. A good book that helped me on the investment front is Tim Hale's : Smarter Investing. Oh and one other thing is that I've achieved it all while a dirty renter with no BTL. Good luck with it.

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