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Bruce Banner

What is an affordable home?

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Serious question.

Every time I turn on the news someone is on about affordable homes, but what exactly is the difference between an "affordable home" and an ordinary home at a sensible price?

It strikes me that it's a con to keep the price of existing homes up by offering a similar alternative at a discount, anything to keep the bubble from bursting.

Is it more than just giving builders a subsidy from the public purse and telling them to pass most of it on?

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Logically I would have thought purchasable by the average salary in that area.

but apparently it means that someone in the world can buy it preferably with a hulking great mortgage.

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Average house should be 2x the average joint income wage of a couple.

Below Average house should be 2x the below average joint income wage of a couple.

Aboce Average house should be 2x the aboce average joint income wage of a couple.

Simple.

The unregulated banks could enforce this tomorrow.

But they wont.

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Logically, for me, it's 3x salary. IIRC with developers it's 20% off the going rate of an equivalent new house on the development.

Edit: the 20% figure is one I've read in the local Cambridge press a number of times whenever a new development mentions it'll provide "affordable" homes as part of the development.

Edited by Bug16

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I'll tell it to you in this way so you understand.

See.... If the normal price of a Twix is £1,000,000 then a twix offered at £900,000 is affordable......now you geddit?

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1 hour ago, sPinwheel said:

Round my ways it's shared ownership homes.

Yup thats pretty much it ....total cost is 400k but we will let you buy a 125k share so that's affordable ....

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'Affordable' would be no more than £150,000, in my opinion.

And £150,000 should be enough to buy a 2 bedroom house in a decent area.

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I would say according to the Metro and Evening Standard property sections is a 1 bed flat at £450k in a dodgy area of London using Help to Buy.  Perfectly affordable at 10 x my wages.

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13 minutes ago, Errol said:

'Affordable' would be no more than £150,000, in my opinion.

And £150,000 should be enough to buy a 2 bedroom house in a decent area.

I'd halve that number and add a bedroom. 150k is still ~5x the median wage.

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3 hours ago, Bruce Banner said:

Serious question.

Every time I turn on the news someone is on about affordable homes, but what exactly is the difference between an "affordable home" and an ordinary home at a sensible price?

It strikes me that it's a con to keep the price of existing homes up by offering a similar alternative at a discount, anything to keep the bubble from bursting.

The official re-definition of "Affordable Housing" came in with the Housing and Planning Act 2016 (while the country and the media were being massively misdirected... concentrating on the referendum and Brexit -- which was, and still is, serving as an opportunity for the government to shovel noxious policies into law... the EU was never the real problem.)

The important bit of the act is " to be sold at a discount of at least 20% of their market value " summary info taken from here (instead of the traditional definition of some relationship between the median earnings and the prices in an area.) (In my book affordable will always mean where price is 4x median earnings in a given area.)

I see the cowards who enacted this policy haven't had the balls to try and change the wikipedia definition of affordable housing yet.

Post-truth is now normal, extending to redefinition of known concepts.

Really it's quite funny the government did this given that months later the BOE have accepted they must now use CPIH as their measure of inflation, (given that you could argue that CPI was another 're-definition' of a known concept).

Edited by The Young and the Nestless
added my expected definition of affordable

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One that provides your base expectation for personal security and comfort, where you can afford food, and when there is enough money left over to afford you the creature comforts in line with your social standing.

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Historically when the deposit to buy is no more than one years gross annual income of one salary.....when the repayments are no more than 35% of one person's net monthly income repaying debt in full over 25 years. ;)

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47 minutes ago, Frugal Git said:

I'd halve that number and add a bedroom. 150k is still ~5x the median wage.

If you have some wealth for a deposit it's a bit less extreme. Say 25k, then it's 5x25k, or 4x 31,250. I suppose most would need affordable rents to accumulate the wealth for such a deposit though.

 

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An affordable house is a tiny shitty slave box that you can just afford to max out a mortgage after you’ve spent 15 years saving for a 5% deposit whilst paying down your student loans, to then just about payoff in time to sell and finance the last couple of years of your miserable life in a care home. Making sure the working class are never in a position to leave anything to their offspring... Debt slaves, rinse n repeat...
 
‘Affordable Homes’ is a vacuous government definition.

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5 hours ago, Nabby81 said:

Yup thats pretty much it ....total cost is 400k but we will let you buy a 125k share so that's affordable ....

And don't forget they will not have the same finishes as the "non-affordable" ones. The shared ownership apartments will have cheaper appliances, probably carpet instead of hard flooring, a cheaper bathroom and so on.

Also you will probably be excluded from using the gym or the pool if the development had these. Fortunately that will reduce your service charge by circa £30 (it will still be £180 or more pm).

Yay!

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'Affordable' is the monthly amount you have to pay and the upfront costs .. so a lower monthly sum over 50 years is more 'affordable' than a higher one over 25 years and a deposit added to the monthly sum is more affordable than having to save for a deposit .. all the governments and banks definitions of course .. The final total cost is of no consequence to anyone .. its like the car market these days ..  

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22 minutes ago, Maynardgravy said:

Affordable is being able to buy with cash. If you have to borrow money (from bank or BOMAD) it's unaffordable by definition.

I totally concur with this. It should be *possible* to do so by saving *hard* in a reasonable time frame (say 10 years) if you prefer to do so vs the requirement to  jump onto a debt train at some point because the prices will always inflate faster than you can save (which logic dictates will eventually end in tears).

This is what i tried, and when you're saving 15-20k p/a only to see prices rise by 40, 50, 60 or a 100k in the same time frame you tend to have a very different opinion on the 'benefits' of HPI then those who lever up without a thought.

 

 

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My definition of affordable housing would be the free market price without artificially low interest rates and government props.

Raise interest rates to normal levels, remove all government subsidies and we will see who is swimming without their trunks. To quote Donald Trump "Drain the swamp".

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