What can the median full time male wage buy in your area?

[Freki]

17 hours ago, RushRoad said:

 

I said 70-80% of the country is highly affordable but politics is decided in Westminster and house prices in and around Westminster are expensive even for the PM just on his PM earnings.

 

To be clear, you are talking about 70% of the area in England,very different from being affordable for 70% of the population.

Am I right?

[Pop321]

On 24 April 2017 at 6:30 AM, nome said:

I bought in 2001, so hardly aeons ago... a nice 3 bed house in a nice area on the edge of the Peak District, had a 20% deposit (£8k) and I was on a single, part time, unskilled wage, oh and I paid the mortgage off in less than 10 years

I'm now full time and higher up the pay scale but couldn't afford to buy the same house at today's prices

Do please carry on...

+1

I bought my Edwardian stone 4 bed semi at 21/22 years old in 1991 having sold my first home just before the 89 crash. I was just on my first step up on the career ladder as a 'senior' clerical job (pays maybe £16k in current monies).

I am now a senior managerial job (salary undisclosed ?) and approaching 50 years old. And I genuinely could not buy my house now EVEN ON MY CURRENT SALARY. 

Mean average male in my town is £455 pw. They couldn't buy anything at 4x, and BOMAD are all over the place in this town. 

I live in an expensive part of Yorkshire....I concede that. But it was expensive in 1991. Remember those 15.4% rates, I do. And it was still easier than today. 

In 2013, (I admit) I very nearly moved to a massive home. I was going to do a BTL interest only and guess what....it was affordable. Intent was then to sell mine and move in. (hmmm, not very ethical but the bank didn't seem too bothered) 

But my salary on a repayment mortgage I was nowhere near. I was so far away it actually stopped me in my tracks and made me realise that whilst I could afford it.....it was not truly affordable or even close to good value. 

I am sure you might be right. 2 median earning males living together could live somewhere in the UK. But not with kids, redundancy, zero contract hours. 

Houses in my area are not affordable. Not nearly. And this is an affluent town where the median full time salary probably is quite common.

Once interest only disappears in 2021 (my prediction following the entitlement of 118'er trying PPI type miss-sale claims resulting in banks and regulators withdrawing) and rates back at say 8% in 2023 you will need cotton wool in your ears to here the bubble pop. 

What do I know? Maybe everything is affordable and all the young people are just spending money on iPhones and coffee. My generation was a lot more frugal (Fred Perry's, beer, fags and Stay Press trousers). 

My conclusion is there are cheap places to buy. Some lovely villages outside Doncaster. They are bordered up so grab a bargain. Median wage £0. Price of house £0. Fill your boots. 

[hayder]

ok. 

muswell hill. male full time wage 638 per week

33178 per annum

4.5 earnings = 149,292

20% deposit = 37,323

total spending power = 186,615

rightmove for muswell hill area shows: 

Your search has returned 0 results

There are no available properties matching the criteria which you have specified.

In order to return more great properties in your searches, try adjusting your search criteria.

 

now 186k is not a small amount of money. The cost of building a 3 bed flat in the area should be around 80k, and if we price land at even 6,000 per square meters, over 10 floors the cost per square meter for a 100 meter apartment would be 600 pounds a meter for the land. That would add about 60k to the cost of construction... for a total of 140k roughly.

adding in other anciliary costs including S106, landscaping, connection to grid and water and gas maybe adds another 10k... bringing up the cost of a 100 meter flat to 150k.

If the contractor makes 25% margin on each unit he can sell for 187k. Giving the average male earner an affordable brand new apartment in an area with expensive land. 

Edited April 25, 2017 by hayder

[RushRoad]

14 minutes ago, hayder said:

ok. 

muswell hill. male full time wage 638 per week

33178 per annum

4.5 earnings = 149,292

20% deposit = 37,323

total spending power = 186,615

rightmove for muswell hill area shows: 

Your search has returned 0 results

There are no available properties matching the criteria which you have specified.

In order to return more great properties in your searches, try adjusting your search criteria.

 

now 186k is not a small amount of money. The cost of building a 3 bed flat in the area should be around 80k, and if we price land at even 6,000 per square meters, over 10 floors the cost per square meter for a 100 meter apartment would be 600 pounds a meter for the land. That would add about 60k to the cost of construction... for a total of 140k roughly.

adding in other anciliary costs including S106, landscaping, connection to grid and water and gas maybe adds another 10k... bringing up the cost of a 100 meter flat to 150k.

If the contractor makes 25% margin on each unit he can sell for 187k. Giving the average male earner an affordable brand new apartment in an area with expensive land. 

 

London had more workers and fewer children and pensioners so the typical buyer can not be a single income but would need to be two incomes

Also Londoners should not be confined to their borough but should search for the whole of London the reason is obvious as there are areas in London that have many more jobs than homes so people need to commute that would be true even if house prices crashed 90%.

 

So up your budger to £372,000 and search for all of London and you have 5,051 properties available for £375k or less.

[spongeh]

£457 x 52 = £23764

£23764 x 4.5 + 20% Deposit = £133672.50

Which will get you this for £130,000 http://www.rightmove.co.uk/property-for-sale/property-59313067.html

[Smiley George]

Whilst I've been trying to bite my tongue and not rise to OP's bait, curiosity got the better of me so I decided to give this a go.

In the area of Surrey I currently rent in, not surprisingly the £187k figure I put in returned 0 properties on Rightmove, entirely as I expected. However, that was just for my postcode (KTx). I expanded the search area to include the entire district (Elmbridge) and after removing shared ownership nonsense, retirement homes and 2 House Boats, I was left with a single 1 bed flat (http://www.rightmove.co.uk/property-for-sale/property-58911118.html). Mr Median wage can relax and rejoice at the same time, his family has a potential roof to put over their heads!

As I'm originally from the North East, I did exactly the same for the area I'm originally from giving me £142k to play with. The wider search covering entire postcode (NExx), as expected returned many more results the majority being one and two bed places with just thirty-three 3 bed+.

Out of interest I narrowed the search to just cover the estate I grew up on, which consisted mainly of 1920's semi-detatched houses. Working class houses for the professional working class. My father was an engineer and my mother a clerical worker when they bought the place in 1974 - a decent area, not flash, not run-down. Guess what? 0 houses (there were 14 in total up for sale) so basically my family would not have been able to afford the home I was brought up in if house prices were then as they are now.

I was not expecting this result, and has come as a big surprise to be honest. It shows the UK housing market is broken regardless where you live, I don't know what the OP was trying to achieve and I don't really care. But I will thank him/her for helping to reinforce the message that the UK housing market is broken almost beyond repair.

RushRoad, I salute you...many thanks.

[CunningPlan]

On 4/23/2017 at 9:04 PM, RushRoad said:

 

I seldom ignore direct questions, I must have missed it.

Yes I could afford my current home on my current earned income

However the criteria for affordability should not be, is it the same price as it was 20 years ago?

Something in 1997 could have been affordable and still be affordable in 2017 even if the 2017 price is twice the 1997 price in real terms

 

For instance there is no doubt at all that the cheapest region in England, the north east, is affordable. Yes its 3 x the price it was 20 years ago but so what its still affordable today and arguable very affordable.

So you have £160k cash in the bank + £30k for stamp duty and earn over £140k per annum.

I would congratulate you but also suggest you know very little about someone on average wage trying to buy an average house.

 

[Noallegiance]

1 hour ago, RushRoad said:

 

So up your budger to £372,000 and search for all of London and you have 5,051 properties available for £375k or less.

You are Kirsty Allsop AICMFP.

[Nabby81]

I was just pre approved for a mortgage based on income / debts outstanding alone ...once I added in childcare (800 per month ) the amount they would lend me was cut by around 60% so 2 people on medium wage may be able to buy add in a kid and costs its a whole other story

 

 

 

 

[Darby Ram]

2 hours ago, RushRoad said:

Also Londoners should not be confined to their borough but should search for the whole of London the reason is obvious as there are areas in London that have many more jobs than homes so people need to commute that would be true even if house prices crashed 90%.

This would have the neat side-effect of turning London's housing crisis into a Mexican wave pattern. As everyone moved to low-earning Barking from the other 31 boroughs, prices would fall elsewhere and rise in Barking. Then, the people with lower median wages from Barking could move to Kensington and Chelsea. You could just repeat this every three months or so, and houses would be affordable. 

[RushRoad]

5 minutes ago, Nabby81 said:

I was just pre approved for a mortgage based on income / debts outstanding alone ...once I added in childcare (800 per month ) the amount they would lend me was cut by around 60% so 2 people on medium wage may be able to buy add in a kid and costs its a whole other story

 

Banks should allow renters to prove affordability with rent payments.

If a renter has been paying £800pm for 2 years to a landlord he should not be turned away from a five year fix mortgage that costs less than the same £800pm

[RushRoad]

3 hours ago, hayder said:

now 186k is not a small amount of money. The cost of building a 3 bed flat in the area should be around 80k, and if we price land at even 6,000 per square meters, over 10 floors the cost per square meter for a 100 meter apartment would be 600 pounds a meter for the land. That would add about 60k to the cost of construction... for a total of 140k roughly.

adding in other anciliary costs including S106, landscaping, connection to grid and water and gas maybe adds another 10k... bringing up the cost of a 100 meter flat to 150k.

If the contractor makes 25% margin on each unit he can sell for 187k. Giving the average male earner an affordable brand new apartment in an area with expensive land. 

 

That's not how it works. London is mostly already built so going forward what you need to do is

Purchase x units

Knock them down

Rebuild 3x units

Give away to the council 50% of the net increase in homes at a price the council can let them as social housing. So 1x units of your new build need to be sold to the council for £80k a piece.

Let's assume x is 100 units.

 

You purchased 100 x £300k flats for £30m and spent £36m knocking and clearing and finance costs.

You then spend £120k per apartment building the 300 apartments for £36m

You have spent £72m add in 20% profit and you need to get £86m. However you have to sell 100 units for £8m to the council. Leaving you with 200 units you can sell and you need £78m so you need a price of almost £400,000 per property.

We've not even considered CIL or S106 costs or planning costs or delay costs (add 5% interest for each year things are delayed) etc etc 

Simply put it's impossible to build cheaply in areas where the building has to primarily be done by buying existing homes or ships or other buildings to knock them down and rebuilt more densely.

What's needed if you wanted cheap homes in London is to get rid if the green belt and even more importantly get rid of the conditions where the builder needs to give 50% of the net new build number to the council at a huge loss

 

[Nabby81]

1 hour ago, RushRoad said:

 

Banks should allow renters to prove affordability with rent payments.

If a renter has been paying £800pm for 2 years to a landlord he should not be turned away from a five year fix mortgage that costs less than the same £800pm

'Should '' perhaps but  the reality is they don't and ergo affordability is compromised because of this 

[Muddlehead]

27 minutes ago, RushRoad said:

What's needed if you wanted cheap homes in London is to get rid if the green belt and even more importantly get rid of the conditions where the builder needs to give 50% of the net new build number to the council at a huge loss

Currently builders earn a return on holding land for a long time before building (land-banking). Couldn't the government buy the land itself (compulsory purchase, or just hint at or impose land value taxes) and then pay builders to build, then sell the houses? Is there any reason why builders must own the land first, and own the finished houses?

[RushRoad]

27 minutes ago, Muddlehead said:

Currently builders earn a return on holding land for a long time before building (land-banking). Couldn't the government buy the land itself (compulsory purchase, or just hint at or impose land value taxes) and then pay builders to build, then sell the houses? Is there any reason why builders must own the land first, and own the finished houses?

 

Why do you think a government department can manage the building of houses better than a company that's been doing it for generations?

More importantly we do not have a shortage of homes in the UK. Builders are building at about the rate that its possible to build and sell. Hence the new bright idea of build to rent which the government seems to want to push the idea being that more can be built to rent than sold.

Personally I'm not convinced I think the only shortage of homes is a huge shortage in zone 2 London which ripples out to zone 3 and that to zone 4 and so on until it gets all the way to the south east towns.

The problem with building many more homes in zone 2 London is that there is no spare land and thus you need to buy 10 homes knick them down and build 25 in its place that is far more expensive than building on greenbelt where you don't need to do that.

[Lavalas]

11 minutes ago, RushRoad said:

Why do you think a government department can manage the building of houses better than a company that's been doing it for generations?

It would be helpful if you actually read AND understand the post that you're replying to and then we wouldn't have to sit through this rubbish.

[Muddlehead]

14 minutes ago, RushRoad said:

Why do you think a government department can manage the building of houses better than a company that's been doing it for generations?

 

50 minutes ago, Muddlehead said:

Couldn't the government pay builders to build?

Couldn't the government pay builders to build?

I think it is quite well established that large building firms own land for a long period of time and watch it's value appreciate.

The building industry is an oligopoly (a few large builders dominate). Competition between firms is like the prisoner's dilemma. If one firm built on all of its land as fast as possible and tried to sell it's properties quickly, other firms it might earn high profits if none of its competitors responded. But surely they will respond, and so none of them would earn high profits (they would be high volume, low margin, flooding the housing market with supply, perhaps initiating a crash). So there remains a tacit collusion of builders to build on land at a fairly slow rate.

Builders take risk when building as they don't know what the market will do in the years it takes to plan, build and sell. The current system forces them to focus on the value of land rather than building. Builders might be better placed to focus on housebuilding if the government owned the land and simply paid them to build.

[Muddlehead]

2 hours ago, RushRoad said:

Banks should allow renters to prove affordability with rent payments.

If a renter has been paying £800pm for 2 years to a landlord he should not be turned away from a five year fix mortgage that costs less than the same £800pm

Why do you think a company that's been lending to people for generations "should" do it differently? Do you think lending rules should be determined by a government department? If so why do think it can do it better? If not, is there any mechanism other than hope that should make the banks behave differently?

[RushRoad]

1 minute ago, Muddlehead said:

Why do you think a company that's been lending to people for generations "should" do it differently? Do you think lending rules should be determined by a government department? If so why do think it can do it better? If not, is there any mechanism other than hope that should make the banks behave differently?

 

Banks are already heavily regulated so remove that and im sure some of the banks would be happy to lend outside of normal criteria 

[Muddlehead]

4 minutes ago, RushRoad said:

Banks are already heavily regulated so remove that and im sure some of the banks would be happy to lend outside of normal criteria 

This could probably be argued several ways, but it's important to note that regulations exist at least in part for the benefit of big business. This is particularly true of builders and banks.

Compared to current regulations banks seem fairly cautious. Banks have been prohibited from than lending more than some percentage of total lending as high LTI mortgages (I think it was more than 4.5 times income), but they are nowhere near the limit. If banks wanted to, they could target risky customers. Instead they seem to want to compete for customers deemed not to be risky.

But what would happen if banks change their lending requirements such that millions of renters could get mortgages? Prices would adjust and only a fraction of them would be able to buy.

Similarly if millions of median wage earners read this thread and had a epiphany and went househunting prices would adjust and only a fraction of them would be able to buy.

[Bland Unsight]

We are so, so lucky to have insightful new posters like RushRoad and Muddlehead joining the forum.

I say this sincerely, and without reservation - the discussion above is the most considered and insightful back and forth I have seen in five years here on the forum.

Other posters may see trolls. I pity those other posters; this stuff is gold. I plan to get it all tattooed on my face.

[CunningPlan]

8 hours ago, CunningPlan said:

So you have £160k cash in the bank + £30k for stamp duty and earn over £140k per annum.

I would congratulate you but also suggest you know very little about someone on average wage trying to buy an average house.

 

Sorry. I should have posed this as a question since i believe you answer these. Are the above assumptions correct?

[hayder]

17 hours ago, RushRoad said:

 

 

17 hours ago, RushRoad said:

That's not how it works. London is mostly already built so going forward what you need to do is

Purchase x units

Knock them down

Rebuild 3x units

Give away to the council 50% of the net increase in homes at a price the council can let them as social housing. So 1x units of your new build need to be sold to the council for £80k a piece.

Let's assume x is 100 units.

 

You purchased 100 x £300k flats for £30m and spent £36m knocking and clearing and finance costs.

The costs you imply above are very high and demonstrate the extreme inefficiency of local construction companies. This inefficiency continues because they're really selling into the ponzi as opposed to a real "free market" and thus there's no compulsion to improve efficiency.

17 hours ago, RushRoad said:

You then spend £120k per apartment building the 300 apartments for £36m

once again. The kind of basic apartments being thrown up in London are not worth £120k in construction costs each. If the construction firms are indeed paying that much, it once again demonstrates the inherent inefficiencies and profligacy that happens during massive booms. This sort of thing afflicts other industries too when t hey get too much cash.

17 hours ago, RushRoad said:

You have spent £72m add in 20% profit and you need to get £86m. However you have to sell 100 units for £8m to the council. Leaving you with 200 units you can sell and you need £78m so you need a price of almost £400,000 per property.

We've not even considered CIL or S106 costs or planning costs or delay costs (add 5% interest for each year things are delayed) etc etc 

Simply put it's impossible to build cheaply in areas where the building has to primarily be done by buying existing homes or ships or other buildings to knock them down and rebuilt more densely.

There's actually plenty of land in London to increase housing density. But of course infrastructure would have to be expanded to cope with it. Even the "largest" developments taking place in London aren't paying for the expansion of services... all the money disappears into "mad gainz" for old land owners, developers, their estate agents and of course the banks. 

17 hours ago, RushRoad said:

What's needed if you wanted cheap homes in London is to get rid if the green belt and even more importantly get rid of the conditions where the builder needs to give 50% of the net new build number to the council at a huge loss

 

How about the councils using CPO power to buy cheap land (or use their existing land) and hire foreign construction firms to use off-site construction methods and simply cut out all local developers, estate agents and banks who have proven to be self-serving and breathtakingly inefficient.

[PaulParanoia]

All you'd get in my home town in Essex is a couple of 1 bedroom retirement flats.  Crazy.

[disenfranchised]

In my town it works out to be just under £130k budget, which currently buys

A 2 bed flat

A 3 bed ex-council house on one of the roughest estates in town 

A 2 bed terrace with a front door opening onto the pavement in a crap part of the town centre.

 

Hooray, where do we sign up?

Not to mention how do we save up nearly a years pre-tax income for the deposit when these self same properties currently rent at around 50% of the median FT male take home pay, plus bills?

RentRoad is being defeated by his own attempts to prove affordability. 

Every mainstream political party acknowledges housing is too expensive and in crisis. 

 

Edited April 26, 2017 by disenfranchised