House Price Affordability

[laurejon]

House prices remain affordable for those that are commited to buy.

A couple working at McDonalds would gross £464 per week thats £348pw after tax.

They could borrow 100K for £100pw that would leave £248 pw for living expenses. The Dole leaves you with £37pw for living expenses.

What they could not do is drive a 1.6 Ford Fiesta with rear spoiler insured for 2k a year, wear 100 quid trainers, and spend 50 quid a night on Fast Food and Fast Pills.

[eek]

House prices remain affordable for those that are commited to buy.

A couple working at McDonalds would gross £464 per week thats £348pw after tax.

They could borrow 100K for £100pw that would leave £248 pw for living expenses. The Dole leaves you with £37pw for living expenses.

What they could not do is drive a 1.6 Ford Fiesta with rear spoiler insured for 2k a year, wear 100 quid trainers, and spend 50 quid a night on Fast Food and Fast Pills.

<{POST_SNAPBACK}>

Actually they should not be able to and any sensible advisor (especially after 1st November) should not allow them to borrow more than 60k (464*52*2.5 (for joint earnings).

Yes interest rates are low now but that does not and will not mean that they will be low in the future. When I moved six years ago I took a fixed rate of 6.7% because that was a very good rate at the time based on past rates. I know others who 10 years ago took fixed rates at 9% because that was good.

What goes down can also go up and that fact (coupled with the fact that many people only looked at the low 2% introductory rate not the 3-5 years tied to the standard MVR @ 6% or so afterwards) means that many Mr + Mrs McDees are already suffering for mortgage repayments higher than they can afford.

[OnlyMe]

Is this the gay MCDonalds worker couple model?

It won't work very well for any couple if they want children in the near future.

[Keefter]

House prices remain affordable for those that are commited to buy.

A couple working at McDonalds would gross £464 per week thats £348pw after tax.

They could borrow 100K for £100pw that would leave £248 pw for living expenses. The Dole leaves you with £37pw for living expenses.

What they could not do is drive a 1.6 Ford Fiesta with rear spoiler insured for 2k a year, wear 100 quid trainers, and spend 50 quid a night on Fast Food and Fast Pills.

<{POST_SNAPBACK}>

Hmmm, please tell me where I can get a mortgage of 100k for £433 repayment per calender month. A Standard repayment mortgage over 25 years @ 100k will be a repayment of £630.00 fixed at 1% above base.

Oh I see your talking about interest only!! - are you stupid or something?

1) dependant on where you are located anyone who took an interest only mortgage at the moment would be looking at having paid **** all off the captal in 4 years time, in most cases they are stuck for a further few years because the house is in NE. In reality they may as well have RENTED for the four years and then bought somewhere with a 'Proper' mortgage.

2) I live in a luxury apartment in an exellent location. If I wanted to buy the same standard property across the road it would set me back 160k, my rent is currently 575 pcm. So why would I want to move for the sakes of having a mortgage which costs hundreds more than what I could rent for which will paid nothing off the capital of the house for years to come. Your essentially renting it off the bank with clause in your lease saying that you cannot terminate the agreement if the market value of the property drops below that which it was when you moved in.

So please don't talk about 'property affordability' without having a little think about it first. Your Maccy Dees workers scenario is a load of tosh.

[Keefter]

What a Crazy time we live in...

People thinking the deserve to own their own home,

without saving or sacrificing for it

<{POST_SNAPBACK}>

Who said anything about not saving? and as for sacrifice, at the end of your 25 year term you have paid the bank exactly 88,731 int and that assumes that interest rates remain rock bottom.

I'm not sure whether you are referring to my post or not, if you are at least have the balls to sya that you are, and at least quanify your throw awaye remarks.

[Martello]

What a Crazy time we live in...

People thinking the deserve to own their own home,

without saving or sacrificing for it

<{POST_SNAPBACK}>

I am not sure if you are serious or not. I think the price we pay for property is utterly absurd in this country. The person that started this thread is undoubtably insane. Who the hell wants to live in a country where 2 people have to work full time in a burger bar - to afford to buy a flat not big enough to turn round in. And, as someone else said - what happens when they want kids - or need a bigger house? What a load of utter nonsense! They said property is still affordable for people that are committed! If you believe property is affordable - you should be committed - to the nearest insane asylum.

The idea that you should have to scrimp and save for years to get a deposit and then work your fingers to the bone for at least 25 years - just for a pile of bricks, timber and plasterboard is what is really crazy. In other times and other places, people have found a bit of land, cut down a few trees and built themselves a house. I'd love to see someone walk up to a pioneer in America 150 years ago and say - I'll lend you the money to build that house - but you'll have to work hard for 25 years to pay me back. They would have been lucky not to be shot! The 'value' we as a society place on land and property is the main reason the quality of life in this country has been going downhill for at least the last 20 years.

I am thinking of becoming a gypsy. My mother was Irish so I might be able to qualify. The idea of turning up outside a nice village and saying 'I have a human right to build a shelter for myself' appeals to me. Good luck to the gypsies. I hope they turn up outside every town and village in the country and decimate property prices.

[Keefter]

I am not sure if you are serious or not. I think the price we pay for property is utterly absurd in this country. The person that started this thread is undoubtably insane. Who the hell wants to live in a country where 2 people have to work full time in a burger bar - to afford to buy a flat not big enough to turn round in. And, as someone else said - what happens when they want kids - or need a bigger house? What a load of utter nonsense! They said property is still affordable for people that are committed! If you believe property is affordable - you should be committed - to the nearest insane asylum.

The idea that you should have to scrimp and save for years to get a deposit and then work your fingers to the bone for at least 25 years - just for a pile of bricks, timber and plasterboard is what is really crazy. In other times and other places, people have found a bit of land, cut down a few trees and built themselves a house. I'd love to see someone walk up to a pioneer in America 150 years ago and say - I'll lend you the money to build that house - but you'll have to work hard for 25 years to pay me back. They would have been lucky not to be shot! The 'value' we as a society place on land and property is the main reason the quality of life in this country has been going downhill for at least the last 20 years.

I am thinking of becoming a gypsy. My mother was Irish so I might be able to qualify. The idea of turning up outside a nice village and saying 'I have a human right to build a shelter for myself' appeals to me. Good luck to the gypsies. I hope they turn up outside every town and village in the country and decimate property prices.

<{POST_SNAPBACK}>

Bravo!! all hail Martello 'King of Gypsies'

Some sense at last.

[Yonmon]

I read a report yesterday about some overpriced southern village where gypsies had moved into plot nearby, the locals reckoned it had wiped 10% off their property prices overnight. So, my cunning plan is to hire gypsies to move around the country to selected locations, triggering a local HP collapse there, buy up all the houses on the cheap, use the profits to pay the gypsies to move on and repeat at next location. We get houses on the cheap, the gypsies get gold plated caravans. Everyone's a winner baby!

Incidentally where I grew up was near a gypsy camp. Didn't affect our house prices, but then in that area they've always been worth **** all! My "ancestral home" there is still only worth about £25k post HP boom! One of the gypsy caravans is worth more!

[Topher Bear]

If this had been posted by someone "new" I would have called it a TROLL post, but Laurejon is a member of reasonable standing on this forum...so why post such utter drivel?

Others have already dealt with the amount borrowed & the repayement details, I am going to talk about the Unemployement amount

It is 55.65 a week for contribution based Jobseekers, there is a further ~£50 for income baed jobseekers, plus housing benefit (full cost of a reasonable rent for the size you need) + full council tax payements (these are with compared to having no job), and then if you have children, you can get a lot more from child tax credit.

No the government do realise that the costs of living are more than £37 a week, you can get a huge amount of support from various places to supplement benefits, meaning that the amount the government reckon you need is far closer to the £248 a week that you are suggesting.

(my Personal example, is

£55 contribution based JSA

£105 housing benefit

£30 council tax

[the government reckons £30 a week fom savings!]

£220 a week (and that is without income support, child benefit and child tax credits, working tax credit!) )

This is nearer the MINIMUM the government reckon you need to live on, £248 is only £28 a week extra, which won't go far.

Perhaps its not such a bad example after all, it really shows that the affordability argument is codswallop these days!

[Antsy]

I agree with Topher - Laurejohn has been trying to construct one of Boris's inverted pyramids of piffle.. though his won't turn out to have been true (sorry Boris..)

No-one seems to think about the long term. If the middle earners are forced to rent until retirement what happens then? (obviously if you and partner are currently on about 25k each you can't afford kids AND a home unless you either give up and get a council house or suddenly become super-rich by winning the lottery / sueing the police for whatever) We already have a pensions crisis, so for those who have no rent / mortgage outgoing at 65 it will be tough enough paying council tax out of their meagre stakeholder plan. As for those still renting, is the state going to pick up the tab for their rent?

[zzg113]

As for those still renting, is the state going to pick up the tab for their rent?

I doubt it. They will have to work to pay their rent until the day they die.

[Cityfool]

House prices remain affordable for those that are commited to buy.

A couple working at McDonalds would gross £464 per week thats £348pw after tax.

They could borrow 100K for £100pw that would leave £248 pw for living expenses. The Dole leaves you with £37pw for living expenses.

What they could not do is drive a 1.6 Ford Fiesta with rear spoiler insured for 2k a year, wear 100 quid trainers, and spend 50 quid a night on Fast Food and Fast Pills.

<{POST_SNAPBACK}>

Aside from anything else what exactly are they going to buy for £100K, london and the SE has plenty of Macdonalds in it and they don't pay much more than your example. They are not going to be able to "buy" (it's in inverted commas because they aren't buying at all if they are merely repaying interest) f**K all there.

So basically what you are saying is that if they live in a cheap part of the country and find a lender crazy enough to stump up the money a working couple can live in a hovel and take a massive hugely leveraged gamble on house prices going up before interest rates do and cripple them (except if they go up just another 10% even this sort of madenss wouldn't be possible).

[no accountant]

Nice summary !

[laurejon]

I have obviously touched a bone here.

My point is and you appear to be missing it, is that even a burger bar kid can get on the ladder. So its pretty rich that people earning 25K plus can sit down and whinge they cant get on the ladder.

Someone mentioned that Interest only was ridiculous.

Tell that story to those who bought five years ago, and now have 150K in equity. As as result of them being ridiculous they can now sell up and put 150K down on a property of 200K get a mortgage of 50K and happily go forth and multiply to their hearts content on a repayment mortgage.

My suspicions are confirmed, most people cant see further than the end of their noses.

[Dicky]

I have obviously touched a bone here.

My point is and you appear to be missing it, is that even a burger bar kid can get on the ladder. So its pretty rich that people earning 25K plus can sit down and whinge they cant get on the ladder.

Someone mentioned that Interest only was ridiculous.

Tell that story to those who bought five years ago, and now have 150K in equity. As as result of them being ridiculous they can now sell up and put 150K down on a property of 200K get a mortgage of 50K and happily go forth and multiply to their hearts content on a repayment mortgage.

My suspicions are confirmed, most people cant see further than the end of their noses.

<{POST_SNAPBACK}>

[laurejon]

Very Nice Dicky.

May I say that your username is most suits you to a T.

[zzg113]

even a burger bar kid can get on the ladder

laurejon, earlier contributors to this thread have already proven that a burger bar kid cannot get on the ladder. Why you persist in this untruth is not clear.

[laurejon]

earlier contributors to this thread have already proven that a burger bar kid cannot get on the ladder

You are in denial, the facts are plain to see.

What the contributors did point out is that the fictitious burger bar kids could only get a studio flat.

Well like anything you have to walk before you run. Common sense tells you that nobody should expect to get a mansion flat as a first time buy on a burger bar salary.

Look on Prime Location or Rightmove and there are rakes of properties for around 100k. As said you have to start somewhere and being a loser your entire life living in a bedsit because you cant be bothered to make the effort is your own choice.

To criticise others who put in the hard yaka and made the effort is exactly what is wrong with todays borrow it all tommorow never comes society.

Something else that has also cropped up from time to time is the question "How do you buy a house when you have children to support".

The answer is simple, you dont..........you should plan your future properly and should have secured a home before you decided to start a family.

[Guest Charlie The Tramp]

QUOTE

even a burger bar kid can get on the ladder

Correct me if I am wrong but don`t these companies employ mainly on part time contracts. Most of the supermarkets only offer 20 to 30 hour part time jobs now.

I know people who do part time jobs not by choice, and are only offered overtime during holiday periods. In fact one supermarket told an applicant who wanted full time work that their policy was part time only. Keeps the government unemployment stats down as these choose not to live on benefits, but try to stand on their own two feet. Employers today I would not P**s on a lot of them if they were on fire, and I speak as an ex-employer.

[RJG18]

I have obviously touched a bone here.

My point is and you appear to be missing it, is that even a burger bar kid can get on the ladder. So its pretty rich that people earning 25K plus can sit down and whinge they cant get on the ladder.

No they can't. Someone earning £25k a year will be lent upto around £90,000 a year by most banks. The minimum property prices he in sourth east (Sussex) is in the region of £140,000 for 1-2 bedroom flat/house. This requires an income of around £40,000 a year, and as such excludes just under 85% of the population. And this is just for an entry level, tiny little house. For an average house in this region of the country (£226,000 - source: Hometrack) a buyer would need to be earning in the region of £64,000 a year. Note, the average worker in the UK earns £19,000-20,000.

You should be aware that over time the average person must be able to afford the average house, otherwise there is 100% proability of the market collapsing until this price price is reached.

Someone mentioned that Interest only was ridiculous.

Tell that story to those who bought five years ago, and now have 150K in equity. As as result of them being ridiculous they can now sell up and put 150K down on a property of 200K get a mortgage of 50K and happily go forth and multiply to their hearts content on a repayment mortgage.

<{POST_SNAPBACK}>

Surely this depends entirely on sustained massive property price rises, in order to build up massive amounts of equity without paying a penny off on your mortgage, effectivly gambling on massive rises in the market. Surely this is not disimilar to betting on a horse (and a horse which now has three legs and a fat jocky at that).

If you look at what I wrote at the top of this article.... affordability is currently not present in the market. This affordability cannot be further reduced in order to create the level of HPI rises that are required make your 100% mortage preoperty-ladder sceario workable. It would require an exponentially increasing money supply into the marky for an infinite period in order to create a high enough rate of "free" equity through HPI to be sustainable.

There simply isn't the amount of money in the world to sustain this.

To illustrate this point, try this (REALLY do try it) :

Get a chess board and a normal bag of rice.

Place one grain of rice on the first square of the board.

Now place two grains of rice on the second square.

Now place four grains of rice on the third square. Keep going, double the number of grains on each square.

Let me know when you run out of rice.....

Ok, not a direct analogy by any means, but goes to show what happens if you depend on the ever increasing supply of anything at an ever increasing rate.

[zzg113]

RJG, what actually happens? do you run out of rice before you've covered the chess board?

[RJG18]

RJG, what actually happens? do you run out of rice before you've covered the chess board?

<{POST_SNAPBACK}>

By the time you get to the last square you would need 92233700000000000000000 grains of rice, more than there are on the whole planet. In fact the quantity of rice would go a long way towards weighing as much as large proportion of the whole planet.

Laid end to end the grains of rice would stretch for nearly 1,000,000,000,000,000 kilometres.

[RJG18]

Likewise, the model where people buy constantly at 100% mortgages (with no repayment) but move up the ladder by making massive "free" equity from price rises in order to move up the ladder would require an ever increasing supply of money at an ever increasing rate to support the market. Within the life time of your children, every house in the UK would cost more than the GDP of our entire planet.

[laurejon]

My sums are based in a couple sharing.

If you are suggesting that the most densely populated land mass as an Island of over 60 Million people can afford the land mass to build a single house for every single person in the Country then obviously no.

If you are single then I am afraid bedsits are what you can expect. No country can afford to have single people in large houses all to themselves.

McDonalds do offer career oportunities of full time work leading into management,however many chose to work part time. I am not heralding McDonalds as some kind of great employer I chose McDonalds as you need no qualifications and most youngsters would not be seen dead working there. They pay over the Minimum wage.

[Antsy]

Something else that has also cropped up from time to time is the question "How do you buy a house when you have children to support".

The answer is simple, you dont..........you should plan your future properly and should have secured a home before you decided to start a family.

<{POST_SNAPBACK}>

Sorry - but there are currently two ways to secure a home on the average 25k per person wage, delay having kids till you're late 30s and want the NHS to fork out for the fertility treatments or give up and throw yourself on the mercy of the council, Lizzie Bardsley 'Wife Swap' style where you get everything paid for and then get the right to buy at a discount. Should breeding therefore be left to the very rich and very poor only?