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West Bromwich Albino

Wage/mortgage/house Price Multiples

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When people talk about wage multiples and house price affordability (eg 3.5 times salary, 2.5 imes joint salary), is this for the full house price or just the amount borrowed? I'd like to use this multiple when deciding if a house is priced correctly, but as houses vary greatly, which should you use as a guide?

For example - if the multiple is 3.5 times salary and using the full price, I'd be buying somewhere worth around £90,000. If this means waiting for terraced houses to drop to this figure, what are people waiting for who earn less than myself!?

Let's say you earn £15,000 - You're looking at £52,000 - what will you get for that in the future even if prices do drop?

I'm getting confused.

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When people talk about wage multiples and house price affordability (eg 3.5 times salary, 2.5 imes joint salary), is this for the full house price or just the amount borrowed? I'd like to use this multiple when deciding if a house is priced correctly, but as houses vary greatly, which should you use as a guide?

For example - if the multiple is 3.5 times salary and using the full price, I'd be buying somewhere worth around £90,000. If this means waiting for terraced houses to drop to this figure, what are people waiting for who earn less than myself!?

Let's say you earn £15,000 - You're looking at £52,000 - what will you get for that in the future even if prices do drop?

I'm getting confused.

No need to get confused, this is just a measure of affordable gearing based on long-term factors such as interest rates, historic wage growth, etc and relates solely to how much you can borrow comfortably given those assumptions.

Lionel

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Whats the value of a property? Well a simple 3.5 salary won't cut it.

How much is being chav free worth to you ? Want good schools, trendy bars and a Waitrose? Being so close you can walk to work ..etc.

People will and do pay a premium for these extras (400K + one bedder in shad thames for instance), you can't look at the property in isolation.

Safety is worth a lot, increasingly so.

There are plenty of homes in the uk you can buy for 3.5 times salary or less but no one in their right mind would live in a lot of these locations, either chav invested or commuting is a pain.

The FTB territory is under attack from all sides, you have downsizers , retirees or divorcee's buying your target FTB property as well as BTL'ers . It is becoming common for parents to MEW to help with deposits as well.

If your a singleton on just an ok salary forget it.

Edited by mercsl

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  • 301 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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