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Bbc: House Costs 'five Times Income'

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In many ways BTL remind me of arms dealers. They perpetuate the very social ill that blights society--- 'im just filling a market need' (by creating it and feeding it in the first place) <_<

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http://news.bbc.co.uk/1/hi/uk/7029135.stm

Last Updated: Thursday, 4 October 2007, 23:59 GMT 00:59 UK

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House costs 'five times income'

For Sale signs

The report reveals that renting is generally cheaper than buying

The income first-time buyers need to get on the housing ladder has reached unprecedented levels, a report says.

Research for the housing data company Hometrack shows the ratio of house price to income has nearly doubled in the past decade.

An average house in Britain now costs more than five times the average first-time buyer's income.

The average cost of a home in England and Wales is £176,300, according to Hometrack's figures.

This ratio of house price to income is far higher than at the peak of the last price boom in 1990.

Despite a long period of low interest rates, mortgage costs as a percentage of income - seen by some as a fairer measure of affordability - have also virtually doubled over the same period to more than 32%.

Buy-to-let

Figures show the most expensive place to buy is the London borough of Kensington and Chelsea, and the cheapest is the district of Wansbeck in Northumberland.

The BBC's John Andrew said the research also shows how private renting is on the up, helped by the boom in buy-to-let.

Across England, the cost of renting was generally up to 30% cheaper than a mortgage on the same property.

The report also found that nearly half of all households on the move were going into the private rented sector, which is now enjoying increased investment after a century of decline.

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In many ways BTL remind me of arms dealers. They perpetuate the very social ill that blights society--- 'im just filling a market need' (by creating it and feeding it in the first place) <_<

----------------------

http://news.bbc.co.uk/1/hi/uk/7029135.stm

Last Updated: Thursday, 4 October 2007, 23:59 GMT 00:59 UK

E-mail this to a friend Printable version

House costs 'five times income'

For Sale signs

The report reveals that renting is generally cheaper than buying

The income first-time buyers need to get on the housing ladder has reached unprecedented levels, a report says.

Research for the housing data company Hometrack shows the ratio of house price to income has nearly doubled in the past decade.

An average house in Britain now costs more than five times the average first-time buyer's income.

The average cost of a home in England and Wales is £176,300, according to Hometrack's figures.

This ratio of house price to income is far higher than at the peak of the last price boom in 1990.

Despite a long period of low interest rates, mortgage costs as a percentage of income - seen by some as a fairer measure of affordability - have also virtually doubled over the same period to more than 32%.

Buy-to-let

Figures show the most expensive place to buy is the London borough of Kensington and Chelsea, and the cheapest is the district of Wansbeck in Northumberland.

The BBC's John Andrew said the research also shows how private renting is on the up, helped by the boom in buy-to-let.

Across England, the cost of renting was generally up to 30% cheaper than a mortgage on the same property.

The report also found that nearly half of all households on the move were going into the private rented sector, which is now enjoying increased investment after a century of decline.

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Blimey! Thats a very bearish article. Has someone at the BBC had a lobotomy? :lol:

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In many ways BTL remind me of arms dealers. They perpetuate the very social ill that blights society--- 'im just filling a market need' (by creating it and feeding it in the first place) <_<

----------------------

http://news.bbc.co.uk/1/hi/uk/7029135.stm

Last Updated: Thursday, 4 October 2007, 23:59 GMT 00:59 UK

E-mail this to a friend Printable version

House costs 'five times income'

For Sale signs

The report reveals that renting is generally cheaper than buying

The income first-time buyers need to get on the housing ladder has reached unprecedented levels, a report says.

Research for the housing data company Hometrack shows the ratio of house price to income has nearly doubled in the past decade.

An average house in Britain now costs more than five times the average first-time buyer's income.

The average cost of a home in England and Wales is £176,300, according to Hometrack's figures.

This ratio of house price to income is far higher than at the peak of the last price boom in 1990.

Despite a long period of low interest rates, mortgage costs as a percentage of income - seen by some as a fairer measure of affordability - have also virtually doubled over the same period to more than 32%.

Buy-to-let

Figures show the most expensive place to buy is the London borough of Kensington and Chelsea, and the cheapest is the district of Wansbeck in Northumberland.

The BBC's John Andrew said the research also shows how private renting is on the up, helped by the boom in buy-to-let.

Across England, the cost of renting was generally up to 30% cheaper than a mortgage on the same property.

The report also found that nearly half of all households on the move were going into the private rented sector, which is now enjoying increased investment after a century of decline.

E-mail this to a friend Printable version

let us remember all those bulls who told us it is never easy to get on the ladder and that ftbs should shut up and get on with it - it is never easy to get on, but at the moment it is twice as hard - why do it?

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The BBC's latest property show, Homes Live (10am) should be amusing this morning.

Unlike other property progs they made the mistake of:

1 ) trying to appeal to bulls;

2 ) regularly reviewing the property press @ the start of the program.

How the hell are they going to do 1) when 2) consists of reviewing this:

"This ratio of house price to income is far higher than at the peak of the last price boom in 1990. ....mortgage costs as a percentage of income ... have also virtually doubled over the same period to more than 32%. "

With the current format , it seems as though they have no choice but to cover an increasingly bearish string of property stories at the start of a program clearly designed to titilate property devotees. Oh dear.

Edited by Sledgehead

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As Jedi Master RB would say, the devil is in the detail.

This morning on BBC breakfast, they did say that the average house price was 5 times the average HOUSEHOLD income....

;)

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With the current format , it seems as though they have no choice but to cover an increasingly bearish string of property stories at the start of a program clearly designed to titilate property devotees. Oh dear.

Should make entertaining viewing! :)

edit: poor html

Edited by Disillusioned

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An average house in Britain now costs more than five times the average first-time buyer's income.

The average cost of a home in England and Wales is £176,300, according to Hometrack's figures.

So the average FTB earns £35k according to this survey, considerably more than the average national wage. :lol:

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Guest DissipatedYouthIsValuable

Oh well. It's a start from the BBC.

I'm still not wasting my money on a TV or TV licence though.

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It was covered on Radio 4 this morning. Began with a bried statement from Liz at PricedOut.

Disappointingly the author of the report gave the line that BTL was therefore of benefit in providing a required service while houses are so expensive.

Apparently any relationship between people buying houses to rent them out and the increasing cost of houses escaped both the author of the report and the presenter.

There was more than a hint of "let them eat cake" about it.

Bearish but spun as bullish I'm afraid.

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It was covered on Radio 4 this morning. Began with a bried statement from Liz at PricedOut.

Disappointingly the author of the report gave the line that BTL was therefore of benefit in providing a required service while houses are so expensive.

Apparently any relationship between people buying houses to rent them out and the increasing cost of houses escaped both the author of the report and the presenter.

There was more than a hint of "let them eat cake" about it.

Bearish but spun as bullish I'm afraid.

yep heard it too, this un-opposed view in the meeja that; BTL has filled a gap and provided quality rental, otherwise we'd be at the mercy of Rigsby, needs continually de-bunking IMHO. Rental is stated as being cheaper than owning and yet BTL providers tell us rents are going up... <_<

Edited by Converted Lurker

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Personally, I don't know ANYONE who's bought in the past few years who hasn't paid AT LEAST 7 times their salary for a property.

OK, so it's London, but we're not talking Mayfair; these people (earning 25-30K p.a.) have bought in places like Hackney, Morden, Wood Green...

Now, if these people were told they couldn't have a loan above 4 times their income, where would the market be?

In a better state than it is now, I'm guessing.

Banks have a lot to answer for. As do the FSA. :angry:

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Across England, the cost of renting was generally up to 30% cheaper than a mortgage on the same property.

*spits coffee over the keyboard*

30% is clearly a lot bigger than it was when I was at school. Looking back over the last three places I've rented, the repayments on a repayment mortgage would have been more than 30% greater than the rent in every case (with my current place being "more than double"), so this claim was pretty much valid six years back.

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Disappointingly the author of the report gave the line that BTL was therefore of benefit in providing a required service ....Bearish but spun as bullish I'm afraid.

That's not how I see it, and it's certainly not how a BTLer will see it.

Essentially they are saying BTL is like a charity. Can you imagine how outraged people like this guy would be to hear that?

_40902502_hoog_pa_203x260.jpg

Van-"this is how I've got my tenants"-Hoogstraten

Edited by Sledgehead

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It was covered on Radio 4 this morning. Began with a bried statement from Liz at PricedOut.

Disappointingly the author of the report gave the line that BTL was therefore of benefit in providing a required service while houses are so expensive.

Apparently any relationship between people buying houses to rent them out and the increasing cost of houses escaped both the author of the report and the presenter.

There was more than a hint of "let them eat cake" about it.

Bearish but spun as bullish I'm afraid.

I found the debate on Radio 4 rather disappointing. The author of the report ended the discussion by citing reduced interest rates as a driver of house prices, but he left out the corollary to this -- incomes are rising much more slowly. FTBs pay less up front, but pay more of their income for a longer period of time when compared to a high interest rate / high inflation environment. The fall in interest rates is a fall in nominal not real rates, so the cost of financing a house purchase is not cheaper, it only changes the timing of the payments. This is first year economics / finance and he really should know better (though it seems par for the course when it comes to discussions in the media).

The other thing they dropped the ball on is really comparing the benefits of renting vs. buying, which was supposed to be the reason for the discussion. Tenancy laws in the UK make it very hard to rent long term with any sense of security. Landlords can boot you to the street at a few months notice. Good luck finding a house for rent that is both appropriate for a family and where you can get a lease for more than a year. Germany has a well developed private rental sector because tenancy laws there make people want to rent -- not because tax gimmicks have made landlords want to own rental property (the UK strategy).

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That's not how I see it, and it's certainly not how a BTLer will see it.

Essentially they are saying BTL is like a charity. Can you imagine how outraged people like this guy would be to hear that?

_40902502_hoog_pa_203x260.jpg

Van-"this is how I've got my tenants"-Hoogstraten

for the most part BTL players are a charity; subsidising your mortgage payments by hundreds of pounds a month in order to shelter the priced out, whilst they wait to pounce in a corrected market, is very charitable IMHO. :)

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So the average FTB earns £35k according to this survey, considerably more than the average national wage. :lol:

If we look at reality, the normal British wage is around £20K (median) and remember more than half the population earn less than that (taking into account part time and unemployed workers) Then by the BBC's reckoning, the average house is worth around £100K. Wonder what their research department bods get up to all day? not fact finding, thats for sure. Doing some simple calculations would show us the real discrepencies between what people realy earn and what property actualy costs. Perhaps these people dont realy want to know to what extent our money has been debased and to what level of servitude this ultimatly pushes the vast majority of the population down to. By any standards the Labour party is guilty, they have followed tory policies to the letter on this one.

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I found the debate on Radio 4 rather disappointing. The author of the report ended the discussion by citing reduced interest rates as a driver of house prices, but he left out the corollary to this -- incomes are rising much more slowly. FTBs pay less up front, but pay more of their income for a longer period of time when compared to a high interest rate / high inflation environment. The fall in interest rates is a fall in nominal not real rates, so the cost of financing a house purchase is not cheaper, it only changes the timing of the payments. This is first year economics / finance and he really should know better (though it seems par for the course when it comes to discussions in the media).

The other thing they dropped the ball on is really comparing the benefits of renting vs. buying, which was supposed to be the reason for the discussion. Tenancy laws in the UK make it very hard to rent long term with any sense of security. Landlords can boot you to the street at a few months notice. Good luck finding a house for rent that is both appropriate for a family and where you can get a lease for more than a year. Germany has a well developed private rental sector because tenancy laws there make people want to rent -- not because tax gimmicks have made landlords want to own rental property (the UK strategy).

woman presenter appeared to want to keep the discussion on her terms and to her script... <_<

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Guest DissipatedYouthIsValuable
That's not how I see it, and it's certainly not how a BTLer will see it.

Essentially they are saying BTL is like a charity. Can you imagine how outraged people like this guy would be to hear that?

_40902502_hoog_pa_203x260.jpg

Van-"this is how I've got my tenants"-Hoogstraten

Now that is a bloke whose only benefit to this world will be when he's compostable.

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Personally, I don't know ANYONE who's bought in the past few years who hasn't paid AT LEAST 7 times their salary for a property.

OK, so it's London, but we're not talking Mayfair; these people (earning 25-30K p.a.) have bought in places like Hackney, Morden, Wood Green...

Now, if these people were told they couldn't have a loan above 4 times their income, where would the market be?

In a better state than it is now, I'm guessing.

Banks have a lot to answer for. As do the FSA. :angry:

How do they get a mortgage at these multiples?

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If we look at reality, the normal British wage is around £20K (median) and remember more than half the population earn less than that (taking into account part time and unemployed workers) Then by the BBC's reckoning, the average house is worth around £100K. Wonder what their research department bods get up to all day? not fact finding, thats for sure. Doing some simple calculations would show us the real discrepencies between what people realy earn and what property actualy costs. Perhaps these people dont realy want to know to what extent our money has been debased and to what level of servitude this ultimatly pushes the vast majority of the population down to. By any standards the Labour party is guilty, they have followed tory policies to the letter on this one.

I fully agree - lazy journalism at its worst. Even using ONS data their reporting is complete nonsense.

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How do they get a mortgage at these multiples?

Self cert and lie. A number of my friends have done this, including one case where an entire career was invented for the application. Extremely high *real* income multiples are a lot more common amongst FTBs than is generally thought. Eric Pebble's posts may be afflicted by schoolboyfontitis, but his stance on "lie to buy" is, in my experience, pretty much spot on.

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Yahoo is far more bearish

Young Priced Out Of Home Ownership

Almost a quarter of young working households have now been priced out of the property market, new figures show.

Property website Hometrack has also found that this figure has leapt to 50% in the worst effected areas such as London, the South East

(Advertisement)

and South West.

That is as the gap between average wages and house prices has grown to its widest in a decade.

Research for Hometrack by Professor Steve Wilcox of the University of York compared the incomes of working households with local house prices across the country.

First-time buyers in many areas of the country would need to borrow more than five times their household income to get on to the property ladder, it found.

At the same time, there were only a handful of areas where house prices were less than three times average household incomes - the traditional multiple that mortgage lenders will advance.

London is the worst-affected region with the average cost of a two to three bedroom room property in the capital more than five time average household earnings at the end of last year.

But the South West was also badly affected with property costing around 4.8 times local household earnings, while in the South East house prices were nearly 4.7 times greater than local pay.

Scotland is the most affordable area of the country, with just 16% of young working households there unable to get on to the property ladder.

The report also found that in England and Wales renting was considerably cheaper than buying, representing less than two-thirds of the costs of house purchase - bad news for buy-to-let investors.

"Not too long ago there was little difference between the costs of buying and renting," said Professor Wilcox.

"But while house prices tripled in the years since 1994, private sector rents only increased in line with earnings, and the costs of renting have as a result fallen relative to the costs of buying."

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