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And as a multiple of income, the average first-time mortgage dropped back from 3.38 to 3.32 times income.

Oh really? I'm delighted to see that houses as so affordable.

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The CML figures show that in January the average loan taken by a first-time buyer dropped from £117,921 to £115,000.

The knock-on effect was that the average loan as a percentage of the purchase price fell for the first time since early 2005, from 90% to 88% .

And as a multiple of income, the average first-time mortgage dropped back from 3.38 to 3.32 times income.

This implies that currently the average first time buyer is earning 34.5k, versus the average income of 24k.

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Oh really? I'm delighted to see that houses as so affordable.

Yes indeed. Under 3.5 times income. Very cheap. What has all the "unaffordable" housing fuss been about. They have been cheap all along and we just didn't realise it.

I'm off to pick up some bargains at around 120k. Hang on, just had a butchers in my local rag and the only thing you can get for under 180k is a bedsit overlooking the Birmingham Road with heavy traffic passing 2 feet from your front door.

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They've released this a day early, I wonder if tomorrow's budget was a factor?

The figures are shocking! It's going to be carnage on the Halifax/Nationwide/Land Registry figures May onwards!

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New loans for home buyers fell to 50,300 in January.

I seem to remember below 70,000 was bad so 50,000 must be very bad.

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Is there anyone left who believes prices will 'plateau'? :lol:

Yes, you just need to rotate the chart through 60 degrees anti-clockwise. "Cyclically adjusted", so to speak.

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Oh really? I'm delighted to see that houses as so affordable.

yes those median income multiples are something being used recently to defend affordability by VIs.

The CML has historical data for those median figures on a .XLS on its website. You can see there that the median figures over the past year are by far the highest recorded since the start of the data in 1978. For comparison, the median towards the end of 1989 was 2.31.

source CML http://www.cml.org.uk/cml/media/press/1537 (sheet ML2 - first time buyers, lending and affordability)

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Must be talking about a 40 year-interest only mortgage such a promising start for a young couple!

Isn't this a by-product of them turning the taps off at sub prime and higher multiples?

I see this as a lending criteria issue, not an affordability issue.

I thought it would be worse than that, but I see they are talking about January.

Actually, why are they talking about January?

Should we be seeing the Feb figures from the CML?

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Wow.

August 2007 - 103,000 loans for home purchase

January 2008 - 50,300 loans for home purchase

Wow, wow, wow.

That's some wow-factor.

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This implies that currently the average first time buyer is earning 34.5k, versus the average income of 24k.

Are they talking about single incomes though? It used to be 3.5 times a single income, now they seem to have craftily switched to joint incomes.

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They've released this a day early, I wonder if tomorrow's budget was a factor?

The figures are shocking! It's going to be carnage on the Halifax/Nationwide/Land Registry figures May onwards!

I'm sure the budget was a factor. If you look at the three key UK players

FSA - moribund - waiting to be closed, hived off, reformed after the NR fiasco.

BoE - shackled to CPI 2.0 - with inflation out of the trap and running.

Treasury - clueless, and caught in a very hard place with a tanking economy, falling tax revenues and rising benefit costs.

The Treasury's task is to carry out the impossible - make NuLabour electable in the next 18 months - by persuading everyone that the economy is okay, their house values secure, and that the pound isn't toast.

If CPI 2.0 stands, then the BoE look the villain of the piece, with interest rates being held-up or even rising to keep to the CPI target.

I wonder whether the BoE would actually be pushing for a change to CPI 3.5 - because it would allow them to have some chance of keeping the economy going. It would keep the FTSE up, and allow them to cut rates, while the downside would be sterling and import prices.

However, the question is whether Brown and Darling can emerge with a shred of credibility if they abandon CPI 2.0 when the going gets tough. UK must be already starting to look like a banana republic to the big banks, and I can see them taking their toys over to the asian markets, rather than stay in a recessionary UK. If sterling tanks too badly, those international bankers who've settled in London will find their wealth dropping very quickly. Especially compared to their colleagues in Zurich, Paris, Tokyo or Hong Kong.

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Is there anyone left who believes prices will 'plateau'? :lol:
Is there anyone left who believes prices will 'plateau'? :lol:

According to leading Professor Frederick Schnappzeil, Ph.D., chair of forensic economics at Dresdener Akademie, it is possible for a plateau to form in any given market following a run up in prices above and beyond levels of sustainability viz. wages. It requires the total agreement of sellers to maintain prices at a level on any given day for a considerable period of time. The "plateau" or, as the economists call it, the "fiscal equilibrium of price stasis" will only work as long as the agreement to maintain selling prices is in force. If one seller lowers the price or if a reposession leads to a fall in the price the plateau scenario is quickly broken. <_<

The probablility of a plateau forming in a cyclical economic model is thought to be less than impossible in practice. Famous psychiatrist and behavioural modification expert, Dr. Viktor Frankl* suggested that dwelling on the possibility of the virtually impossible is classic delusional wishfull thinking. It is better, according to Frankl, to confront your worst fears and turn them to your advantage. In an HPC scenario, he would probably advise to sell quick before everyone else tries to do the same thing.

_________________

Frankl, Viktor, "Man's Search for Meaning" a classic work on behaviour modification related to fearful situations.

Edited by Realistbear

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Conspiracy theories aside, look at the figures; 75,500 last January, 50,300 this January. THAT'S SHOCKING!

If this trend continues, a 30% drop in prices in this calendar year is a betting certainty.

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Conspiracy theories aside, look at the figures; 75,500 last January, 50,300 this January. THAT'S SHOCKING!

If this trend continues, a 30% drop in prices in this calendar year is a betting certainty.

I have no reason to doubt that view. A 30-40% drop in 2008 is not beyond the realms of possibility. 2008 is going to be a very bad year for house prices, sterling and Gordon Brown's political career.

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To add something that's often missed ...

Although the average national house price hovers around the 200k figure these days, the average first time buyer property, outside of London, is likely to be significantly under 200k.

Maximum £150k, or a more realistic figure for a first time buyer, buying as a couple, would be 135k.

10% deposit = 13k

Mortgage of 121k.

Fits in with the figures from CML.

So lets take the average household income of 34k, that's three times income.

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I have no reason to doubt that view. A 30-40% drop in 2008 is not beyond the realms of possibility. 2008 is going to be a very bad year for house prices, sterling and Gordon Brown's political career.

I know, but it's still a shock to see the first real figure that confirms the theory.

This truly is a red letter day; first Leonard Cohen announces his first tour since the early 90's and now this. I may have to raise a glass of something expensive tonight to celebrate.

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So lets take the average household income of 34k, that's three times income.

But it used to be 3X single income, not "household income." I know because I used to buy houses on my single income.

Try doing it now!

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Conspiracy theories aside, look at the figures; 75,500 last January, 50,300 this January. THAT'S SHOCKING!

If this trend continues, a 30% drop in prices in this calendar year is a betting certainty.

It is shocking.

There was a statement recently that a normally functioning UK housing market averages about 140k transactions a month, with 100k "forced transactions" (job relocations, divorces, bereavments etc), and 40k "life-style transactions" (up-sizing or down-sizing through choice). In February the UK market was achieving only 80k transactions, so less than even the "forced" component requires. That suggests there's a mighty inventory overhang building up in EA windows!

Unfortunately I'm not quite as confident that this will translate to a 30% price drop by the end of this year.

As a STR'r I'd be delighted to be proven wrong, but I experienced first-hand the unbelievable downward "stickiness" of house prices during the last crash, and I know how stubborn and intractable the average UK seller can be when it comes to adjusting their attitude towards the market value of their home!

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I know, but it's still a shock to see the first real figure that confirms the theory.

This truly is a red letter day; first Leonard Cohen announces his first tour since the early 90's and now this. I may have to raise a glass of something expensive tonight to celebrate.

Paddles, I beg you, don't go for a glass of the expensive stuff. Stick to wine, or vintage champagne, because petrol - despite the glamour of its expensive image is actually really bad for you!

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  • 293 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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