Wednesday, December 31, 2008

Thats nice

U.K. Housing Becomes Most Affordable in Five Years, HBOS Says

"HBOS said that properties in London, Wales, Northern Ireland and the West Midlands are still unaffordable for those buying their first home".....says it all really.

Posted by bystander @ 12:39 AM (772 views)
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10 thoughts on “Thats nice

  • little professor says:

    How recockulous. Strange that they have just launched this new “Halifax First-Time Buyer (FTB) Affordability Review,” based on the ratio of house prices to average incomes, when for years while HPI was booming they were telling us this ratio didn’t matter, you could borrow as much as you liked, because interest rates were low and so your monthly payments were still affordable. They used this as a justification for ever-increasing mortgage amounts as multiples of salaries – people were getting 5x, 6x their annual salaries.

    Traditionally the long term average for a mortgage is 3.5x salary. Average wage of around £25k a year means the average house price should be around £103,000, assuming a 15% deposit. We’ve got a long way to go yet

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  • little professor says:

    From back in the day:

    Whilst reading that article also found this gem from June 2007. How quickly things change:

    “City bonuses will drive house prices still higher”
    A bumper start to 2007 for City dealmakers and traders means that bonuses at least equalling last year’s £8.8 billion are on the cards, according to forecasters.

    Much of this cash will be pumped straight into prime London flats and houses, helping to maintain the relentless upward march of prices despite higher interest rates.

    Shares have also risen on the back of a strong global economy with the FTSE 100 rising to within 350 points of its all time high in recent weeks.

    Andrew Weir, area director for Central London at Foxtons, says there is still no shortage of buyers even at today’s inflated prices.

    He said: “We are still registering around 150 new buyers a week in each of our central London branches, but they only take on about 20 new properties a week. “

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  • gone-to-colombia says:

    Something is only affordable if one has the money to pay for it.
    One’s own money, these days, and not another’s.

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  • Everybody seems to be in the habit of talking the housing market up these days….and we are only just going into recession.

    There still is a strong prevelance of the underlying belief that ”houses will only ever go up in price”.

    The next few years will show that this simply isn’t true.

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  • japanese uncle says:

    Good news! Then let’s make it even more affordable by wating a few more years.

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  • The mortgage securitisation system that enabled the hp bubble is broken. House prices can only recover if this system can be mended. Central Bankers know this and that falling house prices guarantee a long recession. My guess is that once Central Bankers feel they have prevented the Financial System from imploding they are going to focus on the house price crash. The Fed is already targetting long term interest rates to try drop mortgage rates. Buying up bad mortgage securities will probably increase. More nationalisation of the banking system. Much more meddling to come and yes probably a dead cat bounce somewhere along the line.

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  • it_is_going_with_a_bang says:

    “HBOS said that properties in London, Wales, Northern Ireland and the West Midlands are still unaffordable for those buying their first home.”

    Hmmm. i think a list of where property is ‘easily’ affordable anywhere in the UK would be more useful.
    I think they missed southern, eastern, western and northern England off the list.

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  • Yesterday we get all the commentators bleating that prices are ‘only’ back down to where they were in Feb 2006 and now HBOS is saying they are the ‘most affordable’ in 5 years.

    I wonder if the average earnings part of the ratio includes only those people who are employed, or is an average of any income including benefits. Since unemployment hits the youngest hardest, an average of how much employed first time buyers earn will become irrelevant as many of them struggle to find a job.

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  • notaneconomicsguru says:

    6. I think house prices are unlikely to be recovered by a return to previous levels of securitisation, simply because the cost of securitisation has gone up so much because investors and insurer’s won’t take the risks at the prices they would a little while back. In short I think we are unlikely to get back to those levels of securitisation. In my view house prices will only stabliise once they descend back to a level at which borrowing can once again be largely met by bank deposits – the way it used to be. That should take away all of the froth off the market generated by at least the last 5 to 7 years. That seems healthy. There are some signs that people do realise that they now have to spend less and pay back more. Once established I expect that trend to become quite powerful – just as it became so about 18 years ago.

    Also I do not think that HPC by itself gaurantees a long recession but I do believe that when the recession ends HPC will continue for some time afterwards

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  • LittleProfessor

    I thought the average Salary was £38k according to the Nationwide a couple of weeks ago. Well I guess thats what happens when you allow people to lie about their Salary when applying for a mortgage. From now on I just 25 years old.

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