Sunday, May 3, 2009

Three times more affordable

First-time buyers still struggling to afford supposedly 'affordable' properties

"the average property bought by an FTB remains unaffordable for an average earner in all of the local authorities surveyed in London, South West, East of England and Northern Ireland." What the hell does that say about the price of houses, so why do papers continue to day GREEN SHOOTS GREEN SHOOTS? All I can say is THANK GOD FTB's are excluded with property prices due to fall 40% + thank heavens the lenders do not want to take any more loss upon themselves. Would someone be kind enough to explain to the bear of little brain what 3 times more affordable means? If the average property was £200000 in 2007 and it is now 3 times more affordable what does that mean as a % fall?

Posted by sybil13 @ 08:08 AM (1226 views)
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6 thoughts on “Three times more affordable

  • stillthinking says:

    In 1850 to 1900 the average property was out of reach of 95% of the population in the UK and Ireland, but there was no debt attached to the existing landowners, hence the nature of society forming social strata. If the FTBs cannot afford to purchase property, but the existing purchasers are able to hang on and pay down their debt through rental income, then ironically New Labour will have recreated the worker’s worst nightmare.

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  • brickormortis says:

    How can the term “affordability” be used so recklessly? The argument that affordability rises simply with the interest rates on offer is a nonsense. If interest rates rise from 3% to 6% then what was just affordable is no longer affordable at all. The measure of affordability should therefore be House price to earnings ratio which we all accept should be in the region of about 3 to 3.5 times salary.

    I have posted such a comment to the author and only hope he takes note.

    Surely encouraging people to feel that housing is affordable on the back of ludicrously, non-sustainably low interests rates. (Bar the total destruction of sterling, that is!)

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  • I have decided to put on hold my house purchase for the next decade, because by then, masses of baby boomers will need to downsize their homes to pay for their old age care. The problem will be the huge gap beneath them on the property ladder. They will realise the rungs supporting them for the past 40 or 50 fifty years are missing, so who will buy their homes from them at their hour of need? Not the average first timer at 34 years of age who hasn’t had the imaginary inflation of house prices that the boomers have all thrived on.

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  • stillthinking says:

    brickormortis,
    Curious you say that because you are obviously concerned about future inflation because I think that and I am sure many others do too. King is certainly not managing to establish credible belief in maintaining a 2% inflation target in the future, or perhaps he is being sabotaged by the borrowing of the government. This is why the deflationary spiral is going to tighten, and this must be what happened in the early days of Japan, the population was scared away from borrowing due to fear of higher rates (inducing their deflationary spiral), and after a few years of that, popular opinion became deflationary in outlook, again scaring the population away from borrowing due to debt servicing increasing in real terms. The Japanese government must have completely failed to persuade anybody of rigorous adherence to their target inflation rate.
    I also agree with will, destitute oldies only have one asset…

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  • It is about creating controversy and to get FTB confused. Anyway the banks have no money and their lending criteria is not designed for FTB because they do not have equity in their portfolio.

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  • Years ago I remember poster’s on this site advocating a FTB strike, in the face of the ridiculous prices for rabbit hutches. It took some time, but anyone looking at the graphs showing the current decline would be wise to hold on for now, particularly if they have held on for some time already. After all, whats another 6-12 months! anyone who buys now and gets into trouble within a year deserves no and I mean NO sympathy. This part of the cycle has a long, long, long way to go and most of it is going to be down.

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