Monday, April 5, 2010

Same old tripe about FTB house affordability, with absolutely no mention of prices being too high!

The struggle of first-time house buyers

Richard Westcott reports on the obvious - FTB's can't afford a home, and doesn't even mention the fact that house prices are 5x salary. Dooh, wake up and smell the coffee. Prices are too high. People aren't buying because they can't afford the inflated prices.

Posted by markj69 str05 @ 09:28 PM (2280 views)
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18 thoughts on “Same old tripe about FTB house affordability, with absolutely no mention of prices being too high!

  • markj69 str05 says:

    Sorry about this guys and girls, I know it’s more of the same. But I just hate to see this sort of media coverage withtout any comment on actual house prices.

    The chaps comment – ‘I think we’re in a situation where we’re going to see very slow thawing, very slow improving in market conditions’.

    Ha ha ha ha ha. Does that mean it’s currently frozen??? I suggest you keep your thermals on for a little while longer.

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  • Diddums. What will they do? Rent. Imagine that. Horrors. Worse than not getting on the housing ladder, they’re not climbing the social ladder.

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  • Jocelyn King says:

    House prices are as affordable to FTB as ever. I bought my first house in 1978 at the age of 19 for £10,500.- a 3 bed Victorian terrace in East sussex. We had joint salaries of £2000 – so just over 5 x JOINT salaries. Mortgage was £65 month, all of my first month’s take home salary. We saved £2000 deposit over 2 years from the age of 17 by staying in most of the week and only going out at weekends, living with our parents until we could afford house. Parents took out £500 overdraft to top up balance and we paid this back 3 years later. We went without a car for first year and I caught 2 buses and a train to get to work – took 1 1/2 hours, left a 7am to get there. Had no washing machine for a year and just a black & white portable tv for first 5 years.

    If you really want to buy a house you CAN but don’t expect it to be easy. Don’t expect someone to do it for you and don’t expect to have everything you want AND a buy a house, for most it’s not like that.

    Fed up with hearing people winding up the hysteria on this one. It’s about Priorities that’s all – wake up and smell the coffee.

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  • mark wadsworth says:

    Philippa is billed as a school teacher and says things like “For Scott and I…” at 1 minute 8 seconds in.

    Write out one hundred times “For Scott and me”.

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  • “the Easter weekend traditionally marks the start of the house-hunting season”

    Seriously? Where do they find these journalists?!

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  • And the solution is always the same to these idiots. It’s not that house prices are too high but credit is too expensive.

    I am shocked but not surprised that this tripe is still being trotted out by the BBC.

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  • Livinginababylon says:

    Try 10 x the average salary down here in the South east! The question is will prices ever drop to a more affordable level im not sure but all i can say the way it is going is ridiculous and first time buyers are seriously buggered so to speak. I supose the younger generation will have to pay for years of property booms and greed by those who saw property as a way of making money rather than a home sending house prices into rediculosly inflated prices this country is trully a complete piss take!

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  • Livinginababylon says:

    its a joke

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  • As soon as I saw the Burberry collar on the dog I knew this would be good.

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  • These commentators seem to be saying the banks aren’t lending enough or repayments are too high.

    If 2 people want to buy locally (Essex, M25) and they are averaging £30k each, then they can’t afford local prices. They are priced out until houses become cheaper. And these are the ones who “went to university and worked hard”. They deserve better, and better (IMHO) is NOT a millstone which will last forever, but an affordable place to live.

    I think the BBC is out of focus here. Prices need to go down.

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  • it_is_going_with_a_bang says:

    Just about everything else in life that we have to pay for is carefully scrutinized for it’s value and it’s price generally forced as low is it can be and is not artificially supported at high levels. Yet with property this does not happen – in fact quite the reverse.

    The most expensive thing most people will ever have to buy and yet the price is openly forced as high as possible over time. To the point where most new ‘buyers’ won’t ever actually buy it in full/ pay it off, they will just have a debt to service.

    Who would have thought it could happen during 13 years of a Labour government.

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  • A piece that glaringly misses the elephant in the room..!

    ..when it refers to first time buyers having halved, you have to remember that it’s actually far worse than that.

    A lot of ‘first time buyers’ are people who have left the property market and then re-entered, usually following divorce, and are being counted for the second time. These people often have the benefit of equity saved from their previous encounter with the property market, and are in a much stronger position, financially.

    If you then strip out those FTB’s who have the benefit of family money, you realise that the number of ‘traditional’ FTB’s – young people with no financial assistance, saving up a deposit and then buying – has totally collapsed.

    Unless there is renewed interest in buying property to let (and why anyone would want to do that now is beyond logic..) it follows that the supply/demand side of the market is heavily skewed against the support of current price levels.

    The real killer though, I believe, will be rising interest rates..

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  • Jocelyn King said, “House prices are as affordable to FTB as ever. I bought my first house in 1978 at the age of 19 for £10,500. We had joint salaries of £2000 – so just over 5 x JOINT salaries. Mortgage was £65 month, all of my first month’s take home salary. We saved £2000 deposit over 2 years from the age of 17 by staying in most of the week and only going out at weekends, living with our parents until we could afford house. Parents took out £500 overdraft to top up balance and we paid this back 3 years later.”

    * 4 times joint salary ( Loan / Salary = (10500-2000-500)/2000 = 4) – so you stretched it slightly. Nice to have had that last 5% as an interest free loan (I assume) over three years, rather than having to borrow more at a 20% LTV rather than less at a 25% LTV.
    * £65/month – the salary of the lower earner and putting payments at 39% of income – sounds about right from the above (slightly stretched).
    * Only going out at weekends – that’s not exactly putting yourself through /that/ much really is it?! (not having a car, well depends where you lived I guess).

    so far I am pretty much in agreement. However …

    * Using ONS RPI data your joint wage of £2000 in 1978 is equivalent to a couple today (OK last year) who earn all of £8,575 – only a touch more than a couple on benefits with no dependants. On the same measure the house (£10,500) would be all of £34,300. Yes these maybe slightly out of line with wage inflation, but not by much – If I were to add a whole percent of wage inflation every year on top of RPI (pretty generous!) these two would be £11500 and £46,025. Now tell me that it’s the same now! …
    46K won’t buy you much more than a garage unless you’re in the middle of nowhere (or looking at it the other way a couple taking 11.5K a year are unlikely to be buying a house, they may be saving for one, but it’ll take around 10 years with the tightest of budgets rather than two with a fairly tight one)
    – basically wage inflation and house price inflation have gotten completely out of kilter – there has not been equivalent give in other costs of living, so the most likely problem is that house prices have grown too fast (or energy prices, or most likely both).
    165000 / 46000 = 3.585 ( I assume the house was typical but maybe not, how much is it valued at now?)
    Are we going to see this equivalent couple suddenly successfully demanding they are paid three and a half times as much to put themselves in an equivalent position to that which you found yourself in? I don’t think so!

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  • Jocelyn,

    Back in 1978 I had my very first job in a local factory. Not long after I joined, the unskilled workers in the factory got their pay increased to £1.00 per hour. Today the factory is still there, and the same workers now get £6.80 per hour, a multiplier of 6.8.

    The old title deeds to the house I live in today reveal that it changed hands in 1978, for just one eighteenth of what I would expect to get if I sold it now.

    So if you were starting out 32 years ago with the same mountain to climb that young people face today, that first home would not have been priced at £10,500, but about £27,800..

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  • Thanks UT a good bit of anecdotal evidence.
    I thought my 1% on top was generous… maybe not so, 6.8 would put it at a whopping 21.6%
    (Maybe the factory worker’s union did a good job for them over the years though?)

    If it is 6.8 that would make:
    Equivalent joint salary = £13,600
    Equivalent house price = £71,400
    Required salary multiplier if this is a typical house = 2.3
    Same argument holds (although we /only/ want 2.3 not 3.5 times as much pay).

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  • oops made a mistake, it would NOT make it 21.6% it would make it 1.57%. Thought that was a bit crazy. Still quite a good rate over RPI for them though.

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