Tuesday, July 15, 2014

Carney tells MP’s that High House Prices make EVERYTHING unaffordable

Bank of England governor warns of a bubble as UK house prices rise 10.5%

What the members on here have been saying for years........ Carney said that as house prices rise, individuals become increasingly overstretched financially in order to afford to buy a house, prompting them to cut spending on other things. "What we were trying to address was the indirect risk from indebtedness ... and the macroeconomic consequences of that. Because history shows British people pay their mortgages, there are very low default rates on mortgages. What happens if households are borrowing at high multiples is they have to economise on everything else in order to pay their mortgages.

Posted by daniel @ 03:07 PM (2822 views)
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6 thoughts on “Carney tells MP’s that High House Prices make EVERYTHING unaffordable

  • Out of the hundreds of comments, the Guardian Pick comment, chosen by the Guardian staff could have come straight from HPC:

    House Prices are MASSIVELY overinflated against all historic measures of affordability, and unfortunately, our society has come down to the ‘haves’ and the ‘have nots’

    [People on the ladder dont want to hear this, so I’ll expect the usual niggles and insults.]

    But the facts are there for all to see.

    The averagely priced house, since about 1952, through to recently, has been bought for a median of no more than 3.5x individual average salary, with an average mortgage rate of 7% interest, and an average downpayment of 10%.

    Thats been the definition of affordability for half a century.

    Yet the national average wage earner, today, who, according to the ONS is on £26k, who buys the averagely priced house, at £250k, will be paying 10x his/her individual salary.

    And the cost of living is higher today as well. If you are priced out you should ‘refuse to buy’

    You could HALVE house prices overnight and they would still be massively overinflated against all historic measures of affordability.

    Peaks and troughs, and variations, in locations, and prices, have always existed, thats why there is an average.
    So individual examples, are not as accurate as taking the average mean.

    And the individual national average wage has always been able to buy the averagely priced house, all throughout the 1950’s, 1960’s, 1970’s, 1980’s and 1990’s.
    For between 2.5x – 3.5x individual income.

    Yet today its a staggering 10x individual income

    The 8 million plus renters, priced out of a house and a life, should not be voting Lib/Lab/Con.

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  • sibley's b'stard child says:

    Overinflated land prices in drain on productive economy shocker.

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  • Hi Sib’s – I’m just back from a few weeks holiday and spotted various articles on the Wilson’s selling up whilst away, not sure if anyone posted a related article here on HPC ? (there appears to be little activity full stop these day’s)

    See http://www.theguardian.com/money/2014/jul/07/britains-biggest-buy-to-let-landlords-sell-entire-portfolio

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  • sibley's b'stard child says:

    Hi Jack, welcome back; go anywhere nice?

    That’s right, it appears the Wilson’s have been lured from their media hiatus. This is definitely ‘calling the top’ territory. When the big boys are exiting it can only mean one thing….

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  • Hi Sib’s – couple of weeks on the Balearic Islands which was very nice.

    My thoughts entirely – if the Wilson’s can now actually exit it’s surely got to be top of the market territory.

    “When the big boys are exiting it can only mean one thing….” – more Government intervention to keep the party going no doubt (lol)

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  • sibley's b'stard child says:

    True Jack, ‘what won’t the gov do to protect the rentiers’ can only be answered with ‘nothing’.

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