Re: Affordability
In 1997 the average house cost 3.55 times the average median local wage.
In 2017 that ration had risen to 7.8 times the average local wage.
This pattern isn't consistant across the country. There are areas where this ratio is much, much higher.
Taking one authority at random: South Oxfordshire. In 1997 it was 5.3, but by 2017 it was 11.9.
Given that a standard mortgage lender works on a 3.5 multipler this is something of a problem. Yes you can get higher multipers but you have to have exceptional credit and thats still taking a bloody huge risk and it will cost you more in the long run to do too.
Not only this, but the affordability of new housing is considerably worse: New homes typically cost 9.7 times wages, whereas existing homes cost 7.6 times full-time pay. Which doesn't exactly suggest that planning and schemes like help to buy are really resolving very much at all. Indeed it looks a lot like developers are lining their pockets and not building the type of housing stock thats really needed - four bed executive houses are much more typical than 2 bed starter homes.
And given the problem of extending your mortgage, thats also lending itself to encourage people to extend their existing homes thus also reducing the housing stock of smaller homes (and pushing their price up too in the process).
The ONS report which did the figures stated that: ‘Housing affordability has worsened significantly in 69 local authorities in England and Wales over the last five years, with over three-quarters of these being in London, the South East and the East.’
This means that if you grew up in this area, you pretty much can not just 'choose a rougher area or a longer commuter route'. Your options are leave the SE or rent. Your ability to do that depends on your employment options. Not everyone can just completely upsticks and move - because they need to keep a roof over their heads in the meantime or because they have family issues that might prevent them from moving - either needing family for childcare, or caring for an elderly relative or having a school age child and not wanting to disrupt their education.
The increase of the affordability ratio has been so rapid and so widespread that for an average household this has pushed home ownership out of range for an increasing number of people. I will stress the relevant point here being that these ratios are based on the local average wage. So even if you do move, you are unlikely to beat the issue, because you still are going to be subject to the local wage structure of the area you choose to move to. Great if you can, but you are going to be the exception to the rule. People suggesting you can, are talking out of their arses.
So you have to save for much much longer. What has happened is that the average age at which people buy their first house has risen considerably. This has consequences in itself for moving up the housing ladder later on. When you have children has an age limit. What that means is couples are having children and buying homes later - and this restricts their ability to move up the housing ladder. Whilst your career might advice you also have bigger outgoings relating to having children so lenders are less likely to give you bigger multiplers. So you might be able to buy your first home, but there is a fair old chance you'll be effectively stuck in a house which is too small for your needs unless you recieve a windfall of some description. Its seen as a growing issue that has been largely overlooked by government.
Its also been found that reporting / people commenting on home ownership is very misleading. Many newspapers say that people have 'saved' their deposit. Except when this has been examined, what they have found is that, no people have not 'saved' at all. Indeed the wages people are on would make it impossible for them to save the amount they needed even if they did so heavily for a decade - because the ratio between affordability and house prices has outstripped the amount they can save. The misleading reporting that people have 'saved' instead of being helped out by parents or recieving a windfall is compounding the politics of this by allowing this myth to continue, that 'if you just changed your lifestyle then you could buy a house'. The reality just does not hold true. If anything the reality that you will never be able to afford a house, is driving a lifestyle of not saving because 'well whats the point?'
Study after study has shown that home ownership is increasingly becoming more restricted to almost an upper middle class aspiration. Politically this is reflected in how people vote - and why there is a generational divide opening up about the age 40 mark.
I'm a home owner. When I look at local prices in 2013 I weep. We couldn't afford to move up the ladder then. Our household income has increased considerably - more than it has for all our contemporaries - and yet the affordability ratio has STILL outstripped our ability to move up. On 2013 prices we'd be laughing.
Threads of this nature piss me off relentlessly, cos of the 'I'm all right jack' dickheads who come on spouting arse which disproved in all the data that housing planners and the ONS produce. They are actively warning that affordability has increased to the point where people CAN NOT just save or make lifestyle changes or lower their expectations. Affordability rather than actual houseprices is the key measure. In terms of seeing a house as an investment - well thats not something that features in the minds of the current generation of first time buyers. The price increases of the past are completely unsustainable for all the reasons above. Home ownership is increasingly becoming about security rather than a long term investment thing.
The lady prattling on about chickens is dumb as the analogy does not convey any of this. It just makes people think she's talking out of her arse. But she speaks a lot more sense than a lot of people on this thread who know fuck all about affordability and how the economics and reality have changed.
/rant.