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Housing gloom

by mel starrs on December 15, 2008

in Uncategorized

Been tidying up my RSS feeds, doing a bit of pruning and catching up on feeds. One of the feeds I’ve been diligently ignoring has been Brian’s Brickonomics. Having now read back over the past month, I’m utterly depressed.

Having had a quick look at the mortgage market out there, the best deal I could find was 20% deposit, 1.5% tracker and only 2.7 times combined earnings. Yikes. Given the median salary for the UK in 2008 (pdf), for a couple both in full time employment (both earning median wage), this means an “affordable”* house is roughly an overall price of £132,030 with a massive deposit of £26,406.

The average price according to the Halifax in November is still £163,605 (not sure if this is a median?). So, there are two paths. Either the lending gets ‘unfrozen’ and goes back up to 3.5 (i.e. 3.5 times median combined salaries of £171,150) or house prices continue to fall. The second scenario seems the most likely currently.

Brian has been accused of being gloomy. Looks to me like he’s just being realistic.

*affordable in this context is not the same as the generally accepted definition of “affordable housing” where rent or mortgage (and in some definition utilities) are no more then 30% of household income.