fr8neck Posted December 25, 2006 Share Posted December 25, 2006 What was this calculation The calculation is what mortgage lenders will traditionally lend: 3 1/2 x annual earnings. I've just sold a terraced house in Worksop for £64,000 ; so they are available at around that price, but not in particularly pleasant areas. Around the country the average earnings/ house price equation seems to lack any real link. I think the market is distorted by: the buy-to-rent market (where those with excess cash add themselves to the 'demand' side of the supply/demand equation) : immigration, both permanent and temporary (the however-many-100,000 Poles etc don't live in the wall cavities do they?) : and the availability of lendable mortgage money.( there is presently a glut of this cash and the 'auction' character of house purchase allows prices to be bid-up by simply offering larger sums to all interested parties)* *This last deserves a thread all of it's own imo. Link to comment Share on other sites More sharing options...
the_mandarin Posted December 25, 2006 Share Posted December 25, 2006 Well I don't live at home, so it isn't loads, but I'm happy. That is what is most important - that you are happy and can manage on what you have. There are people who make less than 500 a month and happily live off that, and there are people who make more than a grand and still have to borrow. Not much of a choice about who I would like to be Link to comment Share on other sites More sharing options...
Savannah2 Posted December 25, 2006 Share Posted December 25, 2006 That is what is most important - that you are happy and can manage on what you have. There are people who make less than 500 a month and happily live off that, and there are people who make more than a grand and still have to borrow. Not much of a choice about who I would like to be Thank you...there are people people that are worse off than myself, out of my money this December I manged to give £15 to Shelter...not a great amount I know, but I hope it helps someone worse off than myself. Link to comment Share on other sites More sharing options...
King Rat Posted December 25, 2006 Share Posted December 25, 2006 Seems to be a bizarre mix. Lots of people on 14 - 17k Lots on 50k per year. Just trying to get my head around the house prices in sheffield I personally think the gap between the rich & the poor in Sheffield is grerater now than it has ever been, mostly because if the house prices increasing particular in the poorer districts of Sheffield which makes it even more difficult for people get on the housing ladder, plus the fact that many people now are in short term employment. Link to comment Share on other sites More sharing options...
coopster1974 Posted December 25, 2006 Share Posted December 25, 2006 The calculation is what mortgage lenders will traditionally lend: 3 1/2 x annual earnings. I've just sold a terraced house in Worksop for £64,000 ; so they are available at around that price, but not in particularly pleasant areas. Around the country the average earnings/ house price equation seems to lack any real link. I think the market is distorted by: the buy-to-rent market (where those with excess cash add themselves to the 'demand' side of the supply/demand equation) : immigration, both permanent and temporary (the however-many-100,000 Poles etc don't live in the wall cavities do they?) : and the availability of lendable mortgage money.( there is presently a glut of this cash and the 'auction' character of house purchase allows prices to be bid-up by simply offering larger sums to all interested parties)* *This last deserves a thread all of it's own imo. I think the point was that 20k x 3.5 is 70k not 65. Link to comment Share on other sites More sharing options...
Cyclone Posted December 25, 2006 Share Posted December 25, 2006 3.5 is the 'old' calculation anyhow. You can find a lender to lend you 5* your salary if you wish or you can self certify and borrow as much as you can actually afford to repay. Link to comment Share on other sites More sharing options...
upinwath Posted December 25, 2006 Share Posted December 25, 2006 House prices have shot up. Lots of new cars about. All the kids have fancy trainers and god knows what toys. Perhaps it's not a question of how much people are earning but how much they are getting themselves into trouble with loans of one sort or another. Lots of ads about getting out of credit problems so there must be a trend going on. Link to comment Share on other sites More sharing options...
the_mandarin Posted December 25, 2006 Share Posted December 25, 2006 I think the point was that 20k x 3.5 is 70k not 65. Actually - no! I wasn't pointing out the incorrect math. I wanted to know what fr8neck has explained (Thanks for that, mate ) The fact that lenders are ready to lean you 3.5 (or 5) times what you earn is not what I find encouraging. But the fact that someone would be willing to borrow that big a sum is what I find scary. But then again, may be its just me! Link to comment Share on other sites More sharing options...
Cyclone Posted December 25, 2006 Share Posted December 25, 2006 There certainly is a debt problem, but i'm not sure that it rests in the demographic you're suggesting... The big portion of house price rises has occured in the last 5, maybe 6 years. That leaves a lot of people reaching their late 20's or early 30's now who got on the ladder before it got silly. In the time since these people got cheap (compared to today) houses, there careers have been progressing and their incomes have risen. These are the people buying new or nearly new cars, and of course there are a lot of jobs where the car comes with it. Link to comment Share on other sites More sharing options...
Cyclone Posted December 25, 2006 Share Posted December 25, 2006 Actually - no! I wasn't pointing out the incorrect math. I wanted to know what fr8neck has explained (Thanks for that, mate ) The fact that lenders are ready to lean you 3.5 (or 5) times what you earn is not what I find encouraging. But the fact that someone would be willing to borrow that big a sum is what I find scary. But then again, may be its just me! People have borrowed 3.5 times their income since the idea of owning your own house was popularised. It's not an amount that's really difficult to repay, and since it's secured on a house, which historically is a pretty good investment it's not particularly unsafe either. Buying a house is a big financial comitment to be sure, but quite a reasonable/sensible one if you plan it right. Link to comment Share on other sites More sharing options...
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