Updating post from Reddit.
According to the latest ONS Housing Affordability Report for 2023, home ownership is increasingly out of reach for first-time buyers.
The report, published today, highlighted that the average annual disposable household income was £35,000 in England for the financial year ending (FYE) 2023, while the average house price stood at £298,000, resulting in a ratio of 8.6 years of income.
An imprecise estimate is that a mortgage is limited to 5 times a household income.
Sources:
Data:
Typically, the ratio is as a proportion of earnings, not after tax, or based on disposable income.
House prices are now determined by two full time earners in an household, so the ratio is 4.2, in line with historical norms.
As a floor, the minimum wage is 24k x 2, so 48k for a household income.
Yeh this really screws anyone whose a single earner. You could be on 50k and seen as a higher earner but two people on 25k can combine expenses to a degree and won't be paying off student loans.
They may very well still be paying off student loans.
Possible sure idk the limits for all loan schemes off the top of my head. I know at 40k I am paying way more than 2x what I did at 28k however.
So what happens when rental or home owning is priced out? Increase in help for rent? But what about when there is a lack of stock?
Bought by someone else to rent out.
Large corporations and governments buy and rent out properties and private landlords are eventually priced out.
But this is saying more people can't afford to rent so what will happen?
Prices adjust demand, like every other market. Then demand adjusts price. There is no cure for high prices, better than high prices.
HMO's will become the norm and entire generations of family will start to share housing. Anyone who has no family will be using services to find a suitable flatmate to share living costs with and undesirable locations will start to pick up steam.
Despite the media frenzy, I honestly think we are at least 30 years off of housing being truly unaffordable. Other countries (including the one I'm working in right now) have it worse. When ex council housing in an area with no jobs is too expensive for a young couple to split between them, that's when we are nearing peak.
There is still a lot of room for growth and if people think it's bad now, they should prepare themselves for how much worse it's going to get. The days of being able to afford a 3 semi-detached with a nice garden on a single income are long gone and they aren't coming back.
At least not this century.
It only takes a government to put a significant tax system on landlords and they will pull out. Or an interest rate rise.
Once that happens prices would drop. If there's enough sentiment this will happen, and it's growing rapidly.
Landlords are already pulling out. The number of rental properties on the market is at five year lows yet rents and house prices are at new all time highs and predicted to skyrocket in the next few years. There will always be workarounds.
Rental properties are more efficient than lived in properties when it comes to housing. Artificially constraining supply does nothing to fix the underlying issue, costs will be passed on to the tenants.
However let's say you're right and the government goes full communist/authoritarian and controls the entire free market which would require a monumental shift in policy, one that would likely not be supported given 60% of the country are homeowners.
Even in that case there isn't enough housing out there. People will instead be living in cheap council HMOs. Nobody on a single income without dependents is going to be deemed priority for a 3 bedroom semi. Those days are gone.
You've kind of backed up my side of the argument. It would take a complete change of policy which wouldn't be supported as 60% of population are homeowners. Yet more people will be living in HMOs. So the numbers will topple, the sentiment will change and policy will follow. People can own property and not live in HMos, take that away and people will force change.
35k disposable seems laughable. 35k gross is out of reach for most and I have questions about what they consider disposable to be when you have a list of bills to pay including rent.
It does, to be disposable is after fixed costs. Perhaps ONS has a different meaning.
Yeh that's my definition. Who the hell has 35k available after that? A very very small % of people. So lies and statistics. None of which pass even the most basic test.