Mortgage costs for many at over 3/4 of their take-home pay.
Home prices 24 times average incomes.
Soaring foreclosures and insolvencies nationwide.
Yup. Ponzi Scheme. Executed perfectly here in England. A country that thought soaring home prices were a good thing for society, that everyone could get rich, that property prices can only go up and up and up and up, and that inflation has nothing to do with housing costs - thems are savin's after all ma!
They do call it the "Property Ladder" over here, and you know nobody every goes down the ladder - only up! Right? Right?
We'll see...
MORTGAGE COSTS ARE CRIPPLING
Daily Express (UK)
Home owners are having to fork out crippling mortgage payments which eat up as much as three-quarters of their take-home pay. Millions struggling with record utility bills and rising interest rates are paying an average of 51 per cent of their net income.
But, with some parts of the country seeing house prices rocket to 24 times the average salary for the area, many are being forced to pay up to 71 per cent of their wages to put a roof over their heads.
The figures were revealed in a report which makes clear the shocking financial burden being shouldered by hard-working families because of soaring property prices.
The grim report reveals that the property boom pushed average house prices to more than six-and-a-half times salaries last year – up a formidable seven per cent from the previous year’s figure. It led experts to warn that while rising prices are felt by many to be positive, any significant increase in interest rates could have a damaging impact on households.
Rob McPherson, of management consultants Hay Group which produced the study, titled Home Truths: Pay and Property 2006, said: “Rising house prices are outstripping take-home pay, placing enormous pressure on home owners.“Increased house values may make consumers feel more wealthy, but the truth is that the buying power of wages has taken a serious hit when it comes to property.
Citizens Advice policy officer Peter Tutton said: “We are already seeing a rapidly growing number of people falling behind with mortgage payments and in some cases threatened with repossession.
“We know that some people are taking on mortgages that stretch them to the limit. Increases in interest rates could spell disaster.”
February 18, 2007
View from England: How do you know when it's a housing mania? When people with jobs can't afford a home anymore.
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16 comments:
I hope the UK crashes and burns to the wahzoo! If you have ever tried to buy a house in South of France, Rhone Valley Switzerland, Chamonix you will very quickly realize that the Brits have been driving prices sky high! It is darn annoying to those people (like me) who would like to buy a place in these regions without having to sell my soul.
Keith,
In Pounds Sterling what is the average price of a home in the UK? How many square feet (or square meters) is this?
And what is the officially stated average salary in the UK?
Big Cheese
Another thing...
Where did the Brits get the money to pay for all this property? I thought the lending terms weren't as loose as the US?
-BC
Keif, I have posted this before and I think you did not publish it.
In the Euro zone its not only housing that’s expensive.
I traveled there this summer.
Everything from food, clothing, houseware, hardware etc. are insanely expensive compare to everyday items here in the US.
Europeans are poor, not only financially.
I sense multiple Robin Hoods are being created at every moment. Think about it: 71% of salary going to pay the Lord?!? Mortgage brokers and tax collectors beware! Stay the F out of Sherwood Forest (ok, the streets at night) or there's going to be a bunch of peasants robbin' you blind...
And just pray the French don't revert to La Revolucion and break out La Guillotine...
is that a pic of the queen mum?????
I hear what you're saying, but I think it's unfair to blame just the Brits.
House prices in Ireland are ludicrous, it isn't the Brits pushing up the prices.
The Germans have been buying holiday property throughout Europe for over 20 years to my knowledge, you do remember how strong the Deutschmark was prior to the Euro?
A worldwide credit boom is to blame, and interest rates are on the rise. with a base rate of 5%, an increase of 1% (and it's on the cards) will increase mortgage payments 20%!! Watch this idiocy unravel before your very eyes.
My one bedroom flat in Chelsea would list for about $1.2 million
Granted, it's nice and all, but in a sane world would go for $400k tops. That would about break even on rental income.
$1.2 million is a joke. But the russians and saudis don't care - to them $1.2 million is chump change, and they're not looking at rental income.
The real fool is anyone who's buying and is looking to rental income, or someone who would be wiped out if $1.2 million turns into $400k.
The ride up will go on here longer than I would have guessed. And the ride down will be fantastic.
"My one bedroom flat in Chelsea would list for about $1.2 million"
That's not too far from Manhattan's own Chelsea.
The typical Manhattan 1br apartment goes for roughly $1 million and I believe the 2br mean is somewhere around $1.2 million.
I think it's only a matter of time when that $1.2 million becomes $600K.
I was in England and France last spring. England was very overpriced. Food was outrageous except for a very few foreign owned food carts and holes in the wall. Train tickets were high (no subsidies). Supermarket no better. However, milk was cheaper than US and tasted soooo much better. Go fig!
French food where I was buying (train station, then later in Claremont-Ferrand which is certainly not fancy dining in Paris, that's more like NYC) was reasonable, about like US but better tasting. Books were MUCH cheaper (even including how I got raped on exchange rate!). Train tickets were comparable to Amtrak (subsidized). Museum fees were reasonable (you get big discounts if you're under 18 which I am no longer ... sigh). Youth hostel for one night was wicked cheap (Paris), subway in Paris WAY cheaper than anywhere in US today ... maybe France just has a weak economy (like OK after oil bust, when I noticed McD's prices were lower than the rest of the country).
Exchange rate is worse today, which would make France more expensive, but it wasn't bad last year. London ... obvious bubble, and worse now? Wow.
One thing I noticed was that houses and apts in Europe are FAR smaller than the new building in the US. Britain's housing stock looks downright decripit, while France one could fairly say is much more 'modest'. We do enjoy great wealth (in some sense) here in the US.
Keith, I think you are mistaking the disappearance of the middle class with a "housing bubble"
Skyrocketing housing prices (aka "bubble") are a symptom of the middle class being inflated away.
It's the dollar stupid
Citizens Advice policy officer, Peter Taylor: "We know some people are taking on mortgages that stretch them to the limit. Increases in interest rates could spell disaster".
Earth to Peter Taylor: It's not the interest rate that's the problem, it's the ASSET PRICE.
Jeesh. ....Get. With. The. Program.
Keith,
How about outside the city of London? Say Birmingham, Manchester, Newcastle...? Are houses more affordable there?
-Big Cheese
"Increased house values may make consumers feel more wealthy, but the truth is that the buying power of wages has taken a serious hit when it comes to property."
Shows once again that inflation only truly benefits the slick, ruthless, and corrupt.
Keith, I think you are mistaking the disappearance of the middle class with a "housing bubble"
Skyrocketing housing prices (aka "bubble") are a symptom of the middle class being inflated away.
If there is no middle-class, there won't be any demand for the $500K crap box in the slum of L.A.
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