Collapse of the UK housing market

[Tara]

I can't read the Bloomberg article without setting up an account, but I remember some research from about 20 years ago that the long-term average house price to income ratio was about 3.5 in the UK, and that if we go much above that level we're heading into bubble territory.

I'm a bit behind collecting my data on this, but on a quick yahoo search I got average price £295k and income £31.4k, so the ratio is over 9!!

The earnings multiple is a crude measure and, for instance, takes no account of mortgage rates. Most buyers do not look at price but rather what the monthly mortgage payment is.

The market is also very local. There are locations, particularly in London and Devon/Cornwall, where home prices are 20 times local annual income, and yet demand is strong.

If the demand is strong at 20 times local income, then the demand will mainly be from wealthy people from outside the area. The local people are not able to afford house prices at 20 times their income. So where are they supposed to live?

Here are some places I cannot afford to live:

Aruba
Monaco
Aspen
Andorra
Knightsbridge
NYC upper east side

Should laws be passed so I can live in places I cannot afford? Should I demand subsidies so I can afford them?

None of that is relevant to Devon and Cornwall where you said house prices are 20 times local income. Young people who are born there are not able to afford to live there. That is wrong. And yes, the government should do something about it.

[BullDog]

I can't read the Bloomberg article without setting up an account, but I remember some research from about 20 years ago that the long-term average house price to income ratio was about 3.5 in the UK, and that if we go much above that level we're heading into bubble territory.

I'm a bit behind collecting my data on this, but on a quick yahoo search I got average price £295k and income £31.4k, so the ratio is over 9!!

The earnings multiple is a crude measure and, for instance, takes no account of mortgage rates. Most buyers do not look at price but rather what the monthly mortgage payment is.

The market is also very local. There are locations, particularly in London and Devon/Cornwall, where home prices are 20 times local annual income, and yet demand is strong.

If the demand is strong at 20 times local income, then the demand will mainly be from wealthy people from outside the area. The local people are not able to afford house prices at 20 times their income. So where are they supposed to live?

Here are some places I cannot afford to live:

Aruba
Monaco
Aspen
Andorra
Knightsbridge
NYC upper east side

Should laws be passed so I can live in places I cannot afford? Should I demand subsidies so I can afford them?

None of that is relevant to Devon and Cornwall where you said house prices are 20 times local income. Young people who are born there are not able to afford to live there. That is wrong. And yes, the government should do something about it.

And what does the government need to do about the same locals who sell their properties to the highest bidder who is from outside the local area?

[Lootman]

The earnings multiple is a crude measure and, for instance, takes no account of mortgage rates. Most buyers do not look at price but rather what the monthly mortgage payment is.

The market is also very local. There are locations, particularly in London and Devon/Cornwall, where home prices are 20 times local annual income, and yet demand is strong.

If the demand is strong at 20 times local income, then the demand will mainly be from wealthy people from outside the area. The local people are not able to afford house prices at 20 times their income. So where are they supposed to live?

Here are some places I cannot afford to live:

Aruba
Monaco
Aspen
Andorra
Knightsbridge
NYC upper east side

Should laws be passed so I can live in places I cannot afford? Should I demand subsidies so I can afford them?

None of that is relevant to Devon and Cornwall where you said house prices are 20 times local income. Young people who are born there are not able to afford to live there. That is wrong. And yes, the government should do something about it.

But again, just because you are born in a town, why does that entitle you a discounted lifetime lease when you blatantly lack the job skills to afford that place?

[Mike4]

None of that is relevant to Devon and Cornwall where you said house prices are 20 times local income. Young people who are born there are not able to afford to live there. That is wrong. And yes, the government should do something about it.

Can you explain why that is wrong, please?

Thanks.

[Tara]

The earnings multiple is a crude measure and, for instance, takes no account of mortgage rates. Most buyers do not look at price but rather what the monthly mortgage payment is.

The market is also very local. There are locations, particularly in London and Devon/Cornwall, where home prices are 20 times local annual income, and yet demand is strong.

If the demand is strong at 20 times local income, then the demand will mainly be from wealthy people from outside the area. The local people are not able to afford house prices at 20 times their income. So where are they supposed to live?

Here are some places I cannot afford to live:

Aruba
Monaco
Aspen
Andorra
Knightsbridge
NYC upper east side

Should laws be passed so I can live in places I cannot afford? Should I demand subsidies so I can afford them?

None of that is relevant to Devon and Cornwall where you said house prices are 20 times local income. Young people who are born there are not able to afford to live there. That is wrong. And yes, the government should do something about it.

And what does the government need to do about the same locals who sell their properties to the highest bidder who is from outside the local area?

They are not the same locals. I am talking about the local young people in their 20s and 30s earning the local average income. They are not able to afford to buy a house in the area so how can they be selling their property to the highest bidder?

[Harry23]

But again, just because you are born in a town, why does that entitle you a discounted lifetime lease when you blatantly lack the job skills to afford that place?

Well, ... what's important here, imposing a free market structure onto what is patently not a free choice (we all need somewhere to live), and destroying centuries of local culture and tradition, or making some concessions to preserve settled families and communities? I don't go for a binary choice of extremes here but I also don't want a globalised capitalist system to destroy our culture any longer. And I do like to go on holiday in nice coastal areas myself! So it's not an easy one to resolve without getting caught on either horn of the dilemma.

[Lootman]

But again, just because you are born in a town, why does that entitle you a discounted lifetime lease when you blatantly lack the job skills to afford that place?

what's important here, imposing a free market structure onto what is patently not a free choice (we all need somewhere to live), and destroying centuries of local culture and tradition, or making some concessions to preserve settled families and communities? I don't go for a binary choice of extremes here but I also don't want a globalised capitalist system to destroy our culture any longer. And I do like to go on holiday in nice coastal areas myself! So it's not an easy one to resolve without getting caught on either horn of the dilemma.

Again, just because you grow up in a town does not entitle you to a free ride at the expense of others.

You are not the centre of the freaking universe.

Shelter is a basic right but not the right to live in expensive and desirable places that you cannot afford.

[Tara]

But again, just because you are born in a town, why does that entitle you a discounted lifetime lease when you blatantly lack the job skills to afford that place?

what's important here, imposing a free market structure onto what is patently not a free choice (we all need somewhere to live), and destroying centuries of local culture and tradition, or making some concessions to preserve settled families and communities? I don't go for a binary choice of extremes here but I also don't want a globalised capitalist system to destroy our culture any longer. And I do like to go on holiday in nice coastal areas myself! So it's not an easy one to resolve without getting caught on either horn of the dilemma.

Again, just because you grow up in a town does not entitle you to a free ride at the expense of others.

You are not the centre of the freaking universe.

Shelter is a basic right but not the right to live in expensive and desirable places that you cannot afford.

Well the Government gives all of the illegal migrants coming in on boats every day a free ride at the expense of UK taxpayers. They all get to live in expensive hotels in desirable places that they cannot afford.

It would be better if some of these wasted millions was given to the young people of Devon and Cornwall and many other parts of the UK, who cannot afford to buy a house in their local area.

[Lootman]

But again, just because you are born in a town, why does that entitle you a discounted lifetime lease when you blatantly lack the job skills to afford that place?

what's important here, imposing a free market structure onto what is patently not a free choice (we all need somewhere to live), and destroying centuries of local culture and tradition, or making some concessions to preserve settled families and communities? I don't go for a binary choice of extremes here but I also don't want a globalised capitalist system to destroy our culture any longer. And I do like to go on holiday in nice coastal areas myself! So it's not an easy one to resolve without getting caught on either horn of the dilemma.

Again, just because you grow up in a town does not entitle you to a free ride at the expense of others.

You are not the centre of the freaking universe.

Shelter is a basic right but not the right to live in expensive and desirable places that you cannot afford.

Well the Government gives all of the illegal migrants coming in on boats every day a free ride at the expense of UK taxpayers. They all get to live in expensive hotels in desirable places that they cannot afford.

It would be better if some of these wasted millions was given to the young people of Devon and Cornwall and many other parts of the UK, who cannot afford to buy a house in their local area.

I am not getting sucked into a debate about immigration. But it is not the broke refugees who are pushing up the prices of 300K plus houses.

[Harry23]

Again, just because you grow up in a town does not entitle you to a free ride at the expense of others.

You are not the centre of the freaking universe.

Shelter is a basic right but not the right to live in expensive and desirable places that you cannot afford.

"Entitle". "Right". In those little words there's a world of complexity.

Just because you're born somewhere doesn't entitle you.
Just because you're rich doesn't entitle you.

Rights are whatever the law says they are. There are plenty of countries which restrict ownership of property and companies to locals, it just depends what kind of country we want.

[ursaminortaur]

But again, just because you are born in a town, why does that entitle you a discounted lifetime lease when you blatantly lack the job skills to afford that place?

what's important here, imposing a free market structure onto what is patently not a free choice (we all need somewhere to live), and destroying centuries of local culture and tradition, or making some concessions to preserve settled families and communities? I don't go for a binary choice of extremes here but I also don't want a globalised capitalist system to destroy our culture any longer. And I do like to go on holiday in nice coastal areas myself! So it's not an easy one to resolve without getting caught on either horn of the dilemma.

Again, just because you grow up in a town does not entitle you to a free ride at the expense of others.

You are not the centre of the freaking universe.

Shelter is a basic right but not the right to live in expensive and desirable places that you cannot afford.

Well the Government gives all of the illegal migrants coming in on boats every day a free ride at the expense of UK taxpayers. They all get to live in expensive hotels in desirable places that they cannot afford.

It would be better if some of these wasted millions was given to the young people of Devon and Cornwall and many other parts of the UK, who cannot afford to buy a house in their local area.

The accomodation provided to most asylum seekers is pretty poor

https://www.redcross.org.uk/stories/migration-and-displacement/refugees-and-asylum-seekers/asylum-seekers-are-they-living-on-easy-street

Are asylum seekers put in ‘top hotels’?
No - far from it. When an asylum seeker arrives in the UK, they are unlikely to know anyone here or have anywhere to go. The Home Office will house them in an initial accommodation centre. This is a temporary measure before they’re moved on elsewhere.

However, an unprecedented asylum backlog in the UK means that 'temporary' can last months. British Red Cross research published at the end of November shows that the asylum backlog has now got so bad in the UK, people are suffering with poor mental and physical health for years.

It also revealed that the backlog in asylum cases has increased 74 per cent in the last year, with nearly 150,000 men, women and children forced to live in limbo. Two thirds of these cases wait for longer than six months for a decision on their case.

You may have read about the situation at a processing centre in Manston, Kent. With reports of overcrowded accommodation, the British Red Cross has called for an urgent assessment of the backlog of asylum decisions.

"We are extremely concerned about the escalating humanitarian situation at Manston," said Alex Fraser, the British Red Cross's director of refugee services.

"It’s clear that immediate action is required to ensure that the men, women and children who have just made a dangerous and potentially traumatic journey have their basic needs met in a safe environment.
.
.
.
Well, what happens next?
Thankfully, an asylum seeker eventually receives a more permanent place to stay.

But they have no choice about where they end up – even if they do know someone in a certain part of the country.

And they definitely won’t end up with a penthouse suite in Mayfair. Due to a housing shortage in London and south-east England, most asylum seekers are sent where accommodation is cheaper, and often poorer quality. The Home Office calls it ‘dispersal’.

Our staff and volunteers in refugee services see it first-hand day in and day out: long stays in unfit hotel accommodation, dirty and unhygienic kitchens and people who have been living in the same clothes for weeks on end.

One family has not had a decision on their asylum case for three years and are struggling to look after a disabled son without public support.

Another family with complex needs has been put in a first floor flat, even though a member of the family is disabled. Others asylum seekers report suicidal thoughts.

"The backlog in asylum decisions is increasing at an alarming rate. This means more men, women an children are waiting for years for a response to their asylum claim", says Jon Featonby, policy and advocacy manager, British Red Cross.

"The longer people wait for an asylum decision, the longer they are living in unsuitable accommodation without certainty - no work, no permanent place to live and no way to start the process of reuniting with family members."


But do they get this free housing forever?
No.

When someone gets refugee status, they can no longer stay in asylum accommodation. They can choose where to live, but they have to pay for their rent or ask for government help – like any UK citizen. (But without the family ties or support that many of us take for granted.)

A refugee is assessed against the same criteria as other British nationals. They are not automatically prioritised for any housing they need.

[gryffron]

Migration is linked to 82% of population growth (between 2001 and 2016).

And the vast majority of those came quite legally from Eastern Europe under EU freedom of movement rules - which is (overwhelmingly IMO) why the UK voted to leave.

Gryff

[Mike4]

Migration is linked to 82% of population growth (between 2001 and 2016).

And the vast majority of those came quite legally from Eastern Europe under EU freedom of movement rules - which is (overwhelmingly IMO) why the UK voted to leave.

Gryff

I think you're right about that, but has such freedom of movement actually been curtailed or stopped now?

I found myself wondering as the two good-natured lads who delivered my new cooker the other day said they'd recently got here from Romania. I didn't get the chance to ask what when 'recently' was, as one of them clonked his head really quite badly on the low kitchen doorway in my ancient hovel.

[gryffron]

I think you're right about that, but has such freedom of movement actually been curtailed or stopped now?
I found myself wondering as the two good-natured lads who delivered my new cooker the other day said they'd recently got here from Romania.

Well completely “free” movement has stopped. But that hasn’t stopped Europeans coming here, or Brits going to the EU to work. Just need a visa.

Gryff

[Spet0789]

But again, just because you are born in a town, why does that entitle you a discounted lifetime lease when you blatantly lack the job skills to afford that place?

what's important here, imposing a free market structure onto what is patently not a free choice (we all need somewhere to live), and destroying centuries of local culture and tradition, or making some concessions to preserve settled families and communities? I don't go for a binary choice of extremes here but I also don't want a globalised capitalist system to destroy our culture any longer. And I do like to go on holiday in nice coastal areas myself! So it's not an easy one to resolve without getting caught on either horn of the dilemma.

Again, just because you grow up in a town does not entitle you to a free ride at the expense of others.

You are not the centre of the freaking universe.

Shelter is a basic right but not the right to live in expensive and desirable places that you cannot afford.

Well the Government gives all of the illegal migrants coming in on boats every day a free ride at the expense of UK taxpayers. They all get to live in expensive hotels in desirable places that they cannot afford.

It would be better if some of these wasted millions was given to the young people of Devon and Cornwall and many other parts of the UK, who cannot afford to buy a house in their local area.

It's already been shown they actually get put in pretty cheap accommodation. What would you propose we do instead? Machine gun them on the beaches? Shell the boats mid-channel?

[Spet0789]

The earnings multiple is a crude measure and, for instance, takes no account of mortgage rates. Most buyers do not look at price but rather what the monthly mortgage payment is.

The market is also very local. There are locations, particularly in London and Devon/Cornwall, where home prices are 20 times local annual income, and yet demand is strong.

If the demand is strong at 20 times local income, then the demand will mainly be from wealthy people from outside the area. The local people are not able to afford house prices at 20 times their income. So where are they supposed to live?

Here are some places I cannot afford to live:

Aruba
Monaco
Aspen
Andorra
Knightsbridge
NYC upper east side

Should laws be passed so I can live in places I cannot afford? Should I demand subsidies so I can afford them?

None of that is relevant to Devon and Cornwall where you said house prices are 20 times local income. Young people who are born there are not able to afford to live there. That is wrong. And yes, the government should do something about it.

And what does the government need to do about the same locals who sell their properties to the highest bidder who is from outside the local area?

Precisely this!

What has happened is that property-owning Devon and Cornwall locals have sold to outsiders. And then they bleat that their children don't have affordable homes to buy. If they cared, they would have been perfectly entitled to put a covenant in place on their property restricting its use to a primary residence for a person born in Devon and Cornwall. They didn't. And why not? Because it would have taken their price from the £500k that second home buyers from London can afford to the £250k that locals can afford.

[ursaminortaur]

Migration is linked to 82% of population growth (between 2001 and 2016).

And the vast majority of those came quite legally from Eastern Europe under EU freedom of movement rules - which is (overwhelmingly IMO) why the UK voted to leave.

Gryff

Or came perfectly legally in as great or greater numbers from elsewhere in the world (particularly from commonwealth countries) with the numbers coming from those countries increasing now that EU freedom of movement has stopped. The most common country of birth for immigrants in the UK is India.

https://migrationobservatory.ox.ac.uk/resources/briefings/migrants-in-the-uk-an-overview/

In the year ending June 2021, India was – once again – the most common country of birth for migrants (896,000) in the UK. It regained the top place from Poland, after a number of Polish-born people left the UK.

[Spet0789]

Migration is linked to 82% of population growth (between 2001 and 2016).

And the vast majority of those came quite legally from Eastern Europe under EU freedom of movement rules - which is (overwhelmingly IMO) why the UK voted to leave.

Gryff

Or came perfectly legally in as great or greater numbers from elsewhere in the world (particularly from commonwealth countries) with the numbers coming from those countries increasing now that EU freedom of movement has stopped. The most common country of birth for immigrants in the UK is India.

https://migrationobservatory.ox.ac.uk/resources/briefings/migrants-in-the-uk-an-overview/

In the year ending June 2021, India was – once again – the most common country of birth for migrants (896,000) in the UK. It regained the top place from Poland, after a number of Polish-born people left the UK.

And no doubt all of the Leavers who so voted due to immigration concerns welcome those Indians with open arms…

[Tedx]

I'm pretty sure we were pretty close to a trade deal with India late last year which I'm sure had some kind of immigration quotas involved, but I think theres been some kind of a hitch.

There was probably some resistance to tens of thousands of desperately poor & unskilled people living in sub standard housing with little medication or sanitation looking to emigrate and catch a free ride on a prosperous society.

Said India.

[Mike4]

I'm pretty sure we were pretty close to a trade deal with India late last year which I'm sure had some kind of immigration quotas involved, but I think theres been some kind of a hitch.

There was probably some resistance to tens of thousands of desperately poor & unskilled people living in sub standard housing with little medication or sanitation looking to emigrate and catch a free ride on a prosperous society.

Said India.

Yes very amusing!

That's essentially the same joke as when Wayne Rooney visited footballer Fabrice Muamba in hospital after Fabrice collapsed on the pitch and spent weeks in a coma fighting for his life.

"The lad is improving rapidly and can almost speak normally now, forming almost whole sentences", said Fabrice.