Probably best not to bother. The bloke is a bit of a simpleton if he can't see just how relevant the ease of repayment is to a potential homebuyer.
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Buy To Let
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I've not seen evidence of that before, but we're certainly in strong disagreement here.
Uncle C
Well-known member
The discussion was about house prices being overinflated as typified by the house price ratio and you were calling the ratio into disrepute to be replaced by some fuzzy logic about ease of repayments.
Is the cost of living really relatively cheaper now than say 10 years ago? Fuel has soured, as has food. Wages are generally static or going down. I'm intrigued as this is not something I've noticed. In fact when I mentioned my food basket had not increased in price I got shot down.
I suspect that it is, although certain things have increased in price such as fuel and food (as already mentioned by you and me in separate posts)
My only point is that looking at house prices as a ratio of average salary is misleading and perhaps ought to be looked at as an inverse function of discretionary income.
Uncle C
Well-known member
No you haven't imagined that, you're just not quite intelligent enough to interpret my words correctly and like to be unnecessarily rude to make up for this deficiency in your on-line personality. I'll re-write my point so that it makes sense to your small little brain:
So I was talking about discretionary income. This is income AFTER the cost of living has been considered. So whilst food and energy prices have both risen, your discretionary income is the income you have left after this. My basic point is that the cost of housing is probably more accurately an inverse function of discretionary income (money to buy life's luxuries) than as a straight forward multiple of salary.
Its predictable how people result to insults as they start to loose an argument. So the discretionary income of everyone without a mortgage or rent has gone up.
Well we agree there.
Fuzzy logic? How can the ease of repayments not affect house prices? If interest rates go to 10% tomorrow, house prices will plummet like you've never seen, because the repayments are expensive.
Are you drunk Uncle C? Aren't you supposed to be a mortgage broker?
I agree. That's why you got unnecessarily uppity with comments like "perhaps I imagined it when you said <direct quote>".
Back to the point, and I haven't lost any argument, well certainly not with you. Lets follow this through. Why are you saying "So the discretionary income of everyone without a mortgage or rent has gone up."? It clearly hasn't and I'm not arguing that.
It's LOSE by the way. This really is basic English.
The Economist use two price based ratios: the first is the price-to-rents ratio. This is analogous to the price-earnings ratio used for equities, with the rents going to property investors (or saved by homeowners). The other is the ratio of prices to disposable income per person. These are good enough for me and factor in my aforementioned non-property inflation via disposable income. Both have the UK as being over valued. That said, it's not an exact science and as with most estimations comes down to your belief/faith in the under lying assumptions used.
Tight shorts
Active member
In August 1988 the Government removed Tax relief on mortgages (MIRAS) for couples so there was a rush for people to go out and buy properties before the deadline, which artificially increased prices just before they plummeted. I feel both old and a bit sad that I remember this.
A few other clarifications on advice I've noticed from skimming through:-
You can't get entrepreneur's relief on selling a residential rental property so rate of capital gains tax will be 18 - 28%
You have never been able to put residential property in to a SIPP (it was talked about but never went ahead)
Uncle C
Well-known member
This morning it was claimed I was an estate agent and this evening a mortgage broker. I dont think so.
If someone made such insults to me I'd report them to Bozza.
oh, sorry, confused you with Uncle Spielberg.Anyway, regarding house prices, I know I'm right, so feel free to argue away.
Uncle C
Well-known member
The ultimate insult.
Uncle C
Well-known member
This is not on, someone entering the conversation who knows what they are talking about.
To whom?
Anyway, come on, explain why you think the ease of repayments doesn't affect house prices.
Uncle C
Well-known member
I never said that. All I said was that the price/earnings index is the way to measure affordability. Ease of repayments is interesting but not relevant.
Yes, it was the dual MIRAS they (Nigel Lawson) ended (30k each I think).
Yes you did, you said that using ease of repayments to help determine house prices was fuzzy logic. Interest rates directly affect house prices, and you don't seem to understand that.
No it isn't 'the' way, it's 'a' useful guide.
You know that what people earn effects house prices, but you don't realise the cost of the mortgage also effects them. You clearly don't know what you're talking about.