Housing Market: Difference between revisions
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|style="width:160px;"|'''Average Salary'''
|| This is taken from Monster recruitment measurements of salary<ref>Average Salary Information for the UK - https://www.monster.co.uk/career-advice/article/uk-average-salary-graphs</ref>. Typically it would
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|| This is taken from the Nationwide House Price Index<ref>Nationwide House Price Index - https://www.nationwide.co.uk/about/house-price-index/house-price-calculator</ref>. It is based on the UK wide average results. See figure 1&2 for regional variations. </br></br></br>
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|'''Multiple of Salary''' || This is the average house price divided by the average salary as used by building societies to determine their loan limit. In the past this was restricted to 2.75 times the applicant's salary. This was a good thing as it restricted house price inflation. In countries where it is worked out on 50% deposit and then a multiple of salary, house prices are much less volatile and more affordable. </br></br>
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|'''Deposit''' || This assumes a 5% deposit</br></br>
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| '''Mortgage Year''' || Typical mortgage
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|'''Percentage of Wage''' || The percentage of wage that is consumed in mortgage
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'''Figure 4''' illustrates how the market crashed in 2008 and how it made a remarkable recovery.<ref>HM UK Land Registry House Price Index - https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/june2018</ref> It is historically unheard of for a market to collapse and then almost immediately recover to previous levels.
As you will see from the graph, there have been a number of dips in house
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At the introduction of
House inflation then increased to a high point in 2014 of 9%. House inflation then held fairly steady at above 5% until late 2016 when houses prices began to fall away again. It is a normal reaction of the market for
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Much of the impact on first time buyers has been covered in sections [[#House price inflation|House price inflation]] and [[#Government purposely Inflating prices|Government purposely Inflating prices]]. However the trend we will see with the present model of house price inflation is ''First Time Buyers'' becoming ''Last Time Buyers''. All properties across the spectrum have seen similar inflation except for flats which have seen a lower level of growth. A 5% inflation rate on a house valued at £200,000 will see the house price rise to £210,000 in a year, while the same percentage increase on a house valued at £300,000 will increase the price to £315,000. This creates an equity gap of £5,000 between the two properties. This has always been the case, but the difference now is that those in the buying window are not seeing the wage increases that allow this gap to be filled. You can see in '''figure 5''' how house prices are running away from first time buyers and those who get on the housing ladder are chasing a larger gap to
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The other factor that has a serious negative impact on first time buyers is the level of foreign investors in the UK housing market. Not only does this push up the price of new builds (particularly in the South), it also forces longer commutes which again is a drain on
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