Friday, 31 December 2010

If the Daily Mail were written by economists...

From The Daily Mail:

House prices are becoming more affordable in nearly every region in Britain, amid hopes that next year could be excellent for the housing market.

Official figures from the Land Registry revealed that affordability improved in eight of the ten regions in England and Wales in November. London and the South West were the two exceptions. The speed of the improvements in affordability has picked up. In July, affordability was improving in four regions; in August, five; in September, six, and it has now reached eight regions. In just one month, affordability improved by 3.4 per cent in Wales, the best-hit region, making it £4,250 cheaper to buy a typical home.

The average home in Wales still costs a ludicrous £120,290, a modest improvement on the clearly ridiculous ‘peak’ price of just over £141,000 in January 2008. The figures confirm growing hopes that the housing market is starting its second big move towards affordability since the credit bubble went *pop* three years ago. Last month, house price affordability improved by 0.6 per cent across England and Wales. It is the third consecutive month that houses have become more affordable, with the majority of economists predicting that housing will become even more affordable next year.

It ends an extraordinary period between May 2009 and August 2010 when house prices became less affordable every month, except one, because of the government's desperate attempts to make housing unaffordable. The majority of housing experts predict that houses will become even more affordable next year, according to a poll of 56 economists by the Financial Times.

Most expect housing to become more affordable by between five and ten per cent. Chris Williamson, chief economist from the consultancy Markit, said: ‘I expect the traditional three-bed semi outside of London to see the biggest improvements in affordability as superfluous public sector employees suffer reduced pay or job cuts.’

With an average house price in England and Wales at a nigh-unaffordable £164,773, the cost of a home is still far above what a worker on the country’s average salary can afford. For a person in their twenties, who typically earns just under £21,000, the average price is nearly eight times their salary, which is clearly insane.

But the registry figures show that London remains insulated from the improvements in affordability in the rest of the country. The average price in the capital is a completely surreal £341,009, more than double the average in the rest of the country. Every day in September, the latest available figures, 13 idiots paid more than £1 million for a home in London.

Experts say the affordability improvements in the rest of the country are being fuelled by a favourable combination of an end to reckless lending, the imminent tax rises which will help kill off the economic recovery, the superfluous public sector jobs bloodbath and a widespread anxiety about the state of the economy.

Paul Hunt, managing director of mortgage software firm Phoebus Software, said: ‘Another modest improvement in house price affordability indicates that lenders have realised that their insane reckless lending practices have to stop. They are not overly concerned about the impact of higher taxes on the rest of the economy and lower public spending in the New Year, because bank bail outs don't come cheap and the government has to get the money from somewhere.’

H/t Titanic Captain at HPC.


JuliaM said...

I'd settle for the 'Mail' being written by real journalists...! ;)

And happy new year!