Houses 10 times earnings of bottom 25 percent

Dire predictions from the NH&PAU that the bottom quarter of or population will never be able to afford housing. Not since Margaret Thatcher walked the floor boards of number ten have things looked so bad for the more vulnerable in our  society. From BN … 

According to the National Housing and Planning Advice Unit, by 2026 the cheapest 25 per cent of houses will be worth ten times the earnings of the poorest 25 per cent.Apparently, at the moment the ratio is seven times and a decade ago itwas just four.

The unit is chaired by former Bank of England Monetary Policy Committee member Stephen Nickell. He said: “The forecast is of course uncertain but given the current conditions the probability is that the market will go up quite a bit more.” In fact, Mr Nickell is predicting continuation in house price inflation, although he admits that if rates hit 6 per cent soon, there could be a housing slow down for awhile.

Clearly there is a growing and potential chronic shortage of homes. But even so, ten times earnings?

Let’s assume disposable income is 50 per cent of earnings and interest on mortgages is 5 per cent. Assuming house prices rise to ten times earnings, that would mean a 100 per cent interest only mortgage would equate to 100 per cent of disposable income.

As we’ve pointed out in previous articles, it seems to be the poor who’ve been left behind since the current Labour party  have been in power. For all the party’s talk of socialism and looking after the vulnerable there seems to be a hollow ring to the tone.

Will Gordon Brown make up for previous sins -only time will tell – but then, hasn’t he already had plenty of time.