House Prices

Both Nationwide and Halifax recorded falls for October in the average price of a UK house is now in the £165,000 region. This is the national average and is based upon the actually selling prices of houses. This will include property from estates when someone has died, to those buying for the first time.

Allowing for a 20% deposit as an average (after all its now difficult to get a mortgage with a smaller deposit)then this would lead to the suggestion of an average mortgage of £132,000 which would require an income of roughly £40,500.

In my view this is the problem. The national average wade is closer to £27,000 which would infer a mortgage of about £88,000 (3.25x). Here in London/South East £165,000 will not buy much. So whilst I accept there are flaws in using "average figures" [some people will have no mortgage or a small mortgage so my 20% equity is perhaps understated] the problem is that house prices are still out of sync with income. This cannot continue without further considerable house price depreciation.

I would suggest that the main reason we have not seen dramatic house price falls reported is due to the fact that most people are sitting out the recession, enjoying low interest rates and only moving if they absolutely have to do so...the anecdotal evidence - looking out of my window, I can see yet another new loft conversion.