5 ms·

> "Wage rises without solving the housing issue is only going to raise house prices further." House prices aren't that tightly linked to incomes. House prices

> "Wage rises without solving the housing issue is only going to raise house prices further." House prices aren't that tightly linked to incomes. House prices are more strongly influenced by interest rates and availability of credit. And, of course, supply/demand fundamentals (ie: population change vs. number of housing units in an area).

ZeroGravitas 5y ago
I wasn't making a claim about what impacted house prices the most. If I was, then I'd say a system where the government basically gives you free money/tax breaks if you buy a home, is the root cause behind the things you mentioned which then drives house prices. The point is, without fixing that issue, you can't solve it by wage rises. People who don't even want homes are buying them, either as outright investments that they can sit on for years, or as something they also live in, but need to treat as an investment, rather than a home.
- pjc50 5y ago
  > the government basically gives you free money/tax breaks if you buy a home Such as? MIRAS was abolished 20 years ago. Homes are arguably under-taxed (no US style property tax), but that's not really a "break".
  - rjsw 5y ago
    There is Help to Buy [1]. [1] https://en.wikipedia.org/wiki/Help_to_Buy https://en.wikipedia.org/wiki/Help_to_Buy
    - xyzzyz 5y ago
      Which is not free money from the government. It’s a loan.
      - regularfry 5y ago
        It's a loan for the buyer. It looks a lot like free money to the seller, which is where the problem is.
Loughla 5y ago
Is availability of credit not linked to income?
antattack 5y ago
Home prices could be linked to wages through renting. I have often seen mortgage loan monthly payment compared to monthly rent as a reason a buy instead of renting.
FartyMcFarter 5y ago
> House prices aren't that tightly linked to incomes. House prices are more strongly influenced by interest rates and availability of credit. I believe banks in the UK don't lend you more than 4.5x - 5.5x of your income, regardless of interest rates.
- notauser 5y ago
  In the UK, lenders are resticted by the regulator - only 15% of their loans can be at greater than 4.5x income. As a result 5x and 6x income mortgages tend to be easier to get the more you earn.
  - nly 5y ago
    5x and 6x loans also require lower LTVs
postingawayonhn 5y ago
Increased income means increased servicing ability and therefore banks granting higher loans.

ZeroGravitas 5y ago

I wasn't making a claim about what impacted house prices the most. If I was, then I'd say a system where the government basically gives you free money/tax breaks if you buy a home, is the root cause behind the things you mentioned which then drives house prices. The point is, without fixing that issue, you can't solve it by wage rises. People who don't even want homes are buying them, either as outright investments that they can sit on for years, or as something they also live in, but need to treat as an investment, rather than a home.

pjc50 5y ago
> the government basically gives you free money/tax breaks if you buy a home Such as? MIRAS was abolished 20 years ago. Homes are arguably under-taxed (no US style property tax), but that's not really a "break".
- rjsw 5y ago
  There is Help to Buy [1]. [1] https://en.wikipedia.org/wiki/Help_to_Buy https://en.wikipedia.org/wiki/Help_to_Buy
  - xyzzyz 5y ago
    Which is not free money from the government. It’s a loan.
    - regularfry 5y ago
      It's a loan for the buyer. It looks a lot like free money to the seller, which is where the problem is.

Loughla 5y ago

Is availability of credit not linked to income?

antattack 5y ago

Home prices could be linked to wages through renting. I have often seen mortgage loan monthly payment compared to monthly rent as a reason a buy instead of renting.

FartyMcFarter 5y ago

> House prices aren't that tightly linked to incomes. House prices are more strongly influenced by interest rates and availability of credit. I believe banks in the UK don't lend you more than 4.5x - 5.5x of your income, regardless of interest rates.

notauser 5y ago
In the UK, lenders are resticted by the regulator - only 15% of their loans can be at greater than 4.5x income. As a result 5x and 6x income mortgages tend to be easier to get the more you earn.
- nly 5y ago
  5x and 6x loans also require lower LTVs

postingawayonhn 5y ago

Increased income means increased servicing ability and therefore banks granting higher loans.