On the Absurdity of House Prices 🧵 Take a look at the floorplans of the two 3 bed, Victorian terraces below. Admittedly, one has a basement shower room and a slightly 'larger' garden, but the other has more floor space. They come in at between 100sqm and 106sqm internally 1/6
Here are some photos of the two properties and yes, there are differences in decor but, I don't think they're vastly different homes 🤷♂️ So, if a property's price were determined by the physical structure, these would be a comparable price, no? How does x9.7 more 💷 sound? 🤔 2/6
One is in Middlesborough, the other Fulham and below are all of the sale prices since '97 and usefully they both sold in '99 and within 3mths of each other recently. Since '99 one has increased £111K (242%), the other by £1.2M (357%). What about the people who bought them? 3/6
A single person, on the Middlesborough median wage of £31.6K could, with a 15% deposit of £23.6K, buy that house on a 25yr term at a 4.75% rate and spend £762 a month ie. 35% of their net salary 🥳 Happy days! It's a 100sqm starter home. In Fulham, aside from the £97K stamp 4/6
duty, the 15% deposit is £230K, a total of £327K ie. more than two of the Middlesborough houses. Then they need to borrow £1.3M which, if they took a 25yr mortgage at 4.75% would mean monthly repayments of £7,411. This requires a couple EACH earning £220K pa for the same 35% 5/6
affordability, or an individual earning £460K 🤔 To live in a 100sqm 'palace'. I'm afraid 40yr mortgages don't fix this issue, especially as the median wage in Fulham is only £43.9K ie. £12.3K more than Middlesborough 😱 https://www.rightmove.co.uk/ho... https://www.rightmove.co.uk/ho... 🤪🙈😭