Hi Everyone,
At the end of 2017, I wrote the post ‘The Mortgage Slave’. This post looked at rising house prices and the effect this is having on the affordability of houses. The post also summarised some of the likely reasons for these increases.
I thought it was about time to revisit the topic of housing affordability. This time round I want to present the information in the form of a video. The content in the video is similar to that of the post from 2017. I have updated most of the data to include publications that are more recent. I have also elaborated on some of the areas explained in the previous post. I hope you enjoy the video.
Just in case, the 3Speak version becomes unavailable at some point. I have also uploaded the video to YouTube.
The video is presented in three parts. The first part of the video identifies the extent of housing affordability across several countries. These countries include Australia, United Kingdom, Canada, USA, and New Zealand.
The second part of the video considers the likely reasons for the extent of the housing affordability problems identified in the video. These reasons include reduced down payment requirements, lower interest/mortgage rates, shortage or restricted supply of housing, and land regulations.
The third part of the video considers the winners and losers from higher house prices. The winners have been identified as property investors (own more than one property) who bought when the prices were lower and banks profiting from larger loans. The losers have been identified as first time homebuyers struggling to get into the market. Homeowners that entered the market with low down payments who are struggling to make repayments.
The video notes that continued appreciation of house prices is not particularly beneficial to existing owners as wealth remains tied up in the property as a consumer durable (owner of one property).
At the end of the video, I briefly discuss how the housing affordability crisis could eventually be resolved.
Below are the sources for data and information used and presented in the video. Feel free to click on the links to find out more information.
15th Annual Demographia International Housing Affordability Survey: 2019
Don’t concentrate your portfolio in bank shares
House price to residence-based earnings ratio
UK houses now cost almost eight times average earnings, says ONS
6 low or no down payment mortgage options for 2019
How Much Should I Save For a Down Payment?
Before Making A 20% Mortgage Down Payment, Read This
What’s the Average Down Payment on a House?
Falling property prices starting to bite
Examining the Causes of the Credit Crisis of 2008: A Primer
Housing prices boom but monthly payments remain steady?
Do Rising Interest Rates Cause Property Prices To Fall?
Swedish housing market the boom is over
How an interest-rate cut could change the housing market
THE CANADIAN BANKS ARE NOT WORKING FOR YOU
American bank profits are higher than ever
Profit Margins on Fixed Rate Mortgages
Expect more banks to exit national mortgage lending
Generation Rent: London to become a city of renters by 2025
Home ownership in Australia in decline for three decades: Grattan Institute
If you want to read any of my other posts, you can click on the links below. These links will lead you to posts containing my collection of works. These posts will be updated frequently.
I have launched my first Udemy course ‘Economics is for Everyone’. The course focuses on how economics affects everyday people, the decisions they make and how they interact with the world around them. The course contains 24 video lectures (about 4 hours of viewing), 64 multiple-choice questions (3 at the end of most lectures), 32 downloadable resources (presentation slides, additional notes and links to relevant Steem posts), and 2 scenario questions. The course is currently free-of-charge. Click the link above to access the course.
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