* Here are the numbers. According to HBOS, the average house price is £175,215. Assuming a loan of 90% of the price at 3.11 times income (the averages for first-time buyers according to the CML) this means you need an income of £50,700 to buy it. This neat tool shows that such an income would put a single person in the top 3% of earners.
The trick is that most first-time buyers, certainly outside of London, will not spend anywhere near £175,000. Most people will go for a slightly smaller home than they might like, in order to get in the property ladder in the first place.
He also uses the average mortgage borrowing rate of 3.11 times income, whereas 4 or 4.5 times income is not terribly difficult to obtain at present, and is easily affordable. For instance, the capital/interest repayments on my mortgage of £64,000 costs £380 per month.
The most expensive flat bought by a first-time buyer that I know, and let's face it, Edinburgh is not cheap, was £116,000. To buy this at 4 times salary mortgage would mean that you would have to earn £29,000 (with capital/interest repayments of about £680 per month at 5%), a salary which is by no means impossible. Far more so, out in the sticks here, than the £50,000 that Chris quotes.
The tool that he used to calculate where that fits in, would put a single person on £29,000, with £1200 a year Council Tax, in the top 5% of earners. However, there is a caveat.
Each bar corresponds to an income band of about £6, and to maintain a reasonable scale, it has been necessary to truncate the distribution at incomes above around £671 per week. Around 3%, or 1.6 million individuals, have incomes higher than this, after adjusting for the size and composition of their households.
Now, I could be reading that wrong, but that seems to imply that the above person would actually be in the top 8% of earners (in a household of one person).
The real problem, of course, is that getting a 100% mortgage is tricky (and you'd almost certainly need a guarantor): Chris is quoting a 90% mortgage. So, on £116,000 property, then you would need to put down £11,600, which is quite a large sum of capital. Which is why I oppose Inheritance Tax: because capital enables social mobility.
Thanks to Gordon's retrospective Trust Fund raid, people will now find it even harder to obtain the capital to buy property. Do you see?