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The truths they don't want you to read....

Tuesday, August 28, 2007

House prices

We are told that the Western Isles is the most affordable place in which to buy a house, with average house prices of £110,015 or 4.3 times income.

Nice, but meaningless.

And wrong.

According to HIE, average earnings in the Highland and Islands are £304.60 per week or £15,839.20 per annum, and as that includes Inverness, the average earnings in the Western Isles will be much lower and have been estimated at around £12,000. That implies a ratio of at least 9 times earnings, which makes us one of the most expensive places in the UK.

But the scandal in this is not that house prices are high, but that earnings are low. I have repeatedly argued that we should be aspiring to earning AT LEAST the Scottish average of over £18,000, or 50% higher than it is at present. If politicians want to make a difference to the islands, their success (or failure) can be measured by average incomes, and it requires a seismic shift to bring us close to what we should expect.

Share your ideas with us, boys?


Anonymous said...

i have a friend who says that house prices will never have a significant fall again - your bviews angus?

Angus said...

Forecasting is difficult, especially about the future.

But I'll stick my neck out and say that a biggish bust will happen in the next couple of years, leaving many with negative equity, mainly as a result of householders not being able to finance their credit boom.

However, the trend is still upward as there is a shortage of houses and house sites and a huge unmet demand.

One big caveat, which is that global economic events could easily make nonsense of my predictions.