Turnbull 2000 in the comments to the previous post:
House prices to average salary is an obsolete benchmark. It has been for a decade.
It's now about monthly affordability. With dual income, 30 year mortgage terms and low interest rates becoming the norm, a couple on 25K each can afford a property of £250,000. I've long expected UK house prices to settle at 6-7x average salary, perhaps 10x in premium areas.
OK, compare and contrast with fifteen years ago:
Nationwide median price paid by first time buyers Q2 2014: £159,804
Assume £15,000 deposit, mortgage repayments on 4% mortgage over 30 years, monthly repayment = £698 per month.
Median household income (guess) = £45,000 gross, so mortgage repayments = 19% of gross.
Nationwide median price paid by first time buyers Q2 1999: £55,618
Let's assume that the median wage has gone up by about half over that period so median income was £30,000, so the deposit which people could have saved up out of earned income was one-third lower and the amount which people could pay off each month lower.
So £10,000 deposit, mortgage repayments on 6% mortgage over 15 years = £391 per month = 16% of gross £30,000.
So those who bought just in time before house prices went mad could have easily paid off their mortgage by now, the mortgage repayments were lower as a percentage of income to start with and by the end they were early affordable i.e. being nearly £300 a month less than what today's first time buyers have to pay, or only 10% of gross.
Today's first time buyers are stuck with a higher monthly payment for twice as long, with wages rising more slowly than retail price inflation.
The point is that a doubling in house prices mean that people pay twice as much for their mortgages, whether that's twice as much per month for the same mortgage term, or for a mortgage term which is twice as long is irrelevant. It's two ways of measuring the same thing. Twice as much is twice as much.
(And we don't even know whether Nationwide normalised their price paid figure for the fact that fifteen years ago FTB's were more likely to be buying a house and today they are more likely to be buying a flat.)