FTB Salary v Median Salary

Turnbull2000 wrote: »

These very interesting statistics were composed by a HPC.co.uk member. In 1997 the typical FTB salary was 8% above average. In 2007, the typical FTB now has to earn 46% above average.

I guess this explains why the CML income multiples don't seem that dire. The few FTBs left have to earn a much higher salary than usual.

ONS Median Salary    CML FTB Median     Difference     CML     Income Multiple
         Weekly   Annualised     Annual          £       %    Advance   National    FTB
1997     £320.5     £16,666     £18,080     -£ 1,414   -8%    £41,800    2.5        2.3
1998     £334.9     £17,415     £19,600     -£ 2,185   -13%   £45,000    2.6        2.3
1999     £345.5     £17,966     £21,141     -£ 3,175   -18%   £49,000    2.7        2.3
2000     £359.0     £18,668     £22,018     -£ 3,350   -18%   £51,253    2.7        2.3
2001     £375.9     £19,547     £23,700     -£ 4,153   -21%   £56,950    2.9        2.4
2002     £390.9     £20,327     £26,644     -£ 6,317   -31%   £69,000    3.4        2.6
2003     £404.0     £21,008     £27,137     -£ 6,129   -29%   £76,412    3.6        2.8
2004     £419.2     £21,798     £29,270     -£ 7,471   -34%   £90,000    4.1        3.1
2005     £431.2     £22,422     £31,173     -£ 8,750   -39%   £97,488    4.3        3.1
2006     £447.1     £23,249     £33,997     -£10,748   -46%  £108,917    4.7        3.2

Source :
http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=14123
http://www.cml.org.uk/cml/statistics

The effect that this has on house prices overall depends on investors. As long as BTLers are prepared to pump money into the market instead of FTBs the house of cards can remain standing.

Look at NZ, a market dominated by investors due to their tax treatment of 'negative amortisation'. House prices are 10x average earnings.

A youngish couple would expect to have to get together a big deposit and then spend the entirety of the higher earner's income on servicing an interest only mortgage. They can forget about kids unless the higher earner is getting some pretty hefty pay rises.

People who want to earn a higher rate of interest out there can put their money into investment schemes that lend to 'property devlopers' that are just starting out and don't have a good enough business plan to get financing from more traditional places. The investors get a higher rate of interest until the finance house goes bust. A big one went bust last week.

Crazy at it may seem, its perfectly possible that this madness has got a long way further to go.

Guy_Montag wrote: »

I think people were quite surprised at what the CML claim is the FTB median wage. If it is 140% of the national median wage it suggests that only the highest paid can afford to get on the housing ladder these days.

The median FTBer's salary is in the top 25% of all full-time employees. Which when you think about it is quite startling, since FTBers tend to be young you would expect the salary to be a little below the median; the assumption being as they age, they will earn more & become 2nd time buyers & so on. They could be already at their peak earnings potential - if they are older FTBers, or it could just be the best paid that are now able to get on the ladder.

Are the incomes verified only or do they include 'self certificated loans'. If the latter the scewing could just as easily come from fraudulent borrowers.