50% rise in house prices needed before crash

Tassotti

meanmachine wrote:

Sure, that's a good point. London is well ahead of the game in this mad race to "absolute unaffordability".

I think the average wage is 30K to a 250K property, so yes, the capital could hit 1989 figures in the next 3 years.

Are you talking about London here. Surely, the average wage in London must be higher than that. I would have thought 50K to be about average for London salaries.

http://www.thisismoney.co.uk/news/article.html?in_article_id=404961&in_page_id=2

Pal

From the article that you linked to:

Across London as a whole average pay rose 7.2% last year to an average of £36,442.

Jay1b

Pal wrote:

From the article that you linked to:

lol.... Well read

Although you dont think about them, their are still lots of people that work in the 10000000's of subways and McDonalds on £20-22K a year that bring the average down. Lots of the rich bankers live in leafy suburbs just outside of London, which obviously effects the average.

Swipe

You can earn £22K in MacDonalds? So i busted myself to gain a postgrad education for an extra £7k a year? I wouldn't have bothered if I'd known.

van_persie

A word on the term 'affordability' with regards the housing market; if we take the mean line for HPI, it is widely agreed that 3.5 times the average salary is a guide to the average property price. In 1995 it was below that. Now, depending on whose figures you believe, it's anything from 6 to 10 times that.
I am yet to be convinced that 'it's different this time' and we are about to enter into a new paradigm of house prices. Although I welcome any comments supporting this view...

meanmachine_2

Haha how funny. Tassotti, you find the time to link to an article then don't bother reading it. Too busy managing your bulging property empire no doubt.

No the London average, like these blessed housing indices, vary wildly from 30K to 39K.

The national average ranges from 21K to 28K I think.

Whichever way you look at it, on simple multipliers we're in cloud cuckoo land. But looking at this nebulous notion of affordability, then there's still more slack in the system - as evidenced by rises in Lodnon this year.

The problem there, of course, is that affordability can be changed by any factor, from the price of oil to, literally, the price of fish.

It's a rather dodgy foundation for such a huge industry.

meanmachine_2

Jay1b wrote:

lol.... Well read

Although you dont think about them, their are still lots of people that work in the 10000000's of subways and McDonalds on £20-22K a year that bring the average down. Lots of the rich bankers live in leafy suburbs just outside of London, which obviously effects the average.

Wow, I'd be amazed in MickeyDs paid that much.

I was reading that PC World pay their staff c13K. I should think fast food workers get around the same, if not less.

Raggie

Macdonalds.. always amazes me.. but

check out deals offered..

http://www.mcdonalds.co.uk/pages/careers/managementopportunities.html

midway down the page...

do not forget to add the london weighting.. £3K

so thats £21.5 K for Trainee Manager in London..

exil

There are still a lot of jobs in London at not much more than the minimum wage, and many of those are part time, so there will be a lot of people on 10k a year or less.

Anyway, as far as house prices are concerned, people on low wages are not in the market anyway.

As the average standard of living rises, then the "multiplier" you can apply to average salaries to find what is an affordable house price goes up over the years. It's "disposable" income after paying taxes, food, and other bills which is the important figure.

Pal

Raggie wrote:

Macdonalds.. always amazes me.. but

check out deals offered..

http://www.mcdonalds.co.uk/pages/careers/managementopportunities.html

midway down the page...

do not forget to add the london weighting.. £3K

so thats £21.5 K for Trainee Manager in London..

So that is 21.5K for a trainee manager. How much less for the nice staff that man the tills?