More average salary stats to argue over.....

carolt

andykn wrote: »

Neither can you use the earnings of nearly 30 million workers to judge the prices of 17 million owner occupied houses.

Why not? That's what the mean avarage has always been based on. Homeowners aren't a hermetically-sealed group. If the housing market is going to survive, you have to take into account the wages of those who don't yet own - or where will FTB's come from?

Don't forget that a lot of those who own the most expensive properties actually have very low wages, if any - pensioners.

lostinrates

JonnyBravo wrote: »

Very honest of you.

When you pay cash for a job do you think most people declare it?

I always point out its going in my records and often jot it down/staple receipt in there and then. I think thats the best I can morally do. When I'm perfect myself morally and as a person maybe I'll have to refuse to pay anyone cash

Its an interesting question, philosophically and much as practically. One I don't have the answer too, because although I adhere to the system much I think in the system is wrong. Perhaps thus adhering is morally wrong while legally right?

andykn

JonnyBravo wrote: »

Well both the Halifax and Nationwide for starters.
They actually report the price of "a typical house".

I'd bet that almost all the indices use some sort of statistical method to eliminate or reduce the impact of outlying "anomalous" properties.

I'm pretty sure the Halifax now include them, Nationwide may not.

The Land Registry figures will tend to include more auction and right to buy properties than the "Haliwide" figures. They do explain their methodology quite well but I've lost my copy at the mo.

JonnyBravo

andykn wrote: »

It's not a rule of thumb at all, old fashioned or otherwise.

Halifax have used Mean, Male, Full time earnings as a long term trend comparator.

You cannot use median earnings as a yardstick to measure mean house prices (skewed by extremely expensive houses).

Neither can you use the earnings of nearly 30 million workers to judge the prices of 17 million owner occupied houses.

Well, whilst I agree that it's perhaps not the most meaningful measure of course you can use it.
If you look at the trend of the ratio if it increases it tells you it's becoming more unaffordable for more people regardless of the actual number.
Then the question becomes, is the supply such that it matters?
Clearly if supply is very limited it may not matter that more can't afford it as still enough can afford it.
The value of this is also increased if the deviation within the spread of earners remains constant.... (I'm not sure I've seen any figures on this bar the slightly meaningless figures that the very richest and far richer than the very poorest by ever increasing amounts)

So then the question comes back to..... is the number (whatever the ratio is) really going to be the same as it was 20, 40 or even 60 years ago. It is here I side with Hamish and say no. I think it is changing with time. To what, and from what, I'm not sure..... but I do believe it is increasing. ie the ratio of house price to earnings is becoming higher in a long term trend

Cannon_Fodder

JonnyBravo wrote: »

I'm not bothered whether they are included and then "averaged out" by statistical methods or not in from the start.
If he was so bothered by the methodology he'd have looked it up beforehand. The fact is that I have, so I know it doesn't matter if twice the number of £1m+ properties sell in one month compared to the last. The fact is he was arguing about the stats being wrong to suit his side of the argument without checking first. I told him he was wrong, if he's that bothered as to the exact why and wherefores he can go look it up himself..... but seeing as you wanted it, heres a handy link for him to start as you seem to worry he cant....



http://www.nationwide.co.uk/hpi/method_qs.htm

• Nationwide house prices are mix adjusted - i.e. we track a representative house price over time rather than the simple average price. We do not use the simple average price (Land Registry uses this method) because it is too easily influenced by a change in the mix (i.e. proportion of different property types, locations etc) of houses
• Although it remains similar to the Halifax method we substantially updated our system in 1993 following the publication of the 1991 census data. These improvements mean that our system is more robust to lower sample sizes because it better identifies and tracks our representative house price

Thanks.

:rolleyes:

A long way of saying high house prices are NOT excluded...

Because he was assuming you knew what you were talking about, he didn't feel the need to check up on your b_llsh1t...

That's doesn't make you right, or him wrong.

Typical one-liner quibbling. If someone says something forcefully enough, it appears to hold water, when in fact its as made up as anything we see on here...

andykn

carolt wrote: »

Why not? That's what the mean avarage has always been based on. Homeowners aren't a hermetically-sealed group. If the housing market is going to survive, you have to take into account the wages of those who don't yet own - or where will FTB's come from?

Don't forget that a lot of those who own the most expensive properties actually have very low wages, if any - pensioners.

The figure "always" used by the Halifax is Mean, Male, Full time, not the Median, Male & Female figure now preferred by the Office of National Statistics (ONS).

FTBs do not buy "average" houses, they buy 1 or 2 bed flats.

Your point about OAPs is a good one and another reason the simplistic 3 times "average" earnings plus deposit is a poor measue of "average" house prices.

Any consistent measure of earnings is useful as a trend, not necessarily as an absolute yardstick of prices.

lostinrates

The other thing I always am unsure about with average salary stats is the impact of things like tax credits,for example, etc on them: salary doesn't always equal income, does it?

It seems with the changes in the benefit/fiscal system both income and ressure on income are varibles and I've not seen anything that chrts this comprehensivly that I can recall.

andykn

JonnyBravo wrote: »

Well, whilst I agree that it's perhaps not the most meaningful measure of course you can use it.
If you look at the trend of the ratio if it increases it tells you it's becoming more unaffordable for more people regardless of the actual number.
Then the question becomes, is the supply such that it matters?
Clearly if supply is very limited it may not matter that more can't afford it as still enough can afford it.
The value of this is also increased if the deviation within the spread of earners remains constant.... (I'm not sure I've seen any figures on this bar the slightly meaningless figures that the very richest and far richer than the very poorest by ever increasing amounts)

So then the question comes back to..... is the number (whatever the ratio is) really going to be the same as it was 20, 40 or even 60 years ago. It is here I side with Hamish and say no. I think it is changing with time. To what, and from what, I'm not sure..... but I do believe it is increasing. ie the ratio of house price to earnings is becoming higher in a long term trend

Sure, there are many income measures that are fine as a medium to long term trend measure. Unfortunatley I don't think median earnings has been around since the last crash even.

JonnyBravo

Cannon_Fodder wrote: »

A long way of saying high house prices are NOT excluded...

Because he was assuming you knew what you were talking about, he didn't feel the need to check up on your b_llsh1t...

That's doesn't make you right, or him wrong.

Typical one-liner quibbling. If someone says something forcefully enough, it appears to hold water, when in fact its as made up as anything we see on here...

Not excluded. Yep you're right I should have worded it differently but was
entirely correct in pointing out that his assertion
"Shouldn't we also expect the average house price to be skewed by all those big expensive houses that the big earners buy?"
is entirely wrong. It is taken account of statistically rather than by excluding them.

Is that better for you?

:rolleyes:

Treadmill

Huzzah, I'm in the top 10%, top 5% on a year with plenty of overtime