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

andykn

carolt wrote: »

Actually, andykn, FTBs don't usually buy 1 & 2 bed flats - the vast bulk of those built in the last few years were built for and sold to BTL investors. 2/3 of newbuilds built in London recently (mainly small flats) were sold to BTLetters - I posted on this a few days ago.

Er, maybe lots of newbuild flats in London were BTL bought but what do you think FTBs inside the M25 buy though? Where I live (W14) the majority of properties are flats.

There's lots of areas where the only affordable property for "true" FTBs (not those seperating with equity) has been flats for many years.

andykn

carolt wrote: »

Why can't "a market of 17 million owner occupied houses be simplistcally matched with the income of nearly 30 million earners" - do all owners buy alone?

Of course not. But then you have to use mean or median "household" income, not individual income. And still recognise that the average "true" FTBs do not buy an "average" house; historically most people start low and work up - fewer do it the other way around.

I thought the crux of the argument for many on this thread was that historical notions of affordability based on income multiples were meaningless because everyone buying nowadays was doing so as a couple, both in full-time work? You cannot have it both ways.

I'm just trying to explain that the median wage for one person is not a good affordability measure for an "average" house (that, on "average", will have 50% equity).

And what is your evidence for your supposition that "the 7 million or so rented households will be disporportionatley occupied by lower earners". My household income is many times that of my parents who own a million pound house - they are retired; I rent. Difference - they bought years ago; I wanted to buy at what turned out out to be a peak in house prices. Our income is excellent by any standards; we're very far from loaded, but far above average, either for the UK or our area. Yest we cannot comfortably afford to buy in our area.

Think about it. Do you really think that the median wage of renters is the same as the median wage of owner occupiers?

The simple fact is that it has been shown many times that very few people could now afford - on their current earnings - to buy their current home at its current market price. This is why house prices have to fall.

But that goes for many people, my parents could never have afforded the home they have lived in since the early 70s as FTBs.

You seem determined to endlessly repeat your error, which is to fail to notice that all the variations you see have always existed (eg some people unwaged, pensioners on low incomes, etc) BUT the income multiple has remained static over time.

That's why we're headed back to 3.5 times income average house prices - or less.

Income multiples have not remained static at all, they've varied wildly.

All I'm trying to say is using median wages of all earners is not a good affordability yardstick for the mean prices of all properties.

Becasue both the measure (median and mean) are different and the population (earners and house buyers/owners).

andykn

wolfman wrote: »

Erm... from the same data used to calculate the average house price maybe...

Sorry to be dense, but do you have access to the raw data or am I missing something in the "Haliwide" stats, whiere the headline figure is a "mean", I believe.

From what I've read (think it was on the bbc) owner occupier numbers are actually lower, at around 15 million. Does that mean much in the context you are implying though? Maybe if prices were cheaper, there would be more owner occupiers. The fact is people can't afford to which is why the number is lower.

Either way, my point was that the average is not a representative figure. The average is often used used to mean something like typical or normal, when it's not.

It's like saying, how many legs does the average person have. It'd actually be under 2 (maybe 1.8??), whereas the median would be 2. It reflects data better.

Even if the "Haliwide" figures are median, the populations (earners vs owners/FTBs) are different.

It's a useful indicator but not an absolute rule.

carolt

andykn wrote: »

Of course not. But then you have to use mean or median "household" income, not individual income.

Fine - please compare mean household income to mean house prices. Instead of going on about your 30 million earners - which is neither here nor there.

And still recognise that the average "true" FTBs do not buy an "average" house; historically most people start low and work up - fewer do it the other way around.

The age of FTB's has been going up, and their earnings with it. Many, like myself, already have families and frankly, are rather past the stage of living in a 1 bed flat. But this is not new - as I stated before, my parents and older brother both bought houses as their first purchases, both in London and both on extremely ordinary salaries, in manual/lower grade admin type work - both on below average incomes. Your idea that FTBs always started with tiny flats has no basis whatsoever in reality.

I'm just trying to explain that the median wage for one person is not a good affordability measure for an "average" house (that, on "average", will have 50% equity).

I'm not trying to compare median with mean - I'd like you to compare mean with mean.

It only has 50% equity because oh HPI - remove that and I'd giess years of MEWing will have reduced equity achieved by paying down the mortgage for many. Or what about today's headlines? - that only 1 in 100 with an endowment mortgage will be able to pay it off?

Think about it. Do you really think that the median wage of renters is the same as the median wage of owner occupiers?

No. I think it's higher, actually, for private renters - private rents are usually higher than mortgages for those who took out mortgages some time ago, particularly with interest rates at current lows.

But that goes for many people, my parents could never have afforded the home they have lived in since the early 70s as FTBs.

Quite.

Income multiples have not remained static at all, they've varied wildly.

We're talking averages here.

All I'm trying to say is using median wages of all earners is not a good affordability yardstick for the mean prices of all properties.

Agreed - but that's not what I'm trying to do. I'd like to compare mean wages with mean property prices - why can't you just focus on that?

Becasue both the measure (median and mean) are different and the population (earners and house buyers/owners).

Please see my previous post - you appear to have missed this commet near the end:

"You seem determined to endlessly repeat your error, which is to fail to notice that all the variations you see have always existed (eg some people unwaged, pensioners on low incomes, etc) BUT the income multiple has remained static over time."

bluey890

carolt wrote: »

Please see my previous post - you appear to have missed this commet near the end:

"You seem determined to endlessly repeat your error, which is to fail to notice that all the variations you see have always existed (eg some people unwaged, pensioners on low incomes, etc) BUT the income multiple has remained static over time."

IF you know so much about house prices. Why didn't you buy when they were 'cheap'?

IveSeenTheLight

wolfman wrote: »

?

That makes no sense. If you're inferring I don't know the difference between median and mean, re-read my posts.

I'm not inferring anything like that.

I understand however that Halifax and Nationwide report median average house prices.
Land Registry report mean average house prices.

When wanting to know average house prices I always use LR or RoSEA which provides more market data than Halifax or Nationwide

See here under the calibration row
http://www.houseprices.uk.net/articles/house_price_indices/

wolfman

IveSeenTheLight wrote: »

I'm not inferring anything like that.

I understand however that Halifax and Nationwide report median average house prices.
Land Registry report mean average house prices.

When wanting to know average house prices I always use LR or RoSEA which provides more market data than Halifax or Nationwide

See here under the calibration row
http://www.houseprices.uk.net/articles/house_price_indices/

Ah oops, so that's what LR means. I was googling it as some sort of forum lingo.

wolfman

andykn wrote: »

Sorry to be dense, but do you have access to the raw data or am I missing something in the "Haliwide" stats, whiere the headline figure is a "mean", I believe.

I think you're missing the point of what I'm saying.

No I don't have that data. It may be available, I don't know. I'm sure it could be worked out via the Land Registry data though which is arguably more accurate.

Anyway, my point was that "Haliwide" go on average house prices, and people use that figure by which to judge the prices of a typical house.

Mean isn't typical, where as median is. As I've mentioned average prices aren't representative, as the value is skewed by expensive, 1mil plus houses for example. It's the same with salaries.

I'm just mentioning in the context of this thread regarding salaries, which in turn became about house prices.

baileysbattlebus

The Haliwide use a mix adjusted price for a "typical" house - the "typical" house does not exist and is put together using different bits of different types of property and locations etc, (the mix). The Haliwide figures are not the average price of all houses that have been approved for a mortgage. They are the price of an average house. But what is an average house?

They use the "mix" to stop different types of property having an impact on the average price - ie, more detached houses selling than terraces, or flats falling in price more than houses. It gets rid of that variability, which can skew the averages.

They use the mortgage approval data after the survey, and their system lets tham apply this to all the combinations of the factors used in the "typical" house to the price a house actually sold for. Using that they can then come up with a price that a "typical" house would cost. The published price for an average house.

The Halifax and Nationwide both use slightly different criteria to come up with a "typical" house - which could explain some of the differences in their published average price.

Nationwide - June 09

“The price of a typical house rose by a seasonally adjusted 0.9% in June, building upon the improving trend seen over the last several months

In their press release for June the Nationwide themselves call it the price for a typical house - not the average price for a house.

IMHO, as the LR uses actual house prices - prices paid for real house and the Haliwide use a synthetic price for a synthetic house - they aren't really comparable.

I just use all of them to see the general trend - they all tend to follow the same path.

The mix-adjusted price represents the price for an average or 'typical' house. This should not be confused with the average price of all houses. The latter is usually higher because even though there are fewer more expensive houses sold, their price is such that they bias the simple average to be greater than the price of the typical house.

You takes your pick and makes your choice -

daveb975

tommy75 wrote: »

Utter rubbish. In 2003 I nearly bought a 2 bed terrace in the north west for under 35k that didn't need any work and was in a good area. That same house would command over 100k today and what about the extra interest to be paid back on top of that?

1 and 2 bed flats have sprung up in their thousands over the last few years mainly in city centers built by greedy companys making a quick buck, and lots of them still lie empty.

Most FTB's have always bought terraced housing or 2 bed semi's as a first home. 1 and 2 bed flats have been built on a large scale in the last odd few years.

Edit : Also, I didn't need a massive deposit in 2003 to get a decent mortgage rate.

You obviously haven't thought this argument through..

The difference is the area. In more expensive parts of the SE, a good proportion of FTBs have always bought flats. When you get into central London, a lot of people often don't buy anything else.

I think you would have to go back to at least the early 1980s to find a time when a majority of FTBs bought a house in an SE town like Guildford, let alone decent places further in.

I'd agree that in the north, a house has always been the first natural step on the ladder, certainly until the turn of this century anyway.