House prices to suffer 'significant correction' in 2010

HAMISH_MCTAVISH

IveSeenTheLight wrote: »

Other useful information

Male Full Time mean average = £35,661
Female Full Time mean average = £26,000
Male Part Time mean average = £13,324
Female Part Time mean average = £10,500

So if you took the aberage house hold as being full time male and part time female the average would be £35,661 + £10,500 = £46,161.

Makes you realise why property is at the price level it is.

Except of course it's even better than that.......

Those averages are for all people, including the 30% of the population who have never historically been able to afford a house.

When you look at the pool of actual, or likely, house buyers, ie, the top earning 70% of the population, the averages are higher still.

A "typical" house buying couple is probably on a minimum of £50K to £60K, and more like 70K or 80K in many cases.

And of course, most "house" buyers also already have equity from their FTB flat(s), and/or help from bank of mum and dad.

Which is why so many people in their early 30's are easily able to buy 150K or 250K or 350K houses.

Examples......

Male on 30K, female on 20K, (so a lorry driver and a secretary type of wages) 60K equity from a decade in previous flat, or flats, and a bit of savings.

160K house, (national average) 60K deposit and a 100K mortgage of 2.0 times joint income. And if she wants to give up work and make babies, mortgage remains less than 3.5 times his income.

or......

Male on 40K, female on 35K (sales/service rep, middle manager and senior PA/teacher type wages) 100K equity from slightly nicer first flat(s), and a bit of savings.

250K house, 100K deposit, 150K mortgage of 2 times joint income, or just over the long term average of 4 times income for him if she quits work to breed. Which is perfectly managable.

or......

Male on 60K, female on 40K, (solicitor and HR manager type wages) 150K equity from previous flats (one each) and a bit of savings.

350K house, 150K deposit, 200K mortgage of 2 times joint income, or 3.75 times his income if she breeds.


Affordability, for most house buyers, is not a problem. And the CML mortgage figures bear this out. The averages never crossed 3.5 times income even at peak.

The problem is certainly real for people who have not bought a flat whilst young to build equity, and who are on a single income of average or below average, and who then expect to be able to buy the "average house" as a first step. They are going to find it hard. But there are enough people around who didn't make the mistake of renting for a decade to keep prices up indefinitely.

sjaypink

IveSeenTheLight wrote: »

You need more suitable properties to be marketed in order for all to be able to buy.

Sorry, I don't get what you mean?

ukcarper

sjaypink wrote: »

why not use median ft wage then?

I thought he had

Graham_Devon

IveSeenTheLight wrote: »

But your including part time workers, students etc that are not going to be buying property.

Oh, you mean REAL people, living in the REAL world, doing REAL things we all have to do to live a REAL life?

Sue me.

Anyway, i wasn't. I was using the exact same figures as yourself. Just median, instead of mean.

As mentioned before, property ownership is approx 70% therefore its only the top 70% of earners that need to be able to afford

If anything, it might be higher than the mean average.

This has been explained to you many times before Graham.

Explained? You mean you argued your side for using your preferred figures which means you can inflate house prices?

Bite me.

sjaypink

sjaypink wrote: »

why not use median ft wage then?

ukcarper wrote: »

I thought he had

Me too, but ISTL thought otherwise...

IveSeenTheLight wrote: »

But your including part time workers, students etc that are not going to be buying property

Nope, have checked, median ft wage is £25,428

DaddyBear

IveSeenTheLight wrote: »

Only the top 5%.
Then it should be higher than the mean then.

Really? Do you want to rethink that statement?

Graham_Devon

IveSeenTheLight wrote: »

Only the top 5%.
Then it should be higher than the mean then.
The lower 30% of the population are priced out given that property is 70% owner occupied.
Lets face it, do you think that part time workers such as students should be buying property.
It's natural that these lower earners are excluded from the calculation

It's an ideallic but unrealistic world to think that the average property should be affordable to the median average earner.

I don't know where you have got part time workers and students from? No one is talking about them except yourself.

As for the second part. Why is it unrealitic to think that the average property should be affordable to the average earner?

There is absolutely no point in using the mean wage here. All it does is give YOU a bigger average to make your point. But in the real world, this mean figure you quote is not realistic for most of the country.

It's what most people earn that matters. Not the middle number of what all people earn, as that's completely distorted by the likes of bankers and bonuses being included in salaries.

ukcarper

Graham_Devon wrote: »

As for the second part. Why is it unrealitic to think that the average property should be affordable to the average earner?

.

But you are saying that a FTB should be able to buy an average house and that has never been the case

IveSeenTheLight

sjaypink wrote: »

Me too, but ISTL thought otherwise...



Nope, have checked, median ft wage is £25,428

Using the median full time wage would be acceptable.
The small problem is that some full time workers will still be unable to be able to afford to buy a property.
It also assumes there is a balance of supply and demand in order to be able to cater for all full time workers being able to afford.

What you really need is to average the earnings of property buyers.
This takes into consideration the supply and demand basis which direclty affects thr house price market.

Even taking you Median FT wage, many house buyers are dual income.
Would this mean that the median average dual income would be £50,856?

HAMISH_MCTAVISH

Graham_Devon wrote: »

It's what most people earn that matters. Not the middle number of what all people earn, as that's completely distorted by the likes of bankers and bonuses being included in salaries.

See post 122.......