House Price Crash

MORPH3US

RHemmings wrote:

I thought that Martin wasn't talking about a £80,000 mortgage, but a combined salary of £80,000. I may have to listen to his talk again to check.

Ha ha, confusion reigns! I was quoting you when I said about £80,000 mortgages.

You said

"I think you'll find that there are lots of people who would just want to be able to buy a three bed semi for £80,000 in a safe neighborhood near their work."

RHemmings

MORPH3US wrote:

Ha ha, confusion reigns! I was quoting you when I said about £80,000 mortgages.

You said

"I think you'll find that there are lots of people who would just want to be able to buy a three bed semi for £80,000 in a safe neighborhood near their work."

I see. If 3 bed semis were available for £80,000, then two salaries of £16,000 would be a combined salary multiple of 2.5. Reasonable. But I've now lost track of what we were saying and cannot then make the next point in the argument.

CB1979_2

RHemmings wrote:

I see. If 3 bed semis were available for £80,000, then two salaries of £16,000 would be a combined salary multiple of 2.5. Reasonable. But I've now lost track of what we were saying and cannot then make the next point in the argument.

sod it just chuck a random question in! lol

bring on the revolution!

aderbyshirelad

RHemmings wrote:

The graph is adjusted for inflation.

Ok, I can see that, too. But I was asking about wages. Inflation is a measure for price increases, isn't it, and does not cover wages. I was interested in wage levels over the same period adjusted for inflation. Or am I being daft? I truly won't be insulted if you say yes, just a bit embarassed!

RHemmings

aderbyshirelad wrote:

Ok, I can see that, too. But I was asking about wages. Inflation is a measure for price increases, isn't it, and does not cover wages. I was interested in wage levels over the same period adjusted for inflation. Or am I being daft? I truly won't be insulted if you say yes, just a bit embarassed!

I see. I must admit I hadn't thought about the increase in real wages. I don't think there has been much in the last generation. Certainly real house prices have doubled since say 1980, a generation ago. And 1980 was a peak. I can't imagine that real wages have increased anything like that. I have heard that real wages had been falling for a while, but can't find an appropriate graph.

RHemmings

CB1979 wrote:

sod it just chuck a random question in! lol

bring on the revolution!

What do you get when you multiply six by nine?

lisyloo

The graph above certainly shows that prices have risen but what it doesn't show is interest rates.

What you need is a graph of interest rates superimposed on the house price graph and you will see a correlation (inverse).

House prices were certainly lower in the 80s but people were paying nearly 15% interest rates at some points.
Now you can get a mortgage for below 5%.
The COST of a mortgage is directly related to interest rates so this graph only shows part of the picture.

I have been looking in detail at the housing market for 4 years now (on a daily basis) and whilst I have an understanding of the main issues, I also have an understanding of how complex it is and difficult it is to predict.

aderbyshirelad

RHemmings wrote:

I see. I must admit I hadn't thought about the increase in real wages. I don't think there has been much in the last generation. Certainly real house prices have doubled since say 1980, a generation ago. And 1980 was a peak. I can't imagine that real wages have increased anything like that. I have heard that real wages had been falling for a while, but can't find an appropriate graph.

Yeah, I was just interested to see if it really is much harder now than it was for our parents. I never get any sense out of my father as he appears to consider me very fortunate not to have a diet that consists solely of gravel.

I wonder what the real differences are between now and the late 70's early 80's? Things such as the price of a loaf bread and its ratio to incomes, etc. I have seen many argue that although wages haven't kept pace with HPI that other high spend goods such as cars, white goods and electricals are now much, much cheaper than they were relatively speaking.

lisyloo

I wonder what the real differences are between now and the late 70's early 80's?

This is purely anecdotal and not scientific but from my memory (I was born in 1968) back in those times expectations, things people did and the possessions people had were different.

We used to go on holiday once a year in a caravan within the UK.
Now I go abroad 3 or 4 times a year.
We NEVER eat out or had takeaways when I was young.
Now it's a fairly regular occurence for many people with disposable income (weekly).
We just had one car per family and one TV per family.
I don't particularly remember feeling poor simply because we didn't have loads of electronics and takeaways.
If we wanted something we saved up for it, we didn't have credit cards.

Personally I don't think things were easier.
It has ALWAYS been hard for people starting out.

The problem is now that many people have an expectation of getting their own home straight away.
Years ago people had to share with family (sometimes after they were married).

Undoubtedly land prices and house prices are relatively high right now, but I think people's expectations are also very high these days.
No-one likes saving for anything anymore, they want it NOW.

lynzpower

i do agree with lisyloo

my parents when I was born in 77 were "fortunate" if you can call it that an auntie died and left them thier first home. Before thast they were living with my grandparents sharing a single bed. My sdad worked in kitchens at the time and recalls how he used to try and eat there all the time so it cost less on food at home. and that they used fray bentos pie tins as crockery as they didnt have anything else.

Sorry, people jsut wouldnt do that these days would they