Average home £1million by 2024

meanmachine_2

http://uk.news.yahoo.com/06112006/325/million-pound-starter-home-2024.html

Not quite sure how we're meant to take this.

Clearly it shows that the current situation is utterly unsustainable.

It's also a clear example of banks making stuff up to get into the newspapers.

Anyway, wages aren't rising 7.4%. They're going up around 4% at the moment.

So instead of 146K, the average wage in 18 years, compounding the ave 25K wage by 4% each year will be a grand total of....wait for it...£51,000.

Which means that the average mortgage would have to be 19 times the average wage.

Sadly, I don't think any newspaper bothered to do even that quick calculation.

Oh, and that doesn't take into account a recession or two, deflation, globalisation, a housing crash etc etc

richgirl

Sorry but your calculations are nonsense.

The london housing market cannot carry to 19X average salaries, trends have persistenly shown that that the London Market maxes out at about 7X then declines or wages catch up.

meanmachine_2

richgirl wrote:

Sorry but your calculations are nonsense.

The london housing market cannot carry to 19X average salaries, trends have persistenly shown that that the London Market maxes out at about 7X then declines or wages catch up.

Beg pardon?

I think you'll find that my calculations are the correct ones, and I'm pointing out that the average home WON'T be a million quid in 18 years because the average wage is likely to only be 50K.

Sorry if I didn't make that clear.

zag2me

Wages will rise alot in that time, I wouldnt be suprised if it was 1 million quid.

25 years ago people would also have laughed at todays prices.

meanmachine_2

zag2me wrote:

Wages will rise alot in that time, I wouldnt be suprised if it was 1 million quid.

Well I hope they do. If wages rise, so too will interest rates. Lovely jubbly.

Oh, but then house prices go down.

So which is it guys? Wages or house prices? I know which one I'd prefer.

zag2me

House prices will go through a few cycles in that time, wages will continually increase, its just a fact of life.

richgirl

Yeh the cycle generally for the UK is between 4.5X and 2.5X earnings.

And for london between 7X and 3.5X

Hence house prices are at a peak now, the next stop is the lows some years forward

ukmike

wages will continually increase

Maybe so in the *good old days*, but not now/in the future due to other factors such as new EU members coming here to work.As an example,bricklayer's wages have gone down by a huge amount.In manufacturing,the same thing is starting to happen.I fear we are in for a rough ride.

meanmachine_2

In my industry there has been ZERO wage inflation in ten years.

And no, that doesn't invite the advice "change your career then you big moaner".

It's still well paid, but nowhere near as well paid as it was.

richgirl

meanmachine wrote:

In my industry there has been ZERO wage inflation in ten years.

And no, that doesn't invite the advice "change your career then you big moaner".

It's still well paid, but nowhere near as well paid as it was.

Average earnings continue to increase year in year out, at a rate above the rate of inflation (CPI). I don't think they have ever been negative ?

No change in 10 years would mean a 50% loss in purchasing power, are you sure your wages have not gone up in 10 years

scorpio_princess

I work for my family's business and haven't had a wage rise in 3 years! I'm on a pretty low wage, and it drives me mad when the local rag goes on about how the 'average wage has never been so high' - 23k a year. What they don't tell you is that they include the big cheeses at Norwich Union, high-flying legal types and Bernard Matthews himself! I personally don't know anyone who earns over 19k, and if you take a look in the job pages around here the only people who do earn over that amount are those that have joined the gravy train (civil service) or people with very specific skills/qualifications/experience.

Don't get me wrong, i'm not going to go down the 'it's not fair' route - after all, life would be very dull if we we're all the same! Buy the fact is some people would say 'get a better paid job' - definitely not that easy around here, especially if you have a disability that limits what you can do (not in my eyes I might add, only in the eyes of prospective employers