House prices 'to fall for the next five years' in longest property slump for a lifeti

HAMISH_MCTAVISH

Thrugelmir wrote: »

The scenario we are entering now is that real average incomes are going to fall. .

Perhaps.

But any increase in wages, even todays increases of less than general inflation, will still better the ratio between incomes and mortgage debt and thus continue to erode the value of that mortgage debt compared to wages.

When you buy a house, you lock in that amount of debt on the mortgage.

2 years of 5% wage rises or 4 years of 2.5% wage rises still put you in the same place.... with an effective devaluation of 10% of your mortgage debt.

Thrugelmir

HAMISH_MCTAVISH wrote: »

2 years of 5% wage rises or 4 years of 2.5% wage rises still put you in the same place.... with an effective devaluation of 10% of your mortgage debt.

An average wage earner on £25k. Receiving a 2.5% rise. Will be £35 a month better off after tax and nic.

Doesn't go far with the cost of everyday living rising steeply. Let alone interest rates rising at some point. At some point there is going to be a fiscal squeeze that's going to hurt many in the UK. As those in Greece are finding out currently.

While focus is on private sector. A number of private sector job losses announced this week. General pay rates are under downward pressure.

abaxas

HAMISH_MCTAVISH wrote: »

Perhaps.

But any increase in wages, even todays increases of less than general inflation, will still better the ratio between incomes and mortgage debt and thus continue to erode the value of that mortgage debt compared to wages.

When you buy a house, you lock in that amount of debt on the mortgage.

2 years of 5% wage rises or 4 years of 2.5% wage rises still put you in the same place.... with an effective devaluation of 10% of your mortgage debt.

It's not about the valuation of the debt, it's all about servicing it.

There is no point saying 'it's easier to service the mortgage' but I cant afford to eat.

Graham_Devon

Thrugelmir wrote: »

An average wage earner on £25k. Receiving a 2.5% rise. Will be £35 a month better off after tax and nic.

Apparently fuel alone is costing the average family £36 a month more than this time last year.

So that wipes out that increase.

ukcarper

Graham_Devon wrote: »

Apparently fuel alone is costing the average family £36 a month more than this time last year.

So that wipes out that increase.

That’s a lot of petrol as according to AA average petrol price has increased 15p a litre since May 2010. That works out at 240 litres or £326 a month.

blisk3

It's looking bad, very bad.

Graham_Devon

ukcarper wrote: »

That’s a lot of petrol as according to AA average petrol price has increased 15p a litre since May 2010. That works out at 240 litres or £326 a month.

I'm now corrected...

It was £32.76p a month. Still, only £3.25 difference. Suppose it's based on a two car family though in that description. Either way, it's backup to the point made earlier by Thrugel!

http://www.telegraph.co.uk/foodanddrink/8524536/Petrol-prices-failed-to-fall-in-line-with-oil.html

ukcarper

Graham_Devon wrote: »

I'm now corrected...

It was £32.76p a month. Still, only £3.25 difference. Suppose it's based on a two car family though in that description. Either way, it's backup to the point made earlier by Thrugel!

http://www.telegraph.co.uk/foodanddrink/8524536/Petrol-prices-failed-to-fall-in-line-with-oil.html

Ok that's 1800 miles a month in a car that does 35mpg I would guess it's the mean I wonder what the median is.

Graham_Devon

ukcarper wrote: »

Ok that's 1800 miles a month in a car that does 35mpg I would guess it's the mean I wonder what the median is.

Do you see the point being made?

That was just petrol / diesel.

Hamish was trying to state that people would be better off. Infact, if you take other rising costs into account, there are much worse off.

ukcarper

Graham_Devon wrote: »

Do you see the point being made?

That was just petrol / diesel.

Hamish was trying to state that people would be better off. Infact, if you take other rising costs into account, there are much worse off.

That is probably the case but I’m not sure that is what Hamish is saying, all he is saying is that your debt in relation to your wages has decreased. By the way the extra take home on the £25k does not include the increase in the tax-free allowance and they would actually be £47 a month better off.