Real terms house price falls - what is "real"

andybenw

geneer wrote: »

Incorrect. The increase in average salary since the credit crunch have in fact been on a par with inflation, until recently anyway.

I believe you are spouting untruths here. I doubt very much there have been many 5% pay awards this year.

IveSeenTheLight

andybenw wrote: »

I believe you are spouting untruths here. I doubt very much there have been many 5% pay awards this year.

To be fair, these are averages and there will be people who receive a higher than average and those who receive a lower than average.

Of course from a property purchase persepctive, those with higher than average increases will be better placed to afford / buy property.

chewmylegoff

andybenw wrote: »

I believe you are spouting untruths here. I doubt very much there have been many 5% pay awards this year.

http://www.markit.com/assets/en/docs/commentary/markit-economics/2011/feb/UK_Wages_11_02_10.pdf

top of page 2 suggests that since Q2 2008 wages have lagged behind CPI, which is generally lower than RPI (although RPI did fall below CPI and go negative in 2009 at some point I think).

chewmylegoff

IveSeenTheLight wrote: »

To be fair, these are averages and there will be people who receive a higher than average and those who receive a lower than average.

Of course from a property purchase persepctive, those with higher than average increases will be better placed to afford / buy property.

just as some people will lose their jobs. if you're going to compare the average house price increase to anything it needs to be the average wage inflation. it's going to be pretty time consuming if we have a separate definition of "real terms" for each person in the country.

IveSeenTheLight

chewmylegoff wrote: »

just as some people will lose their jobs. if you're going to compare the average house price increase to anything it needs to be the average wage inflation. it's going to be pretty time consuming if we have a separate definition of "real terms" for each person in the country.

the slight problem is that not everyone is able to afford to be a property owner, thus overall averages with regards wages is not reflective.

My point was that higher earners (or those getting higher yearly increases) will be better placed to have the opportunity to buy than those on lower earning, lower than inflation wage increases.

We've already seen owner occupancy levels decrease and potentially it's likely to lower further.

paulmapp8306

I dont care about "real terms". While I think prices are still stupidly high, i want to buy.

I have an income that is "safe" (as its a pension) so im working on that as my "income". if my wife and I get jobs then great - well have more income and can overpay - but if not we wont get behind.

so - that gives me an income. i can work out my BASIC outgoings - what i can struggle by on for food/clothes/insurances/utilities/transport etc - which gives me a figure I can afford to spend on accommodation. That is tern gives me a figure I would be happy to get a mortgage for (much less than a bank would actually lend me) - ad its not much. Around £50k (as what I have available after my calculations is around £250pm).

Now - that means i have to save the rest of the cost of the house. At present between £50k and £70k. if house prices fall -ill have to save less. If they go up Ill have to save more. when I have enough Ill buy.

so - what do I do before then. Well I rent. "but its more expensive to rent" i hear you say "your wasting money". True I answer - BUT i still only have £250pm available - the government will be paying the rest (yes Ive worked out what benefits Id get if i only had that pension income - backed up by my sister who works in housing benefit). So - for me it will cost £250 regardless of whether Im buying or renting.

of course if me and/or the wife get jobs - or good jobs - or really good jobs will move the goal posts. It will mean ill get less benefits, so will pay more of that rent. It also means I can save quicker towards the house. Depending how safe the jobs are - we MAY be prepared to take on a bigger mortgage - but the problem is if Im paying a mortgage, and loose my job, Ill struggle to pay it. The Government wont help. If im renting and loose that job, the government will pay my rental shortfall.

So - ultimately while buying is better, renting being more expensive and money down the drain - I dont care because If I HAVE to rent - Im not paying it (or most of it) the government (or rather the tax payer) is.

Typical figures for my area.

Rent - £650 BUT Government pays £450 of that - cost to me £200
Mortgage (on an 80% for example) £500 all of which I pay.

so - which is cheaper - to me?

This is how a LOT of average people think. Ita not simple about what something costs - its what it will cost me personally.

paulmapp8306

andybenw wrote: »

I believe you are spouting untruths here. I doubt very much there have been many 5% pay awards this year.

Indeed. 2% in 2008, 2% in 2009, 1.6% in 2010, frozen in 2011, frozen in 2012.

so - Ive had an increase of 5.6% (not cumulative I admit) over a 5 year period.

Thats pretty average for the public sector. Private sector? My mum and brother in law have had no pay rise for 3 years. I dont know anyone else in the private sector well enough to know what their financial situation is/has been. One thing is for sure though - anyone who has come close to inflation level pay rises in the last 3-4 years is very very lucky.

geneer

andybenw wrote: »

I believe you are spouting untruths here. I doubt very much there have been many 5% pay awards this year.

uh huh. "until recently anyway".

geneer

IveSeenTheLight wrote: »

To be fair, these are averages and there will be people who receive a higher than average and those who receive a lower than average.

STOP THE PRESS!
The world really should know about this.

geneer

paulmapp8306 wrote: »

Indeed. 2% in 2008, 2% in 2009, 1.6% in 2010, frozen in 2011, frozen in 2012.

so - Ive had an increase of 5.6% (not cumulative I admit) over a 5 year period.

Thats pretty average for the public sector. Private sector? My mum and brother in law have had no pay rise for 3 years. I dont know anyone else in the private sector well enough to know what their financial situation is/has been. One thing is for sure though - anyone who has come close to inflation level pay rises in the last 3-4 years is very very lucky.

Sorry. Anecdotal of 1 counts as "many" does it.