wages to house prices ratios

sm9ai

epz wrote:

as part of a generation whos had to pay massive ammounts to get educated, then found all the jobs are getting shipped off to the 3rd world cause its cheaper and globalisation is good cause my tv is £5 cheaper and taxed more with lower benifits and no job security all i can say to the baby boomers who think i am going to subsidies 40 years of their retirment through tax so i can retire at 75 is i hope the market goes the way all bubles go and takes you down with it, no simpathy.

Well said - but don't forget - we've never had it so good (Apparently :mad: )

talksalot81

sm9ai wrote:

Well said - but don't forget - we've never had it so good (Apparently :mad: )

The definition of 'we' is important. If you mean the average of the population, I think 'we' probably are very well off. If you speak about those who would fall into the traditional description of a family (I guess early 30s upwards) then 'we' are fantastically off (dont forget these are the people who are doing 'well' from the boom). In contrast, those who are really suffering are those who were not really old enough to have benefitted from the boom. At the moment this is a relatively small part of the population - so I can believe that the impact on the overall is low. However, as every day passes, there are more suffering and fewer benefitting. So although the description may be statistically fair, the situation is getting less good by the second.

Dead_Eye_Jones

me 'n' this missus are pretty average earners, we bought a 3 bed semi in London. How we did it was no big secret - we saved money first! Genius! This old trick seems to have been forgotten in the buy no wpay later society we now live in. But using our best MSE skills we saved 1000s a year for a number of years. Our mortgage was pretty big, but not massive by some standards, but more importantly it is easily affordable, we pay as much now as we did in rent. Must admit we bought last year though, so prices have moved on....

We looked at a number of towns in and around London and found we were priced out of the top spots - as im sure we would be at any time in history. But eventually we found a great town which didnt feel like a compromise at all.

Sometimes it seems to me that people are bitter that they cant buy a central westminster pad, but only the wealthy have ever been able to live there... no? My folks bought a shell of a house, they had to buy it together, it wasnt their 1st choice area, they did without all mod cons. Have times really changed - I think the real difference is people dont expect to have to sacrifice these days, my generation seems a little spoilt perhaps, we want a nice house, and all the trappings of a 21st century lifestlye - not quite realising we cant actually afford it....

jhxmt

When my friend and I, both working full-time (plus overtime) in relatively well-paid, secure jobs cannot afford to buy a two-bedroom flat, then it's not a case of being spoiled - it's a case of lack of affordability.

We're renting now. We don't have Sky. We turn the gas off when we head out to work in the mornings and turn it back on when we get in in the evenings. We save as much as we're able.

Don't talk to me about being spoiled. Bitter, yes, definitely, but spoiled is a step too far.

talksalot81

If you look at the peak at the last crash, the monthly repayment on an average priced home at base rate interest was about £750. In the third quarter of 2006, the cost would have been £700. So in absolute terms, it is still cheaper now than just before the last crash. If you factor in wage inflation, we are effectively paying much less of our pay packet into a mortgage than we were 18 years ago - probably more than 50% less.

If you do the sums over the whole of the UK, you can see this for yourself. There is little point debating it if you do not do the sums for yourself!

It does remain that this is a population wide feature. I cannot correct NI for earnings because I have been unable to obtain data, but at peak in the late 80s, an average mortagae on average house would have cost about £350 per month. Third quarter 2006 and it would have cost £750. So there are some really extreme regional fluctuations.

RabbitMad

lypsey wrote:

This is what you are after

http://www.in2perspective.com/nr/stats/house-price-to-earnings-ratio.jsp

My 3 year old could tell you what is going to happen after the 3rd peak.... yes thats right a return to the mean and that is a house price crash

Why does a return to the mean mean house price crash. A return to the mean could equally be achieved through some good old fashion wage inflation while house prices stagnate.

In my situation my current ratio is 6.5 but an annual 5% payrise would reduce that to 6.0 this year, 5.75 next year and 5.5 the year after.

meanmachine_2

Dead_Eye_Jones wrote:

me 'n' this missus are pretty average earners, we bought a 3 bed semi in London. How we did it was no big secret - we saved money first! Genius! This old trick seems to have been forgotten in the buy no wpay later society we now live in. But using our best MSE skills we saved 1000s a year for a number of years. ...

That was stupid.

Why save when house prices are going up @ 10% pa?

Pointless.

Hate to knock you off your high horse, but you might have been better off not saving at all and buying earlier.

Bang goes the sensible approach in a market that's highly irrational.

By the way 2010 is when the population goes into an age spiral - not enough young workers to pay the pensions of the retired etc. That's when property prices will really start to decline.

Won't happen till then, barring an unexpected economic shock.

fivemice

jhxmt wrote:

When my friend and I, both working full-time (plus overtime) in relatively well-paid, secure jobs cannot afford to buy a two-bedroom flat, then it's not a case of being spoiled - it's a case of lack of affordability.

We're renting now. We don't have Sky. We turn the gas off when we head out to work in the mornings and turn it back on when we get in in the evenings. We save as much as we're able.

Don't talk to me about being spoiled. Bitter, yes, definitely, but spoiled is a step too far.

Surely you mean you can't afford to buy in the area you want to live in?