House prices are now back to 2002 levels.

Jegersmart

CLAPTON wrote: »

I'm sure there are stats to show the wages change but I would guess wages have indeed kept up with inflation over the 10 year period.

Even if wages haven't kept up with inflation, his nominal salary will have increased a lot.

So the share of his income going to pay off the mortgage will be less both because wages have risen in nominal terms and interest rates have fallen.

Rents will have risen, so yes he had a very deal buying in 2002.

Thanks, whether property at current prices are a "good deal" remains to be seen?

J

Jegersmart

This may be interesting...

http://www.measuringworth.com/datasets/ukearncpi/earnstudynew.pdf

J

IveSeenTheLight

Jegersmart wrote: »

I agree he has not "paid rent" for 10 years, but he has paid "interest" instead.

It'd be interesting to see the rent paid over the 10 years and the amount of interest paid over the same time.

On a repayment mortgage, the interest reduces each month.

On rental, it generally increases each rental year.

Madone13

So if you'd bought as an investment you'd have a rate of return which has kept up with inflation and on top of that rental income. Seems like a pretty good deal to me.

ukcarper

CLAPTON wrote: »

I'm sure there are stats to show the wages change but I would guess wages have indeed kept up with inflation over the 10 year period.

Even if wages haven't kept up with inflation, his nominal salary will have increased a lot.

So the share of his income going to pay off the mortgage will be less both because wages have risen in nominal terms and interest rates have fallen.

Rents will have risen, so yes he had a very deal buying in 2002.

2012 gross median earnings full time £506 per week 2002 £390 an increase of about 30%

AS you say his nominal pay will have increased and his nominal mortage payment might well have gone down.

Big_Zee

ukcarper wrote: »

2012 gross median earnings full time £506 per week 2002 £390 an increase of about 30%

AS you say his nominal pay will have increased and his nominal mortage payment might well have gone down.

Interesting - so on that basis the cost of owning a house now is quite a lot less than in 2002 as interest rates are much lower. Obviously with lending criteria much stricter its harder to get on the ladder, but once you are on it, then you should be better off now than in 2002.

robmatic

Big_Zee wrote: »

Interesting - so on that basis the cost of owning a house now is quite a lot less than in 2002 as interest rates are much lower. Obviously with lending criteria much stricter its harder to get on the ladder, but once you are on it, then you should be better off now than in 2002.

It's a pretty good time to have a pile of capital. Sucks if you don't though.

Big_Zee

robmatic wrote: »

It's a pretty good time to have a pile of capital. Sucks if you don't though.

yes your right - I've borrowed from every possible place I could think off.

ukcarper

Big_Zee wrote: »

Interesting - so on that basis the cost of owning a house now is quite a lot less than in 2002 as interest rates are much lower. Obviously with lending criteria much stricter its harder to get on the ladder, but once you are on it, then you should be better off now than in 2002.

October 2012 average house price October 2002 £215k, 295x weekly earnings October 2012 £161k, 318x weekly earnings .

Average standard variable interest rate 5.68% in 2002 now 4.32%

Jegersmart

ukcarper wrote: »

Average standard variable interest rate 5.68% in 2002 now 4.32%

What is this? Mortgages?

J