House Prices vs earnings

Wookster

That definitely tells a story!

abankerbutnotafatcat

I've said this before, I didn't have any facts or stats behind it but I think there's an cutoff of say people aged 40/45 (depending on when you were in a position to buy) and younger who find it relatively more difficult to buy than the older generations and although the house price drops in the last few years may have part-corrected that in some parts of the country in the London area it's only got worse.

ukcarper

To me it shows me the best time to buy a house was between 1990 and 2000 and that compared to the 70s excluding housing the cost of living is much lower.

Graham_Devon

ukcarper wrote: »

To me it shows me the best time to buy a house was between 1990 and 2000 and that compared to the 70s excluding housing the cost of living is much lower.

Well yer. But housing is a cost of living.

Thrugelmir

ukcarper wrote: »

To me it shows me the best time to buy a house was between 1990 and 2000 and that compared to the 70s excluding housing the cost of living is much lower.

Then you'll notice that divergence of incomes and high prices from prices happened when the banks first created fractional reserve banking in the early 70's.

Ever since the politicians have ridden the back of a monetary credit boom. Inflation disguising their ineptitude in handling the economy. Consumers too have merely passed debt back to the next generation.

The graph may well indicate there's a serious correction ahead. As everything falls back to normality. What normality is, who knows, until the bubble fully deflates.

ukcarper

Graham_Devon wrote: »

Well yer. But housing is a cost of living.

Earnings have increase by more that twice as much as RPI since the 70s you need to speed a much lower proportion of your earnings to buy food etc leaving more available for housing.

ukcarper

Thrugelmir wrote: »

Then you'll notice that divergence of incomes and high prices from prices happened when the banks first created fractional reserve banking in the early 70's.

Ever since the politicians have ridden the back of a monetary credit boom. Inflation disguising their ineptitude in handling the economy. Consumers too have merely passed debt back to the next generation.

The graph may well indicate there's a serious correction ahead. As everything falls back to normality. What normality is, who knows, until the bubble fully deflates.

I'm not sure it as simple as that but with inflation higher than wages increases and house prices lagging both isn't a correction already taking place. How far it will go I don't now but cheaper house prices might not mean that they are more affordable.

Graham_Devon

ukcarper wrote: »

Earnings have increase by more that twice as much as RPI since the 70s you need to speed a much lower proportion of your earnings to buy food etc leaving more available for housing.

A study was conducted into this and it's simply not true.

You say you need to spend less on food. Granted. But you have to use more fuel to go get it as people end up in out of town shopping centres.

Another one, linked up to the other day suggested the cost of living is actually rising by 8% a year.

It's all far too difficult to compare. Things have changed too much.

People who didn't run a car in the 70's were not at the same disadvantage to those who don't run a car today for instance. RPI measures the change in the cost of living. It doesn't measure the amount of goods required to keep up with todays standard of living. The cost of the internet for example, won't have made any difference to RPI as it only measures the rate of change in that cost, but it wasn't even a cost in the 70's.

chucky

Thrugelmir wrote: »

Then you'll notice that divergence of incomes and high prices from prices happened when the banks first created fractional reserve banking in the early 70's.

Is that a fact or is it your humble opinion?

Thrugelmir

ukcarper wrote: »

I'm not sure it as simple as that but with inflation higher than wages increases and house prices lagging both isn't a correction already taking place. How far it will go I don't now but cheaper house prices might not mean that they are more affordable.

I'm sure that the issue is more complex. Computer technology transformed much from the 70's to the 00's as well. Making vast productivity gains possible.

ukcarper

Graham_Devon wrote: »

A study was conducted into this and it's simply not true.

You say you need to spend less on food. Granted. But you have to use more fuel to go get it as people end up in out of town shopping centres.

Another one, linked up to the other day suggested the cost of living is actually rising by 8% a year.

It's all far too difficult to compare. Things have changed too much.

People who didn't run a car in the 70's were not at the same disadvantage to those who don't run a car today for instance. RPI measures the change in the cost of living. It doesn't measure the amount of goods required to keep up with todays standard of living. The cost of the internet for example, won't have made any difference to RPI as it only measures the rate of change in that cost, but it wasn't even a cost in the 70's.

I was alive and working in the 70s I needed a car for work and drove to a supermarket to get my shopping. As far as I can see the only things I need now compare to then are mobile phone and a PC with Internet connection no more that £30 a month and a one off payment of £300. Compared to a £60 a week shop costing over £120 a week if food had increased in line with wages.