Salary Reality Check

ruggedtoast

Loughton_Monkey wrote: »

Very dramatic, and, as usual, failing to look at any grain of substance, but rather look for some sort of generational conspiracy that just doesn't exist.

Had I stayed in my very first house, and were I to be selling it today, Zoopla informs me that the detached ones in my road are selling for around £100K today. I can only assume my mid-terrace would be something less.

I bought it unseen [my wife visited it in her lunchtime, phoned me, and we had 30 minutes to say yes] because prices had risen 20% in 12 months.

You seem to think I (and others) by pointing out 'generational facts' are saying that you must suffer because we found it difficult. Think what you like, but that's not what I'm saying. I'm simply trying to point out that generation has nothing to do with it. Buying a house in UK has always been expensive and presumably always will be.

Prices go up and down. All the time. They are going up at the moment, after a period of stagnation. Nothing new. Nothing exceptional. And prices are driven by supply and demand. If they are in short supply, then that is not caused by people of any specific age, but the whole working age range.

I would have no particular 'fears' of starting my whole working life again in today's economic climate. I would hopefully learn as I went through and hopefully do just as well. I would listen to much older people and absorb their experiences - picking and choosing what anectodes made sense to me and what didn't.

Wage levels, inflation, stock market performance, mortgage rates, savings rates, taxation, house prices, gdp growth, exchange rates..... are all interconnected. At any one time, some are favourable, some are not. They go in cycles. Up, down, sideways. The young people I know, and in my family, seem to 'get on with it' and I wish them all well. Most of them will do well.

Those that don't will probably accept that it is rather more the situations into which they have chosen to put themselves that are the root cause. Not any one single factor of the external financial environment at any one time. That was perfectly true for my generation as well.

According to the Halifax, in real terms, since 1983 house prices have risen by 101% across the country and 124% in London.

http://monevator.com/historical-uk-house-prices/

Nationwide helpfully go back to the 70s.



Buying housing is roughly twice as expensive for people buying a starter home now than it was for you.

I can only imagine how much rents have risen in real terms as there is now precious little social housing.

ukcarper

ruggedtoast wrote: »

According to the Halifax, in real terms, since 1983 house prices have risen by 101% across the country and 124% in London.

http://monevator.com/historical-uk-house-prices/

Nationwide helpfully go back to the 70s.



Buying housing is roughly twice as expensive for people buying a starter home now than it was for you.

I can only imagine how much rents have risen in real terms as there is now precious little social housing.

But wages have also grown faster than inflation.

[Deleted User]

ukcarper wrote: »

But wages have also grown faster than inflation.

If we look at this chart:

And compare 1983 with 2010; homes were 3.25x salary in '83 and ended up as 5.25x salary in 2010

Original source: http://blogs.thisismoney.co.uk/2010/04/house-prices-vs-average-earnings.html

Confusingly, i bought my first home in 2006 at the start of the peak, but still sold it for 11% more than i paid in 2011.. ah crazy london prices

ps. anyone else notice how the chart follows the house price chart? Showing the rises in house prices are not linked to rises in salaries

I've I've said in the past - no one has heard of a 'salary bubble'

black_taxi_2

do you think it will go to ave again 4?

ruggedtoast

These stats have hit the House Price Denial Green Zone like a truck bomb. They are shell shocked and disoriented with the incontrovertible proof that housing is actually more expensive now than it was in the 80s.

Fall back to the bunkers!

Arm the secret weapon...

Present tautological arguments!


Of course young people cant afford housing when they all have gold, diamond encrusted i-Phones!

CLAPTON

ruggedtoast wrote: »

These stats have hit the House Price Denial Green Zone like a truck bomb. They are shell shocked and disoriented with the incontrovertible proof that housing is actually more expensive now than it was in the 80s.

Fall back to the bunkers!

Arm the secret weapon...

Present tautological arguments!


Of course young people cant afford housing when they all have gold, diamond encrusted i-Phones!

yes I think we can all agree that housing is more expensive now than in the 80s
(as is fuel, bread, gas, electricity, beer, council tax ............

wotsthat

ringo_24601 wrote: »

If we look at this chart:

And compare 1983 with 2010; homes were 3.25x salary in '83 and ended up as 5.25x salary in 2010

Original source: http://blogs.thisismoney.co.uk/2010/04/house-prices-vs-average-earnings.html

Confusingly, i bought my first home in 2006 at the start of the peak, but still sold it for 11% more than i paid in 2011.. ah crazy london prices

ps. anyone else notice how the chart follows the house price chart? Showing the rises in house prices are not linked to rises in salaries

I've I've said in the past - no one has heard of a 'salary bubble'

The chart will obviously show correlations with real house prices because that's one half of the price/ earnings ratio.

There's clearly no direct equation between price and earnings but that doesn't mean there isn't a link. It means that other factors other than earnings are affecting price such as credit availability, interest rates, confidence etc. etc. Logically, earnings are the backstop because ultimately wages pay for houses.

N1AK

black_taxi wrote: »

do you think it will go to ave again 4?

I doubt it. The ratio of workers to households has increased meaning more money is available to spend on housing and comparative wage equality means that we can afford to spend more on housing. I'd be moderately surprised to see ratios return to an average below ~4.5 times; probably closer to 5x.

We're working longer and earning more as households so, although I don't want to see rampant HPI, I don't see why we need to return to the norms of 2-3 decades ago.

ruggedtoast

CLAPTON wrote: »

yes I think we can all agree that housing is more expensive now than in the 80s
(as is fuel, bread, gas, electricity, beer, council tax ............

First confabulatory argument away! [stubbornly refuse to acknowledge difference between nominal and real prices, often conflated with a general assertion that wages have risen massively above inflation]

N1AK

ruggedtoast wrote: »

First confabulatory argument away! [stubbornly refuse to acknowledge difference between nominal and real prices, often conflated with a general assertion that wages have risen massively above inflation]

I thought the same but, possibly ignoring bread, have those products actually gotten cheaper in real terms? Petrol, gas and electricity certainly don't seem cheap today, beer definitely isn't cheaper and I thought council tax had been rising at above inflation rates until recently.

However, you are right that in general costs have fallen since the 80's.