Is it really that hard?

Cornucopia

Samsonite1 wrote: »

Well for my parents, they bought a 5 bed Victorian house for less than 2x my Dad's 25k salary. This was 1986 in a salubrious part of a big city. The same house last sold for around 500k, more than 10x the 1986 value. 25k is still not a terrible salary but you are going to be struggling to buy this house, in fact a 1 bed flat is barely affordable on that salary in that location.

I think the point I am making is - 1986 meant a huge house in a lovely location for little borrowing. Today means barely affording mortgage payments for a flat in the same area.

Your logic, if I've understood your post, is somewhat flawed.

When your Dad was earning £25K in 1986, that was the going rate for a Manager or a senior professional person.

£25K now is the going rate for a graduate or maybe a salesperson including an element of commission.

In short, you aren't comparing like with like (which is, as we've seen on this thread, actually quite hard to do properly).

Cornucopia

Samsonite1 wrote: »

It would be interesting to know what the OP thinks now given that it appears that things are way worse now than they were back then...

I can't see him coming back now people have used "fail" as a noun so liberally about what he said.

I imagine that what he meant to post was that property had increased fifty-fold, but that was reduced to five-fold by the difference in interest rates. The maths are still a little bit lacking, but it makes a lot more sense that way.

ukcarper

Samsonite1 wrote: »

Well for my parents, they bought a 5 bed Victorian house for less than 2x my Dad's 25k salary. This was 1986 in a salubrious part of a big city. The same house last sold for around 500k, more than 10x the 1986 value. 25k is still not a terrible salary but you are going to be struggling to buy this house, in fact a 1 bed flat is barely affordable on that salary in that location.

I think the point I am making is - 1986 meant a huge house in a lovely location for little borrowing. Today means barely affording mortgage payments for a flat in the same area.

This does not affect me, but I really feel for first time buyers.

I too was very surprised to find my house had gone up £120k in the past 2 years in the lofty heights of Zone 6 lol - I actually find it eye-opening working in Central London. I feel poor in comparison to the 1000 or so people I work with throughout the year. They all have multiple properties, some in London, some abroad. I feel like a failure only owning a family home in Zone 6! This emphasises to me why prices will not drop any time soon in London - there is too much money about.

In 1986 £25k was a very good salary probably equiv of about £60k now. I bought the house I live in now in 1985 for £60k an identicle house has just sold for £350k this is in commuting distance of London. I bought my first house in 1972 in same area as my present house it was over 5x my salary which was above average same house would now cost about 7x equivalent earnings.

Samsonite1

Cornucopia wrote: »

Your logic, if I've understood your post, is somewhat flawed.

When your Dad was earning £25K in 1986, that was the going rate for a Manager or a senior professional person.

£25K now is the going rate for a graduate or maybe a salesperson including an element of commission.

In short, you aren't comparing like with like (which is, as we've seen on this thread, actually quite hard to do properly).

Of course, you are (mostly) entirely right and I was using salary loosely. My dad was a project manager - he was not senior so how much would you say this should be bumped up to? I see junior project managers on 30-40k? You would not pay first-time PM more than that outside London I am fairly sure. I think that £25k is still potentially viable - some junior PMs would take £25k. I agree it would be higher generally but not that much more.

cells

dktreesea wrote: »

There's a page on BBC's website called "Where can I afford to live?" (http://www.bbc.co.uk/news/business-23234033) where it allows you to put in your deposit, the amount you want to pay on your mortgage each month, how many bedrooms (I put 3) and whether you want a house at the expensive, mid market, or cheaper end of the spectrum, then it shows you where in Britain you could buy a home.

I was quite surprised, when I put in a deposit of £5k, and that I only wanted to pay £400 a month, to see I could afford to buy in 17% of local authority areas in Britain, including right across the central belt of Scotland, areas around Newcastle, South Wales, Lancashire and East Yorkshire/North Lincolnshire. All easy commutes to major cities for work.

When I upped this to a £20k deposit, and a mortgage of £800 a month, i could afford to buy in 66% of Britain, including places within commuter distance of London, e.g. Gravesend, Medway.

Up the deposit to £30k and the amount on the mortage to £1000 and even the south east of England became available. Keeping in mind this is for a 3 bedroom property. For a 2 bedroom property even East London became available.

I have concluded that it isn't that people can't afford to buy a house - they just want a better house than they can afford in the area they want to live.

you can make the exact same argument if prices double tomorrow

just buy a smaller house in a cheaper place....


The opposite should be true. As time goes on we should be able to afford bigger and better homes as technology and business improves on its ability to make and deliver things. Pretty much everything you buy has held true to that at least in real terms except.....houses

ukcarper

cells wrote: »

The opposite should be true. As time goes on we should be able to afford bigger and better homes as technology and business improves on its ability to make and deliver things. Pretty much everything you buy has held true to that at least in real terms except.....houses

I'm not sure what you mean by that as the main thing influencing the price of property is the price of land. I would agree that it should even out demand across the country but that is far from what is happening.

Samsonite1

ukcarper wrote: »

In 1986 £25k was a very good salary probably equiv of about £60k now. I bought the house I live in now in 1985 for £60k an identicle house has just sold for £350k this is in commuting distance of London. I bought my first house in 1972 in same area as my present house it was over 5x my salary which was above average same house would now cost about 7x equivalent earnings.

Doing some quick research suggests that those on an average to above average salary in 1986 would have increased by only 60% which means that my dad would be on £40k if he were an inexperienced PM today - seems generous.

So with some more realistic apples to compare, in 1986 my parents' house was 1.9x my dad's salary. In today's money (at £500k) it is worth over 12x the current salary for the same job. I rest my case.

chewmylegoff

cells wrote: »

on the facts and figures page of oxford university website, it says 20% of their graduates gain a job paying £30,000 (or more) within six months

That means 80% don't...

Meaningless without context.

http://www.telegraph.co.uk/education/universityeducation/11299177/Oxbridge-degrees-add-7600-to-graduate-starting-salaries.html

ukcarper

Samsonite1 wrote: »

Doing some quick research suggests that those on an average to above average salary in 1986 would have increased by only 60% which means that my dad would be on £40k if he were an inexperienced PM today - seems generous.

So with some more realistic apples to compare, in 1986 my parents' house was 1.9x my dad's salary. In today's money (at £500k) it is worth over 12x the current salary for the same job. I rest my case.

Where did you get your figures from I was earning £15000 in 1986 equivalent job now £35k. Average house price in 1986 was £37k now £188k so your farthers house was not typical.

Samsonite1

ukcarper wrote: »

Where did you get your figures from I was earning £15000 in 1986 equivalent job now £35k.

I just Googled to find information on earnings from 1986 compared to now. In any case £40k is what you can find on a job site for a junior PM (often less), so there is no argument to be had really.

Even if I wanted to take your statistics. £15k would mean that my parents' house was 3x salary compared to 12x today. Not sure what argument you are trying to make here.