Relativity...

HAMISH_MCTAVISH

You don't need to be Einstein to see the big picture....

Generali

The whole thing is a tautology, of sorts at least as everything needs to sum to 100. It would be interesting to see the same graph including saving and Government spending. The fall in the price of food & clothing really has been transformational to people's finances.

kinger101

The food one is particularly interesting. People always seem to forget how expensive food (and clothing) were when they mention how much housing costs today. Also with food, I suspect as well as it being cheaper, people eat out a lot more now too, rather than having egg and chips 6 days a week.

michaels

Hamish you have got it all wrong again:
House price to income ratio should be fixed over all time at 3.5x median single earner.
Interest rates make no difference.
The proportion of income spent on other items such as food and clothing makes no difference.
Higher income earners do not have enough disposable income to pay a higher proportion of their income on housing

And, looking at your chart, there is clearly a bubble in services that will soon be corrected in almighty crash as restaurants and hair dressers come tumbling down because they are clearly taking up an unaffordable share of income.

Graham_Devon

While not wishing to fall into Michaels trap, the one thing that graph misses completely is purchase frequency.

What I mean by that you need to buy food week in week out. Therefore any savings or increases are felt by all of us.

The same applies to clothes, transport, services, power, household goods etc. We ALL have to buy it at the price it is today.

Where it doesn't apply is housing. The key to how much it costs each individual is the price you bought it at. Two identical houses next to each other can have two very significantly different costs to each neighbor.

So while a 65 year old may be consuming housing, they may not be paying for it (paid the mortgage off), a 25 year old may have just bought the house and see it taking 45% of their income.... so it skews the average household income on housing.

If people had to effectively "rent" their house at the "new" prices each month, the line on the graph would be FAR higher. As it is, the purchase cost (and therefore the household expenditure) to any one person varies wildly dependent on whether you are buying that item today for the first time or you bought it 40 years ago for the first time.

You can't say the same for any of the other items on the graph. They all have to be bought frequently at the "new" price.

The graph certainly doesn't suggest houses are cheaper. Just like it doesn't suggest tobacco is cheaper (in this case, it's the simple fact that less people smoke so less income goes on it).

Generali

Graham_Devon wrote: »

While not wishing to fall into Michaels trap, the one thing that graph misses completely is purchase frequency.

What I mean by that you need to buy food week in week out. Therefore any savings or increases are felt by all of us.

The same applies to clothes, transport, services, power, household goods etc. We ALL have to buy it at the price it is today.

Where it doesn't apply is housing. The key to how much it costs each individual is the price you bought it at. Two identical houses next to each other can have two very significantly different costs to each neighbor.

So while a 65 year old may be consuming housing, they may not be paying for it (paid the mortgage off), a 25 year old may have just bought the house and see it taking 45% of their income.... so it skews the average household income on housing.

If people had to effectively "rent" their house at the "new" prices each month, the line on the graph would be FAR higher. As it is, the purchase cost (and therefore the household expenditure) to any one person varies wildly dependent on whether you are buying that item today for the first time or you bought it 40 years ago for the first time.

You can't say the same for any of the other items on the graph. They all have to be bought frequently at the "new" price.

The graph certainly doesn't suggest houses are cheaper. Just like it doesn't suggest tobacco is cheaper (in this case, it's the simple fact that less people smoke so less income goes on it).

This shows how the housing section of the survey is calculated:

http://www.ons.gov.uk/ons/rel/family-spending/family-spending/2015-edition/chapter-2.html

So some costs (cost of purchase) are influenced by the timing of purchase, others (maintenance, rents, mortgage interest rates) are not.

kinger101

Graham_Devon wrote: »

While not wishing to fall into Michaels trap, the one thing that graph misses completely is purchase frequency.

What I mean by that you need to buy food week in week out. Therefore any savings or increases are felt by all of us.

The same applies to clothes, transport, services, power, household goods etc. We ALL have to buy it at the price it is today.

Where it doesn't apply is housing. The key to how much it costs each individual is the price you bought it at. Two identical houses next to each other can have two very significantly different costs to each neighbor.

So while a 65 year old may be consuming housing, they may not be paying for it (paid the mortgage off), a 25 year old may have just bought the house and see it taking 45% of their income.... so it skews the average household income on housing.

If people had to effectively "rent" their house at the "new" prices each month, the line on the graph would be FAR higher. As it is, the purchase cost (and therefore the household expenditure) to any one person varies wildly dependent on whether you are buying that item today for the first time or you bought it 40 years ago for the first time.

You can't say the same for any of the other items on the graph. They all have to be bought frequently at the "new" price.

Tobacco on the other hand hasn't fallen because it's fallen in price. It's simply the fact that less people spend out on it.

The graph certainly doesn't suggest houses are cheaper. Just like it doesn't suggest tobacco is cheaper (in this case, it's the simple fact that less people smoke so less income goes on it).

The housing costs are rent, mortgage repayments, home improvements and repairs and maintenance. I can see your point, but as long as the ONS doesn't keep changing the way it collects the data, I don't see the problem. It's just a matter of understanding that averages have limitations.

cells

Graham_Devon wrote: »

While not wishing to fall into Michaels trap, the one thing that graph misses completely is purchase frequency.

What I mean by that you need to buy food week in week out. Therefore any savings or increases are felt by all of us.

The same applies to clothes, transport, services, power, household goods etc. We ALL have to buy it at the price it is today.

Where it doesn't apply is housing. The key to how much it costs each individual is the price you bought it at. Two identical houses next to each other can have two very significantly different costs to each neighbor.

So while a 65 year old may be consuming housing, they may not be paying for it (paid the mortgage off), a 25 year old may have just bought the house and see it taking 45% of their income.... so it skews the average household income on housing.

If people had to effectively "rent" their house at the "new" prices each month, the line on the graph would be FAR higher. As it is, the purchase cost (and therefore the household expenditure) to any one person varies wildly dependent on whether you are buying that item today for the first time or you bought it 40 years ago for the first time.

You can't say the same for any of the other items on the graph. They all have to be bought frequently at the "new" price.

The graph certainly doesn't suggest houses are cheaper. Just like it doesn't suggest tobacco is cheaper (in this case, it's the simple fact that less people smoke so less income goes on it).

The graph for housing looks to be one of imputed rents rather than mortgagge payments.

and another reason housing is a higher portion is that we actually consume more of it now than in the past

we live at 2.35 persons per home, at one point we lived at 4.7 persons per home. Therefore the amount of housing we consume has doubled as we went from 4.7 to 2.35

Likewise homes have got a bit bigger and better too

wotsthat

I'd rather be choosing to spend my money on a nice house and having a good time rather than having to spend it on food and fags.

zagubov

Let's hope that the food-producing companies don't diversify into non-food areas and abandon food production for more profitable branches of industry.

Generali

zagubov wrote: »

Let's hope that the food-producing companies don't diversify into non-food areas and abandon food production for more profitable branches of industry.

If companies move away from food production, the food waste figures imply overproduction, then prices will rise and encourage companies to move into the sector.

I don't know why so many posters distrust capitalism to put food on their plates. Capitalism has done an excellent job of feeding people profitably at ever falling prices for decades now. The mass famines of the C20th have been outside the capitalist world where Government intervention, normally for ideological reasons, has led to terrible famines at a cost of tens of millions of lives.