£194,400 minimum wage

davomcdave

GreatApe wrote: »

A couple in 2020 working 40 hours a week 51 weeks of the year multiply their earnings by 4.5 x via a mortgage and they have a 15% deposit that gives them a budget of £194,400 in 2020

By comparison according to Land Registry these are the average prices today

North East £123.7k

Norther Ireland £125.5k

Scotland £138.8k

Wales £145.3k

North West £152.6k

Yorkshire&Humber £152.2k

East Midlands £176.8k

West Midlands £180.5k

Houses are so cheap in 8 UK regions that a couple in 2020 on min wage can afford to buy not a house on the lower end but the median house in their region. There is no housing bubble in most the country homes are cheap :T

Oh and just to make the point, 15% deposit is the best part of £30 grand. That's almost a year's gross income for our heros to have to save up. If they were to save at the current UK average savings ratio of 3.3% of income then it would take them about 30 years to save up the deposit. Of course if interest rates rise that would help them raise the deposit but then they couldn't afford the mortgage.

Even if they save a triple the average savings rate, a tall order for someone on the minimum wage, they would take a decade to get together a deposit.

Your couple are looking more and more heroic the longer we look at them.

economic

davomcdave wrote: »

What do you think happens to demand for housing when interest rates are cut to zero and why do you think aspiring home buyers are responsible for that?

no one is responsible for low rates except the economic situation and part of the cycle we are in. low rates reflect the demand for money. if rates were higher, sure house prices may be lower but then mortgage payments higher. YOU CAN NOT HAVE YOUR CAKE AND EAT IT!!!

people can buy if they really wanted to providing they earn enough and save enough. they will have to make a sacrifice but life is never meant to be easy.

what do you expect exactly? for everyoen to be able to buy and pay the mortgage comfortably? thats just foolish thinking on your part.

economic

davomcdave wrote: »

Oh and just to make the point, 15% deposit is the best part of £30 grand. That's almost a year's gross income for our heros to have to save up. If they were to save at the current UK average savings ratio of 3.3% of income then it would take them about 30 years to save up the deposit. Of course if interest rates rise that would help them raise the deposit but then they couldn't afford the mortgage.

Even if they save a triple the average savings rate, a tall order for someone on the minimum wage, they would take a decade to get together a deposit.

Your couple are looking more and more heroic the longer we look at them.

thank you you just clarified why people cant afford to buy - the low savings rate!! if people want to buy they should start saving rather then buying things they dont need. its simple really. people really do have themselves to blame!!!

davomcdave

economic wrote: »

thank you you just clarified why people cant afford to buy - the low savings rate!! if people want to buy they should start saving rather then buying things they dont need. its simple really. people really do have themselves to blame!!!

If someone is on the minimum wage they probably don't have much fat to cut. And then we're expecting them to save at triple the UK's average rate for a decade only to see house prices accelerate faster than their (state mandated) pay rate can.

The OP's premise is ridiculous, that houses can be easily afforded by couples on the minimum wage. Just as it's not the fault of our heros what interest rates are it's not my fault if you don't have the basic empathy to understand what a stupid point is being made.

How much of their income do you think it's reasonable for someone on the minimum wage to save? That's thirteen grand a year. Hell, most of my colleagues spend more than 10% of that on take out coffee.

economic

davomcdave wrote: »

If someone is on the minimum wage they probably don't have much fat to cut. And then we're expecting them to save at triple the UK's average rate for a decade only to see house prices accelerate faster than their (state mandated) pay rate can.

The OP's premise is ridiculous, that houses can be easily afforded by couples on the minimum wage. Just as it's not the fault of our heros what interest rates are it's not my fault if you don't have the basic empathy to understand what a stupid point is being made.

How much of their income do you think it's reasonable for someone on the minimum wage to save? That's thirteen grand a year. Hell, most of my colleagues spend more than 10% of that on take out coffee.

then stop taking out coffee!

on minimum wage the couple earn what 36-38k a year combined? thats a net take home of around 30k at least or 2.5k a month

if they live in the west midlands, assumign a rental yield of 7%, thats a rent of 1k a month. add to that bills and food etc of 800 a month (please dont tell me its too low, it really isnt) then you have about 700 a month to save potentially. maybe spend 200 for fun then thats 500 and a year thats 6k. a deposit of 30k would take 5 years to save up. and this is just a couple of minimum wage.

of course they are not gonna do it if they spend on take out coffees, holidays, new cars etc but thats their own fault.

ruperts

The fact that in order to demonstrate affordability you've had to use the planned future minimum wage says it all. The planned NMW for 2020 is a 25% uplift on what it is today. Of course if your wages go up 25% and prices stay the same then you'll be able to afford more. Sadly I can't see this absolute fantasy land scenario providing much relief for people in the real world.

GreatApe

There are lots of ways to save. In Birmingham a HMO room costs £350pm all bills included. Our guy on £7.50 per hour 40h a week gets exactly £1300pm

That is £1,157 per month post taxes. If he spends £5 per day on food and 7pm on a mobile phone he can save £650 per month. Let's minus another £50pm for other things.

£600 per month saving over three years is over £21.6k

Use that as a deposit on the median 2 bed house in Birmingham which costs £130,000

Their repayment mortgage would be less than £500 per month. While their post tax take home in 2020 will be close to £1300 per month.

A single person on min wage cab do it. Vast majority get laid note than min wage. Lots of people also get inheritances or gifts. Most people are also in a relationship so two adults sharing costs is even easier.

GreatApe

ruperts wrote: »

The fact that in order to demonstrate affordability you've had to use the planned future minimum wage says it all. The planned NMW for 2020 is a 25% uplift on what it is today. Of course if your wages go up 25% and prices stay the same then you'll be able to afford more. Sadly I can't see this absolute fantasy land scenario providing much relief for people in the real world.

But I did not just demonstrated affordability I demonstrated extreme affordability in 8 regions of the UK where prices are so low that people on minimum wage can afford to buy.

The median full time male wage is about twice minimum wage

7-8 regions of the UK are cheap not just affordable but cheap

GreatApe

economic wrote: »

then stop taking out coffee!

on minimum wage the couple earn what 36-38k a year combined? thats a net take home of around 30k at least or 2.5k a month

if they live in the west midlands, assumign a rental yield of 7%, thats a rent of 1k a month. add to that bills and food etc of 800 a month (please dont tell me its too low, it really isnt) then you have about 700 a month to save potentially. maybe spend 200 for fun then thats 500 and a year thats 6k. a deposit of 30k would take 5 years to save up. and this is just a couple of minimum wage.

of course they are not gonna do it if they spend on take out coffees, holidays, new cars etc but thats their own fault.

The median two bed house costs £650pm to rent in Birmingham. Add in council tax of £100pm and utilities (water gas electric TV broadband) of £150pm and you are at £900pm. £300 food and toiletries is possible. £100pm car.

Their post tax income is £2,314pm

So they have £1,000 to play with.

Our couple only need to save £13k to buy their two bed Birmingham £130,000 terrace. If dedicated they could do it in 13 months if not theb two years should be easy

Of course if some let's give up merchant is savings 3% of their income life looks impossible.

And this is a couple on the absolutely lowest wages buying a house that is the median. Half the houses sold are sold for less than that.

7-8 regions of the UK are not just affordable but are cheap!

GreatApe

davomcdave wrote: »

If someone is on the minimum wage they probably don't have much fat to cut. And then we're expecting them to save at triple the UK's average rate for a decade only to see house prices accelerate faster than their (state mandated) pay rate can.

The OP's premise is ridiculous, that houses can be easily afforded by couples on the minimum wage. Just as it's not the fault of our heros what interest rates are it's not my fault if you don't have the basic empathy to understand what a stupid point is being made.

How much of their income do you think it's reasonable for someone on the minimum wage to save? That's thirteen grand a year. Hell, most of my colleagues spend more than 10% of that on take out coffee.

In some instances they should be able to save close to 100%. There is no reason to be on min wage but if a person is I would expect they could have started working age 16 or 18 a time they can likely stay with their parents and not need to pay rent/utilities/councilTax

Someone I know did just that. They saved from 16-19 and got married and also bought a house at age 20 on just a few pennies above min wage. Their husband was also on min wage. They bought a 3 bed terrace in the west Midlands just last year.

These children must be outbidding your fictional adults on min wage saving just 3% of their income.