Help me understand why house prices and rent won't rise faster than wages forever.

zagfles

jay213 said:

zagfles said:

CreditCardChris said:

This isn't about London.

We all know that the housing market rises significantly faster than wages and there's no sign of that changing any time soon.

Do we? House prices are lower in real terms than 15 years ago.

Could you explain that?

Real terms means accounting for inflation. See https://www.allagents.co.uk/house-prices-adjusted/

I don't know why people believe this myth that house prices always rise faster than inflation/wages. Sometimes they do, other times they don't. Over the last 15 years, prices have risen less than inflation on average.

zagfles

silvertooth said:

Maybe property would have risen more than inflation if it wasn’t for recession and crisis like the pandemic the world is facing right now

The current pandemic won't be included in any figures yet. There are regular crises/recessions. The unusual thing was probably the lack of them between 1997-2007 when house prices did rise massively above inflation, and Gordon Brown thought he'd abolished boom and bust!

CreditCardChris

Retireby40 said:

But where you live obviously 40k before tax isnt really that good. Especially if your working 50 hours a week when a standard contact is 37.5-40 hours. So either that's 40k which includes over time or your hourly wage isnt that great for where you are. If the cheapest house you can get for 200k and your saying that it's a council house in a dump of estate your talking about London. Or very close to it.

So while your above average salary of 40k is above average nationwide how does it compare to the area you live in? I would assume not very well.

I dont know your history or situation and there is no easy answer. If you've been working for say 12-13 years from graduation or whatever you should have a fair chunk of savings. 

You've got a decision to make come onto a forum board crying about the government this and the government that or you can do things within your power to improve your situation. 

I had to work 50 hours a week(37.5 contract 12-13 overtime) for 3 years onto of 10 hours a week travelling. I could only go out once a month with friend for beers. I didnt smoke, didn't eat out too much, didnt have nice holidays. Now I am able to enjoy abit more but I most certainly cant have my cake and eat it.

On the other hand I have a friend who earns slightly more than me, lives with parents, goes out every weekend without fail, buys clothes and goes on 3/4 weekends away to Spain to watch football.

It's all down to the choices you make. Earning above the national average does not entitle you to a lovely detached house unfortunately.

I live in Chelmsford.
I got off to a rough start in my early 20's and made some very poor choices but the last 5 years I've got myself together and for me £40,000 is an amazing salary. 10 years ago I could never have dreamt of earning £40k a year due to my circumstances, which is why it's even more frustrating that I managed to pull myself out of that old life I was in and I still can't afford anywhere decent. Also I didn't go to uni. 

Obviously if I was earning £40k from the age of 21 then things would be different. 

You still didn't answer the original question though.

Retireby40

CreditCardChris said:

Retireby40 said:

But where you live obviously 40k before tax isnt really that good. Especially if your working 50 hours a week when a standard contact is 37.5-40 hours. So either that's 40k which includes over time or your hourly wage isnt that great for where you are. If the cheapest house you can get for 200k and your saying that it's a council house in a dump of estate your talking about London. Or very close to it.

So while your above average salary of 40k is above average nationwide how does it compare to the area you live in? I would assume not very well.

I dont know your history or situation and there is no easy answer. If you've been working for say 12-13 years from graduation or whatever you should have a fair chunk of savings. 

You've got a decision to make come onto a forum board crying about the government this and the government that or you can do things within your power to improve your situation. 

I had to work 50 hours a week(37.5 contract 12-13 overtime) for 3 years onto of 10 hours a week travelling. I could only go out once a month with friend for beers. I didnt smoke, didn't eat out too much, didnt have nice holidays. Now I am able to enjoy abit more but I most certainly cant have my cake and eat it.

On the other hand I have a friend who earns slightly more than me, lives with parents, goes out every weekend without fail, buys clothes and goes on 3/4 weekends away to Spain to watch football.

It's all down to the choices you make. Earning above the national average does not entitle you to a lovely detached house unfortunately.

I live in Chelmsford.
I got off to a rough start in my early 20's and made some very poor choices but the last 5 years I've got myself together and for me £40,000 is an amazing salary. 10 years ago I could never have dreamt of earning £40k a year due to my circumstances, which is why it's even more frustrating that I managed to pull myself out of that old life I was in and I still can't afford anywhere decent. Also I didn't go to uni. 

Obviously if I was earning £40k from the age of 21 then things would be different. 

You still didn't answer the original question though.

Fair play to you. You arent the only one to make poor choices in your 20s we all do. It's what we do though. And part of youth.

I didnt answer your question because to be honest I dont have an answer. I dont know the ins and outs of why one price has risen more than another or why you can only afford x y or z.

It's a similar problem that most find themselves in for example needing 10% deposits plus fees solicitors etc.

Where I am from to get a half decent family home semi detached your talking 130k. Which is very affordable however in practice salaries are lower. Here if your own 25-30k a year your doing well.  Your needing maybe 15k to get going and for someone renting to get that without help from parents its years of sacrifice.

What I also know is that a mortgage is for said house is probably 450-500 quid depending on terms. Renting the same house costs £600. It's ridiculous but the big problem many have is they dont want to sacrifice 2-3 years for long term gain. 

I had a quick look on rightmove there and although I haven't a clue about the area there seems to be a few nice 1 bedroom apartments (not in retirement buildings) for around 180-190k. They definately do not look like council houses. They look exactly like a typical young professional apartment for someone who has no kids or possible plans to have any. You will know the area better but something like that would be a great stepping stone. If your paying rent now that's dead money however paying a mortgage on a house that isnt your forever home isnt.