Thursday, Apr 30, 2009
House prices now have even further to fall to reach 3.5x earnings
Telegraph: UK wages collapse at fastest rate in 60 years
Average weekly earnings fell 5.8pc compared with the same month last year. The private sector took the full force of the fall in weekly earnings, down sharply by 7.7pc; while average weekly earnings in the public sector actually rose by 3.2pc. "We certainly haven't seen anything like this in the last 60 years, and probably not in peacetime since the 1930s," said Michael Saunders, chief UK economist at Citigroup. According to the ONS data, it is only the second month of falls during the current downturn, after weekly wages fell 1.9pc in January compared with a year earlier. The falls partly reflect moves by some private sector employees to freeze wages and even cut pay as they struggle to keep jobs and stay afloat during the recession.
Posted by drewster @ 12:04 AM (1049 views) Add Comment
21 Comments
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1. Eiji said...
Maybe now the HPC overshoot won't happen if you catch my drift? ;)
2. little professor said...
Loss of earnings + loss of ability to borrow freely = further collapse in consumer spending (and house prices) to follow. We're just getting started....
3. general congreve said...
Indeed. Gordon or Gold? The clock is ticking.
4. taffee said...
By my calculations,average houseprice should hit £80-£100k..but flats could be slaughtered
All good for the next generation though
5. japanese uncle said...
Didn't I say this? This is why full-scale inflation backed up by the wage-price-spiral cannot happen.
6. crunchy said...
4. japanese uncle
You can have inflation if wages drop more than products and outgoings. It's not inflation as we know it but is is inflation in that it has the same effect.
7. last_days_of_disco said...
@ju
"This is why full-scale inflation backed up by the wage-price-spiral cannot happen."
Maybe, but its all relative. So what will happen is salaries will drop, but house prices will drop even further to be affordable. Basically the cost of housing as a percentage of your monthly expenses should be reducing already and will continue to do so. This is all good news. The next thing is to get through the salary expectations delusion. Lots of people only accepting jobs in higher pay brackets not realising the world has changed. This is an opportunity for those who embrace reality and take the lower paid jobs on offer before they are all gone, and trust me they will be. This is very similar to being the first guy to sell your house at a lower price. You actually thank your lucky stars you did it six months later when you see others having to drop their asking price below yours and still getting nothing but tumbleweed.
8. japanese uncle said...
crunchy
That may be slightly different from the broadly defined inflation, though what you say does make sense, in that we will all be poorer thus in a trouble, except those fat cats whether in public sector or in private businesses.
9. japanese uncle said...
l.d.o.d
Yes, that is actually already happening in the form of hundreds of applicants for a position of bin-man, as discussed earlier here. Look at the newspaper ads showing the remarkably discounted prices of hotels (and health spas) and other leisure-related products and services. GBP39.99 for a room in Hilton Hotel!!, which used to be GBP120.
You can find many pubs offering 99p coffee these days. Not bad at all.
Viva! 85-75-65 Rule shall prevail, ie. London-85 Auld Reekie-75 Otherwise-65
10. fubar said...
Throw in the fact that according to the world wide interweb every living creature except small dogs and the occasional mad scientist is going to die of flu and its clear this crash has a long way to go yet.
11. crunchy said...
8. japanese
Sterling looks like it may be taking a turn. It is above 200sma daily chart against the yen and I am in a fantastic trade.
So I am expecting sterling to stenghen over the next few weeks. Hope this trending keeps up and we have a little more power in our savings.
12. crunchy said...
9. fubar said...Throw in the fact that according to the world wide interweb every living creature except small dogs and the occasional mad scientist is going to die of flu and its clear this crash has a long way to go yet.
Wow, that's more bearish than JU. lol
13. japanese uncle said...
crunchy:
That trend will be short-lived, as the full-scale HPC along with further bad news in the financial sector in UK will be hammering down GBP. sooner rather than later. Applying plaster onto a severely infected wounds or broken bone will only exacerbate the seriousness of the situation exactly as being done by Darling/Crash policies.
14. stillthinking said...
Wages down, relative debt servicing costs up.
15. crashpad4me said...
This is something which has been concerning me for some time now. If Gordon Brown wishes to inflate the economy by "helicoptering" money in, a perfect way would be to let loose on public sector wages. There is a public sector payroll of over seven million people who would no doubt be delighted to be fiscally stimulated by GB. 3.2% yoy is hardly hyperinflation territory (if I have understood the figures), but I for one am not holding my breath for pay restraint in the public sector.
16. lenny said...
11. Crunchy
Sterling will turn before $1.50 for a largish drop over next 2 months.
17. drewster said...
crunchy / lenny,
I'd say sterling must be due a little bounce, especially against the euro. The euro is looking way overvalued at the moment, it's irrational. That said I'm not a currency trader. The markets can stay irrational longer than you can remain solvent!
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