Sunday, Nov 01, 2009
Earnings versus house prices
Yahoo Finance: 6 morbid careers with devilish incomes
This article would appear to suggest that £27500 is a high salary. If so, what is the national average salary, what does that say about the ability to repay a mortgage and therefore what are realistic house prices?
Posted by mr g @ 02:51 PM (508 views) Add Comment
5 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. fallingbuzzard said...
Unrealistic but housing and realism can't be used in the same sentence
2. drewster said...
Mr G,
I'd suggest £27,500 is an excellent wage for a job which requires little education or training, and offers a steady reliable income throughout the economic cycle.
I'm very skeptical about the figures though. According to US website SimplyHired.com, in the states a Cremation Technician only earns $21,000 (about £13,000) which sounds more realistic given the skill level required. Furthermore, this article was discussed on MoneySavingExpert.com, where somebody states: "My son got a job as a gravedigger with the local council. He was 18 or 19 and it was nowhere near £27k!"
Free advice: it's worth exactly what you paid for it.
3. drewster said...
"what is the national average salary, what does that say about the ability to repay a mortgage and therefore what are realistic house prices"
You're making some common HPC fallacies.
Fallacy 1: Earnings are not the only factor in ability to pay. Mortgage interest rates matter. The cost of living (i.e. other bills, food / gas / water transport) matters. Income tax levels (including NI) matter too. Unemployment levels matter: if the average wage is £30,000 but unemployment is 25% then there's less income nationally than with an average wage of £25,000 and unemployment at 5%. Earnings don't take into account donations from the bank of mum & dad (which seem to be fueling all the house purchases that I've seen lately).
Fallacy 2: One average person does not buy one average house. Low earners disproportionately live in social housing, in private rented housing, or still live at home with parents. Therefore the average house-buyer earns more than average. Also couples tend to buy together, so best to look at dual-incomes.
Fallacy 3: The first house purchased is usually below average; after many years building up equity you can move up the ladder and buy something above average. This is why the "average" house always looks out of reach to FTBs.
The bright news (for those who seek lower house prices) is contained within Fallacy 1. Earnings are falling. Mortgage rates will probably rise. The cost of living will almost certainly rise. Taxation will definitely rise. Unemployment will almost certainly rise. The bank of mum and dad is being run down and will run out soon. The only way for house prices is down.
4. str 2007 said...
Nice points Drewster
5. mr g said...
drewster@2 and 3. I agree with all you say with one exception:
Unless you are a City boy or politician, earnings determine what you can afford, be it housing, food, consumer goods, holidays etc.
The other point I was making (not very clearly, I admit) was that no one has a clue as to what the average wage /salary is, this year I've seen figures of £22k up to £30k p.a. quoted.