Average Income

[Girly girl]

So the solution is to get everybody onto one kind or other of benefits.

Do you see a problem with the long term viability of this at all? Or assuming your dodgy numbers are right (some posters are pointing out their not) can endless government money plug every gap.

I cannot cover every senario, somebody might have an ill child which would give them more money and some might have twins which would give them less. There's nothing dodgy about my figures.

I am trying to point out to you that yes this is viable in the long term because the government will do whatever it takes to ensure it is, printing money for example. I actually didn't used to believe that to be the case but have been proven time and time again that GB will and no government who says they will stop tax credits will be voted in now, too many people either need them to stay alive (and most those people will not be home owners) or work for the DWP in call centres, admin or fraud detection.

My final word on this board is simply, if we had never found housepricecrash.co.uk we would have £50k left to pay on mortgage and own our house outright in 5 years time.

So I wish you all the luck in the world, some of you deserve it

[Godley]

My post specifically and repeatedly referred to the MODAL wage. Any professional would be well aware of the difference between modal and average wages. You have just reminded me of just how poor the level of debate on hpc can be.

edit - typos

No sorry, I was brief. MODAL wage is crap.

Average better, Median probably better still. But open to further debate.

In short your model is crap................

[steve99]

Well, my sympathies to them but in a wider sense, the problem all along is that white collar/upper tier management jobs have for far too long become way above their worth, but I emphasise that your sister's example sounds reasonable and is not included in what follows:

Many earned far too much in the first place. This of course leads inevitably to the question of wage parity in the UK. I am fed up to the back teeth of management level people touting the notion that industry "needs them" and needs others because corporations require the brightest people. If they were that bright they would not have contributed, en masse, to the delusional state of the UK economy and resulting meltdown.

Furthermore, the value to me of, for example, a diligent and excellent house cleaner is far higher than a consultation with a solicitor, most of whom I have only used for the purposes of procedural skills rather than knowledge of the law which I can look up for myself.

Recently a TV programme highlighted a yuppie young woman who was made redundant from her job as a PR consultant. She lived in a very desirable apartment overlooking Regents Park. It was clear that she felt an automatic entitlement to her £120k salary and her £350k mortgage. It did not occur to her that she'd been riding a delusional crest for a decade.

In my view, one really good thing about this recession is that it will knock the stuffing out of those in the "professional classes" who have arrogantly arrived at a mindset in which they feel entitled to a salary 5 times greater than someone else who works arguably harder but is looked upon as "menial" and thus gets a pathetic wage.

In other words, I think that the recession should, and will, promote a well overdue correction of the ludicrous chasm between wage levels. I'm not suggesting everyone should be paid absolutely equal wages but I am suggesting that the high and low differences are at insane levels.

VP

I agree. There must be dozens of jobs out there that are heading for a well deserved extinction. And when a vast number of these t*ssers are out the door, there will be the wishy washy businesses that rely on this over paid class of egotistical non entities, like for instance, 70 - 100 GBP per month gym membership. 20K weddings and all the parasites that feed off them, resturaunts that charge 25 GBP for a bowl of noodles, 70 gbp haircuts, trendy bars that charge 5gbp for a dainty little boutique sized Stella. Im sure this list is endless.

Currently using a foreign keyboard, so no 'pound' sign, to make it worse, its a mac.

[Guest DissipatedYouthIsValuable]

I, like the huge number of people with 37k deposit funds are just being unreasonable and waiting for real bargains.

[the end is a bit nigher]

THIS RELATES BACK TO THE CML DEFINITION OF FTB ISSUE AGAIN AND IS TOTALLY MISLEADING!!!

According to the CML, a FTB is anyone who does not have a house, although they may have prviously. This sort of person is invariably older and has a higher salary.

I do not have a house but I have previously owned one. According to the CML, if I buy a house then I am a FTB. I have a large salary. I skew the figure to the upside.

Answer to the OP, it doesn't make any difference to the outcome for prices as it is statistically misleading ********.

[Godley]

That just means your paying attention today.

Its why I don't go never this board on a weekend, or read the newspapers (and I never watch TV) I just ignore it all. I just pretend its not happening, I can't afford to be angry all the time, its bad for my health.

If Labour get re-elected I might as well buy a house, impregnate the wife, get made redundant. Live off the state, anything else is just peeing straight into a force 9 gale.

Yep, +1 Bingo.

Working hard, being sensible doesn't pay anymore..............

[Imminent_plunge]

Yawn ..... new mothers have always worked, always right up until after WW2 when it was decided that the jobs were required for the men folk.

Oh and everybody gets 6 months maternity leave, most take 12 months.

I can't believe you can be so dismissive. To be at home with your children and really interact with them (not plonk them in front of a DVD) gives them a huge advantage in life. They grow up feeling loved and wanted and it's a magical experience for parent and child. Why should they be parked in baby farms just to be able to afford a mortgage?

[KingBingo]

My final word on this board is simply, if we had never found housepricecrash.co.uk we would have £50k left to pay on mortgage and own our house outright in 5 years time.

So I wish you all the luck in the world, some of you deserve it

Sorry, but are you saying that its a bad thing you found this site because you didn't buy a house as a result?

[munro]

You haven't thought my comment through...........

I was commenting on the start of the market, FTB's not the market as a whole.

80,000 sales a month stabilises the market? Are you sure about that, market stabilisation comes from supply satisfying demand in equal amount's. I would be interested to see you source on this claim please.

If you want to discuss issues, please don't accuse me of "not thinking" things through properly. You won't win friends and influence people that way.

Markets never stabilise. This is a myth of economics textbooks. The housing market goes from overshoot to undershoot, as do financial markets generally - as we are now seeing. The figure of about 80,000 sales per month for house price stability comes from some detailed, thorough analysis carried out by a poster called Spline some time ago. If you search you will find the posts. During the boom sales were well over 100,000 per month, correlated with rising prices. Recently they have been more like 30,000 a month, correlated with prices falling.

You point out that there are roughly 2.4 million 28-30 years olds, of whom 20% are sufficiently well paid that they can buy housing. That's 480,000. Assume a steady flow into and out of that age group. In any one year 160,000 - one-third of a three-year cohort - might be housebuyers. That's 13333 sales per month, way below the 80,000 needed for price stability.

As for the other 80%, they will either be renting or be in social housing. They will be unable to pay enough in rent to support house prices at the level they are at; this is why renting is, generally, cheaper than buying at present. So the effect overall on house prices of the financial situation of the 28-30 cohort is likely to be deflationary for house prices.

[Godley]

I can't believe you can be so dismissive. To be at home with your children and really interact with them (not plonk them in front of a DVD) gives them a huge advantage in life. They grow up feeling loved and wanted and it's a magical experience for parent and child. Why should they be parked in baby farms just to be able to afford a mortgage?

Hugs.......

Get real.

Morally, maybe you are right.........in the real world though people (majority) don't follow your model, hence the majority are the market. Whether you agree that should be the case or not is irrelevant to the housing market.

[Guest DissipatedYouthIsValuable]

Hugs.......

Get real.

Morally, maybe you are right.........in the real world though people (majority) don't follow your model, hence the majority are the market. Whether you agree that should be the case or not is irrelevant to the housing market.

I'm not parking my kids in a baby farm. I'll just get a less aspirational house than I would otherwise.

[PopGun]

Damn server

Edited March 10, 2009 by bloodsucked

[Imminent_plunge]

Hugs.......

Get real.

Morally, maybe you are right.........in the real world though people (majority) don't follow your model, hence the majority are the market. Whether you agree that should be the case or not is irrelevant to the housing market.

Not so I believe. We've had over ten years of bullish property prices. A contraction/recession and rising unemployment makes people re-evaluate and prioritise. The 'housing market' as it was in 2007 is well and truly over.

[Godley]

If you want to discuss issues, please don't accuse me of "not thinking" things through properly. You won't win friends and influence people that way.

Markets never stabilise. This is a myth of economics textbooks. The housing market goes from overshoot to undershoot, as do financial markets generally - as we are now seeing. The figure of about 80,000 sales per month for house price stability comes from some detailed, thorough analysis carried out by a poster called Spline some time ago. If you search you will find the posts. During the boom sales were well over 100,000 per month, correlated with rising prices. Recently they have been more like 30,000 a month, correlated with prices falling.

You point out that there are roughly 2.4 million 28-30 years olds, of whom 20% are sufficiently well paid that they can buy housing. That's 480,000. Assume a steady flow into and out of that age group. In any one year 160,000 - one-third of a three-year cohort - might be housebuyers. That's 13333 sales per month, way below the 80,000 needed for price stability.

As for the other 80%, they will either be renting or be in social housing. They will be unable to pay enough in rent to support house prices at the level they are at; this is why renting is, generally, cheaper than buying at present. So the effect overall on house prices of the financial situation of the 28-30 cohort is likely to be deflationary for house prices.

Your source is another poster so I have no idea how accurate his data is, but I will seek it out.

FTB age is actually 32 so I was being conservative, hopefully this will now come down. But, again you miss the point the other 80% you refer to are not part of the market, they have never been part of the market. Your market is made up of FTB's and homeowners roughly distributed between 30-50? (don't know the top end to be honest). So, mode wage is crap, mode wage of house buying population...............hmmm well okay, better indicator.

Markets stabilise, you are now referring to peaks and troughs thats another debate.

Anyway, your model was crap, if that means you don't want to be my friend then so be it. Trust me I will get over it.

[PopGun]

Well, my sympathies to them but in a wider sense, the problem all along is that white collar/upper tier management jobs have for far too long become way above their worth, but I emphasise that your sister's example sounds reasonable and is not included in what follows:

Many earned far too much in the first place. This of course leads inevitably to the question of wage parity in the UK. I am fed up to the back teeth of management level people touting the notion that industry "needs them" and needs others because corporations require the brightest people. If they were that bright they would not have contributed, en masse, to the delusional state of the UK economy and resulting meltdown.

Furthermore, the value to me of, for example, a diligent and excellent house cleaner is far higher than a consultation with a solicitor, most of whom I have only used for the purposes of procedural skills rather than knowledge of the law which I can look up for myself.

Recently a TV programme highlighted a yuppie young woman who was made redundant from her job as a PR consultant. She lived in a very desirable apartment overlooking Regents Park. It was clear that she felt an automatic entitlement to her £120k salary and her £350k mortgage. It did not occur to her that she'd been riding a delusional crest for a decade.

In my view, one really good thing about this recession is that it will knock the stuffing out of those in the "professional classes" who have arrogantly arrived at a mindset in which they feel entitled to a salary 5 times greater than someone else who works arguably harder but is looked upon as "menial" and thus gets a pathetic wage.

In other words, I think that the recession should, and will, promote a well overdue correction of the ludicrous chasm between wage levels. I'm not suggesting everyone should be paid absolutely equal wages but I am suggesting that the high and low differences are at insane levels.

VP

Another great post VP.

It's happening enmass at my work. Certain people have effectively made themselves too much an expensive luxury in order to be kept on. The fall will be hard, sometimes harsh, but necessary. People need to accept that their lifestyles are the subject of phantom careers in a phantom la la land.

[campervanman]

It may be "average" , at the moment, to have a £37,000 deposit for

a mid range house, but it is decidedly abnormal, historically.

What if Brown starts 'giving' deposits of 37k to buyers? After all, it would prevent the value of the toxic assets we have insured the banks against from falling. They could perform an accounting trick that takes account of the 'deposit' being paid back in 25 years time. :angry:

edit for grammar

Edited March 10, 2009 by campervanman

[Godley]

Not so I believe. We've had over ten years of bullish property prices. A contraction/recession and rising unemployment makes people re-evaluate and prioritise. The 'housing market' as it was in 2007 is well and truly over.

Please, understand me I am pleased the housing market is correcting very pleased........

But, what you are referring to has been the case far longer than the last 10 years, and it will not change signficantly imho. But, I stand to be corrected like a man in orthapedic shoes (is that how you spell orthapedic?)

[Godley]

Another great post VP.

It's happening enmass at my work. Certain people have effectively made themselves too much an expensive luxury in order to be kept on. The fall will be hard, sometimes harsh, but necessary. People need to accept that their lifestyles are the subject of phantom careers in a phantom la la land.

Politics of envy.........such a shame. I agree that the froth jobs should go, like 'Diversity Co-ordinators'.

[GrillsBears]

Politics of envy.........such a shame. I agree that the froth jobs should go, like 'Diversity Co-ordinators'.

Pot meet kettle.

Who made you arbiter of worth?

[munro]

Your source is another poster so I have no idea how accurate his data is, but I will seek it out.

FTB age is actually 32 so I was being conservative, hopefully this will now come down. But, again you miss the point the other 80% you refer to are not part of the market, they have never been part of the market. Your market is made up of FTB's and homeowners roughly distributed between 30-50? (don't know the top end to be honest). So, mode wage is crap, mode wage of house buying population...............hmmm well okay, better indicator.

Markets stabilise, you are now referring to peaks and troughs thats another debate.

Anyway, your model was crap, if that means you don't want to be my friend then so be it. Trust me I will get over it.

The other 80% can only not be part of the housing market if they don't live in houses or flats. Demand for housing is made up directly of owner-occupiers, and indirectly of renters, whose demand is transmuted into housing through the medium of landlords. So while they might not own, they affect prices. Ultimately house prices have to be set by wages in the aggregate. You can't pick out the richest 20% and argue that house prices are a function only of their wages, because they compete for property with the landlords who, on your model, house the other 80%. The prices landlords pay are determined by their rental yields. They will bid less for housing if low wages hold rental yields down. If 80% of the housing market is landlords operating on a business model, they will effectively set the prices and not FTBs. This is why modal wages matter.

[Imminent_plunge]

Please, understand me I am pleased the housing market is correcting very pleased........

But, what you are referring to has been the case far longer than the last 10 years, and it will not change signficantly imho. But, I stand to be corrected like a man in orthapedic shoes (is that how you spell orthapedic?)

Orthopaedic for reference. OK, it's an idealistic idea but there's massive unemployment going on at the moment, hundreds (according to my partner who recruits them) chasing a £7.50 ph call centre job. Surely life would be far more pleasant if you can own a house and survive on one income.

I can't see any reason why this should be unfeasible.

[Godley]

Pot meet kettle.

Who made you arbiter of worth?

Nobody, its my opinion that these type of jobs add no wealth hence they are of no 'worth'.

[HousingBear]

What if Brown starts 'giving' deposits of 37k to buyers? After all, it would prevent the value of the toxic assets we have insured the banks against from falling. They could perform an accounting trick that takes account of the 'deposit' being paid back in 25 years time. :angry:

edit for grammar

This makes an awful lot of sense. Not the idea itself, the fact that it could happen.

[munro]

Orthopaedic for reference. OK, it's an idealistic idea but there's massive unemployment going on at the moment, hundreds (according to my partner who recruits them) chasing a £7.50 ph call centre job. Surely life would be far more pleasant if you can own a house and survive on one income.

I can't see any reason why this should be unfeasible.

It is perfectly feasible as long as average house prices fall below £100k. But people have become so brainwashed by "profits" from housing that they are convinced if prices fall that low, we will be swept away by a tidal wave of speculative BTLers. What they don't seem to realise is that i. banks won't lend on the scale needed and ii. tenants won't be able to pay the rents needed for yields to add up. Of course with savings rates at near zero an argument can be mounted that yields of 3% from BTLing look attractive, but this doesn't allow for capital losses and maintenance/transactions/running costs. Unless we get Zimbabwean-style inflation in which case anyone who possibly can should buy...but that's another argument.

Meanwhile Victorian slum dwelling looks positively humane compared to the 21st century equivalent version of "affordable housing" for those on modal wages - HMOs.

[Godley]

The other 80% can only not be part of the housing market if they don't live in houses or flats. Demand for housing is made up directly of owner-occupiers, and indirectly of renters, whose demand is transmuted into housing through the medium of landlords. So while they might not own, they affect prices. Ultimately house prices have to be set by wages in the aggregate. You can't pick out the richest 20% and argue that house prices are a function only of their wages, because they compete for property with the landlords who, on your model, house the other 80%. The prices landlords pay are determined by their rental yields. They will bid less for housing if low wages hold rental yields down. If 80% of the housing market is landlords operating on a business model, they will effectively set the prices and not FTBs. This is why modal wages matter.

Okay