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House Prices Could Fall Another 40% From Here


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This is all irrelevant as we have discussed before I think. Long term house price average is 3.5 times average wage. It has nothing to do with whether someone on the mean salary or the median salary or whatever is buying mean or median priced houses. It is just a convenient way of tracking affordability as the distributions of the two measures will be reasonably constant averaged over long time periods.

I think it's irrelvant too. That's what I've been explaining to those who think it is.

The long term trend I suspect will be seen to be rising when the bottom is established.

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You should allow for the proportion (maybe 20% or so - I'm not sure) of those 30M who rent. Then allow for the number of dual wage owner households as well.

The real problem is that even above average wages don't by average houses at the moment. My household income is in the top 10% according to IFS.org.uk. I own my FTB house with 100% equity. And I can't afford to move to the next rung of the ladder, without taking on more debt than I can afford (and probably more that the banks will lend at the moment).

I agree. My 30 million vs 17 million is very simplistic, but I feel does refute the "average house price must be median wage, times 3, plus deposit" argument seen so often on here.

My guess is that the proportion of the 30 million on lower wages are the ones proprotionately hinger represented amongst renters. I wonder what the "average" wage of home owners or FTB'ers is.

I'm in pretty much the same situation as you. For most of the last 15 years I've owned my modest 2 bed flat, another 100k would get me a slightly bigger kitchen.

And I suspect that you would love 1993-95 prices (relative to wages) as much as I would; might even be able to get a bigger bathroom too!

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EXACTLY. I really don't get why antsinhispants so resents the 3.5 x rule?! :rolleyes:

Because, as you admitted, you don't understand my point.

Your mates were earning way over average earnmings in the mid 80s when they bought their places.

I think the 3.09 multiple at the very bottom of the last crash, according to the Halifax figures is based on MEAN MALE earnings. The measure used by some bears to try and predict the bottom is MEDIAN MALE & FEMALE earnings.

As a medium to long term comparison of house price trends any CONSISTENT measure of earnings is great, better than (price) inflation.

As a fundamental economic rule, 3 times median earnings plus 10% deposit is deeply flawed.

What do you think the average household income of an owner occupied house is? Or a FTB household?

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You mean the less they have BORROWED the higher the yield? :blink:

No. The yield is based on the money they have invested.

If I invest 10k, borrow 90k spend 100k and get a net (after interest and other expenses) income of 1k pa that's a 10% yield on my 10k investment.

If I spend 100k of my own money and get 5k pa after expenses that's a yield of 5%.

That's why leveraging and borrowing are so popular, increases the yield.

If all goes according to plan.

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Where is the money coming from

the cash buyers have just shot their bolt

hence the spring bounce

Spring bounce? Did I miss something? :lol::lol:

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What is your point here Andy? The point of comparing wages to house prices is to gauge where we are in a cycle. All this talk of the "average wage not buying the average house" is meaningless, as I think you know.

I know about the cycle, I've repeated every time that long term trends of house prices vs (consistently measured) wages are probably a better indicator of trends than (price) inflation. It's just that bears keep posting that "average" house prices must fall to 3 times median wage plus deposit. It's not my argument, just follow some of the posts on this thread. 

Some people use the Nationwide ratios of wages to prices, which use average wage figures which you may dispute. However, it doesn't matter a jot what average wage figures are used, as long as people are comparing like with like, and have enough data to build a reliable historic series (both of which I believe the Nationwide data set provides). So when people such as yourself argue variations of the "average wage for home owners is higher", it doesn't mean that much really. The point is to use a long term reliable data to try and see where we are in that cycle today.

Or you could look at it all this another way, and try and explain the graph that's linked in my sig....

Yes, any (consistent) measure of wages trend is useful. But there's no immutable law that says we must go back to 1993-95 levels.

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:rolleyes:

See update to my sig.

Oh, I see. Libel isn't answering questions or engaging in conversation. Right.

You are clearly a man of principle.

Not a coward and a bully at all.

You didn't even have to admit you'd tested your ignorance in public and been found wanting; not that I suspect a man of your "integrity" would ever, er, "need" to admit he was ever wrong anyway.

But you don't even have the confidence in your wild assertions to test them out, truly pathetic. Just getting two simple things wrong doesn't have to ruin your whole world, you know. I get things wrong and learn from it, myself. You might try it sometime and realise that people who question often overly simplistic assertions are not necessarily all under employed estate agents.

Patprimer74 isn't the only person in the whole wide world who might doubt that everything Maggie did was absolutely perfect, if you got out more you'd know that. Do you accuse everyone down your local pub of being patprimer74 too if they doubt the true Tory ideals?

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I will never answer any questions or engage in conversation with a troll, it just encourages them
Did you not understand my simple challenge or did you bottle it.

Cowardly, like all good bullies.

Patprimer never gives up, always comes back for more, always has, always will .

See update to my sig.

That lasted well, then.

A coward, bully and now a liar. Strangely vindicates my dislike of The Hulk.

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:rolleyes:

Quite simply, BB, by post the following idiotic comment :

"A man turned up on our doorstep two days ago to check that the electoral register was correct and that all living here are included, the same thing happened last year when Brown was planning an election. Coincidence?"

You imply by your 'Coincidence?' question that because 'a man' allegedly called on your doorstep that the Prime Minister must be planning to call a General Election! Now, if you can't see that you look a fool, I can't help you any further.

p

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I agree. My 30 million vs 17 million is very simplistic, but I feel does refute the "average house price must be median wage, times 3, plus deposit" argument seen so often on here.

My guess is that the proportion of the 30 million on lower wages are the ones proprotionately hinger represented amongst renters. I wonder what the "average" wage of home owners or FTB'ers is.

I'm in pretty much the same situation as you. For most of the last 15 years I've owned my modest 2 bed flat, another 100k would get me a slightly bigger kitchen.

And I suspect that you would love 1993-95 prices (relative to wages) as much as I would; might even be able to get a bigger bathroom too!

Well if you and I, on good salaries with 100% equity can't afford to move up the ladder then it is even more stuffed than if only the FTBs are priced out. Four alternatives, either the banks/government come up with some scheme for us to increase debt even further (50 year mortgages perhaps) or prices drop significantly, or inflation with wage inflation devalues houses, or the market grinds to a halt. I really can't see it going any other way. I think myself that it's going to be option 4 for a while, then option 2, and finally a bit of option 3. Japan tried option 1 and ended up killing their economy for a decade.

Edited by apr400
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Hmmm, was that equity generated by the increase in value up to '07?

If so you are just reinforcing Durch's point which I notice you have failed to acknowledge

Ferguson is the man when it comes to all this mess. IMPO he has been spot on. Not so sure about footie management and communication skills though :blink::unsure::blink:

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:rolleyes:
Hahahahaha.

So, because two posters think you're part of the tinfoil hat brigade, patprimer74 seeing some obvious fallacious thinking about electoral roll compilation and I with you thinking that I must be in the property business just because I disagree with you, we must be one and the same person.

You couldn't make it up.

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Hahahahaha.

So, because two posters think you're part of the tinfoil hat brigade, patprimer74 seeing some obvious fallacious thinking about electoral roll compilation and I with you thinking that I must be in the property business just because I disagree with you, we must be one and the same person.

You couldn't make it up.

:rolleyes:

andykn (AKA Patprimer74 - NuLabour troll)

http://www.housepricecrash.co.uk/forum/ind...t&p=1977791

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Hmmm, was that equity generated by the increase in value up to '07?

If so you are just reinforcing Durch's point which I notice you have failed to acknowledge

Probably his friends did what I did in the mid 90s, "jumped" a rung on the ladder because prices were so cheap. I bought a 2 bed flat instead of a 1 bed; not normally something you'd expect to be able to do in a reasonable part of inner west london as a FTB with decent deposit saved and a junior manager's salary.

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