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Average Price At End Of Crash

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Assuming no huge bout of inflation/wage inflation, but with a manageable recession

Based on 3.5x £30K average salary, +20% deposit

We are currently at £155K average price approx, so another 15% off - played out over the next 2 years or so

Takes us back to middle 2003 for prices

Any takers ?

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You talking about a 3 bed home? Hopefully not a 2 bed flat...

Would still like to see that figure drop.. £110k maybe?

New kid on the block at my parent's house soon, and I may be getting a new job so will have to move out and rent. Absolutely gutted as am saving so much right now. Will have to pay ski high Edinburgh rents as there's no way I'm getting a mega mortgage - what a complete waste of money. Bugger. Very annoyed!

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Assuming no huge bout of inflation/wage inflation, but with a manageable recession

Based on 3.5x £30K average salary, +20% deposit

We are currently at £155K average price approx, so another 15% off - played out over the next 2 years or so

Takes us back to middle 2003 for prices

Any takers ?

some pretty huge assumptions there given the possibilities. Armageddon may well have been avoided but it could just as well be around the corner.

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Does anyone have any statistics for how many working people earn 30k?

the price at the bottom of the crash was £151,962 Feb 09

actually I just guessed those numbers but you take my point

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Assuming no huge bout of inflation/wage inflation, but with a manageable recession

Based on 3.5x £30K average salary, +20% deposit

We are currently at £155K average price approx, so another 15% off - played out over the next 2 years or so

Takes us back to middle 2003 for prices

Any takers ?

Logically - I think you are about right.

But logic has left the building. It could just as well go below £80k or rise to stupid levels. The system is THAT volatile.

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the price at the bottom of the crash was £151,962 Feb 09

actually I just guessed those numbers but you take my point

Sorry if this come across as a bit thick or rude, but I don't see how your point relates to the question I asked.

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the price at the bottom of the crash was £151,962 Feb 09

actually I just guessed those numbers but you take my point

picking bottoms is for monkeys...

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Logically - I think you are about right.

But logic has left the building. It could just as well go below £80k or rise to stupid levels. The system is THAT volatile.

I remember one poster has a graph of the ratio between average house prices and average earnings, with a long term average ratio of about 4.

Has anyone got a link to an updated version of this, and how much of a fall we need to take us to this threshold ?

Cheers in advance

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You talking about a 3 bed home? Hopefully not a 2 bed flat...

Would still like to see that figure drop.. £110k maybe?

New kid on the block at my parent's house soon, and I may be getting a new job so will have to move out and rent. Absolutely gutted as am saving so much right now. Will have to pay ski high Edinburgh rents as there's no way I'm getting a mega mortgage - what a complete waste of money. Bugger. Very annoyed!

Surely that depends on where you want to live? As you are from Edinburgh, an 'average' home is probably a 1/2 bed flat in the centre, or a 3 bed house on the outskirts.

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Assuming no huge bout of inflation/wage inflation, but with a manageable recession

Based on 3.5x £30K average salary, +20% deposit

We are currently at £155K average price approx, so another 15% off - played out over the next 2 years or so

Takes us back to middle 2003 for prices

Any takers ?

I'd say sub 100k

The price rests on FTBers entering the market to a fairly major extent. How many people do you think will be able to afford your projected average buyers circumstance?

Do you think a meaningful number of people will be able to stump up a 20% deposit? Do you think there are many people who HAVEN'T been living the typical buy now pay later lifestyle of the last 10 years, who have been paying extortionate rents while buying their 42" must have TVs, who are more than 20K in the black? It seems a little wide of the likely mark when that is probably close to the average working persons number in the red going in to this depression. Definitely if they got a degree, which is likely if they are earning circa 30K, when they will be having to repay their student loans.

If banks don't resume lending to people who are already in large unsecured debt (i.e. 100% + mortgages) i don't see how the property market will stop falling until it reaches silly money again. Houses for a grand in the crappier parts of towns and that sort of thing.

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Assuming no huge bout of inflation/wage inflation, but with a manageable recession

Based on 3.5x £30K average salary, +20% deposit

We are currently at £155K average price approx, so another 15% off - played out over the next 2 years or so

Takes us back to middle 2003 for prices

Any takers ?

no

what's this with saying 3.5x salary WITH A 20% DEPOSIT??? that isn't the long term average calc at all, doesn't include a deposit in the calc

an average house (3 bedder) will go a fair bit less INHO, get rid of the 20% deposit, 2.5x salary - make 75k, inflation adjusted

definitely still at the 'bargaining stage'

negative equity?

Edited by Si1

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Assuming no huge bout of inflation/wage inflation, but with a manageable recession

I like that. you having a laugh? who's going to manage the debt, Japan style, have you seen their house price graph? ha ha ha!!!!!

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Thanks XswampyX,

So we can expect at least 450,000 houses to average 155k, assuming 30k wage x3.5 and a 20 percent deposit.

I wonder what percentage of people earning 30K have access to £31,000

I wonder how many are in debt

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Assuming no huge bout of inflation/wage inflation, but with a manageable recession

Based on 3.5x £30K average salary, +20% deposit

We are currently at £155K average price approx, so another 15% off - played out over the next 2 years or so

Takes us back to middle 2003 for prices

Any takers ?

Nah.... 1950's prices - here we come.... :P

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Nah.... 1950's prices - here we come.... :P

Question: I often see the 3-4xsalary argument. However, a vast amount of people buy with two incomes, no (boy meets girl etc)? Does that somehow change things?

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Sorry if this come across as a bit thick or rude, but I don't see how your point relates to the question I asked.

Not thick or rude. I'm sorry if I misunderstood your question. I thought you were asking how low prices would be at the bottom of this crash. My point is that you don't need to be a monkey to pick this bottom, you need to be a historian: as the charts eg. Nationwide index suggest it was in February 2009.

I don't personally subscribe to the 3.5 x average income + 20 % deposit forumla for many reasons, sorry if your question was more about this.

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Look at the house prices adjusted for inflation graph.

Fit a trend line to the troughs of the graph and it comes out to about £90,000 i.e. 50% real terms peak to trough drop.

Long term average is ITRO 3 to 3.5 times male mean FT earnings so perhaps £110,000 - £120,000 is "fair".

Obviously given the economic outlook a drop below "fair" values is to be expected.

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