O N S 2009 Annual Wages Survey

[Belfast Boy]

http://www.statistics.gov.uk/pdfdir/ashe1109.pdf

Page 9.

2009 UK average income 488.7x52 = £25,412.

2009 Northern Ireland average income 439.1x52 = £22,833.

Looks like Northern Ireland is now the second poorest region of the UK - ahead of the North East.

A link for anyone wanting to look at previous surveys - http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=13101

2008 UK average income 417.6x52 = £21,715.

That is an increase of £1,118 or 5.15% (Have I made a mistake somewhere?)

What I do find interesting is that the Northern Ireland pay increase, from last years survey, is double the increase for the whole of the UK. Thank god for all those public sector job pay rises. Not going to look so good next year as most of the public sector are only getting a 1% pay rise this year. And those in the private sector are still likely to see downward preasure on their incomes. Also expect big cuts in the public sector this coming year. As Northern Ireland is so dependant public sector employment it's average income will be cut proportionally.

[SPADER]

http://www.statistics.gov.uk/pdfdir/ashe1109.pdf

Page 9.

2009 UK average income 488.7x52 = £25,412.

2009 Northern Ireland average income 439.1x52 = £22,833.

Looks like Northern Ireland is now the second poorest region of the UK - ahead of the North East.

A link for anyone wanting to look at previous surveys - http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=13101

2008 UK average income 417.6x52 = £21,715.

That is an increase of £1,118 or 5.15% (Have I made a mistake somewhere?)

What I do find interesting is that the Northern Ireland pay increase, from last years survey, is double the increase for the whole of the UK. Thank god for all those public sector job pay rises. Not going to look so good next year as most of the public sector are only getting a 1% pay rise this year. And those in the private sector are still likely to see downward preasure on their incomes. Also expect big cuts in the public sector this coming year. As Northern Ireland is so dependant public sector employment it's average income will be cut proportionally.

Typical Belfast Boy post here,to summarise: some statistics are produced that indicate that things aren't just as bad as I predicted earlier, HOWEVER I'm confident that next year things will be even worse.

[Belfast Boy]

Typical Belfast Boy post here,to summarise: some statistics are produced that indicate that things aren't just as bad as I predicted earlier, HOWEVER I'm confident that next year things will be even worse.

Typical SPADER post, "I have nothing to add to the discussion, so I will just have a go at Belfast Boy!"

[SPADER]

Typical SPADER post, "I have nothing to add to the discussion, so I will just have a go at Belfast Boy!"

As soon as i can think of a witty reply, I'll post it!

[Belfast Boy]

As soon as i can think of a witty reply, I'll post it!

You are a good advert for contraception

[SPADER]

You are a good advert for contraception

[/quote

Oooooh!

[BelfastVI]

http://www.statistics.gov.uk/pdfdir/ashe1109.pdf

Page 9.

2009 UK average income 488.7x52 = £25,412.

2009 Northern Ireland average income 439.1x52 = £22,833.

Looks like Northern Ireland is now the second poorest region of the UK - ahead of the North East.

A link for anyone wanting to look at previous surveys - http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=13101

2008 UK average income 417.6x52 = £21,715.

That is an increase of £1,118 or 5.15% (Have I made a mistake somewhere?)

What I do find interesting is that the Northern Ireland pay increase, from last years survey, is double the increase for the whole of the UK. Thank god for all those public sector job pay rises. Not going to look so good next year as most of the public sector are only getting a 1% pay rise this year. And those in the private sector are still likely to see downward preasure on their incomes. Also expect big cuts in the public sector this coming year. As Northern Ireland is so dependant public sector employment it's average income will be cut proportionally.

This is interesting stuff. It sort of backs up the CML's stats which showed the average couple had a household income of £42k. If you take the average of Nationwide, Halifax and UUJ of about £140k you get a household income multiplier of 3.3 for the average house. This ratio is only relevant for FTB'ers as they are not taking any equity with them. The average FTB'er house (nationwide) is £128k divided by the average FTBer income (nationwide) of £42k will leave you with a household income ratio of 3.

[BelfastVI]

Office of National Statistics - income reports.

The Annual Survey of Hours and Earnings (ASHE) provides information about the levels, distribution and make-up of earnings and hours paid for employees within industries, occupations and regions.

http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=13101

This is interesting stuff. It sort of backs up the CML's stats which showed the average couple had a household income of £42k. If you take the average of Nationwide, Halifax and UUJ of about £140k you get a household income multiplier of 3.3 for the average house. This ratio is only relevant for FTB'ers as they are not taking any equity with them. The average FTB'er house (nationwide) is £128k divided by the average FTBer income (nationwide) of £42k will leave you with a household income ratio of 3.

[Belfast Boy]

Here are post from another thread which are more relevant here...

I see they are using a figure for Median Household Income of £25,300. I don't know how they work this out, does it include part time workers and those on benefits as it seems low to me. The CML puts the average household income of housebuyers at £42k (say £22k for one party and £20 for the other) sounds closer to me.

Lies, dam lies and statistics.

Median, mean and mode are different methods of calculating an average. The can give very different results.

Also, household incomes will include many people who bought a house before the bubble on much lower incomes. The CML housebuyers income just reflects how much above the average household income a housebuyers income needs to be. Simples.

The recent Stats' on income for NI which you have published elsewhere shows the average income in NI to be almost £23k. Most purchasers today are in couples and if they have average income they will be in and around £46k income range, some £4k above the CML's figures. So the average household of 2 working people needs on average to have average income.

Does the average household have 2 people on average incomes?

Or is the average household more likely to have 1 person on average wage and 1 person doing part-time work and looking after the children?

Are most of the people you are 'seeing' childless couples? Would be interesting to know if the people you are 'seeing' have children or ever intend to have children?

Good point.

Do we agree the income to house price ratio is more important to FTB'ers as the movers generally bring equity to the table. The ratio is still important but more to the amount they are borrowing rather than the price of the house. If they have 5 children the bank will look carefully at their disposable income.

Therefore looking at FTBers, yes most are childless. I don't ask them if they intend to have childern but I assume that all apart from the growing new class of couples will.

Quite often you have one party on above average income and one party ob below average. But they all end up average dont they.

Another point, which I made before is this. Average figures for income includes all incomes. I contend (sadly) that only the top 80% of earners try to purchase a property those in the lower 20% sadly stay in the socal sector. I think if you look at the Housing Executive research you will find plenty of evidence for this. But leaving that aside I believe it is safe to say the average income of all parties purchasing a house will equale or come out above the NI average income figure.

Those couples on less than average income will purchase in the 50% bracket of houses that is under the average price and those on higher than average income will more than likely purchase in the 50% of houses above the average price.

[Ride_on]

This is interesting stuff. It sort of backs up the CML's stats which showed the average couple had a household income of £42k. If you take the average of Nationwide, Halifax and UUJ of about £140k you get a household income multiplier of 3.3 for the average house. This ratio is only relevant for FTB'ers as they are not taking any equity with them. The average FTB'er house (nationwide) is £128k divided by the average FTBer income (nationwide) of £42k will leave you with a household income ratio of 3.

Is the historical joint income ratio not more like 2.2? No data to back it up though just my own sample of 1.

[Belfast Boy]

Is the historical joint income ratio not more like 2.2? No data to back it up though just my own sample of 1.

It looks like it was 2.1...

http://www.economist.com/businessfinance/displaystory.cfm?story_id=15498328

In Britain, house prices are overvalued. This shows up most starkly in the figures for first-time buyers, the plankton of the housing food-chain. Figures from the Nationwide Building Society show that the ratio of house prices to earnings for such buyers peaked at 5.4 in 2007. The ratio then fell as the housing market deteriorated, reaching 4.1 in the first quarter of 2009 before rebounding to 4.4 at the end of last year. But the record low for the ratio was 2.1, which was reached back in 1995. Indeed, the ratio did not even fall back to its long-term average of 3.3 (the data was first compiled in 1983).

If this recession is as bad as the 90's recession (and many people think it will be far worse due to debt levels) then we can expect that record low ratio to be reached again at the low point for this housing market cycle.

Now lets look at my favorite graph which uses single income. When was the record low for house prices vs. single incomes?

Well it looks like the record low against single incomes was at the end of 1995 too. What a big coincidence. With the current ratio at over 6, we still have along way to fall to even reach the long term average of 3.7 times average single income.

But of course it is different this time. Yes, the BoE are printing money this time and the base rate is 0.5%. That really is different. It never ever happened in the 300 year history of the BoE. Also, many of the banks involved are partly state owned. So it really is different this time. At least for the time being as current house prices are obviously not sustainable from single or joint incomes.

Edited February 15, 2010 by Belfast Boy

[Belfast Boy]

This is interesting stuff. It sort of backs up the CML's stats which showed the average couple had a household income of £42k. If you take the average of Nationwide, Halifax and UUJ of about £140k you get a household income multiplier of 3.3 for the average house. This ratio is only relevant for FTB'ers as they are not taking any equity with them. The average FTB'er house (nationwide) is £128k divided by the average FTBer income (nationwide) of £42k will leave you with a household income ratio of 3.

It would appear that the Economist disagrees with your figures...

http://www.economist.com/businessfinance/displaystory.cfm?story_id=15498328

In Britain, house prices are overvalued. This shows up most starkly in the figures for first-time buyers, the plankton of the housing food-chain. Figures from the Nationwide Building Society show that the ratio of house prices to earnings for such buyers peaked at 5.4 in 2007. The ratio then fell as the housing market deteriorated, reaching 4.1 in the first quarter of 2009 before rebounding to 4.4 at the end of last year. But the record low for the ratio was 2.1, which was reached back in 1995. Indeed, the ratio did not even fall back to its long-term average of 3.3 (the data was first compiled in 1983).

Mods: will you please move Belfast VI's post and this one to a discussion thread. Thank you.

Edited February 15, 2010 by Belfast Boy

[BelfastVI]

It looks like it was 2.1...

http://www.economist.com/businessfinance/displaystory.cfm?story_id=15498328

If this recession is as bad as the 90's recession (and many people think it will be far worse due to debt levels) then we can expect that record low ratio to be reached again at the low point for this housing market cycle.

Now lets look at my favorite graph which uses single income. When was the record low for house prices vs. single incomes?

Well it looks like the record low against single incomes was at the end of 1995 too. What a big coincidence. With the current ratio at over 6, we still have along way to fall to even reach the long term average of 3.7 times average single income.

But of course it is different this time. Yes, the BoE are printing money this time and the base rate is 0.5%. That really is different. It never ever happened in the 300 year history of the BoE. Also, many of the banks involved are partly state owned. So it really is different this time. At least for the time being as current house prices are obviously not sustainable from single or joint incomes.

The historical low for single incomes was 2.1, as you say. the average is more like 3.7 as someone else said.

In the period 1993 to 1995 when the ratio was at its lowest ever two things had just happened. The base rate, which had been at 15% and had just returned to 5%-6%. This, which directly effected the cost of housing (more so than the cost of the house) i.e the cost of financing the house dropped by over 60%.

Property prices had only risen £805 (1.6%) from the bottom of the cycle in 1193Q1 but incomes had risen by 16% in that same time frame.

So the cost of money had fallen by over 60%, incomes had risen (in 2.5 years) by 16% and property had risen by 1.6% over the last 2.5 years.

Would it we wrong of me to assume that the low ratio was 100% due to increase in income and 0% to do with falling prices as the prices had actually risen from the bottom of the cycle, 2.5 years earlier when the ratio at that time was 2.4.

We are still above the long term average of 3.7 (or more like 3.5 nationwide) for FTB'ers. It was down to 4.1 (NI) last spring and I imagine it will return to that and lower during this year. I will argue that it will remain higher than the long term average as the comparison of historical figures that included a larger amount of single household incomes to the current market with a higher number of duel income households will have that effect.

Yes this recession is much worse than the 1990's. Then prices fell 20% from top to bottom in just over 3 years. Here in NI we have fallen over twice that in two years. However, the cost of money has remained at, or about its long term average. To me that is the biggest difference. If interest rates were to return to 15% serious inflation would take place, as did then and wage inflation would be one of them. And, as happened then, due to the historically high cost of money the house prices would fall. And when you get falling house prices (20%) and then rising income (over 16%) funny enough you would get a dramatic shift in the income to house price ratio.

[Belfast Boy]

We are still above the long term average of 3.7 (or more like 3.5 nationwide) for FTB'ers. It was down to 4.1 (NI) last spring and I imagine it will return to that and lower during this year. I will argue that it will remain higher than the long term average as the comparison of historical figures that included a larger amount of single household incomes to the current market with a higher number of duel income households will have that effect.

The Economist article quotes 3.3 as the long term average.

"I will argue that it will remain higher than the long term average..."

So the long term average will remain above the long term average You don't understand the basics of economic cycles - the income ratio will go below the long term average. It always does eventually.

Has it never occured to you that number of 'dual income' couples is also in a cycle/bubble and well above the long term average. At some point 'dual income' will return to it's long term average also.

Edited February 15, 2010 by Belfast Boy

[BelfastVI]

The Economist article quotes 3.3 as the long term average.

"I will argue that it will remain higher than the long term average..."

So the long term average will remain above the long term average You don't understand the basics of economic cycles - the income ratio will go below the long term average. It always does eventually.

Has it never occured to you that number of 'dual income' couples is also in a cycle/bubble and well above the long term average. At some point 'dual income' will return to it's long term avarege also.

Take your point on long term averages. I should have said I believe the long term average will rise as it was based on a higher number of single incomes than what is happening now. The ratio has fallen from over 7 to just over 4 as part of this cycle.

No I don't agree that the number of duel income couples is also in a cycle. I wish we could go back to one bread winner but I don't think that is going to happen. Yes the increase in unemployment will no doubt play a factor. Any whilst only 95% of people who were in employment are still in employment that could be read as only 90% of households who had duel income still have duel income.

[yadayada]

If interest rates were to return to 15% serious inflation would take place, as did then and wage inflation would be one of them.

Definitely not. The sole reason for raising interest rates would be to reduce inflation, as happened the last time.

[BelfastVI]

Definitely not. The sole reason for raising interest rates would be to reduce inflation, as happened the last time.

Ok, I will re-word. Interest rates are unlikely to rise to the previous high of 15% unless there is serious inflation, as what happened that last time. In that situation, as what happened the last time wage inflation is likely to also occur.

[Belfast Boy]

That is an increase of £1,118 or 5.15%

Anyone have any thoughts on why the average wage here appears to have increased by 5.15% in the previous year.

I though that increased unemployment may have caused a statistical anomoly, but that amount of unemployment we would have heard of surely?

Edited February 15, 2010 by Belfast Boy

[BelfastVI]

Someone asked for facts to base my opinion that dual income households has increased since the 1970. Alas all I can find is an American site. Its not exactly what I was looking for but the figures are significant enough.

More than 60 percent of families with children under age 18 had both parents employed outside the home in 2005-2006, according to the Bureau of Labor Statistics. That compares to less than a third in 1975

• The single-income family with two children in the early 1970s earned about $32,000 in inflation-adjusted dollars, compared to $73,000 for the dual-income family in the early 2000s.
  
• In 1970, the one-income family saved 11 percent of its take-home pay and allocated 1.4 percent of its annual income to pay revolving debt, such as credit cards. In 2005, the two-income family saved nothing, and allocated 15 percent of its annual income to revolving debt.
  
• On an inflation-adjusted basis, the cost of food, clothing, appliances, electronics, and automobiles has gone down.
  

My link

[Belfast Boy]

Someone asked for facts to base my opinion that dual income households has increased since the 1970.

Dual income housebuyer numbers may have increased significantly during the boom.

It would seem to me that that trend is unlikely to continue...

Proportion of people living alone has doubled since the Seventies

http://www.dailymail.co.uk/news/article-1170283/Proportion-people-living-doubled-Seventies.html

And it is not just old people being widowed...

The ONS said that among those living on their own, 'the largest increase has been among those below state pension age.'

[yadayada]

Ok, I will re-word. Interest rates are unlikely to rise to the previous high of 15% unless there is serious inflation, as what happened that last time. In that situation, as what happened the last time wage inflation is likely to also occur.

No. Wage inflation would defeat the purpose of raising interest rates, and did not happen the last time. Or the time before. It did happen in the seventies, though - then the IMF came in.

Edited February 15, 2010 by yadayada

[BelfastVI]

No. Wage inflation would defeat the purpose of raising interest rates, and did not happen the last time. Or the time before. It did happen in the seventies, though - then the IMF came in.

If you look at the figures from Nationwide it must have. The ratio fell from 2.4 to 2.1 whilst the houses actually rose. If the 2.1 figure is correct then wages must have risen.

[BelfastVI]

Dual income housebuyer numbers may have increased significantly during the boom.

It would seem to me that that trend is unlikely to continue...

It appears to have risen significantly since the 70's, from approximately 30% of households to over 60% of households. That may well be as high as it gets but unlikely to reverse apart from forced unemployment.

[yadayada]

If you look at the figures from Nationwide it must have. The ratio fell from 2.4 to 2.1 whilst the houses actually rose. If the 2.1 figure is correct then wages must have risen.

So no point in adjusting interest rates if wages are only going to alter and cancel their influence. I wonder why there's such an obsession with changing interest rates in response to inflation figures then.

[BelfastVI]

So no point in adjusting interest rates if wages are only going to alter and cancel their influence. I wonder why there's such an obsession with changing interest rates in response to inflation figures then.

I'm only reporting the figures