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Realistbear

Average City Salary 55K--No Wonder Houses Are Affordable

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http://www.bloomberg.com/apps/news?pid=20601087&sid=al9O7iAhubGI&pos=5

London Financial Vacancies Rise by 82% on 2009, Survey Shows
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By Gavin Finch
June 16 (Bloomberg) -- Job vacancies at London’s financial- services companies rose 82 percent in the year to May as firms continued to rebuild businesses hurt during the credit crisis..../
Average City salaries rose 9 percent in May from the previous month to 55,353 pounds ($81,502), the survey showed.
The rise in vacancies follows a 12 percent drop in financial services job vacancies in April, Morgan McKinley said.

Now we know why houses are still so high in the London area. A city type earning 55k can easily afford the average asking price of around 370k which is 6 times salary or 4 times less salary than under the Brown regime where 10X salary was commonplace. Put two city workers in one household on 7 times JOINT salary and you have the ability to pay 700k.

With an 82% vacancy rate and a hiring frenzy going on it would appear that inflation in house prices will be the order of the day. In the SE, at least. The rest of the country will go to the dogs as the nation relies more and more on what the City "produces."

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The thing I can't (entirely) figure out is why this impacts on 'ordinary' housing. McDonalds doesn't cost more just because there's a five-star Michelin restaurant around the corner...

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How many city workers are there vs houses in/around London?

I don't think the city workers per-se will have a massive effect on house prices around London, though of course higher london salaries on average will push up the average house price... It has always been thus, however..

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How many city workers are there vs houses in/around London?

I don't think the city workers per-se will have a massive effect on house prices around London, though of course higher london salaries on average will push up the average house price... It has always been thus, however..

...the other shoe is about to drop.

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http://www.bloomberg.com/apps/news?pid=20601087&sid=al9O7iAhubGI&pos=5

London Financial Vacancies Rise by 82% on 2009, Survey Shows
Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Gavin Finch
June 16 (Bloomberg) -- Job vacancies at London’s financial- services companies rose 82 percent in the year to May as firms continued to rebuild businesses hurt during the credit crisis..../
Average City salaries rose 9 percent in May from the previous month to 55,353 pounds ($81,502), the survey showed.
The rise in vacancies follows a 12 percent drop in financial services job vacancies in April, Morgan McKinley said.

Now we know why houses are still so high in the London area. A city type earning 55k can easily afford the average asking price of around 370k which is 6 times salary or 4 times less salary than under the Brown regime where 10X salary was commonplace. Put two city workers in one household on 7 times JOINT salary and you have the ability to pay 700k.

With an 82% vacancy rate and a hiring frenzy going on it would appear that inflation in house prices will be the order of the day. In the SE, at least. The rest of the country will go to the dogs as the nation relies more and more on what the City "produces."

The new bank lending rules which are mooted will stop 7x salary lending, since it is unaffordable on the 'london' salaries at any normal interest rates like 7.5%.

Central London property is a world of its own and cannot be compared to elsewhere. It involves investor money from abroad and no mortgages, usually bought up when the pound has sunk for a while. That is like now, when some of the really 'prime' stuff has gone to overseas buyers as the pound has devalued 25%.

The SE is in no way immune from a HPC. In fact when and if the momentum gets hold it will drop further by % than a depressed part of the country like Manchester which has not risen in the same way. That is what happened in 1989-93. Crawley in West Sussex enjoyedone of the largest % rises outside London and then was the hardest faller on about 28-30%.

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'Average' city salary will be serioulsy skewed by the mega buck earners.

A median would be nice to know. Probably more like 30-40k ?

There are loads of people working in the City in London who are not on megabucks.

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...in fact many of them are on "star bucks"

True. When people talk about London they seem to have blinkered thinking when it comes to money. The vast majority do not drive around in Ferraris. They work in Tesco or the corner shop or in some wee industrial estate.

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The new bank lending rules which are mooted will stop 7x salary lending, since it is unaffordable on the 'london' salaries at any normal interest rates like 7.5%.

Central London property is a world of its own and cannot be compared to elsewhere. It involves investor money from abroad and no mortgages, usually bought up when the pound has sunk for a while. That is like now, when some of the really 'prime' stuff has gone to overseas buyers as the pound has devalued 25%.

The SE is in no way immune from a HPC. In fact when and if the momentum gets hold it will drop further by % than a depressed part of the country like Manchester which has not risen in the same way. That is what happened in 1989-93. Crawley in West Sussex enjoyedone of the largest % rises outside London and then was the hardest faller on about 28-30%.

Strangely, I think the real problem is the king of all banks - the BoE who keeps printing money. Without the Special Liquidty Schemes etc, there will be no (or very little) 7x lending as banks simply won't have the cash to do that. Real Estate (ok. house) prices linked to availability of credits (and so are those banking jobs). BoE should target the root cause (which is itself), rather than trying to fiddle.

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True. When people talk about London they seem to have blinkered thinking when it comes to money. The vast majority do not drive around in Ferraris. They work in Tesco or the corner shop or in some wee industrial estate.

Even many of the ones you might think are on mega money are not. They are having mega money dangled in front of them while they work themselves to an early heart attack and divorce.

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(1) This is a financial sector average. Most people don't/can't work in that sector; and

(2) The figures are based on a small sample [of roles that require headhunting, i.e. possibly putting a very low weight on support and admin staff].

There are indeed lots of high earners in London. It's obvious that the price of, say, nice Georgian townhouses in Chelsea will never now fall below about £3m [or whatever].

But of course not any average price level is sustainable. Affordability and yields are both dire. This smacks of bubble territory.

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http://www.bloomberg...O7iAhubGI&pos=5

London Financial Vacancies Rise by 82% on 2009, Survey Shows
Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Gavin Finch
June 16 (Bloomberg) -- Job vacancies at London's financial- services companies rose 82 percent in the year to May as firms continued to rebuild businesses hurt during the credit crisis..../
Average City salaries rose 9 percent in May from the previous month to 55,353 pounds ($81,502), the survey showed.
The rise in vacancies follows a 12 percent drop in financial services job vacancies in April, Morgan McKinley said.

Now we know why houses are still so high in the London area. A city type earning 55k can easily afford the average asking price of around 370k which is 6 times salary or 4 times less salary than under the Brown regime where 10X salary was commonplace. Put two city workers in one household on 7 times JOINT salary and you have the ability to pay 700k.

With an 82% vacancy rate and a hiring frenzy going on it would appear that inflation in house prices will be the order of the day. In the SE, at least. The rest of the country will go to the dogs as the nation relies more and more on what the City "produces."

£700k is about what a nice semi in a pretty good (i.e. not the best, but pretty good) part of London costs. £370k would only get you an OK flat in a pretty good part of London.

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I’ve said this before but a couple of anecdotes of close friends / relatives who work in the City seems to point to complete dislocation between ‘them’ and ‘us’:

  1. The presenter at an internal quarterly presentation at Merrill Lynch said to its staff ‘we are making more money than we have ever made before’ and ‘things are looking better now than at any other time’
  2. Friend (Project Manager within IT) got 1 year’s wage as redundancy from a German investment bank and decided to take a few months ‘off’. He tried his luck in the job market last week and was offered 3 positions at much higher rates than he expected – he was incredibly surprised

And to think these are the same institutions that got us in the cr@p in the first place. Lucky for them; happy days.

http://www.bloomberg.com/apps/news?pid=20601087&sid=al9O7iAhubGI&pos=5

London Financial Vacancies Rise by 82% on 2009, Survey Shows
Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Gavin Finch
June 16 (Bloomberg) -- Job vacancies at London’s financial- services companies rose 82 percent in the year to May as firms continued to rebuild businesses hurt during the credit crisis..../
Average City salaries rose 9 percent in May from the previous month to 55,353 pounds ($81,502), the survey showed.
The rise in vacancies follows a 12 percent drop in financial services job vacancies in April, Morgan McKinley said.

Now we know why houses are still so high in the London area. A city type earning 55k can easily afford the average asking price of around 370k which is 6 times salary or 4 times less salary than under the Brown regime where 10X salary was commonplace. Put two city workers in one household on 7 times JOINT salary and you have the ability to pay 700k.

With an 82% vacancy rate and a hiring frenzy going on it would appear that inflation in house prices will be the order of the day. In the SE, at least. The rest of the country will go to the dogs as the nation relies more and more on what the City "produces."

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http://www.bloomberg.com/apps/news?pid=20601087&sid=al9O7iAhubGI&pos=5

Now we know why houses are still so high in the London area. A city type earning 55k can easily afford the average asking price of around 370k which is 6 times salary or 4 times less salary than under the Brown regime where 10X salary was commonplace. Put two city workers in one household on 7 times JOINT salary and you have the ability to pay 700k.

Please tell me that you're not saying anyone would lend x7 joint income? You'd be lucky to get x4 right now.

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The thing I can't (entirely) figure out is why this impacts on 'ordinary' housing. McDonalds doesn't cost more just because there's a five-star Michelin restaurant around the corner...

I think this question deserves a thread of its own.

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Please tell me that you're not saying anyone would lend x7 joint income? You'd be lucky to get x4 right now.

seven times joint income is perfectly affordable.

taking our £100k a year couple as an example, a 25-yr £700k repayment mortgage at 5% interest will set you back £49,667 p.a. in repayments... and apparently middle class families pay 49pc of income in taxes, so that'd be another £49,000 gone... leaving the best part of fifteen hundred quid a year for other stuff, not that i suppose you'd need anywhere near that much, after all, debt and tax, aren't they the twin keys to a nation's prosperidee...

i suppose the house will clearly appreciate by 10% p.a., that's a potential index-linked £70k a year in MEW slush money?

Edited by the flying pig

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seven times joint income is perfectly affordable.

taking our £100k a year couple as an example, a 25-yr £700k repayment mortgage at 5% interest will set you back £49,667 p.a. in repayments... and apparently middle class families pay 49pc of income in taxes, so that'd be another £49,000 gone... leaving the best part of fifteen hundred quid a year for other stuff, not that i suppose you'd need anywhere near that much, after all, debt and tax, aren't they the twin keys to a nation's prosperidee...

i suppose the house will clearly appreciate by 10% p.a., that's a potential index-linked £70k a year in MEW slush money?

I agree its affordable, I'd buy right now if someone was willing to lend that ratio but no one is.

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And to think these are the same institutions that got us in the cr@p in the first place. Lucky for them; happy days.

Oh yeah, it woz the banks that dunit. Of course.

I think the average consumer and the government/regulators are more to blame.

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Average City salaries rose 9 percent in May from the previous month to 55,353 pounds ($81,502), the survey showed.

Yes, forgot to add that we get bonuses too. I have joined the devils. If you cannot beat them, study and work to join them. Be ready to give up a lot of your life in pursuit of the dream and it's by no means easy to get in.

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I am not sure I believe that report. I think an average salary of £51K is way too low. I remember once reading a report that said the average salary for a Canary Wharf based employee was £100K. That seemed much more realistic to me. Maybe it is £51K before bonus, but even that seem pretty low.

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Erm 55k is not all that much.

50k gives you a take home of 3k a month. It's not ferrari money. Assuming you've got 10% deposit stashed away, on a 370k property youve a mortgage of 333k. At 6% interest only thats 1.6k a month, more than half of your take home.

55k gets a sensible person a mortgage of 190k odd. If they happen to have 60k lying around you're looking at up to 250k which in a lot of areas I have lived in is entry level for a decent 2 bed flat. No idea what that gets you in London, I suspect not a lot.

It's not much money. If you're making that you are still dirt poor, but you can pretend not to be for as long as the income lasts. People making under that are dirt poor, but mostly probably think they are not.

You couldn't by any stretch describe 55k as 'Mega'.

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I agree with some of the latter posts that this appears low. I work in Canary Wharf earning £52k. I was more than happy with this coming from outside the financial sector but upon joining it immediately became apparent how low i was on the pecking order. 50k was effectively entry level! I am 29 with a degree and a professional qualification but many of my peers of the same age are earning 65k plus as middle managers. Its another world here and i have to remind myself of that when i visit friends and the like in the real world.

Edited by defweb

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  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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