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Speaks volums, no wonder we are in the sh-t!!

I'm not so sure it does "speak volumes" as you say... while housing is currently overvalued I seriously doubt you can get any fix on its true vlaue from these figures... lets look at some of the issues those who seem to lick their licks with glee have when relying on this kind of data.

- Some average type property ( two or three bed terraced housing) is worth less than this figure is some areas... does that mean they are due a boom ?

- Average salaries vary greatly region to region, anyone thinking £23,000 is a decent average for london or its outlying regions must be barking mad.

- There have been demographic changes .... there has been an increasing trend of both couples working, of partners buying together and dual income households generally.... you simply cannot dismiss this out of hand. This coupled with the above measn you really need to start to look at regional household income rather than national averages vs regional house prices rather than national prices.

- You need to be sure that the income figures take into account all the extra's people get by way of bonuses etc ( they don't always achieve this)

- You need to adjust the figures to reflect the much higher proportion of self-employed people where the tax breaks available serve to under count their true level of earning.

You then need to think about the financing changes we have seen and recognise that 3 plus 1 is long gone and more likely for a home buyer you are likely to see a couple buying with both in employment and the lender offering something like 3 to 4 JOINT.... apply a conservative 3 joint to the current averages quoted and guess what you get to around £140k which is probably a more reallistic target figure ( does anyone really believe the averages are going to correct to £70k odd..... I think that scenario is most unlikely to put it mildly)

So in summary why oh why do people still get excited about these ratios, they are by and large meaningless unless you apply some more filters to them... sitting there and saying that this surely indicates that prices are going back to £70,000 is surely bonkers.

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So in summary why oh why do people still get excited about these ratios, they are by and large meaningless unless you apply some more filters to them... sitting there and saying that this surely indicates that prices are going back to £70,000 is surely bonkers.

bonkers, maybe, doesn't mean it won't happen though.

I'm firmlly in the 60% reduction from peak prices camp. Which means at least a 50% reduction from where we are today.

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So average wage up 4.86% a year, average house 8.79% = Your other half has to go to work so a banker doesn't. :angry:

Item                         1982         2007         APR %Average_salary            £7,117.00     23,307.00      4.86%Average_house            £23,644.00    194,362.00      8.79%Ford_Sierra/Mondeo        £6,524.00     17,210.00      3.96%Weekly_family_food_bill      £32.20         84.82      3.95%22in_Sony_colour_TV         £297.00        148.99     -2.72%Sony_video_recorder         £469.95         44.99     -8.96%Aga_gas-fired_double_oven   £995.00      6,200.00      7.59%Hoover_washing_machine      £299.95        230.00     -1.06%Gallon_of_petrol              £1.64          4.04      3.67%Pint_of_London_Pride          £0.58          2.80      6.50%War_And_Peace_paperback       £3.95          1.99     -2.71%First-class_stamp             £0.16          0.32      2.81%Odeon_cinema_ticket           £1.65          6.50      5.64%Cheapest_ticket_at_ManU       £1.60         23.00     11.25%Manchester_United_season_tic £64.00        437.00      7.99%Can_of_Coca-Cola              £0.20          0.45      3.30%20_Benson_&_Hedges_cigarettes £1.02          5.98      7.33%3lb_frozen_chicken            £0.57          3.03      6.91%Loaf_of_white_bread           £0.37          0.85      3.38%A_dozen_eggs                  £0.73          1.98      4.07%Pint_of_milk                  £0.20          0.36      2.38%2.2lb_of_sugar_(granulated)   £0.44          0.76      2.21%1lb_of_bananas                £0.32          0.42      1.09%Dinner_at_Le_Caprice         £18.00         46.00      3.82%Man’s_gold_Rolexwatch     £4,662.00     11,530.00      3.69%Porsche_911              £16,731.00     60,810.00      5.30%Levi_501_jeans               £20.00         50.00      3.73%Toni_&_Guy_cut_and_blow_dry  £23.00         56.00      3.62%SonyWalkman                  £80.00         19.99     -5.40%Mars_bar                      £0.16          0.41      3.84%Flight_to_Paris             £148.00         51.00     -4.17%Flight_to_New York          £378.00        269.00     -1.35%All                      £54,399.69   £291,602.68      6.95%

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So average wage up 4.86% a year, average house 8.79% = Your other half has to go to work so a banker doesn't. :angry:

So average wage up 5.07% a year.......................compound over 25 years using excel?

Which is about right, a BoE base rate about 6.5%, disconnect between cost of money and level of debt!

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I'm not so sure it does "speak volumes" as you say... while housing is currently overvalued I seriously doubt you can get any fix on its true vlaue from these figures... lets look at some of the issues those who seem to lick their licks with glee have when relying on this kind of data.

- Some average type property ( two or three bed terraced housing) is worth less than this figure is some areas... does that mean they are due a boom ?

- Average salaries vary greatly region to region, anyone thinking £23,000 is a decent average for london or its outlying regions must be barking mad.

- There have been demographic changes .... there has been an increasing trend of both couples working, of partners buying together and dual income households generally.... you simply cannot dismiss this out of hand. This coupled with the above measn you really need to start to look at regional household income rather than national averages vs regional house prices rather than national prices.

- You need to be sure that the income figures take into account all the extra's people get by way of bonuses etc ( they don't always achieve this)

- You need to adjust the figures to reflect the much higher proportion of self-employed people where the tax breaks available serve to under count their true level of earning.

You then need to think about the financing changes we have seen and recognise that 3 plus 1 is long gone and more likely for a home buyer you are likely to see a couple buying with both in employment and the lender offering something like 3 to 4 JOINT.... apply a conservative 3 joint to the current averages quoted and guess what you get to around £140k which is probably a more reallistic target figure ( does anyone really believe the averages are going to correct to £70k odd..... I think that scenario is most unlikely to put it mildly)

So in summary why oh why do people still get excited about these ratios, they are by and large meaningless unless you apply some more filters to them... sitting there and saying that this surely indicates that prices are going back to £70,000 is surely bonkers.

Yes it does speak volumes and your points confirm that . let me take a few of them.

Have never said that prices will fall , back to £70,000 , I said that prices going up way above average wages is causing sh-t in the economy.

There will always be differences in regions, higher average prices in some more affluent , sort after parts of the country with higher average earnings to match.

However thinking back to 1982 when my brother bought his first house on the East london Essex borders for £20k and his and his wifes joint earnings were £200 p.w. take home at the time, the averages stated by the op are a good indication of the changes. Today brothers house would be about £170-180k , 8.5 - 9 times its 1982 price.

However in the same jobs that he and his wife had back then any couple would not be taking home anywhere near £1,700 - 1,800 p.w.

That is why i say it speaks volumes about the sh-t we are now in . As these ludicrous prices for putting a roof over the head have totally distorted our whole economy and are having far reaching economic and social results which is causing massive problems.

Taking into accout all income's bonuses ect will still not make up for this hidious gap.

Your own words " dual incomes " this has added to the social changes that have taken place. There are many women in the work place who want to be there and have a career minded attitude , on the other hand there are many who do not want to be there and would rather be at home looking after their children . These woman have had that choice taken away from them as they are forced to stay in the work place and farm the children out to be looked after. Have met both kinds of women in my working life but at a guess would say that it is about a 1:4 ratio for every 1 wanting to be there , another 4 would rather not , but have no choice. So they stay in the workforce and do not pass on the jobs to the next generation of school colledge leavers. I would say that is a backward step those wanting the jobs can not get them due to others not wanting them being forced to keep them. All due to house prices going up way beyound earnings.

The finacing that you tell me i need to look at is all part of the problem and the cause of the bubble. People have been able to borrow more money, but they have not bought bigger houses they have just paid more for the same house and now more for a smaller house.

Even going back to 3x earnings mortgages they were very tight really , the big difference being that wage inflation quickly reduced 3x earnings debt's to more managble montly payments . Something that is now lacking in our very low wage inflation economy. Making the burden of debt bigger for much longer.

When i refer to the sh-t we are in , i am also talking about the cost's to the taxpayer having to pay peoples very high mortgages when they claim S.S. , it has also had a massive impact on rent's , one of the biggest increasing S.S. cost's is HB, caused by high house prices.

Just to recap i never said that houses would drop to £70k i said high housing cost;s have fu---ed the economy.

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So in summary why oh why do people still get excited about these ratios, they are by and large meaningless unless you apply some more filters to them... sitting there and saying that this surely indicates that prices are going back to £70,000 is surely bonkers.

You're a sh1t bear. Really sh1t.

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So average wage up 4.86% a year, average house 8.79% = Your other half has to go to work so a banker doesn't. :angry:

Item                         1982         2007         APR %Average_salary            £7,117.00     23,307.00      4.86%Average_house            £23,644.00    194,362.00      8.79%Ford_Sierra/Mondeo        £6,524.00     17,210.00      3.96%Weekly_family_food_bill      £32.20         84.82      3.95%22in_Sony_colour_TV         £297.00        148.99     -2.72%Sony_video_recorder         £469.95         44.99     -8.96%Aga_gas-fired_double_oven   £995.00      6,200.00      7.59%Hoover_washing_machine      £299.95        230.00     -1.06%Gallon_of_petrol              £1.64          4.04      3.67%Pint_of_London_Pride          £0.58          2.80      6.50%War_And_Peace_paperback       £3.95          1.99     -2.71%First-class_stamp             £0.16          0.32      2.81%Odeon_cinema_ticket           £1.65          6.50      5.64%Cheapest_ticket_at_ManU       £1.60         23.00     11.25%Manchester_United_season_tic £64.00        437.00      7.99%Can_of_Coca-Cola              £0.20          0.45      3.30%20_Benson_&_Hedges_cigarettes £1.02          5.98      7.33%3lb_frozen_chicken            £0.57          3.03      6.91%Loaf_of_white_bread           £0.37          0.85      3.38%A_dozen_eggs                  £0.73          1.98      4.07%Pint_of_milk                  £0.20          0.36      2.38%2.2lb_of_sugar_(granulated)   £0.44          0.76      2.21%1lb_of_bananas                £0.32          0.42      1.09%Dinner_at_Le_Caprice         £18.00         46.00      3.82%Man’s_gold_Rolexwatch     £4,662.00     11,530.00      3.69%Porsche_911              £16,731.00     60,810.00      5.30%Levi_501_jeans               £20.00         50.00      3.73%Toni_&_Guy_cut_and_blow_dry  £23.00         56.00      3.62%SonyWalkman                  £80.00         19.99     -5.40%Mars_bar                      £0.16          0.41      3.84%Flight_to_Paris             £148.00         51.00     -4.17%Flight_to_New York          £378.00        269.00     -1.35%All                      £54,399.69   £291,602.68      6.95%

Bloody Hanover. I just bought a dozen large eggs here in Rhode Island for 99cents. That's around 60p innit? I never pay above a quarter (16p) for can of coke. 12 cans are two bucks and change if you shop around. A gallon of milk (in pounds) is 2 quid ($3.25) which may be around the same in bulk. I can get banannas at 20 cents a pound at Priceright. I wish fags were 10 quid a pack now I have given up.

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1982 interest rate 14.35%

2007 5.25%

People rarely buy houses for cash and their measure of affordability is monthly payment cost, not house price.

1982 interest rate 14.35% minus miras reduces it by about one third down to about 9.5%

2007 interest rate 5.25% no miras

1982 new mortgages borrowing 3x income was the norm. by 1986 due to wage inflation about 2x income.

2007 new mortgaes borrowing 5-6x income was the norm. By 2011 due to wage inflation still about 5-6 x income ( this is the big difference )

On top of interest rate borrower has to pay back the capital thats 3x their 1982 wage, 2007 5-6 x their 2007 wage.

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Yes it does speak volumes and your points confirm that . let me take a few of them.

Have never said that prices will fall , back to £70,000 , I said that prices going up way above average wages is causing sh-t in the economy.

There will always be differences in regions, higher average prices in some more affluent , sort after parts of the country with higher average earnings to match.

However thinking back to 1982 when my brother bought his first house on the East london Essex borders for £20k and his and his wifes joint earnings were £200 p.w. take home at the time, the averages stated by the op are a good indication of the changes. Today brothers house would be about £170-180k , 8.5 - 9 times its 1982 price.

However in the same jobs that he and his wife had back then any couple would not be taking home anywhere near £1,700 - 1,800 p.w.

That is why i say it speaks volumes about the sh-t we are now in . As these ludicrous prices for putting a roof over the head have totally distorted our whole economy and are having far reaching economic and social results which is causing massive problems.

Taking into accout all income's bonuses ect will still not make up for this hidious gap.

Your own words " dual incomes " this has added to the social changes that have taken place. There are many women in the work place who want to be there and have a career minded attitude , on the other hand there are many who do not want to be there and would rather be at home looking after their children . These woman have had that choice taken away from them as they are forced to stay in the work place and farm the children out to be looked after. Have met both kinds of women in my working life but at a guess would say that it is about a 1:4 ratio for every 1 wanting to be there , another 4 would rather not , but have no choice. So they stay in the workforce and do not pass on the jobs to the next generation of school colledge leavers. I would say that is a backward step those wanting the jobs can not get them due to others not wanting them being forced to keep them. All due to house prices going up way beyound earnings.

The finacing that you tell me i need to look at is all part of the problem and the cause of the bubble. People have been able to borrow more money, but they have not bought bigger houses they have just paid more for the same house and now more for a smaller house.

Even going back to 3x earnings mortgages they were very tight really , the big difference being that wage inflation quickly reduced 3x earnings debt's to more managble montly payments . Something that is now lacking in our very low wage inflation economy. Making the burden of debt bigger for much longer.

When i refer to the sh-t we are in , i am also talking about the cost's to the taxpayer having to pay peoples very high mortgages when they claim S.S. , it has also had a massive impact on rent's , one of the biggest increasing S.S. cost's is HB, caused by high house prices.

Just to recap i never said that houses would drop to £70k i said high housing cost;s have fu---ed the economy.

Forget VI's on both sides of the camp, can anybody seriously argue that high (read stupidly) house prices are good for the economy in general? Less disposable income-bad for everybody, including local Mom and Pop shops. For the young newly weds? Forget it. The social costs are devastating-wonder how many people have topped themselves?

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1982 interest rate 14.35%

2007 5.25%

People rarely buy houses for cash and their measure of affordability is monthly payment cost, not house price.

I can't argue with that logic. It accounts for the stupidity of people who never look farther than next week in the main.

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I can't argue with that logic. It accounts for the stupidity of people who never look farther than next week in the main.

We are in for negative returns on paper/cash/wages. But thats the link bonds, cash, wages are all interlinked..............If we are in/heading for a long period of negative interest rates, then we are in for a long period of negative returns on cash, negative returns on bonds, and negative returns on wage settlements. We are going to get poorer..............simple.

So asset prices cannot go anywhere, less disposable income, but yes you can take advantage of negative interest rates, pay down debt if you have debt. I have no debt, so will spend capital.................So in ten years of negative interest rates, similar to Japan, we will a fall of in excess of 50% in house prices, and in excess of a fall of 50% in the purchasing power of your money, this could be either your wages or your savings. But you will lose purchasing power.

But i would rather lose purchasing power of something i have, rather than lose capital value of something i do not own.

We are in for wealth deflation whether you own assets or liquid cash, they will all fall in value i am afraid. Fighting the tied will be very tiresome.

It is all panning out too far similar to J...............................n.

Credit Deflation.

Credit Contraction.

Loss of Wealth.

Work harder for less?

Savings diminishing.

Loss of spending power to pensions.

House prices falling.

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Forget VI's on both sides of the camp, can anybody seriously argue that high (read stupidly) house prices are good for the economy in general? Less disposable income-bad for everybody, including local Mom and Pop shops. For the young newly weds? Forget it. The social costs are devastating-wonder how many people have topped themselves?

+1 only have to look at my own family to see how things have been distorted.

1982 brother and wife buy house ( 3 years later wife gives up work and has kids )

1986 me and then wife buy flat for £14000 more than brother bought house , i had to go on the night shif to do it. Brother and wife thought we were mad. (1990 able to take whole mortgage over on my own after divorce.)

2005 sister and husband buy first house she is 10 years older than my brother and me when we bought first places.( five years and 2 kids later sister still has to work )

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Wow - really shocking figures!! Well, not really shocking to us HPCers but you know what I mean.

Girlfriend had a 4 bed house 9 years ago - £95k. Now 'worth' £200k (if she had kept it!)

When that house falls back to £120k or so, I'm in.

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you are bonkers.

Are they?

Average salary 1982 = £7,117.00

over 25 years at a yearly increase of 8.79% (House price inflation) = £58481.89 in wages per year.

So we only get 40% of our wages, if you compare wages/house prices for 2007 vs 1982.

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Are they?

Average salary 1982 = £7,117.00

over 25 years at a yearly increase of 8.79% (House price inflation) = £58481.89 in wages per year.

So we only get 40% of our wages, if you compare wages/house prices for 2007 vs 1982.

you forget that interest rates have come down during the same period.

....

this where you get to say "rates can't stay low forever".

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you forget that interest rates have come down during the same period.

....

this where you get to say "rates can't stay low forever".

No chance for nominal prices, idd.

Real terms?

hoo boy.

90% off peak toppermost, 60% a certainty. Back to pre fiat prices.

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I can't argue with that logic. It accounts for the stupidity of people who never look farther than next week in the main.

you forget that interest rates have come down during the same period.

....

this where you get to say "rates can't stay low forever".

We are already at the 15% mark of 1982 if you compare it to wages.... a 1% increase will kill them.

                                        1982                     2007Ave Salary                          £7,117.00               £23,307.00Ave interest per year      14.35% = £3392.914       5.25% = £10204.005Interest as a % of salary              47.67%	                43.78%

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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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