Homebuyer Average Income Tops £40,000; Telegraph

[Liquid Goldfish]

My link

A purchaser's average income was £40,510 in June, the highest level since their records began at the start of 2009. That is a 2pc increase from May and 9pc higher than a year ago.

As homebuyers income has outstripped inflation (2.9pc) and average weekly earnings (3.7pc), MAB said this suggested that "more affluent borrowers were driving up the average as they take advantage of the housing market recovery".

This trend was particularly visible across London, the South West, the Midlands and the North where homebuyer's typical income rose by 10pc or more since a year earlier.

......................

I really don't know what to think of this. Incomes rising 10pc in a year sounds a bit suspicious.

There's also lots of stuff about Help to Buy causing a boom in enquiries

[Bloo Loo]

My link

I really don't know what to think of this. Incomes rising 10pc in a year sounds a bit suspicious.

There's also lots of stuff about Help to Buy causing a boom in enquiries

so the average buyer is in the top 5% of incomes.

There is a problem with averages....5 footballers buy in a given month and the average can rise dramatically.

[The Knimbies who say No]

My link

I really don't know what to think of this. Incomes rising 10pc in a year sounds a bit suspicious.

There's also lots of stuff about Help to Buy causing a boom in enquiries

It's on the money, look at a chart on Neal Hudson's Twitter feed:

https://twitter.com/resi_analyst/status/353140412925485057/photo/1

Edit should also add that it ties in nicely with Duke's thread where the best mortgage deals often come with a hefty upfront fixed application fee, which of course is a less significant overall cost as the borrowings increase.

Seems like 'pent up' demand from frustrated decent earners (who can't save up enough for whatever reason) is being met with HTB. There are not inexhaustible supplies of these types of course.

Edited July 16, 2013 by cheeznbreed

[Liquid Goldfish]

It's on the money, look at a chart on Neal Hudson's Twitter feed:

https://twitter.com/resi_analyst/status/353140412925485057/photo/1

Thanks.

[Bloo Loo]

It's on the money, look at a chart on Neal Hudson's Twitter feed:

https://twitter.com/...5485057/photo/1

thats household income.

two buyers on 20K are seriously disadvantaged when it comes to pay for their 5 times income mortgage and child number 1 arrives.

[Unexpected]

thats household income.

two buyers on 20K are seriously disadvantaged when it comes to pay for their 5 times income mortgage and child number 1 arrives.

They're seriously disadvantaged anyway as the lowest rate mortgages won't give you 4 or 5 times joint income.

[porca misèria]

I think we knew this already. The market is picking up as those with money to spare front-run rises they expect from Help-to-Buy.

c.f. posts #12 to #14 in http://www.housepricecrash.co.uk/forum/index.php?showtopic=191731

Edited July 16, 2013 by porca misèria

[Bloo Loo]

They're seriously disadvantaged anyway as the lowest rate mortgages won't give you 4 or 5 times joint income.

Dont they?...on just about any thread about mortgages, some bright spark loves to pop about the great multiple/income/rate they got offered today...

[awaytogo]

so the average buyer is in the top 5% of incomes.

There is a problem with averages....5 footballers buy in a given month and the average can rise dramatically.

according to this wages are falling,

http://www.bbc.co.uk/news/business-22860320

From what i see and hear a lot of company's are freezing or cutting wages, someone's trying to talk the market up.

[@contradevian]

Northern Ireland saw house price growth for the first time in five years in May, in further signs that the market is turning a corner, up 1.9pc, to reach £134,000 on average.

[Wurzel Of Highbridge]

Surely this just proves that people on lower incomes cannot move or become first time buyers, thus the average moves up as only people on higher wages are applying.

It would be see volume plotted against this, as I highly suspect as volume has become lower as the lower paid have been excluded from the market.

[Bloo Loo]

Surely this just proves that people on lower incomes cannot move or become first time buyers, thus the average moves up as only people on higher wages are applying.

It would be see volume plotted against this, as I highly suspect as volume has become lower as the lower paid have been excluded from the market.

It is the scenario Angus Mctavish was roundly condemned for voicing, on this very site.

[goldbug9999]

so the average buyer is in the top 5% of incomes.

So on average, buyers throughout the country have to be earning 7k more than the average Londoner. Clearly sustainable ...

[eric pebble]

So on average, buyers throughout the country have to be earning 7k more than the average Londoner. Clearly sustainable ...

How does anyone "afford" Britain's house prices??

One simple answer to that....... It's like it has been for YEARS & YEARS.....

PREDATORY LIAR LOANS.

. Simples.

[winkie]

No income required to buy a buy to let.....the rent is the income.....will that skew the pick a figure out of the air figs?

[Bland Unsight]

I really don't know what to think of this. Incomes rising 10pc in a year sounds a bit suspicious.

according to this wages are falling,

http://www.bbc.co.uk/news/business-22860320

From what i see and hear a lot of company's are freezing or cutting wages, someone's trying to talk the market up.

Important to note that the article is not saying that incomes are rising - it is saying that the average income of homebuyers is rising.

Let's say in 2004 we have three buyers, Alice, Bob and Carol earning £20k, £30k and £40k respectively.The average income of a buyer is £30k

A brief period of properdee madness follows, followed by a global financial crisis. Banks seek to deleverage so they raise the deposits they require from people obtaining residential mortgages and they start checking that borrowers can actually be expected to meet the mortgage payment on a continuing basis from their income.

Now a 2013 crop of prospective buyers approach the banks ; Arnold, Beatrice and Clive earning £20k, £30k and £40k. Arnold looks at what kind of house he can afford with the mortgage he could get given his saved deposit and his earnings, (which involves the bank deciding how much they are willing to lend to Arnold given his income), and as a result, Arnold does not proceed to a purchase. The average income of a buyer rises to £35k but only two houses are sold.

Transaction volumes fall and the average income of homebuyers increases, which is exactly what is happening and exactly what these figures are illustrating, (as pointed out already by a number of posters on this thread).

Edited July 16, 2013 by ChairmanOfTheBored

[easy2012]

Now a 2013 crop of prospective buyers approach the banks ; Arnold, Beatrice and Clive earning £20k, £30k and £40k. Arnold looks at what kind of house he can afford with the mortgage he could get given his saved deposit and his earnings, (which involves the bank deciding how much they are willing to lend to Arnold given his income), and as a result, Arnold does not proceed to a purchase. The average income of a buyer rises to £35k but only two houses are sold.

Transaction volumes fall and the average income of homebuyers increases, which is exactly what is happening and exactly what these figures are illustrating, (as pointed out already by a number of posters on this thread).

And also is about people higher up in the income chain buying houses that were meant for different income deciles in the past.

People on £40k + £20k (partner) = £60 would be on the 8th decile (earning >80% of households) and in the past would able to go

for a small detached house but will now go for a terrace instead.

[Bland Unsight]

And also is about people higher up in the income chain buying houses that were meant for different income deciles in the past.

Absolutely. For both these reasons, this news story is a real red flag. In UK housing we had a boom whilst a free market for labour and debt met a command economy for land with planning permission. Now as a result of the government putting their balance sheet behind the banks, we have a much bigger command economy element in the banking sector than we did during the boom. Nothing good will come of this, sooner or later, one way or another it will unravel.

Unless the private debts are written off or inflated away the reckoning for all those lousy decisions is still out there waiting on people. The government doesn't have deep enough pockets to write off the debts. In order to inflate away the nominal value of private debts, you need wage inflation and plenty of it. I rather suspect that the 1970s world of capital controls and trade tariffs that was needed for wage inflation in the UK is not coming back, so neither is wage inflation.

No credit boom, no wage growth. Welcome to the future

Edited July 16, 2013 by ChairmanOfTheBored

[Bloo Loo]

all good points from the Chairman.

Or he could have said...rock and hard place.

from the beginning of this crisis i have consistently said they will be aiming to buy time for the banks to trade through this debt crisis.

And bought time they have....sadly, they havent used the time to cure anything...banks that were broke are just as broke but now bigger, CDS is beyond imagination, and bail outs have not seen the end of seriously bad behaviour...indeed, they are much much worse.

The hard place is harder, and the rock is the size of the moon.

Edited July 16, 2013 by Bloo Loo

[steve99]

Check out the percentile chart in this wiki:

http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom

so all these 2 bit 2up/2down houses are selling to the richest 20% of the population. WhoTFk is buying the most expensive 80% of housing then?

[steve99]

Absolutely. For both these reasons, this news story is a real red flag. In UK housing we had a boom whilst a free market for labour and debt met a command economy for land with planning permission. Now as a result of the government putting their balance sheet behind the banks, we have a much bigger command economy element in the banking sector than we did during the boom. Nothing good will come of this, sooner or later, one way or another it will unravel.

Unless the private debts are written off or inflated away the reckoning for all those lousy decisions is still out there waiting on people. The government doesn't have deep enough pockets to write off the debts. In order to inflate away the nominal value of private debts, you need wage inflation and plenty of it. I rather suspect that the 1970s world of capital controls and trade tariffs that was needed for wage inflation in the UK is not coming back, so neither is wage inflation.

No credit boom, no wage growth. Welcome to the future

'' In order to inflate away the nominal value of private debts, you need wage inflation and plenty of it.''

Our politicians with their anti wage inflation dogma are like the baboon with its hand in the hole.

The idealistic political dogma states that working people should not have pay rises, both con/lab have gone along with it. ie mass import of labour at all economic levels, offshoring of jobs, destruction of unions and false inflation figures to keep pay rises and pensions etc down while at the same time desperately needing wage inflation??? what a conundrum even when they know what to do they wont do it out of 'keeping you in your place' dogma.

Edited July 16, 2013 by steve99

[Eddie_George]

It is the scenario Angus Mctavish was roundly condemned for voicing, on this very site.

Less of the Scottish stereotypes, his name wasn't Angus......

........ it was Hamish

[easy2012]

Check out the percentile chart in this wiki:

http://en.wikipedia.org/wiki/Income_in_the_United_Kingdom

so all these 2 bit 2up/2down houses are selling to the richest 20% of the population. WhoTFk is buying the most expensive 80% of housing then?

Foreigner :-)

Ok.. second/3rd/4th steppers I suppose.

[TrevorS]

from the beginning of this crisis i have consistently said they will be aiming to buy time for the banks to trade through this debt crisis.

And bought time they have....sadly, they havent used the time to cure anything...banks that were broke are just as broke but now bigger, CDS is beyond imagination, and bail outs have not seen the end of seriously bad behaviour...indeed, they are much much worse.

Side point, but RBS has cut staff by 40,000 and the balance sheet has been shrunk by £1 trillion. That's a lot of moolah. Lloyds Tier 1 capital is on track for 9% by year end. Still big, but less of a systemic risk than they used to be. Maybe they are using that time.

[Bland Unsight]

Our politicians with their anti wage inflation dogma are like the baboon with its hand in the hole.

Interesting.

It seems to me that we've got to start from the premise that politicians want to be elected. They can be influenced by vested interests to the extent that the flow of funds allows them to spend more campaigning, but that can only take them so far, it doesn't make any sense for politicians to set out to impoverish the electorate...

Accordingly, I don't think that they are against wage inflation, the dogma is to be against inflation. Politicians function surrounded by a structure that includes the civil servants in the Treasury, the officials of the Bank of England, the Office of National Statistics and a whole array of groups like the think tanks and organisations like the CBI.

My surmise is that if you want to be promoted in the ONS, then stake out some methodological turf that will make CPI look lower, because lower inflation is deemed good. If you want to be promoted in the Bank of England then don't call out the CPI analysis as pure BS and pull down the temple, just make it work... so accept Brown's suggestion that house price inflation is not real inflation. The think tanks pimp their particular interpretation of things, and recently there has been more money flowing into the think tanks that are backed by creditors, and creditors don't care too much for inflation. I would guess that people at the CBI and the CML are not radicals, they've just absorbed the dogmas of the quiet past and are willing to find ways to interpret them which mean that it's best for everyone if their employer does whatever their employer wants to do for other practical reasons, for example, lenders want to lend so the CML economist will think that the solution to the problem (regardless of what the problem is) is more lending.

Where does wage inflation fit into all of this?

IMO it is a number that nobody cares about! The TUC care about it, but they are regarded in the collective unconscious as dinosaurs - and dinosaurs they are. We've travelled too far for too long in the direction of dismantling union power for the TUC to matter. The rights and wrongs of it are worth debating, but the facts of it are plain - the game has changed and workers' earnings cannot and will not be defended by unions.

The Labour Party might have been expected to care about it, but they 'fixed it' by presiding over the incapacitation of our economy with debt, so they are not seen as a credible source of solutions to the problem they exacerbated through their first attempt to fix it! The Conservatives have never campaigned on their ability to prevent the decline in real earnings and thus failing to prevent the decline doesn't seem to be a threat to their current plan, which appears to be selling themselves to the electorate on the appearance of austerity - hence suggesting that they aren't going to actively make things worse - whilst doing everything they can to effectively slow down the flow of economic time (low rates, preventing the bursting of asset price bubbles) in the hope that somehow things will sort themselves out in the meantime, (all that talk about "the economy is healing").

The great unwashed - well, they just don't now which way is up anymore, and who can blame them. They know that they are worse off, but they don't know why, they don't know who to blame and they don't have any real idea about how they want things to be different. And the 'signals' they do recieve are ambiguous - houses in the South East are furiously expensive but for price of a £30/month contract you can get a phone that is cleverer than you are and gives you telly and games...It turned out that the beef was horse, but the government is paying benefits to people in work and other benefits to retired people to help them with the massive interest only mortgage on their own home.

If I was to call it, I might suggest that incomes are the big part of the puzzle. Nobody wants to talk about incomes because incomes are clearly where it is all going wrong. How can I pay more for my house with my decreasing income and not make any provision that will provide me with an income once I stop working AND at some point stop working and have a house to live in that I own outright. The error of composition is fine for economists and the economy, but there is no such thing as an error of composition for the individual - if I can't both pay for my house and save for my retirement then I cannot retire and enjoy a modest income whilst living in a house that I own mortgage free. This is all still going somewhere really bad, really slowly.