Rachel Reeves: People On £60K Income 'are Not Rich'

[steve99]

The way to be wealthy is to realise how little you need, and to stop acquiring when you reach that point.

Except its far more difficult to get off the roundabout, for eg, they will still keep hitting you with taxes, massive council tax in the Uk, increasing VAT, increased services costs not linked to the so-called inflation figures and any savings you have will depreciate quicker than todays new cars, in 10 years time your income need will have increased substantialy and you savings will have diminished, Hence they say everyone will have to work longer whereas if there had been some equity in society rather than government pandering to the mega rich then we would all be retiring at 50, all be able to buy a house on one wage and our savings would hold their value for ever.

I like your phillosiphy though it matches my ideals but reality is a different matter.

[steve99]

Agreed, and the furious protection of fields in preference to housebuilding has the side benefit of ensuring fuel use is higher than it would be otherwise.

Govt is trying, with a measure of success, to get a population which is on a knife-edge of perpetual debt service. Halifax economist talking about buying a house as a no-brainer is extraordinary. Encouraging people to gleefully give up their most prized asset-flexibility, often voluntarily, and then just keep milking them dry if they find themselves commuting a long way if the cost/ease of moving is prohibitive. Half of them barely understand why they are not making much despite a gross wage packet that would have done nicely a few short years ago.

'' to get a population which is on a knife-edge of perpetual debt service'' Hole in one with that statement. The banks own the government and the governemnt does their bidding,, the govt is not governing for the people only the banks and some other big business entities. Probably some dark matter in there also who we may never have heard of, ie who is controling the banks in the background? who really wants us to be debt slaves? Anyone clever enough to follow the money trail may be able to work that out but I suspect the old 'upper' class, the real owners of the UK.

[iamnumerate]

From your language, you may have a joint income of £60k. That works out at roughly £4000 a year more than a single earner on £60,000, or roughly 10% of take home pay. It makes a big difference.

A single income of £60,000 supporting a family, particularly in the South East, is nowhere near "rich". It will afford you a lower middle class lifestyle, but no luxuries. Toyota not Mercedes. Acer not iPad.

I agree with you, but if you had bought your house in the mid 90's or are in a council house, and you are earning 60k a year you are doing very well.

It all depends on your outgoings which depends on the lottery of when you bought or if you have a council house.

Edited September 24, 2013 by iamnumerate

[macca]

60k per yr, of course you are not rich compared to those on astronomical incomes of today BUT the reason for that is that you are living way beyond your means.

Earning that type of income and spending wisely would not take long to become rich, the opportunity is there to become richer far more easily than someone on the average income who's spending the bulk of their money on basic expenses.

Of course this is all relative, someone on 10k per yr would say that someone on 60k is rich compared to them and that would mean that the low earner is relatively poor.

I don't buy into this crap about people in the UK don't understand the word poor compared to those in the 3rd world. What has that got to do with anything? Many people in this country were in a similar state little over 100 yrs ago but because of the sacrifice, bravery, hard work, education, innovation, investment and taxation of generations before us we have reaped a better standard of living and why shouldn't we?

My taxes are going towards helping those poorer countries but if their leaders don't have the balls to spread the wealth fairly then there is nothing I can do about it and I'm not prepared to feel guilty that I live in a country with higher regard for infrastructure and wellbeing. I pay for this heavily and so did my ancestors.

[iamnumerate]

Of course this is all relative, someone on 10k per yr would say that someone on 60k is rich compared to them and that would mean that the low earner is relatively poor.

After tax, tax credits, transport costs etc the difference might be a lot less in some cases than you would think. Particularly if the person on £10k lives

in a council house and the one on £60 k rents privately.

[macca]

After tax, tax credits, transport costs etc the difference might be a lot less in some cases than you would think. Particularly if the person on £10k lives

in a council house and the one on £60 k rents privately.

I know people earning more than 60k living in council housing.......nice life.

[Starla]

After tax, tax credits, transport costs etc the difference might be a lot less in some cases than you would think. Particularly if the person on £10k lives

in a council house and the one on £60 k rents privately.

...and if you live in West London/Greater London burbs and need to commute into London for your 60k job and house a family, then at borrowing of FOUR times salary you can get this in a rough high crime rate area http://www.rightmove.co.uk/property-for-sale/property-42029285.html . If you want to live in a decent area you could always fit everyone in a one bed flat http://www.rightmove.co.uk/property-for-sale/property-43217900.html

The families I know in council housing have a much better standard of living than the ones attempting to rent or buy privately on higher incomes.

[interestrateripoff]

I wouldn't say anyone on £60k in London would count as 'rich', but an older couple (50s) without kids would be quite comfortable on that amount if they bought their house years ago.

It is high house prices that determine whether people are rich or poor these days, not income. If someone who now earns £60k bought a £100k semi in 1980 they will be a lot better off than the person earning twice as much who bought the same semi last year for £800k.

That is why the people living in such houses long term have been solid earners like cab drivers and plumbers and the people moving in to them now are bankers.

Help to Buy will 'fix' that little problem. There are flats available in the poorer parts of most boroughs for £150k and if only a 5% deposit is required that will be £7.5k.

I'd agree although I don't think you need to go as far back as the 80's, although those people that bought then have done very well. I'm in a house that we certainly couldn't afford to buy now on our combined wages, I think the turning point was between 97-00 before the insanity really kicked off.

It's nuts that having a roof over your head is down to luck when you bought.

[Starla]

It's nuts that having a roof over your head is down to luck when you bought.

And/or how rich your parents are. That's pretty much it as far as I can see.

[interestrateripoff]

And/or how rich your parents are. That's pretty much it as far as I can see.

Yep that's the other consideration for those priced out. If you have rich parents it probably doesn't matter too much.

[iamnumerate]

I bought my first flat in 2001 - it had gone up £36K 50% since 98 - you need very rich parents for that not to matter much.

Yep that's the other consideration for those priced out. If you have rich parents it probably doesn't matter too much.

I bought my first flat in 2001 - it had gone up £36K 50% since 98 - you need very rich parents for that not to matter much.

Or you could do what a girl I knew did - become a pro single mum and live in a nice house!

Edited September 26, 2013 by iamnumerate

[worried1]

I'd agree although I don't think you need to go as far back as the 80's, although those people that bought then have done very well. I'm in a house that we certainly couldn't afford to buy now on our combined wages, I think the turning point was between 97-00 before the insanity really kicked off.

It's nuts that having a roof over your head is down to luck when you bought.

There are definitely three different levels. The 80s (and again after the crash in 1990) were very very cheap times to buy a houe compared to now. Price has gone up a lot by 2000, but still clearly a lot easier than now.

In my area, there is definitely a fourth level between 2011 and 2013. Hosues that were changing hands for £450k at the start of that period are now up at £650k, so that is a 40%+ increase in 2 years on top of the already ludicrous prices. It makes me wish I'd bought a couple back then, but I'd never have predicted that at the time!

[Venger]

In my area, there is definitely a fourth level between 2011 and 2013. Hosues that were changing hands for £450k at the start of that period are now up at £650k, so that is a 40%+ increase in 2 years on top of the already ludicrous prices. It makes me wish I'd bought a couple back then, but I'd never have predicted that at the time!

Maybe some people did buy a couple. 'It's not earning anything in the bank' is what the divs say. What's the volume of housing transactions where such £450K now changing hands at £650K? It can fall back even harder and just as rapidly. Hopefully it will and wipe out scum speculators who buy thinking they can sell easily. Or just those who just overpaid along the way during those 2 years.

£60K is a huge income in this world. More so for those on it and in council-houses, or who bought years ago, but still for non-owners as well, who should be angry about policies to keep prices high.

[worried1]

Maybe some people did buy a couple. 'It's not earning anything in the bank' is what the divs say. What's the volume of housing transactions where such £450K now changing hands at £650K? It can fall back even harder and just as rapidly. Hopefully it will and wipe out scum speculators who buy thinking they can sell easily. Or just those who just overpaid along the way during those 2 years.

The transaction volumes and supply are very low and that is what is driving the prices so high. We are talking about 10 or so roads here and one house comes up every 2-3 weeks and is sold at whatever ridiculous price the vendor wants.It is much more sticky outside of those roads, but we are only talking about zone 6 outer London, so I'd expect most moderately desirable areas to have similar areas where prices are going mad.

I get the impression a few people who were planning to move anyway are cashing in because they have found their house has gone up a lot in value compared to their next move somewhere else. Apart from them, there is no real incentive for anyone to sell. If the supply went up, I'd expect the froth to come off these prices very quickly.

£60K is a huge income in this world. More so for those on it and in council-houses, or who bought years ago, but still for non-owners as well, who should be angry about policies to keep prices high.

Absolutely. I'd be interested to see the income levels of the people who are buying the type of houses I am talking about. Of course, there will be a few very high salaries, but I imagine most of them are being bought with a five figure salary and a massive mortgage.

[Venger]

The transaction volumes and supply are very low and that is what is driving the prices so high. We are talking about 10 or so roads here and one house comes up every 2-3 weeks and is sold at whatever ridiculous price the vendor wants.It is much more sticky outside of those roads, but we are only talking about zone 6 outer London, so I'd expect most moderately desirable areas to have similar areas where prices are going mad.

I get the impression a few people who were planning to move anyway are cashing in because they have found their house has gone up a lot in value compared to their next move somewhere else. Apart from them, there is no real incentive for anyone to sell. If the supply went up, I'd expect the froth to come off these prices very quickly.

Absolutely. I'd be interested to see the income levels of the people who are buying the type of houses I am talking about. Of course, there will be a few very high salaries, but I imagine most of them are being bought with a five figure salary and a massive mortgage.

I've seen almost exactly the same 2010-2013 price rises in nearly all of my Rightmove search areas in South Manchester - edge of Cheshire. So I do believe you, and yes it's the same here as you suggest. Low volumes.

Such price rises should bring out more sellers. In the regional forums the other day I was wondering how so many owners can resist cashing in, even if they 'love their homes'. They could sell for fortunes and huge profits from what they bought for just in past 10 years, and downsize or rent. Why are they waiting? I don't want to hear about oldies complaining about heating/energy costs for runing huge family homes, with loads of empty bedrooms. Some are cashing in, but not enough of them. And we need them to cash in with buyers paying lower prices.

Not sure who these people are buying houses at these higher prices (confirmed on sold-house-price websites), forcing all other houses in an area to rise similar houses by the same amount in value. Very few £100K jobs around in Manchester though, although house prices would suggest huge household incomes, or a lot of equity to put in from previous sale sold for high price. Some landlords buying at lower end (£200K-£350K) at big premiums too. Overpaying whenever a FTB house comes on market and it looks like it has any margin of value against the 25% prices have already risen since 2008.

Such big price jumps in value should bring out more supply; that's a generally accepted theory but not really happening yet. Perhaps too many holding on for even more HPI mega-jumps. Have to wait for some sort of shock, and more sellers to bring inventory to market, some owners accepting lower prices, causing a cascade in prices, from the incredible heights such houses have been bid up to.

[worried1]

I've seen almost exactly the same 2010-2013 price rises in nearly all of my Rightmove search areas in South Manchester - edge of Cheshire. So I do believe you, and yes it's the same here as you suggest. Low volumes.

Such price rises should bring out more sellers. In the regional forums the other day I was wondering how so many owners can resist cashing in, even if they 'love their homes'. They could sell for fortunes and huge profits from what they bought for just in past 10 years, and downsize or rent. Why are they waiting? I don't want to hear about oldies complaining about heating/energy costs for runing huge family homes, with loads of empty bedrooms. Some are cashing in, but not enough of them. And we need them to cash in with buyers paying lower prices.

Interesting that you are seeing similar, but I guess it is a similar type of area. There are some differences. There are quite a lot of £100k+ jobs (not in the direct area but in central London) and the sellers have even less reason to cash in because downsizing is not really an option. This 'hot' area of the market around £650-750k is made up of c.1,000-1,200 sqft terraced houses and small semis, so not too much scope to downsize.

There seem to be two types of people who are cashing in - those who no longer need the quick commute so can move to an area with a much wrose train line, or those that want to stay in the area but are prepared to move outside of the sought after part where prices have gone up maybe 15-20% in the past two years rather than 40%.

Like you, I am not seeing that many people in those categorie actually selling.

Not sure who these people are buying houses at these higher prices (confirmed on sold-house-price websites), forcing all other houses in an area to rise similar houses by the same amount in value. Very few £100K jobs around in Manchester though, although house prices would suggest huge household incomes, or a lot of equity to put in from previous sale sold for high price. Some landlords buying at lower end (£200K-£350K) at big premiums too. Overpaying whenever a FTB house comes on market and it looks like it has any margin of value against the 25% prices have already risen since 2008.

Such big price jumps in value should bring out more supply; that's a generally accepted theory but not really happening yet. Perhaps too many holding on for even more HPI mega-jumps. Have to wait for some sort of shock, and more sellers to bring inventory to market, some owners accepting lower prices, causing a cascade in prices, from the incredible heights such houses have been bid up to.

These prices should bring out more supply, but people have got to have somehwere to move to. As I say, I think people that were thinking of moving anyway might have been cajoled into doing so a little more quickly by these prices but it has caused problems for the rest. Either:

1. They don't want to move out of the area so the next 'rung' has moved even further away. Those 40% rises have only happened in the sub-£750k market around here, but the houses that were £1m in 2011 have still gone up to about £1.2m now so the gap in money terms has still increased.

2. The bull run has been so sustained on property that people just don't want to sell as they believe it will go up even more. The 2007/8 'crash' was nowhere near deep enough to dent this opinion and all of the rumblings about extending help to buy etc must be increasing people's confidence that they will continue to earn more from sitting at home than they will going to work. If I owned one of those houses and had made £100k tax free each year for the past 2 years, it wouldn't really matter how much I was earning from my job!