Joe Blogs Posted September 11, 2015 Share Posted September 11, 2015 ....and specifically this boom will be in the midlands and the North. Okay so here's my theory relating to why there will be a new boom in 2020, mainly in those areas that have cheaper housing and have not moved in price over recent years (much of the Midlands, North West, Yorkshire and the North East) If the government manages to get the minimum wage up to £9 per hour for the over 25s by 2020, there will be a big jump in people's disposable income, which has been massively underestimated as to what affect it will have on the economy. This extra income will get pumped into the market specifically at the bottom end which will cause a new mini boom and have an upwards lift on all prices. Here's the maths: A couple earning the new minimum / living wage will be on gross £37440 (assuming 40 hour week) The tax free allowance will be £12500 x 2 = £25000 Take of a 30% in taxation on the rest = £8708 Net monthly income for a couple is now around £2800 Say allow £300 food, £250 car payment, £100 fuel, £500 rent, £250 bills, council tax £100, £600 misc, means £700 left over Over 12 - 18 months they could easily save 10-15k for a deposit and and be in a position to buy easily at £100k plus. In all of the above areas there are plenty of areas where you can still buy terraces, semis for 70-120k etc, as such these properties will start to look cheap in terms of monthly mortgage payments Banks will be throwing money at these people to borrow and I am quite sure borrow they will. All this will feed into a boom in prices in the areas I have mentioned. There must be millions of people on wages below £9 now and the market shows no sign of collapse in prices. Once they get £9 per hour I can only see prices going up. The Government / banks want everyone to buy to keep the Ponzi scheme going - the new minimum wage could well have a massive effect which people have not yet fully understood. They may well have to raise interest rates just to control prices. My advice if you are in apposition to buy in these areas now then I would seriously consider buying sooner rather than later. Once all this new money comes into the economy I can only see prices going one way. I am sure many people will disagree with the above and I could well be wrong, but just looking at the new level of disposable income that people will have means that millions more will be in a position to buy. Alternative / counter opinions welcome. Quote Link to comment Share on other sites More sharing options...
saabman Posted September 11, 2015 Share Posted September 11, 2015 ....and specifically this boom will be in the midlands and the North. Okay so here's my theory relating to why there will be a new boom in 2020, mainly in those areas that have cheaper housing and have not moved in price over recent years (much of the Midlands, North West, Yorkshire and the North East) If the government manages to get the minimum wage up to £9 per hour for the over 25s by 2020, there will be a big jump in people's disposable income, which has been massively underestimated as to what affect it will have on the economy. This extra income will get pumped into the market specifically at the bottom end which will cause a new mini boom and have an upwards lift on all prices. Here's the maths: A couple earning the new minimum / living wage will be on gross £37440 (assuming 40 hour week) The tax free allowance will be £12500 x 2 = £25000 Take of a 30% in taxation on the rest = £8708 Net monthly income for a couple is now around £2800 Say allow £300 food, £250 car payment, £100 fuel, £500 rent, £250 bills, council tax £100, £600 misc, means £700 left over Over 12 - 18 months they could easily save 10-15k for a deposit and and be in a position to buy easily at £100k plus. In all of the above areas there are plenty of areas where you can still buy terraces, semis for 70-120k etc, as such these properties will start to look cheap in terms of monthly mortgage payments Banks will be throwing money at these people to borrow and I am quite sure borrow they will. All this will feed into a boom in prices in the areas I have mentioned. There must be millions of people on wages below £9 now and the market shows no sign of collapse in prices. Once they get £9 per hour I can only see prices going up. The Government / banks want everyone to buy to keep the Ponzi scheme going - the new minimum wage could well have a massive effect which people have not yet fully understood. They may well have to raise interest rates just to control prices. My advice if you are in apposition to buy in these areas now then I would seriously consider buying sooner rather than later. Once all this new money comes into the economy I can only see prices going one way. I am sure many people will disagree with the above and I could well be wrong, but just looking at the new level of disposable income that people will have means that millions more will be in a position to buy. Alternative / counter opinions welcome. you assume no existing debt.....most people have it and some have alot of it.... Quote Link to comment Share on other sites More sharing options...
19 year mortgage 8itch Posted September 11, 2015 Share Posted September 11, 2015 Must be chucking out time at the pub. Quote Link to comment Share on other sites More sharing options...
GinAndPlatonic Posted September 12, 2015 Share Posted September 12, 2015 If the government manages to get the minimum wage up to £9 per hour for the over 25s by 2020, there will be a big jump in people's disposable income. So if someone is working fourty hours they will be earning £80 extra per week. That is presuming they were on £7 per hour in the first place....many are earning more at Asda etc already. After stoppages that would be maybe £65 per week extra. If they are on Tax credits, said tax credits will drop by almost the equivalent amount, so the big jump in disposable earnings does not add up. There must be millions of people on wages below £9 now. If statistics are to be believed there are around 1.2 million. Many if not most, of these are already stretched to their limit with the amount of debt they have. So no, I do not believe your argument stands up to scrutiny. Also with the amount of planned benefit cuts there will be very little disposable earnings . I would say there will be less than there is at the moment. Quote Link to comment Share on other sites More sharing options...
Joe Blogs Posted September 12, 2015 Author Share Posted September 12, 2015 If the government manages to get the minimum wage up to £9 per hour for the over 25s by 2020, there will be a big jump in people's disposable income. So if someone is working fourty hours they will be earning £80 extra per week. That is presuming they were on £7 per hour in the first place....many are earning more at Asda etc already. After stoppages that would be maybe £65 per week extra. If they are on Tax credits, said tax credits will drop by almost the equivalent amount, so the big jump in disposable earnings does not add up. There must be millions of people on wages below £9 now. If statistics are to be believed there are around 1.2 million. Many if not most, of these are already stretched to their limit with the amount of debt they have. So no, I do not believe your argument stands up to scrutiny. Also with the amount of planned benefit cuts there will be very little disposable earnings . I would say there will be less than there is at the moment. G and T, if all working couples are bringing home a net £2800 a month now with tax credits, then yes you are correct there will be no increase in disposable income. I for one do not believe this to be the case and I stand by my argument that real disposable income will rise significantly for the low paid, which is a good thing. I myself am on £7.90 an hour, so will benefit from the £9 per hour. I am not suggesting that £9 per hour is a great wage because it's not, but what I am saying is that with £2800 coming in each a month, the opportunity to buy will be open to many many more people than is the case at at present. Yes they may have to save for 2 years, but the buying a house in be cheaper than renting in many of these areas. We all know the government wants more people to buy - the raising of the minimum wage will enable more people to buy and will raise living standards for many people which is a good thing. As to what effects the minimum wage increase will have on rents I am not sure. I suspect that in the midlands and North rents will be static / fall as more people can afford to buy. In the south I expect rents may go up a little as landlords look to get some of this increase in their pockets. Quote Link to comment Share on other sites More sharing options...
SillyBilly Posted September 12, 2015 Share Posted September 12, 2015 (edited) G and T, if all working couples are bringing home a net £2800 a month now with tax credits, then yes you are correct there will be no increase in disposable income. I for one do not believe this to be the case and I stand by my argument that real disposable income will rise significantly for the low paid, which is a good thing. I myself am on £7.90 an hour, so will benefit from the £9 per hour. I am not suggesting that £9 per hour is a great wage because it's not, but what I am saying is that with £2800 coming in each a month, the opportunity to buy will be open to many many more people than is the case at at present. Yes they may have to save for 2 years, but the buying a house in be cheaper than renting in many of these areas. We all know the government wants more people to buy - the raising of the minimum wage will enable more people to buy and will raise living standards for many people which is a good thing. As to what effects the minimum wage increase will have on rents I am not sure. I suspect that in the midlands and North rents will be static / fall as more people can afford to buy. In the south I expect rents may go up a little as landlords look to get some of this increase in their pockets. You're assuming 80 hours a week of work for a couple. 60 would be closer to the average. I don't buy into your other figures either. £100 a month on fuel for a couple or a family? Probably on the lower side. I also don't think £600 misc (which I presume has to take into consideration non-typical expenses such as an MOT failure) is a lot between 2 or more people. I think you have put forward best case figures and the likelihood is a lot of people have debts, can't budget and have higher expenses than you suggest. Many people have kids and childcare is one of, if not their largest expense for which you haven't made much, if any consideration. Yes, if the whole demographic was 2 wage earners, working max hours (or lower hours and higher incomes) with no kids, cutting outgoings to the bone then the theory might be correct. The economy wouldn't do too well mind as less people buying all the tat on the high street. Edited September 12, 2015 by SillyBilly Quote Link to comment Share on other sites More sharing options...
Si1 Posted September 15, 2015 Share Posted September 15, 2015 The increased minimum wage is stated as to compensate for the withdrawal of working tax credits Epic fail Quote Link to comment Share on other sites More sharing options...
Kiwi Toast Posted September 16, 2015 Share Posted September 16, 2015 Which towns or areas did you have in mind anyway? I imagine much of the north and midlands are either already quite expensive (prices too high compared to earnings and unlikely people will take on mortgages on minimum wage) or places with few jobs*. I don't think either would boom even if disposable income went up slightly. * In fact is there anywhere in Britain where you can buy a house on a local wage, without requiring a very big deposit? Quote Link to comment Share on other sites More sharing options...
Joe Blogs Posted September 16, 2015 Author Share Posted September 16, 2015 Which towns or areas did you have in mind anyway? I imagine much of the north and midlands are either already quite expensive (prices too high compared to earnings and unlikely people will take on mortgages on minimum wage) or places with few jobs*. I don't think either would boom even if disposable income went up slightly. * In fact is there anywhere in Britain where you can buy a house on a local wage, without requiring a very big deposit? Kiwi Just done a quick search, there are over 200 houses for sale between 60-70k, within 1/2 mile of Rotherham. Assume a deposit of £7k (maybe be less with all the government htb scheme) and you are looking at a mortgage of no more than £300 per month to buy a property in this range. People are already buying these houses even into day's low wage economy, come 2020 when the minimum wage goes up to £9 per hour then you will have far more people chasing houses at the lower end of the market. Simple supply and demand - if more people, are able to buy and the supply does not increase then the price will go up. The government wants people to buy houses, as it locks them into the great Ponzi scheme, it is doing everything it can to get more people to buy. I see no house price crash coming at all in the midlands and the North. My advice is if you can afford the re payments now and have found a house you like, then buy instead of paying rent to someone else. Quote Link to comment Share on other sites More sharing options...
thombleached Posted September 18, 2015 Share Posted September 18, 2015 The increased minimum wage is stated as to compensate for the withdrawal of working tax credits Epic fail Ding. That's the only point that needs making here really. It's the whole point of bringing in the living wage, to stop the public subsidising lower wages. It's not for those people to have any increased net income. Quote Link to comment Share on other sites More sharing options...
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