Jump to content
House Price Crash Forum

House Prices vs Salaries  

393 members have voted

  1. 1. When will the average UK house price return to less than 4x the single mean full time wage?

    • 2018-2020
      22
    • 2021-2025
      77
    • 2026-2030
      31
    • 2031+
      28
    • They never will
      235


Recommended Posts

 

Something has to give when the young are saddled with a 50k education debt before they get their first job, and know they have no chance of buying a house without inheriting a deposit. 

If it doesn't correct radically in this crisis, then the young may as well stop trying until it does. Ie Go teetotal,  live at home and ride a bicycle. 

Student debt manifests itself with a ~10% reduction in students takehome until they are  ~55 - or the debt is paid, so til they are 55.

With MMR, that reduction in income will take ~30% off the mortgage they can borrow.

 

 

Link to post
Share on other sites
  • Replies 265
  • Created
  • Last Reply

Top Posters In This Topic

 

Do you have a reference for this please? Would like to know more.

MMR restricts lending to max of 4.5x income after debt n regular payments are removed - Bill's, utils, etc.

Assuming you earn more than 25k, student debt levies a 10% extra tax on income - after all the other taxes.

 

Link to post
Share on other sites
  • 5 months later...

 

 

On 31/12/2020 at 11:15, spyguy said:

Student debt manifests itself with a ~10% reduction in students takehome until they are  ~55 - or the debt is paid, so til they are 55.

With MMR, that reduction in income will take ~30% off the mortgage they can borrow.

 

 

Dude, try researching stuff before posting your made-up stats. You can write some good stuff, but undermine it with nonsense like this

Link to post
Share on other sites
4 minutes ago, PropertyMania said:

 

 

Dude, try researching stuff before posting your made-up stats. You can write some good stuff, but undermine it with nonsense like this

Ah but .... I might have got my numbers wrong but ....

You are just looking at student debt.

By going into HE people are putting off their entry into work by ~5 years.

Its not just student debt thatll be ramped up - other debt etc etc.

Then theres lost income to factor in.

If a degree is doing little or negative to your future earnings then the whole HE thang is v negative in terms of house prices.

 

 

 

Link to post
Share on other sites

Early estimates for May 2021 indicate that median monthly pay decreased to £1,962, an increase of 9.1% compared with the same period of the previous year. According to the ONS

So with average house price standing at £256,405 a quick bit of maths says house prices are at 130 months salary. Or 10.8 years of your gross salary [before tax] to buy 'the average house'.

 

Wages are up and there are up in real 'inflation adjusted terms' too. 

227369270_Figure3_MedianpaydecreasedsharplyinApril2020buthasreturnedtotheprevioustrendsinceAugust2020(1).png.1248d029d71e03c9136ec8f1940711ad.png

 

image.png

Edited by Data Dave
Link to post
Share on other sites
33 minutes ago, Data Dave said:

Early estimates for May 2021 indicate that median monthly pay decreased to £1,962, an increase of 9.1% compared with the same period of the previous year. According to the ONS

 

There are big problems with the ONS wage data at the moment, does anybody seriously believe that the average worker has had a 9.1% y-o-y payrise?

Link to post
Share on other sites
34 minutes ago, Dorkins said:

does anybody seriously believe that the average worker has had a 9.1% y-o-y payrise?

Well, I agree on the face of it. But it could be just identifying the V shaped 'covid dip' [as wages fell last year] then when compared to the same month a year later, so YoY they look to have increased, in percentage terms, by an astronomical figure. 

Probably adding to the 'distortion' is wages paid through furlough.  

Link to post
Share on other sites

Most expensive place in England & Wales probably wont surprise many its Kensington & Chelsea, where median house prices are 36.4 times median salaries!

However in relative terms, they are now 'cheaper' or more affordable I suppose I should say, than they were 2015!

Spend half your gross salary on your mortgage payments [likely impossible after tax] and youd 'have a house of your own' in 'just' 72.8 years!! [ex interest!]

 

image.thumb.png.9e159d260c27c4c83b9b0a05a74c56ca.png

Source: ONS

Link to post
Share on other sites
30 minutes ago, Data Dave said:

Most expensive place in England & Wales probably wont surprise many its Kensington & Chelsea, where median house prices are 36.4 times median salaries!

However in relative terms, they are now 'cheaper' or more affordable I suppose I should say, than they were 2015!

Spend half your gross salary on your mortgage payments [likely impossible after tax] and youd 'have a house of your own' in 'just' 72.8 years!! [ex interest!]

 

image.thumb.png.9e159d260c27c4c83b9b0a05a74c56ca.png

Source: ONS

The good thing about working in Kensington and Chelsea is that you can commute from somewhere cheaper - not so easy in part of Cornwall I guess.

Link to post
Share on other sites
2 minutes ago, iamnumerate said:

The good thing about working in Kensington and Chelsea is that you can commute from somewhere cheaper - not so easy in part of Cornwall I guess.

Very true, commuting and transport links I suppose must a huge part.

So whats the answer? Suppose its as much remote work as possible...?

If I were younger and richer maybe i'd have a punt on Bham. With Birmingham circa 5x [house prices to salary] and the arrival of HS2 putting commuting times from Bham to London at under 50 mins, its actually placing Bham into the commuter belt! Staggering really. 

Link to post
Share on other sites
38 minutes ago, Data Dave said:

Very true, commuting and transport links I suppose must a huge part.

So whats the answer? Suppose its as much remote work as possible...?

If I were younger and richer maybe i'd have a punt on Bham. With Birmingham circa 5x [house prices to salary] and the arrival of HS2 putting commuting times from Bham to London at under 50 mins, its actually placing Bham into the commuter belt! Staggering really. 

HS2 might take some time  - even for young people.  

Remote work will presumably make prices higher in remote places.

I would say that the answer would not to have done all the stupid things in the past like HTB, knocking down houses in Liverpool and changes to the benefit system plus building more homes.

Link to post
Share on other sites
On 15/06/2021 at 13:55, Dorkins said:

There are big problems with the ONS wage data at the moment, does anybody seriously believe that the average worker has had a 9.1% y-o-y payrise?

Ending of furlough for a lot of people probably.

You can see on the plot it has returned to pre-covid trend, what we need to know is what is the increase since before furlough.

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...




×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.