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willing

Ahhhh! House Prices Are About Right?!

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First I've got flu (proper influenza, not a cold!) so I could be wrong but. . .

I've always based the 'There will be a crash' argument on the fact that HP's are way way too high for your average joe.

Then I came accross this, from the graph page of this site:

http://www.housepricecrash.co.uk/xls/AGWE%...d%20females.xls

Fair enough, the av. wage is 26K. Averages for manual and non manual are not given so I extrapolated them from previous ratios.

I then decided to look at a test case of an average single male looking for somewhere to live, both in 1997 and 2005. I decided he'd probably be looking for a flat based on lifestyle.

The results are really suprising.

Average wage for a Male in Non Manual work is £35.1K in 2005.

In 1997 it was 25.6K.

Applying the mortgage multiple of 3.5x to this gives:

1997 Mortgage value ~£90K

2005 Mortgage value ~£123K

One bed flats and maisonettes in our area are, guess what? Going for about 130K - on the face of it this seems a fair price and well within my 'average single male in non manual work', damn it!

Surely 35K cannot be right for an average male in non manual work? If you think about just how much non manual work now encompasses (estate agent, office junior, service industry etc.) surely this 35K figure must be way way off!!

So in our area of the SE house prices are fair for flats!!???? Surely not!? :(

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Guest Winners and Losers

First I've got flu (proper influenza, not a cold!) so I could be wrong but. . .

I've always based the 'There will be a crash' argument on the fact that HP's are way way too high for your average joe.

Then I came accross this, from the graph page of this site:

http://www.housepricecrash.co.uk/xls/AGWE%...d%20females.xls

Fair enough, the av. wage is 26K. Averages for manual and non manual are not given so I extrapolated them from previous ratios.

I then decided to look at a test case of an average single male looking for somewhere to live, both in 1997 and 2005. I decided he'd probably be looking for a flat based on lifestyle.

The results are really suprising.

Average wage for a Male in Non Manual work is £35.1K in 2005.

In 1997 it was 25.6K.

Applying the mortgage multiple of 3.5x to this gives:

1997 Mortgage value ~£90K

2005 Mortgage value ~£123K

One bed flats and maisonettes in our area are, guess what? Going for about 130K - on the face of it this seems a fair price and well within my 'average single male in non manual work', damn it!

Surely 35K cannot be right for an average male in non manual work? If you think about just how much non manual work now encompasses (estate agent, office junior, service industry etc.) surely this 35K figure must be way way off!!

So in our area of the SE house prices are fair for flats!!???? Surely not!? :(

I just received 20 applicants for a non manual work job paying £11,000. 20 applicants! From young and old alike. There are plenty of real people out their desperate just to get a job paying this much. 35k! Yeah, some are getting paid 50 and the rest are getting 15.

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Looking further at this:

Extrapolating the av. Female Non Manual worker gives an average income of 24.3K.

If (let's say) we have a professional couple, then the average professional couples income would be:

24.3 + 35.1 = £59.4K

Taking a more usual mortgage multiple of 3 x joint, this would give a mortgage power of:

£178K

About the average current house price!!! :o

35K is rubbish - more like 25K

Well someone debunk the figures then - sadly it's in black and white.

:) Wait a minute! I see the flaw in these calculations - damn flu! I'm using 1997 ratios of manual to non-manual. If more non-manual posts are in existance now then the ratio should moderate the figures a bit.

However, this is still a bit worrying!

(BTW the boards concatted my posts into one long one - I actually replied twice separately)

Edited by willing

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One flaw is that the average male encompases not just people looking for one bedroom flats but also fathers/husbands etc who need to support children. Therefore you should be looking at the price of the average house and not of the bottom rung.

Factoring in a deposit this suggests that the average person back in 1997 could afford to pay perhaps £105,000 for a home, which back then would probably have bought a reasonable house.

Nowadays the avearge person can pay perhaps £140,000 and gets a small flat in return in which to bring up his family. It just doesn't make sense, that is why prices must come down.

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More like £21K in my area as an average.

Many earn double that, and for every person earning double there needs to be a whole load more to bring the average down.

If I earnt £40K (I'm glad I don't, I'd never afford a house :) ) then there would need to be another 2 people earning only £11.5K to balance it out, or 3 people earning only £14.6K etc etc....

I think what is most applicable is how the distribution of earnings matches the distribution of property types/sizes etc.

If I earn more than double the local average wage yet could only just afford a reasonable average home (with reasonable deposit and 3.5 times income mortgage) then everyone else is truly stuffed.

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Well someone debunk the figures then - sadly it's in black and white.

I should get back to bed and drink your Lemsip if I were you.

Averages of this kind are not very useful.

Really what you need to look at is the median salary but as that would take a great deal of time most people opt for the illusory figure of mean averages.

For example.

5 people earn the following wages:

10000

15000

20000

75000

100000

The mean average salary is £44k

The median is £20k

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I should get back to bed and drink your Lemsip if I were you.

Averages of this kind are not very useful.

Really what you need to look at is the median salary but as that would take a great deal of time most people opt for the illusory figure of mean averages.

For example.

5 people earn the following wages:

10000

15000

20000

75000

100000

The mean average salary is £44k

The median is £20k

Yes I know what you are getting at but (and I could really be wrong on this):

Shouldn't we compare Average Earnings with Average House Prices?

or Median salaries with Medain House Prices?

NOT Average House Prices with Median Salaries - if you see what I mean!

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The BBC need people like you to dispell the myth of HPC.....

And you might get a better than 'average wage' too..... Looking at graphs and pointing out the roses is just their line of business......

But your flat in 1997, was the price more affordable in relation to the mortgage calculation ie. Less than £94000 ??......

Mortgages will always be affordable to the 'average Joe' quoted in earnings statistics... Otherwise how would they (the money owners) promote an unaffordable product ???

All the average joes i know are on £12000 / £23000 including lots of overtime... All dependents on the state of the job market that seems to be on the edge

Good luck to Mr and Mrs Big money on their massive mortgage for their two bed box of space up in the air somewhere in a converted city center carpark.....

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All the average joes i know are on £12000 / £23000 including lots of overtime... All dependents on the state of the job market that seems to be on the edge

Where are you, exactly? Albania? £12k sounds rather low.

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The BBC need people like you to dispell the myth of HPC.....

I beleive HPs are unaffordable, but I trained as an engineer and was brought up with science. Even those things that you find unpalitable from your own POV should be explored. It's the so-called (and never found) 'objective truth' that's important. Stop slagging people off just coz they don't always point out 'Palitable Truths' or you might just be labled an ignorant t0sser!

And you might get a better than 'average wage' too..... Looking at graphs and pointing out the roses is just their line of business......

Yep, I actually do earn quite a bit more than my 'calculated' av. male non-manual wage - but this is completely irrelevant to whether HPs will crash or not!?!!

Mortgages will always be affordable to the 'average Joe' quoted in earnings statistics... Otherwise how would they (the money owners) promote an unaffordable product ???

Thats massive paranoia! I have heard a lot of conspiracy theories - and some may be true. But fixing government salary figures back to 1997 to show HPs are affordable? Why the hell would they care? As far as the government line goes we are 'in a new beautiful paradigm' - haven't you heard? Wages are completely detached from earnings now -we can all afford what we want according to GB :lol:

Good luck to Mr and Mrs Big money on their massive mortgage for their two bed box of space up in the air somewhere in a converted city center carpark.....

I sense you may have some pent up anger. Perhaps you should seek medical help?

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This is just the old house prince to earnings topic which has been debated many times. The long term average is 3.4% and we are currently hovering at about 6% depending on which survey you subscribe to.

That says to me that prices aren't 'about right' they're at a peak.

Avg wage of £26,900 is nonsense. About as reliable as any other 'statistic'.

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First I've got flu (proper influenza, not a cold!) so I could be wrong but. . .

I've always based the 'There will be a crash' argument on the fact that HP's are way way too high for your average joe.

Then I came accross this, from the graph page of this site:

http://www.housepricecrash.co.uk/xls/AGWE%...d%20females.xls

Fair enough, the av. wage is 26K. Averages for manual and non manual are not given so I extrapolated them from previous ratios.

I then decided to look at a test case of an average single male looking for somewhere to live, both in 1997 and 2005. I decided he'd probably be looking for a flat based on lifestyle.

The results are really suprising.

Average wage for a Male in Non Manual work is £35.1K in 2005.

In 1997 it was 25.6K.

Applying the mortgage multiple of 3.5x to this gives:

1997 Mortgage value ~£90K

2005 Mortgage value ~£123K

One bed flats and maisonettes in our area are, guess what? Going for about 130K - on the face of it this seems a fair price and well within my 'average single male in non manual work', damn it!

Surely 35K cannot be right for an average male in non manual work? If you think about just how much non manual work now encompasses (estate agent, office junior, service industry etc.) surely this 35K figure must be way way off!!

So in our area of the SE house prices are fair for flats!!???? Surely not!? :(

If you live in an area where the average bloke not in a trade actually earns £35,000 and you can buy a flat for £130,000 then you don't live anywhere near me..

and to claim that wages have gone up by 50% since 1997???

bored

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If you live in an area where the average bloke not in a trade actually earns £35,000 and you can buy a flat for £130,000 then you don't live anywhere near me..

and to claim that wages have gone up by 50% since 1997???

bored

You are so missing the point!

I'm not claiming this - the figures on HPC.co.uk's graph page are!!!!!

Damn it, just read the post in future!

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Grrrr..

sorry didn't mean to offend..

Figures can be used to say anything..

Personally I think most manual jobs pay better then office based..

I agree it can't be right..

tghere also seems to be a perception that some monkey in a flash suit who works as a sales monkey is a better person then a mechanic..

a mechanic has oil on his clothes.. my experience of most suits is that they havent been cleaned in athree months..

Grubby buggers

Edited by apom

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Grrrr..

sorry didn't mean to offend..

Figures can be used to say anything..

Personally I think most manual jobs pay better then office based..

I agree it can't be right..

No offence taken ;)

What's just annoying sometimes with this site is that if you raise anything that doesn't tow the line, you get slated.

Now I'm a science bear. If we are going to solve this HP mess and see what's coming we need to use scientific principles. That means investigating even the things we don't want to hear.

I've yet to hear a reliable argument as to why Av. HPs should not be used with Av. Wages or (better still) affordability.

I agree Av. Wages are pretty useless if you're trying to figure out what the guy next to you in the pub earns. But so are av. HPs if you're trying to work out whether prices fell or rose in your street.

However, av. HPs compared to av. Wages aren't a bad first guess as far as affordability goes.

(Edit: A Science Bear with bad Dyslexia. . .dang!)

Edited by willing

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No offence taken ;)

What's just annoying sometimes with this site is that if you raise anything that doesn't tow the line, you get slated.

Now I'm a science bear. If we are going to solve this HP mess and see what's coming we need to use scientific principles. That means investigating even the things we don't want to hear.

I've yet to hear a reliable argument as to why Av. HPs should not be used with Av. Wages or (better still) affordability.

I agree Av. Wages are pretty useless if you're trying to figure out what the guy next to you in the pub earns. But so are av. HPs if you're trying to work out whether prices fell or rose in your street.

However, av. HPs compared to av. Wages aren't a bad first guess as far as affordability goes.

(Edit: A Science Bear with bad Dyslexia. . .dang!)

spot on, and they go to show two previously unseen house price crashes..

I have used the average salary to show the effects of wage push inflation and recessions.. that have followed house price inflation each time before

here is my affrodability thread..

http://www.housepricecrash.co.uk/forum/ind...showtopic=22153

its old.. but I think relevent..

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spot on, and they go to show two previously unseen house price crashes..

I have used the average salary to show the effects of wage push inflation and recessions.. that have followed house price inflation each time before

here is my affrodability thread..

http://www.housepricecrash.co.uk/forum/ind...showtopic=22153

its old.. but I think relevent..

The trouble is that when we look at averages we tend to ignore the inner trend average.

The inner trend here (I suspect) is a transference of manual to non-manual jobs. I guess that today compared to 15yrs ago we have far more non-manual workers than manual.

Yet the ratio of the averages (manual/nonmanual) don't appear to shift much from 1990-1997. This would tend to show an overall increase in average non-manual wage and hence resilience to increasing HPs.

Not exactly something I wanted to find in the figures!

Ps. Will read that link you gave in full - cheers

Edited by willing

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It's not about income multiples anymore!!

Joe public who have not bought a property are priced out of the market.

Those that bought some years are not priced out and are keeping the bubble going by remortgaging and buying other properties.

I blame it on the Londoners and the ripple effect. Did you see Relocation X 3 last night?? A typical example.

Income multiples do not matter anymore, they no longer count.

It's those who have already bought who hold the upper hand!!

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Okay... here's my take on it.

My Dad was on a pitiful wage (even by my standards) until the day he retired... yet my wage would have to double for me to be able to buy the house he bought when he was my age.

So what do folks like me do? Go f**k ourselfs, or remind you that there was a time when not just the average joe, but the significantly below-average joe, could actually afford bricks and mortar?

My wage is equivalent to the non-manual worker's average salary from 1989!

The 'national average salary' is a myth. Period.

Houses are overpriced. Period.

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Okay... here's my take on it.

My Dad was on a pitiful wage (even by my standards) until the day he retired... yet my wage would have to double for me to be able to buy the house he bought when he was my age.

So what do folks like me do? Go f**k ourselfs, or remind you that there was a time when not just the average joe, but the significantly below-average joe, could actually afford bricks and mortar?

My wage is equivalent to the non-manual worker's average salary from 1989!

The 'national average salary' is a myth. Period.

Houses are overpriced. Period.

HPI isn't personal, even if it sometimes feels like it is.

I'm just as p1ssed as you about it all. As a new graduate, I watched HPs inflate out of my reach for 3 years until finally my salary caught up. During that time I almost split from the wife over HP and my inability to buy. Now I consider myself to be a high-flyer (by luck and pushiness more than skill) - none of my mates are even close to what I earn. I can afford a pretty decent house, but it's be difficult to raise the deposit. So if I find things difficult it must be impossible for them, and if my relationship suffered, then what must it be like for them?

Whats more is I can afford a 3 bed semi now, and that's with a big wage for the area. if I had the wage I have now in the year I graduated I would have been able to afford a veritable detatched mansion! So I have to pay some lard-ass inDUHvidual for having the luck to buy a semi in 2001 for 90K so he can sell it to me now for 350K? And all the while GB is busy screwing me for 40% tax and top whack NI...

You think I'm not angry???!!

HPI is simply unfair.

But that doesn't mean that a crash will/won't happen.

Markets don't care about 'fair' - so if we are to win this one we are going to have to try to stay objective and keep our feelings out of the market analysis.

Edited by willing

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I can dispell this in 1 foul swoop. And we can ALL relate to this.

You go out with your mates to the city centre. You have £100 in your ass pocket. You wake up the following morning and you only have a £10 note and shit-loads of pound coins in your pocket. You count it all and it comes to £18.87!

Well you know that the DONNER cost you £3.50 and the cab £12 and there was no other expenditure. You then work out that you must have spent £54.63 on the beer.

At an average of £3.00 a pint (generous for Liverpool) that means that you had 18 1/2 pints!

Thats based on averages - but did you really have that many pints????

NOO!!! But the averages say you did!!

WEAK ARGUEMENT I KNOW - But I know that loads of people can relate to this :)

TB

EDITED: Sorry so used to putting K's on the end of prices (must spend too much time on this site!)

Edited by teddyboy

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  • 301 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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