krosfyah Posted May 4, 2006 Share Posted May 4, 2006 What i see so much of on here is "Prices need to come back down to 3.5 times single income salary". Yet they ARE at 3.5 times the salary of people i know. I am on an average London wage of £30k or thereabouts. However, i know people my age (30) and slightly younger who are earning £70k+ in IT, financial services, sales and as lawyers. I also know people earning less. However, the problem is, the wage spectrum is so wide, that it's impossible to say "houses need to be affordable at 3.5 times salary" - i don't understand why people are doing this. Those friends i know who are on those wages can readily afford a place - a 1 or 2 bed flat in not such a bad area. I on the other hand would be able to get something at a push with my and my wifes combined salary - yet with me on the cusp of a London wage and her below the average London wage, even on 2.5 times our combined wage, we could afford something too. Maybe not a house, but then moving straight into a house was never normal in London anyway. Everyone i know of my generation has started out in a flat and then moved up. This is the problem - people are basing alot of their thoughts it seems on the fact that even couples are taking out 5 or 6 times multiples of joint income, or average people are taking out 8 or 10 times multiples. This is just not the case. A lot of people seem to forget that a lot of (young) people are actually making a lot of money - and not just in London either. I have friends up and down the country on wages way better than mine and i think this is why we have seen the gap closing between the north and south in terms of prices. What do you guys think? Quote Link to comment Share on other sites More sharing options...
bubbleturbo Posted May 4, 2006 Share Posted May 4, 2006 What i see so much of on here is "Prices need to come back down to 3.5 times single income salary". Yet they ARE at 3.5 times the salary of people i know. I am on an average London wage of £30k or thereabouts. However, i know people my age (30) and slightly younger who are earning £70k+ in IT, financial services, sales and as lawyers. I also know people earning less. However, the problem is, the wage spectrum is so wide, that it's impossible to say "houses need to be affordable at 3.5 times salary" - i don't understand why people are doing this. Those friends i know who are on those wages can readily afford a place - a 1 or 2 bed flat in not such a bad area. I on the other hand would be able to get something at a push with my and my wifes combined salary - yet with me on the cusp of a London wage and her below the average London wage, even on 2.5 times our combined wage, we could afford something too. Maybe not a house, but then moving straight into a house was never normal in London anyway. Everyone i know of my generation has started out in a flat and then moved up. This is the problem - people are basing alot of their thoughts it seems on the fact that even couples are taking out 5 or 6 times multiples of joint income, or average people are taking out 8 or 10 times multiples. This is just not the case. A lot of people seem to forget that a lot of (young) people are actually making a lot of money - and not just in London either. I have friends up and down the country on wages way better than mine and i think this is why we have seen the gap closing between the north and south in terms of prices. What do you guys think? Do a search, this has been discussed many times. Not everyone is earning 70K per year, these examples are massively in the minority. Quote Link to comment Share on other sites More sharing options...
cupidstunt Posted May 4, 2006 Share Posted May 4, 2006 I am on an average London wage of £30k or thereabouts. What do you guys think? I think you're on the average London wage and can't afford to buy. Quote Link to comment Share on other sites More sharing options...
FreeFall Posted May 4, 2006 Share Posted May 4, 2006 I think the 3.5 times salary argument for an average house represents the fact that a couple in their peak earning years won't necessarily be happy living / starting a family in a 1 bedroom flat. You're right that there's lots of examples where people earn more than 30k a year, but these are massively outweighed by the cases where people earn significantly less than that. Quote Link to comment Share on other sites More sharing options...
OzzMosiz Posted May 4, 2006 Share Posted May 4, 2006 Families in Cornwall and Devon earn around 30K for both (15K each). You find them an average house for 75K. GOOD LUCK!!!! Quote Link to comment Share on other sites More sharing options...
LivingTheDream-JustLikeLeedsUtd Posted May 4, 2006 Share Posted May 4, 2006 I think maybe if you spent a day or so talking to people in the pub around the corner from where you live, you know, the one you're afraid to go into, you'd realise that your £70k friends in London are actually a minority rather than the norm. Young Goat had a link to a website that showed the distribution of earnings in this country. It showed that the "average" wage is skewed upwards by the very highest earners, and actually the majority of people in this country aren't on anywhere near the "average". Quote Link to comment Share on other sites More sharing options...
Disillusioned ftb Posted May 4, 2006 Share Posted May 4, 2006 What i see so much of on here is "Prices need to come back down to 3.5 times single income salary". What do you guys think? I see it this way, You seem to be earning above the average wage, but my guess is that if you wanted to buy an "above average house" you would need more than 3.5x your salary To me, this seems unfair - simple as that If you enjoy living in a "Storage space for the working class" aka "A Flat" then good luck to you I'd rather rent a house thanks, as i get a lot more for my working class £note Quote Link to comment Share on other sites More sharing options...
pyewackitt Posted May 4, 2006 Share Posted May 4, 2006 What i see so much of on here is "Prices need to come back down to 3.5 times single income salary". Yet they ARE at 3.5 times the salary of people i know. I am on an average London wage of £30k or thereabouts. However, i know people my age (30) and slightly younger who are earning £70k+ in IT, financial services, sales and as lawyers. I also know people earning less. However, the problem is, the wage spectrum is so wide, that it's impossible to say "houses need to be affordable at 3.5 times salary" - i don't understand why people are doing this. Those friends i know who are on those wages can readily afford a place - a 1 or 2 bed flat in not such a bad area. I on the other hand would be able to get something at a push with my and my wifes combined salary - yet with me on the cusp of a London wage and her below the average London wage, even on 2.5 times our combined wage, we could afford something too. Maybe not a house, but then moving straight into a house was never normal in London anyway. Everyone i know of my generation has started out in a flat and then moved up. This is the problem - people are basing alot of their thoughts it seems on the fact that even couples are taking out 5 or 6 times multiples of joint income, or average people are taking out 8 or 10 times multiples. This is just not the case. A lot of people seem to forget that a lot of (young) people are actually making a lot of money - and not just in London either. I have friends up and down the country on wages way better than mine and i think this is why we have seen the gap closing between the north and south in terms of prices. What do you guys think? Look at the figures... about £42K or more puts you in the top 10% of UK earners. about £90K or more puts you in the top 1% of UK earners. (Based on ODPM figures) The average London house price is now about £298K So the wages needed for an average house: £298/3.5 = £82K (assuming no deposit) I, like you, have many friends who can comfortably buy a flat. And like your friends they are in the top 5-10% of all UK income earners but they can't afford anything more than a two bed flat in an ok area. In fact my friends on lower incomes (nurses etc.) but with housing support are far better off as they get preferential offers from housing associations etc. I have some friends who have tried to keep up with others and either borrow vast sums from parents (50K+) or have taken out IO mortgages on obscene morgage multiples (in one case 6x and another 9x). You're right in saying that most people had to start off with a flat in london before moving onto houses - but that was never true for high income professionals on 60-70K or more... but it is now. Things are broken... this will become apparent if IR's or unemployment rise. - Pye Quote Link to comment Share on other sites More sharing options...
Nem Posted May 4, 2006 Share Posted May 4, 2006 I'm currently earn just over 30k (twice the average earnings for the area) and I couldn't afford to buy the house I bought 6 years ago without a 20k deposit. The market is screwed, nothing more nothing less. Reality will bite hard in the coming years, it will be tough for hundreds of thousands of new homebuyers. Quote Link to comment Share on other sites More sharing options...
Zzzzzzzzzzzzzzzzzzzzzzzzzz Posted May 4, 2006 Share Posted May 4, 2006 Check out the median! Quote Link to comment Share on other sites More sharing options...
Goat Posted May 4, 2006 Share Posted May 4, 2006 (edited) There's a topic I started a couple of weeks ago about household income distribution. What was startling was that although there are people who earn £70,000+ they represent a very small proportion of the population. Does anybody have any other links for income distribution stats? Edit: Have you got a link Pye? Edited May 4, 2006 by Young Goat Quote Link to comment Share on other sites More sharing options...
geneer Posted May 4, 2006 Share Posted May 4, 2006 If I earned £180K the average flat would be 1 times my salary. But if I earned £180K its unlikely that I will be buying a 2 bedroom ex-council flat. Pointless analysis im afraid. Quote Link to comment Share on other sites More sharing options...
godsakes Posted May 4, 2006 Share Posted May 4, 2006 average house for the average wage - I think some people do have their expectations too high for their first house, but to put it in perspective... I earn over £70k and i can only afford a semi in an average area - perhaps I’m being greedy but shouldn't i expect more for that kind of earnings? it wasn't that long ago you could buy a substantial detached for similar money. Also, don't forget that while someone may have double your salary they don't have double the take home pay there is that pesky 40% tax bracket. Quote Link to comment Share on other sites More sharing options...
Guest Bart of Darkness Posted May 4, 2006 Share Posted May 4, 2006 average house for the average wage - I think some people do have their expectations too high for their first house Note house, not flat. Many people would be over the moon to be able to afford a semi in an average area (as opposed to an ex-LA property in a somewhat seedy area). Quote Link to comment Share on other sites More sharing options...
tonification Posted May 4, 2006 Share Posted May 4, 2006 Huge deposits from inherited money are distorting these income multiples so much as to make them meaningless. Quote Link to comment Share on other sites More sharing options...
godsakes Posted May 4, 2006 Share Posted May 4, 2006 Note house, not flat. Many people would be over the moon to be able to afford a semi in an average area (as opposed to an ex-LA property in a somewhat seedy area). Yes and you should expect a better area for your money if you earn average wages - which just illustrates how overpriced the market is. Quote Link to comment Share on other sites More sharing options...
jonewer Posted May 4, 2006 Share Posted May 4, 2006 Heh. If I earn £10000000000000000000000000000000000000000 a year then I'm sure average house prices are nothing to be alarmed about. You need to compare mean average house prices to mean average earnings. To get a better picture, compare median wages to median earnings. The ratios are pretty well similar. Compare apples with other apples not apples with orangutangs! Everything is massively overpriced. Quote Link to comment Share on other sites More sharing options...
Jason Posted May 4, 2006 Share Posted May 4, 2006 It is a little pointless comparison. In the company I work for they're are about 10 people 25 and below (my age). Out of those I earn the most, and could just afford a 2 bed flat with my deposit. The point is all these others have no chance in hell of affording a home at today's prices - it's just a pipe dream for them unfortunately. Which ever way you look at it house prices are too high, even at today's low interest rates. Quote Link to comment Share on other sites More sharing options...
underpressuretobuy Posted May 4, 2006 Share Posted May 4, 2006 Huge deposits from inherited money are distorting these income multiples so much as to make them meaningless. I am sorry, I don't understand your point. You are talking as though no one ever inherited money before or that no one ever thought of using inheritance as a deposit before. I just don't see that the use of inheritance to enable the purchase of a property is anything new. Possibly the only thing that is new is that inherited money is used as a way of getting on to the first rung of the property ladder now rather than as an aid to get onto the second or third rung of the ladder as it used to be. Quote Link to comment Share on other sites More sharing options...
tahoma Posted May 4, 2006 Share Posted May 4, 2006 I bought my house in 98, I was earning 20K at the time. It cost 60K, and I got a 2% off variable rate deal for the first two years. Even so, those two years were the toughest of my life financially. God help buyers coming into this madness. Quote Link to comment Share on other sites More sharing options...
krosfyah Posted May 4, 2006 Author Share Posted May 4, 2006 I think maybe if you spent a day or so talking to people in the pub around the corner from where you live, you know, the one you're afraid to go into, you'd realise that your £70k friends in London are actually a minority rather than the norm. Young Goat had a link to a website that showed the distribution of earnings in this country. It showed that the "average" wage is skewed upwards by the very highest earners, and actually the majority of people in this country aren't on anywhere near the "average". What the f*** are you on about, "the pub i'm afraid to go into"? I know plenty of people, on plenty more money than me, who are doing all sorts of things, out there hustling and doing what it takes to make their bread. They include boxing promoters, dj's, strippers and those involved in music promotion. Don't talk to me about pubs i'm afriad to go into, i know people running things down here, that have no education and are making serious amounts of money, and if you think a link to some website showing me how wages are skewed will tell me anything, you are sorely mistaken. If you think it's ONLY bankers and lawyers on big salaries, forget it. This isn't a battle of the classes, it's a battle between those on different earning levels. Look at the figures... about £42K or more puts you in the top 10% of UK earners. about £90K or more puts you in the top 1% of UK earners. (Based on ODPM figures) The average London house price is now about £298K So the wages needed for an average house: £298/3.5 = £82K (assuming no deposit) I, like you, have many friends who can comfortably buy a flat. And like your friends they are in the top 5-10% of all UK income earners but they can't afford anything more than a two bed flat in an ok area. In fact my friends on lower incomes (nurses etc.) but with housing support are far better off as they get preferential offers from housing associations etc. I have some friends who have tried to keep up with others and either borrow vast sums from parents (50K+) or have taken out IO mortgages on obscene morgage multiples (in one case 6x and another 9x). You're right in saying that most people had to start off with a flat in london before moving onto houses - but that was never true for high income professionals on 60-70K or more... but it is now. Things are broken... this will become apparent if IR's or unemployment rise. - Pye Good points. And backed up with facts and figs. And i agree on the "can ony afford a 2 bed in a nice area" thing. In fact you're right, some of even the top earners wouldn't be able to get even a 2 bed flat in a nice area. Quote Link to comment Share on other sites More sharing options...
Red Baron Posted May 4, 2006 Share Posted May 4, 2006 What i see so much of on here is "Prices need to come back down to 3.5 times single income salary". Yet they ARE at 3.5 times the salary of people i know. I am on an average London wage of £30k or thereabouts. However, i know people my age (30) and slightly younger who are earning £70k+ in IT, financial services, sales and as lawyers. I also know people earning less. However, the problem is, the wage spectrum is so wide, that it's impossible to say "houses need to be affordable at 3.5 times salary" - i don't understand why people are doing this. Those friends i know who are on those wages can readily afford a place - a 1 or 2 bed flat in not such a bad area. I on the other hand would be able to get something at a push with my and my wifes combined salary - yet with me on the cusp of a London wage and her below the average London wage, even on 2.5 times our combined wage, we could afford something too. Maybe not a house, but then moving straight into a house was never normal in London anyway. Everyone i know of my generation has started out in a flat and then moved up. This is the problem - people are basing alot of their thoughts it seems on the fact that even couples are taking out 5 or 6 times multiples of joint income, or average people are taking out 8 or 10 times multiples. This is just not the case. A lot of people seem to forget that a lot of (young) people are actually making a lot of money - and not just in London either. I have friends up and down the country on wages way better than mine and i think this is why we have seen the gap closing between the north and south in terms of prices. What do you guys think? Yet another missive to justify taking two incomes into account to support the doubling of house prices in a few short years. If this argument held any water everything else would have doubled in price over the same period; the price of motor cars, white goods, or even the weekly shop at Sainsburys. It hasn't happened of course and it shows how deeply flawed our thinking has become to justify the truly daft prices now obtained for dreadful housing. As I write this I am looking across the road at a 'roof space' (i.e. loft space) in a medium sized house that has been converted into a miserable flat. It sold for £120K within 24 hours; a compelling illustration of how detached from reality this country has become in its obsession with property 'at any price'. Quote Link to comment Share on other sites More sharing options...
BillyShears Posted May 4, 2006 Share Posted May 4, 2006 Huge deposits from inherited money are distorting these income multiples so much as to make them meaningless. Got any figures to back that up? Billy Shears Quote Link to comment Share on other sites More sharing options...
spline Posted May 4, 2006 Share Posted May 4, 2006 Does anybody have any other links for income distribution stats? This post has the graphs of the income distribution (2003 data, but easily scaleable): Link: http://www.housepricecrash.co.uk/forum/ind...ndpost&p=189067 Quote Link to comment Share on other sites More sharing options...
mightytharg Posted May 4, 2006 Share Posted May 4, 2006 If I earned £180K the average flat would be 1 times my salary. But if I earned £180K its unlikely that I will be buying a 2 bedroom ex-council flat. Pointless analysis im afraid. Strangely enough, that's exactly the situation I'm in. Wondering whether to spend half a million on a Barbican flat, knowing I'd have the satisfaction of subsidising some scummy shelf-stacker who's renting next door for £150/month. Oh, the joys of living under Socialism. Quote Link to comment Share on other sites More sharing options...
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