Edinbugh Latest

[Scunnered]

And again, the average wage figures include the lowest 30% of earners, who are very likely to be living in social housing and so be unlikely to ever buy a house.

The average wage of likely house buyers (excluding social housing residents) is almoist certainly a lot higher.

Bear in mind that this is the average of something that isn't normally distributed.

[wilko]

I was incorrect, the average wage is £33k in edinburgh, but close enough.

...

http://news.bbc.co.uk/1/hi/scotland/7753648.stm

...

The average wage of likely house buyers (excluding social housing residents) is almoist certainly a lot higher.

Although I don't dispute the BBC figures they appear to be mean values, while I quoted median values. I remember seeing the distribution of UK earnings and it wasn't normal but closer to log normal distribution. Something dosn't quite fit here as I would expect the median to be higher than the mean in this case.

That said, the same logic you use to discard the bottom 30% of earners would also apply to the to top 30% of earners, as they don't fit in our target demographic of a FTB after a 1 bed flat.

I'll try and dig out the raw data from somewhere. That BBC data came from Office for National Statistics, are these things supposed to be in the public domain?

[The McGlashan]

The BBC report of earnings averages is from a Bank of Scotland report which itself cherry-picks figures from the ONS.

The full ONS excel files are linked to from these pdfs here:

http://www.statistics.gov.uk/downloads/the...2008_res_la.pdf

http://www.statistics.gov.uk/downloads/the...008_work_la.pdf

Much more data than just the headline grabbers from BBC and RBS.

[Scunnered]

More ONS data can be found here: http://www.statistics.gov.uk/StatBase/Product.asp?vlnk=15187.

Edit: Oops. I see the McGlashan (I once knew one of those: wonder if it's the same one?) got there before me.

Looks like the median gross weekly pay for full-time employees in Edinburgh in 2008 was £508, or £26,416 per annum. Still a bit more than I might have thought, but well under £33,000

Edited February 27, 2009 by Scunnered

[Deleriad]

Was in Scottish Office today and picked up booklet called Edinburgh by the numbers - stats for edinburgh. PDF

Housing stats are interesting

Edinburgh 1991, 2006 Scotland 1991, 2006

Owning outright 22% 34% 16% 29%

Buying with loan or mortgage 45% 31% 36% 36%

Renting from Council / Scottish Homes 20% 11% 38% 17%

Renting from housing association 4% 5% 3% 8%

Renting from private landlord 9% 17% 5% 7%

What surprises me is that 34% of households own a house with no mortgage in 2006; more than have a mortgage. 17% rent from a private landlord. Only 31% have a mortgage. I don't know how that compares to the UK in general but Edinburgh's outright ownership and private rented sector is significantly larger than Scotland in general and you have to figure that affects the market dynamics.

Other stats from 2006: affordability in Edinburgh 4.23 - Scotland as whole 2.88

2-bed flat Marchmont/Bruntsfield in 97 - £83,771, in 2007 -£274,659 (Q2 figures).

And, rather amusingly, Edinburgh's top-ranked companies (figures are turn-over and profit.)

1 The Royal Bank of Scotland Group 28,000.00 9,186.00

2 HBOS 22,710.00 5,706.00

for the recession watchers, employment by sector

Services 279,086 91.2%

.. Banking, insurance, finance 30,988 10.1%

.. Business services 52,633 17.2%

.. Health 32,007 10.5%

.. Retailing 27,598 9.0%

91.2% of people in Edinburgh work in the services...

[HAMISH_MCTAVISH]

I find it more interesting that only 10% of jobs are in the financial services and banking sectors.

That's going to put a slight damper on ccc and dws's dreams of a 50% to 75% crash......

[Guest An Bearin Bui]

What surprises me is that 34% of households own a house with no mortgage in 2006; more than have a mortgage. 17% rent from a private landlord. Only 31% have a mortgage. I don't know how that compares to the UK in general but Edinburgh's outright ownership and private rented sector is significantly larger than Scotland in general and you have to figure that affects the market dynamics.

...

for the recession watchers, employment by sector

Services 279,086 91.2%

.. Banking, insurance, finance 30,988 10.1%

.. Business services 52,633 17.2%

.. Health 32,007 10.5%

.. Retailing 27,598 9.0%

91.2% of people in Edinburgh work in the services...

Some great statistics there - I was at an economics conference recently and there was a whole swathe of revealing statistics like this in one of the presenter's talks. I think the high rate of owned outright properties can be explained by the age demographics in Edinburgh. The population of Edinburgh city (not including region and commuter suburbs) has an older profile now than in 1991.

This also explains the interesting statistic I took away from the conference which is that Edinburgh's economic dependency ratio is quite high, relative to other areas of the UK. Something like 50% of the population (can't remember exact percentage) are not in active employment! This is explained by the presence of a lot of older people and also students, as the university sector has also expanded hugely since 1991.

[geneer]

I find it more interesting that only 10% of jobs are in the financial services and banking sectors.

That's going to put a slight damper on ccc and dws's dreams of a 50% to 75% crash......

As always what you find interesting is highly convenient.

BTW, any ever call a 75% crash outside of HM's fevered imagination?

[geneer]

Averages are funny things.

For example, ESPC stats have shown average increases in house price where everything but the

£0.5M town houses were tanking.

But the £0.5M town houses had increased 20%.

And abracadabra: Headlines that house prices are still rising in Edinburgh.

Median values are more relevant I think.

[Jadoube]

Although I don't dispute the BBC figures they appear to be mean values, while I quoted median values. I remember seeing the distribution of UK earnings and it wasn't normal but closer to log normal distribution. Something dosn't quite fit here as I would expect the median to be higher than the mean in this case.

That said, the same logic you use to discard the bottom 30% of earners would also apply to the to top 30% of earners, as they don't fit in our target demographic of a FTB after a 1 bed flat.

I'll try and dig out the raw data from somewhere. That BBC data came from Office for National Statistics, are these things supposed to be in the public domain?

Much as many will hate me to support Hamish I think you've got those the wrong way round.

The income distribution has a 'tail' up to the silly money, which drags the mean higher than the median. (The median is the middle of a list of all households ranked by income. The size of income is irrelevant. The size does however effect the mean.)

If your taget demographic is a FTB after a 1 bed flat you need to compare like with like, the incomes of such with the prices of such. So if you exclude those on high incomes you also downweight the 'average' house price by loads. I've never seen sufficiently robust data to do this effectively.

The good old standard of 3 times salarly is a sound one as far as it goes - BUT building socities only offered that to folk who came through the door asking for a mortgage. Once you note that it is clear that 3 times the average income of the total population is an irrelevant figure. The correct universe is those who apply, or better - who might apply in the future. Hamish is correct when he points out this concept, although may not be correct in detailed calculations

Nationwide et al often give a figure for the average income of those who've taken morgages. UIt is generally higher than the national average income - and the main board is full of folk who can't use understand numbers who automatically accuse them of lying.

Its worth considering firstly that the figure they quote is not that much higher than the national average, and secondly that it is historical and might be expected to come down as prices fall.

Summary - modelling incomes and analysing income distributions is not as trivial as much of HPC assumes. OTOH it doesn't make a huge difference in broad terms so there's little point having a heated debate about it.

[Scunnered]

Which is of course completely irrelevant.

The only thing that matters is how many people in Edinburgh earn 35K or more (that would be about 50% of full time male workers, in case you're wondering), and more importantly what percentage of likely house buyers earn that much, once you exclude the 30% of people that are low income and living in social housing.

Having had a closer look at the ONS figures, it says in their Table 8.7a (linked from this page) that the median gross annual pay for full time male workers resident in Edinburgh is £28,153, so the £35k figure is about a 25% overestimate.

[HAMISH_MCTAVISH]

Having had a closer look at the ONS figures, it says in their Table 8.7a (linked from this page) that the median gross annual pay for full time male workers resident in Edinburgh is £28,153, so the £35k figure is about a 25% overestimate.

See Jadoubes previous post.

[wilko]

Much as many will hate me to support Hamish I think you've got those the wrong way round.

The income distribution has a 'tail' up to the silly money, which drags the mean higher than the median. (The median is the middle of a list of all households ranked by income. The size of income is irrelevant. The size does however effect the mean.)

Summary - modelling incomes and analysing income distributions is not as trivial as much of HPC assumes. OTOH it doesn't make a huge difference in broad terms so there's little point having a heated debate about it.

Yeah, you’re right. I had it the wrong way round. I've plotted some of this data as provided in the ONS report (attached). This is where the BBC have picked the 33k figure from.

I agree with your point that any analysis using just income and mortgages ratios will not give you a nominal property price figure as the system is a whole lot more complicated than that. Saying that I would assume it provides a rough indicator to the direction the market will follow? It was the average earnings to average house price chart that convinced me not to buy a year and a half ago. If I had ignored this indicator I would be a lot worse off financially today. Rest assured I won’t be jumping on the bandwagon when the 3x earnings threshold is breached, it’ll involve a mix of other financial and personal circumstances too.

There is a lot of confusion regarding Mean / Median numbers with each party picking the one that best fits their standpoint. It's not always clear which one the media are using so I've personally learnt to take every figure with a pinch of salt.

[Scunnered]

See Jadoubes previous post.

What about it? I'm pointing out that you were factually incorrect, and by a wide margin. Your premise was wrong, so presumably we have no reason to pay any attention to whatever conclusions you were attempting to draw from it.

Edited February 28, 2009 by Scunnered

[ccc]

I find it more interesting that only 10% of jobs are in the financial services and banking sectors.

That's going to put a slight damper on ccc and dws's dreams of a 50% to 75% crash......

Looks like 27.3% to me.

I get a funny feeling 'Business Services' have a lot to do with the financial sector.

Anyone have a description of what these actually mean ? Definitions etc..

[Guest An Bearin Bui]

Looks like 27.3% to me.

I get a funny feeling 'Business Services' have a lot to do with the financial sector.

Anyone have a description of what these actually mean ? Definitions etc..

Business services, in my experience, covers businesses in the area of HR consulting, recruitment services, IT, marketing, sales, financial processing etc. And from what I know of such companies, a large proportion of their clients are either public sector or - you guessed it - banks.

[dances with sheeple]

Looks like 27.3% to me.

I get a funny feeling 'Business Services' have a lot to do with the financial sector.

Anyone have a description of what these actually mean ? Definitions etc..

+ 10% for retail, obviously there are no shops closing up and down the land, and the wee woman who sells you your ciggies is sitting on a pile of equity and a well diversified portfolio.

[copper crutch]

Prices are going down slower than what i wanted ,but there are good signs down south, our local market normally follows the English trend, so overall it is looking very good.

http://www.thesun.co.uk/sol/homepage/news/...icle2195198.ece

[Jadoube]

Rest assured I won’t be jumping on the bandwagon when the 3x earnings threshold is breached, it’ll involve a mix of other financial and personal circumstances too.

There is a lot of confusion regarding Mean / Median numbers with each party picking the one that best fits their standpoint. It's not always clear which one the media are using so I've personally learnt to take every figure with a pinch of salt.

Exactly right. The long and the short of it is that prices will continue down and the precise definition will not change the fact. Geeks like me find definitions interesting but in the end the ratio is just a number.

To me, the whole point is to interpret data appropriately for a decision you are about to take. If one's not about to take a decision I suggest wait for the next set of data and build up the knowledge base.

OTOH rebutting Hamish helps keeps the Scottish forum active, which is a good thing.

[geed]

Having had a closer look at the ONS figures, it says in their Table 8.7a (linked from this page) that the median gross annual pay for full time male workers resident in Edinburgh is £28,153, so the £35k figure is about a 25% overestimate.

mmm Hamish at it again huh. Dismissing someones post as "completely wrong/untrue/incorrect etc..." making them out to be dimwitted and uninformed, only then to receive a reply which clarifies the position and turns the tables on Hamish with fact and figure usually showing Hamish to be completely out of his depth. He accused me of being a liar a few weeks ago, I corrected his erroneous post making him out to be rather foolish in his claims. Funnily enough I did not receive a reply.

I have seen his type before, completely rebuking an argument on a topic that he knows very little about. The main aim is to win the argument at any cost, the moral or ethical purpose of the debate has little relevance.

Hamish, it doesnt hurt now and again to admit you are wrong, often "completely wrong".

[ccc]

mmm Hamish at it again huh. Dismissing someones post as "completely wrong/untrue/incorrect etc..." making them out to be dimwitted and uninformed, only then to receive a reply which clarifies the position and turns the tables on Hamish with fact and figure usually showing Hamish to be completely out of his depth. He accused me of being a liar a few weeks ago, I corrected his erroneous post making him out to be rather foolish in his claims. Funnily enough I did not receive a reply.

I have seen his type before, completely rebuking an argument on a topic that he knows very little about. The main aim is to win the argument at any cost, the moral or ethical purpose of the debate has little relevance.

Hamish, it doesnt hurt now and again to admit you are wrong, often "completely wrong".

Indeed. This is something I find very strange about internet faceless forums. Who gives a shit if you admit you are wrong ? Anyone who can't admit they are wrong has serious mental issues in my opinion.

I also imagine Hamish is the type who will fail to acknowledge they have learnt interesting info/concepts from others. Again I don't understand this in internet forums.

Hamish told me I was a liar a few weeks ago. Simply because I told an anecdotal story of a bird I know in Perth. Apparently I had to 'put up or shut up'. Yeah right, I am going to give away someone's personal info on a public forum. Hamish refused to do exactly the same and tell us all where he worked, seeing as he had been telling all and sundry on the main forum his position of seniority.

Hamish would be far more useful if we could have reasonable debate with him. Would be good.

[Radge]

Booger me! Must rush down to Platinum Point pronto!

http://edinburghnews.scotsman.com/latestne...s-as.5027940.jp

Or maybe not.

Sorry, just seen this on the asking prices dropping thread.

Edited March 2, 2009 by Radge

[Deleriad]

Hamish, it doesnt hurt now and again to admit you are wrong, often "completely wrong".

Personally I find he's right more often than he's wrong.

Median gross weekly pay in Edinburgh for all workers is £424, mean is £510. For males in F/T employment it is median £525, mean £644. (from ONS)

Therefore yearly average, where average refers to arithmetic mean, for male in F/T employment in Edinburgh is £33,448. This is the standard measure that has been used down the ages to determine house price affordability.

According to Edinburgh by numbers, 36% of Edinburgh's working age population (16+) is in F/T, 6% is self-employed and 10% in p/t employment. 26% retired. They say that there are 237,600 economically active out of a working population of 295,900.

The decile figures for Edinburgh males in F/T employment are

10% 20% 25% 30% 40% 60% 70% 75% 80% 90%

282.4 341.8 368.4 400.0 457.6 609.4 699.5 764.6 829.8 1,179.9

If you figure that in normal circumstances a lender would lend 3.5 times income then you get the following loans

10% 52k

20% 62K

25% 67K

30% 72K

40% 83K

60% 111K

And so on. Clearly you have to be earning more than average to be able to qualify for a 110K mortgage, i.e. the single bedder in Granton. Basically the average 2-bed flat in a desirable area in Edinburgh is completely out of reach in present circumstances to a single FTBer earning less than average because they are still quite junior in their career. You either need a partner, wealthy parents or to be able to borrow more than 3.5*income.

For comparison. Assume DINK FTBers both earning in the 40%ile. Male: 457.6/week, female 398.7. Borrowing 3.5*income plus 2*income can borrow £155K. That's probably as good as it gets for FTBers outside of wealthy parents. For the record, that would be £179/week in interest on a standard 6% rate - about 21% of gross pay. At the moment, nice 2-bedders tend to rent for around 700/month = £161/week. Just looking at those figures, once nice 2-bedders start coming down to around 170K and lenders start offering 90% LTV then the better-off DINK FTBers are likely to start buying again providing they feel secure in their jobs.

[ccc]

Personally I find he's right more often than he's wrong.

Median gross weekly pay in Edinburgh for all workers is £424, mean is £510. For males in F/T employment it is median £525, mean £644. (from ONS)

Therefore yearly average, where average refers to arithmetic mean, for male in F/T employment in Edinburgh is £33,448. This is the standard measure that has been used down the ages to determine house price affordability.

According to Edinburgh by numbers, 36% of Edinburgh's working age population (16+) is in F/T, 6% is self-employed and 10% in p/t employment. 26% retired. They say that there are 237,600 economically active out of a working population of 295,900.

The decile figures for Edinburgh males in F/T employment are

10% 20% 25% 30% 40% 60% 70% 75% 80% 90%

282.4 341.8 368.4 400.0 457.6 609.4 699.5 764.6 829.8 1,179.9

If you figure that in normal circumstances a lender would lend 3.5 times income then you get the following loans

10% 52k

20% 62K

25% 67K

30% 72K

40% 83K

60% 111K

And so on. Clearly you have to be earning more than average to be able to qualify for a 110K mortgage, i.e. the single bedder in Granton. Basically the average 2-bed flat in a desirable area in Edinburgh is completely out of reach in present circumstances to a single FTBer earning less than average because they are still quite junior in their career. You either need a partner, wealthy parents or to be able to borrow more than 3.5*income.

For comparison. Assume DINK FTBers both earning in the 40%ile. Male: 457.6/week, female 398.7. Borrowing 3.5*income plus 2*income can borrow £155K. That's probably as good as it gets for FTBers outside of wealthy parents. For the record, that would be £179/week in interest on a standard 6% rate - about 21% of gross pay. At the moment, nice 2-bedders tend to rent for around 700/month = £161/week. Just looking at those figures, once nice 2-bedders start coming down to around 170K and lenders start offering 90% LTV then the better-off DINK FTBers are likely to start buying again providing they feel secure in their jobs.

Interesting stats. A few points. Isn't the long term lending normal for first income X 3.5 and X 1 for the second income ?

You also don't note that the rent for 2 bedders is also coming down at a slow but steady rate.

The rent it out instead brigade are ensuring that there is a glut of 2 bedders for sale or to rent. Take one from the sale list and it gets added to the rent list, and vice versa. (In a very simplistic way)

Job security is as you say very important. I can't see people feeling too secure for a good few years. Again nobody knows but it is looking pretty bad out there.

Good stats though. However I do feel there is a very large issue with it. How many FTB's would even bother to read what you have said above Sentiment is oh so important.

They are being told house prices are dropping and jobs are being lost. It will be a long time after things have bottomed out before people dive back in. Unless of course this crash is different from all previous. It is possible. I wouldn't bet on it though.

[Scunnered]

Personally I find he's right more often than he's wrong.

Median gross weekly pay in Edinburgh for all workers is £424, mean is £510. For males in F/T employment it is median £525, mean £644. (from ONS)

Therefore yearly average, where average refers to arithmetic mean, for male in F/T employment in Edinburgh is £33,448.

True, but Hamish explicitly said

The only thing that matters is how many people in Edinburgh earn 35K or more (that would be about 50% of full time male workers, in case you're wondering), and more importantly what percentage of likely house buyers earn that much, once you exclude the 30% of people that are low income and living in social housing.

so he was clearly talking about the median (he even spelled it out for our benefit), and he was a long way out.

For comparison. Assume DINK FTBers both earning in the 40%ile. Male: 457.6/week, female 398.7. Borrowing 3.5*income plus 2*income can borrow £155K. That's probably as good as it gets for FTBers outside of wealthy parents. For the record, that would be £179/week in interest on a standard 6% rate - about 21% of gross pay.

I'm not quite clear about this: is that just the interest, or the total weekly repayment? If it's just the interest, what would the total be?