State of the Market

[Fraidycat]

It was never x3. It was always x4 and above. In the early 1990s there was a deep recession. In the late 1980s during a boom it was over x6. Currently the ratio is x6.7 and will drop back to x4 if there is a recession is as severe as in the 1990s or early 1980s.

What are your figures:

In 2023: Average house price is 260K, average salary is 33K, Ratio is x7.9

In 1995: Average house price was 52K, average salary was 15K, Ratio was x3.5

A 90% mortgage payment back in 1995 would have been £350 a month. Today it will be £1500 a month.

The ratio is not going to fall back to x4, interest rates will have to be cut to get those £1500 payments back down to £800 a month again.

[SussexSeagull]

Oddly enough I imagine if you asked 10 under 25s about their spending habits you would get ten different answers, much the same as for any other age group.

[JustKeepSwimming]

The ratio is not going to fall back to x4, interest rates will have to be cut to get those £1500 payments back down to £800 a month again.

I assume you mean 'if the ratio is not going to fall back to x4'?

So the £33k seems to be household income, meaning individual income will be lower?

In the before times x4.5 was seen as the highest a lender would lend, with only certain groups getting x5 (like doctors).

So that's £148k mortgage. Funnily enough £148k at 5% is about £850/m.

So for average house prices to remain at 260k means the average household would need £110k equity/deposit.

If you exclude equity gained by house price inflation, just how much does an average person have to put down?

Personally I see average house prices hitting the £190,000-£220,000 range in 2025, which is only 2016/2017 prices.

Recession and persistent inflation and I would be looking at £160,000-£180,000 which again is only 2013/2014 prices.

[northernladuk]

Personally I see average house prices hitting the £190,000-£220,000 range in 2025, which is only 2016/2017 prices.

Recession and persistent inflation and I would be looking at £160,000-£180,000 which again is only 2013/2014 prices.

I see what you are saying and I think you are right about the drop. I don't think we will ever see those numbers though. They could be right based on the financials as you mentioned but I do think other factors are in play including finite number of houses and growing population amongst others. I think that will artificially inflate the base level they numbers could fall to whatever the finances.

[JustKeepSwimming]

I see what you are saying and I think you are right about the drop. I don't think we will ever see those numbers though. They could be right based on the financials as you mentioned but I do think other factors are in play including finite number of houses and growing population amongst others. I think that will artificially inflate the base level they numbers could fall to whatever the finances.

There are other factors, but cost of money is the primary determiner of house prices. It doesn't matter how many homeless people there are, if the bank won't lend it won't lend.

[Fraidycat]

So the £33k seems to be household income, meaning individual income will be lower?
In the before times x4.5 was seen as the highest a lender would lend, with only certain groups getting x5 (like doctors).

33K is average individual income these days, 21K is just minimum wage in 2023.

A couple both on average income, is 66K, a 90% mortgage on an average house is 234K.

234K/66K = 3.5 Lending ratio

It only works for couples both on at least the average wage.

[BlasterBates]

What are your figures:

In 2023: Average house price is 260K, average salary is 33K, Ratio is x7.9

In 1995: Average house price was 52K, average salary was 15K, Ratio was x3.5

A 90% mortgage payment back in 1995 would have been £350 a month. Today it will be £1500 a month.

The ratio is not going to fall back to x4, interest rates will have to be cut to get those £1500 payments back down to £800 a month again.

https://www.ftadviser.com/mortgages/...m-record-high/

The house price to income ratio has eased from its record high in June of last year to sit at 6.7 as of June 2023, research from Halifax has revealed.

https://www.halifax.co.uk/media-cent...ice-index.html

Wage growth also remains strong, which has helped with affordability, with the house price to income ratio now at its lowest level since June 2020 (6.2 in September vs 6.3 in August).

1995 was the middle of a housing crash. To get that you need a deep recession. In 1988 it was just over 6 times earnings.

If house prices drop by 20% you're back to 1995 prices.

[JustKeepSwimming]

https://www.ftadviser.com/mortgages/...m-record-high/




1995 was the middle of a housing crash. To get that you need a deep recession. In 1988 it was just over 6 times earnings.

If house prices drop by 20% you're back to 1995 prices.

They are using odd figures.

Halifax detailed that the cost of a typical UK home was £286,276 and the annual earnings of a full-time worker was £43,090 in 2023.

This was a fall on last year when the cost of a typical UK home was £293,586 and average annual earnings were £40,196, putting the ratio at 7.3, the highest (or least affordable) level ever recorded.

You aren't comparing like for like. I'm seriously getting ****ed off with absolutely tulip journalism. This journalist is using average household income but doesn't actually say it. It's made worse because they actually say 'average annual earnings'.

Oh look, the journalist is a 'senior reporter' for the ******* FT, he graduated in September 2021. How the **** is 24 year old with 2 years experience senior anything?

He is parroting press releases without actually understanding them and not having the experience to sense something doesn't add up.

Actually I don't even know anymore. Lloyds seems to be the source for the £43k average salary. ONS shows pre bonus average salary at £32k in Sep 2023. Average bonus is not £11k.

[Fraidycat]

"The Institute for Fiscal Studies (IFS) warned in its latest Green Budget that Britain will slump into a “moderate” recession in the first half of 2024 as borrowing costs stay elevated."

I predict the bottom of the market (both stock market and the contract market) will be sometime in 2024.

Both the contract and perm market looks very bad at the moment. Very hard to get agents on the phone, return emails, or reply to messages. It looks like Agents are spoilt for choice with candidates.

Below 20,000 job on Jobserve at the moment (and that doesnt look due to them cleaning out the database which they sometimes do and it lowers the numbers for a while), this looks like legit low numbers. First half of the year it was between 40,000 to 50,000.

[dsc]

What are the salaries like atm in IT vs say 2-3yrs ago? is it going up, staying the same, dropping perhaps? I'm in a different industry, still engineering and I've realised that the salaries have pretty much stayed the same for the last 6-8yrs, it's actually pretty ridiculous, especially considering inflation etc.