House Price Crash

[Fraidycat]

Fact in 2009 rates for senior devs on day rates was 650 per day - 10 yers later and they are still there and in many cases have come down to 550

IT jobs watch stats are UK median contract rate in 2009 was £350 a day, and currently around £470. Which is inline with inflation over the period.

Specific skills and locations will vary, some will beat inflation, some will lag.

eg I was on £350 a day in 2006, im currently on almost £600

[NowPermOutsideUK]

Also worth pointing out that many lenders in 2015 i think reduced the maximum income multiple for mortgages over 500K from 5 times to 4 times so reducing the amount of money that can be borrowed - This matters in london where a smart three bed flat is 1 million and you need a 750k mortgage

I can also tell you that perm salaries in london have no where near kept up with inflation - Fact in 2009 rates for senior devs on day rates was 650 per day - 10 yers later and they are still there and in many cases have come down to 550

Five years ago I was able to squeeze a 780K mortgage out of Halifax on a day rate of 650 - These days the max they would lend is 624K and thats if you are luckly because they also have an affordability so the 624K number is the absolute max

[Fraidycat]

How many 90k salary paying jobs do you see on jobserve ? I see plenty for 50k.
From my personal experience , in my skillset , 20 years ago, I was on a salary of 40k.
If I join a permie job now I will get no more than 50-60k.
I may see a job advertised for 80k but that will be an outlier and they keep advertising that for months

40K to 60K is still a 50% increase.

40K to 70K would be exactly 75%, which is the official compounded rate of inflation over the last 20 years.

An IT professional with 20+ years of experience should be easily able to command 70K as a permie, unless said professional is really crap at his job.

I mean before covid hit at least, now employers and agents may be exploiting the situation to get people cheaper

[Andy2]

Now that kind of 55K role is paying 90K, and the £500 a day contract in the city is typically advertised at £700 a day.
.

How many 90k salary paying jobs do you see on jobserve ? I see plenty for 50k.
From my personal experience , in my skillset , 20 years ago, I was on a salary of 40k.
If I join a permie job now I will get no more than 50-60k.
I may see a job advertised for 80k but that will be an outlier and they keep advertising that for months

[Fraidycat]

After the financial crisis banks were weak so they demanded high deposits you can buy a house with a 5% deposit these days.

95% Mortgages | 5% Deposit Mortgage - HSBC UK

High inflation doesn't help because the banks jack up the interest rates to compensate.

Those wont help most people because prices are so high. You need to raise much more that 5% to get within the lending multiple.

The property you want is 250K but bank will only lend 200K based on your salary, so you need to raise a 50K deposit.

The days of self cert/ liar loans are long gone.

This is why the average first time buyer deposit is 50K ( and 100K+ in London).
Most cant qualify for 5% mortgages any more. Not unless you earn IT contractor rates...

[BlasterBates]

Monthly payments are just as reasonable.

But you ignore my point about how much harder it is to raise a 20% deposit.

Takes 8 eight years longer to save that deposit these days.

Getting on the housing ladder is harder now than at any point in the past.

And inflation is low these so doesnt erode the debt like it did in the past.

After the financial crisis banks were weak so they demanded high deposits you can buy a house with a 5% deposit these days.

95% Mortgages | 5% Deposit Mortgage - HSBC UK

High inflation doesn't help because the banks jack up the interest rates to compensate.

[Fraidycat]

Prices today are just at a reasonable level given the low interest rates.

Monthly payments are just as reasonable.

But you ignore my point about how much harder it is to raise a 20% deposit.

Takes 8 eight years longer to save that deposit these days.

Getting on the housing ladder is harder now than at any point in the past.

And inflation is low these so doesnt erode the debt like it did in the past.

[BlasterBates]

Not sure about others, but in IT , salaries have not increased since the last 20 years while the house price have increased 2-3 fold

Adjusted for inflation house prices haven't changed since 2007.



No difference between the price of piece of cheese or a house.

Salaries have been flat in real terms since 2007

The average UK salary in 2007 was 30,000 and is now 38,000
House price in 2007 was 184,000 and is now 224,000

What you probably mean is that there were highly paid contractors 20 years ago and the gravy train ended, but you can't extrapolate from that, and you're probably looking back to the depths of the housing crash, but they weren't realistic long term prices. Prices today are just at a reasonable level given the low interest rates. Those "low prices" in the 1980's and 1990's came with mortgages at eye watering interest rates often above 10% and much lower salaries in real terms. People were paid less in those days.

[Fraidycat]

Not sure about others, but in IT , salaries have not increased since the last 20 years while the house price have increased 2-3 fold

This is strictly not true.

In 1999, £55K was a top end developer salary for skill set, and £500 per day was a top end advertised contract rate in london for a developer (i am aware some people were earning more than that)

(Things went much higher in 2000, due to the nasdaq market bubble, but im going to ignore the pay rates in 2000 as they were part of a bubble)

Now that kind of 55K role is paying 90K, and the £500 a day contract in the city is typically advertised at £700 a day.

So i would say perm salaries are up 65% since 1999, and contract rates are up 40% since 1999.

Offical inflation since 1999 is like 75%. So contracting has lagged quite a bit but perm not so much.

[Andy2]

People have always spent a large proportion of their income on mortgage payments. Interest rates in the 1980's and 1990's were much higher than today. That is always the case when you buy a new house. After several years and a few salary increases it gets easier.

Nothing much has changed.

Not sure about others, but in IT , salaries have not increased since the last 20 years while the house price have increased 2-3 fold