The UK is being run exactly as predicted back in 2016 by those warning were a vote to leave the EU would take us. We know who this country is being run for, and it sure as hell isn’t “the little guy” or SMEs or workers.
+1
Brexit isn't the destination, it's the vehicle.
Just to balance out the ‘rich white blokes of STW’ who are sitting pretty with their ISA’s and stock portfolios, we’ll be lucky next year to hang on to the house that took 10 years to save up for. We’ve slashed spending this year and in October 23 we’ll be going from thin ice to deep shit.
How I would love to have the problem of a mortgage to worry about! I'm still stuck renting in my 40's and am currently stuck in a cheap flat (been here nearly 10 years with no rent rises!) that the landlord id thinking of selling which is 43 miles away from work. The commute is a drain and killing the car but I cannot afford to move closer to work as the rental market has gone bonkers. Even if I manage to stay in my current place any rent rise will make the economics unaffordable and I'll be having to move back to my parent's house. That would mean giving up my job and essentially being back at square one, back to when I was 18 but with 23 fewer years to the end.
A quick (& far from exhaustive) googleshows that average earnings in the UK in 1990 were £14k (rounded up slightly) and the average house price was £57k. So just over 4x earnings.
Figs for Nov 22 are £33k and £295k respectively. Which is a growth of approx 2.5x on the salary and approx 5x on the house prices. So not sure where the 3x and 4x stay referenced above came from (I got involved because that seemed iffy to me).
1/ It's all in the link in the same post, which said the average disposable HOUSEHOLD income in 1990 was £12353, rather than your £14K. So to me your average earnings look high - might be pretax, is it individual, don't know? Or as the link says, there are discrepancies in some reported values because they have been inflation adusted on one side and not the other.
2/ It was 2020, not Nov 2022 as the 'now' number, because the article's a couple of years old, and of course we now house prices have continued to rise, driven partly by incentives like SD holidays, etc., but wages have stagnated.
And as I said in the earlier post - yes, the devil's in the detail and I'm sure you can find some places where average prices are >10x salary and others where it's far less. So averages start a debate but rarely answer it.
Cheap credit was to blame for all this, if it's to be any better for our kids people who have already been shafted are going to get it again as house prices need to fall. Its the same story across the economy, keep growing the unsustainable until eventually it burst, housing, energy prices, productivity all top show with no strategic base. Bubble was going to burst at some pint, appears it will be now.
I'm lucky and prudent (but mainly lucky), bought in 2001 with 3.5 times my salary, mortgage is close to paid off and each 0.5% only represents an extra few quid for me. I've been lucky that for a large chunk of mortgage life rates have been low combined with the luck of swapping to a base rate tracker just before the last crash. Prudent because I didn't borrow more when moved, bought a nice house in a far less desirable post code and haven't felt the need to upgrade in since 2001 as many people seem to have. Every time you move it probably costs £30k minimum, I know people who have moved 3 times in the time to upgrade, nuts.
So raising interest rates is to reduce inflationary pressure and impoverishes Joe Public but giving it to the bankers and landlords is not inflationary? Forget the cod economics, this is a political decision about a redistribution of wealth and income and one big FU.
The problem is everyone got used to silly low interest rates, and no one from the government down to us ordinary folk thought what would need to be done and prepared for when they had to go up.
I got called condescending last time I said this but I'll go again - instead of looking at what were clearly low interest rates vs past history, and also cheap energy that we knew couldn't last (OK, didn't predict a war would **** it up so quickly but it was only going one way eventually), and using the excess of wages over spending to pay down mortgages or build up savings, there was a frenzy of buying. Not just a frenzy of buying - but buying above means because credit was cheap and freely available. Expensive cars being a particular example.
Yes, of course I'm sympathetic to anyone that finds themselves now in a hole, but I can't help thinking that this has been coming for a while and [in some cases at least] the worst could have been avoided to some extent.
Crises of overproduction occur when people's wages are inadequate for purchasing what is being produced so rather than raise wages, introduce cheap credit. Indebtedness keeps people in their place and mortgages discourage strikes.
I don't think people buying houses over the last 15 years could have avoided this trap, however if they also have expensive PCP cars and racked up a lot of other debt, as many have, I'm less sympathetic (last car was 9 years old when sold, had it from new and wife's car was £13k brand new 2 years ago and will soon be paid for, doesn't have to be the latest repmobile on the drive).
You mean one street in Liverpool?
That might have been the pinnacle of it yes, but I know people who have bought houses in deprived areas of the north in the last few years for less than I have spent on bicycles in the last few years...
How I would love to have the problem of a mortgage to worry about! I’m still stuck renting in my 40’s
Sorry to hear that... The reality is that if I hadn't met my current GF 5 and a bit years ago, I'd be in the same position as you though... Our combined income was the only way we could get on the property ladder in the first place!
The government could do something proper about energy prices – either at the supplier level or the demand level
like what? Set a price cap so the go bust? Or strongly subsidise them with borrowed money, either landing our children with huge government debts to give us a temporary reduction in interest rates, or starting a run on the pound that even Liz Truss couldn’t stomach.
Find out about a fiduciary/fiat currency (it's been explained on here quite regularly). You're starting off with the completely wrong premises.
Keeping the economy from lurching around is a balancing act. Interest rates are part of that.
In the current UK situation, what would help are improvements to the supply of goods/services.
E.g.
Better food supply - allow migrants/asylum seekers to work on farms, for example. Or increase agricultural land use/ improve (EU) imports.
Lower energy costs - build more power stations/reduce demand/improve efficiency. e.g. investment in new technology for industry/improve house building standards
End the war in Ukraine/re-establish peace. Or get our commodities elsewhere.
None of these are short term fixes, so we're stuck with interest rate rises to curb spending.
either landing our children with huge government debt
FFS why do people still parrot this economically illiterate tabloid nonsense? Your children will never ‘pay back’ govt debt any more than we paid back debt from the 70s or our parents paid back debt from the war. Here’s a clue as to why, the ‘debt’ is never paid back.
Forget the cod economics, this is a political decision about a redistribution of wealth and income and one big FU.
If that's the case they're doing exactly the same in the US, Canada and nearly the whole of the EU as rates are similarly high in those countries also.
That might have been the pinnacle of it yes, but I know people who have bought houses in deprived areas of the north in the last few years for less than I have spent on bicycles in the last few years…
Crack on, you could still pick one up in Grangetown for <£1k not so long ago. I mean it's because:
a) everything smells of naphtha from Wilton nextdoor
b) all the copper has already been robbed
c) it's Grangetown
There areas been suffering depopulation for a long time.
a) everything smells of naphtha from Wilton nextdoor
Pardon?
jamesoz - are you thinking of Wilson, as in a person, who could smell of naphtha?
50-odd percent of English were stupid fheckers who chose Brexit. Many in the poorer end of the spectrum.
There's more than a degree of getting exactly what they voted for. For those who voted to Leave and now suffering the consequences, suck it up, buttercup.
(Just like those who voted for the party who promised the privatisation of gas, electricity, water, phones, and the railways. You're reaping what you sowed.
And now all us ‘high earners’* in Scotland need to pay even more tax. It’s just endless
* I appreciate that to their voter base 43k may be a huge salary, but in the real world, it just means more people like myself are going to be eating in to their savings every month just to survive
* I appreciate that to their voter base 43k may be a huge salary, but in the real world, it just means more people like myself are going to be eating in to their savings every month just to survive
Many would say "quite right, too" to this for anyone earning over much over 27-30k.
I can somewhat see the ire. If my tax was actually producing tangible results then I'd be delighted however we have trains that don't run, and NHS that only got their pay rise, eventually, as a show of oneupmanship and teachers still aren't getting one. The country is a bag of shite and people are naturally tired of being asked to give and seeing nothing in return except excuses. We keep hearing that any tax raises affects Barnett so why bother other than ****ing it into those that are actually earning? Oh, that's right, to pay for those selfish ****s in the NHS rather than Ferguson Marine.
I'm all for progressive taxation but not when we're not seeing anything in return.
Well having moved to Scotland 5 years ago and seen my tax burden rise as a result, I’m quite happy that:
I can get a dentist
Prescriptions are free
My daughter won’t be saddled with an outrageous student loan
My dad won’t be forced to sell his home to pay for care
Many would say “quite right, too” to this for anyone earning over much over 27-30k.
I really don’t enjoy this levels of jealousy over peoples pay, especially without consideration to circumstances which wouldn’t make that go very far at all. It’s a blinkered comment at best.
This graph shows one way of measuring affordability. It is getting worse unfortunately.
Source https://twitter.com/resi_analyst
This also highlights the trouble with using the mean for the average UK household income, it skews it. If you use the median it’s £31,400, compared to a mean household income of £37,100 for 2021, (2020 data below).
Or the mode is about 20k, ie most people are on 20k.Thats the whole fallacy with mean and median, we think that most people are on average wages, when the majority of the population, the mode, are only on 2/3rd of average wages.
If Starmer wants to be a gammon he needs to put forward a 100% tax on Forriners buying our houses
No need to go gammon. Build lots of social housing and implement rent controls and basic housing standards for all rentals.
You mean one street in Liverpool?
TBH it was a street not many STWer would want to live in, in an area none would want to live in. You wouldn't be leaving a MTB in your house, let alone in the shed you'd built. Sure they're worth 'more' than £1.... but I'd personally need a hell of a lot of persuading to live there. I was massively impressed with one girl who really seemed to embrace the offer and the area, she was doing her best, but i also feel it was a losing battle for her.
Yep, and as I tried to say, i suspect the breadth has increased (and hence mean is now further from the mode than it was in 1990)
Graph above shows it nicely, we're still in 'more affordable' territory based on the multiplier of house prices AND interest rates because the low rates have more than compensated for the increases, but that's now changing, and changing quite fast without income increasing at the same time.
But if you drew an average line for the last 20 years say, you'd put it at what, 22%? So while for the last 10 years the actual has been 4-5% lower than that, what did people do with the extra disposable income. Save it for what was coming? - 10 years of putting 3% of income away would be 1/3 of a year's salary in reserve. Or in many cases, it was spent on shiny things some of which are now owned and OK, the excess is now diverted back to mortgage payments, but in others it was spent on credit and stuff that is still committed and can't be afforded.
In the end it's choices but not everyone is finance savvy, or as conservative (small c) as they might be - and the assessment of affordability by finance and credit companies on the basis of artificially low interest and other costs has let them down, IMHO.
Build lots of social housing and implement rent controls and basic housing standards for all rentals.
Yep, easy isn't it. Only a party with true commitment and no backers to upset would do it though so that is the end of that one.
More social housing is the right path. But with all this it’s not just about ‘backers’, but also about ‘voters/residents’ who often kick back about well placed new social housing, or even lower sale price houses for owner occupancy or the public rented sector.
That is where the commitment comes in...
There are too many barriers to the kind of massive housing renewal needed in our towns and cities. The Germans helpfully flattened enough of our urban landscape to force us into large scale slum clearance and rebuilding in the 50s and 60s. Whole postcodes could be emptied and levelled, and there was the political will and public support to do this.
Now you have overvalued pockets of slum housing in the hands of private landlords next door to privately-owned and reasonably maintained homes. Local authorities have been asset-stripped and beaten down for so long that they have no ability to even consider the task of picking through their streets, inspecting private housing and taking it back into public ownership.
Feels like we need a post-war government right now to renew our public assets, but many of the public are still being told that everything is OK.
What's wrong with building council estates like we did in the 50s and 60s?
In the current system developers don't want a proportion of their stock to be 'affordable housing', people buying don't want a third of their shiny new estate to be social housing. It seems everyone is fighting for social housing not to be built.
Councils should buy land and commission a builder to build at a fixed price per unit without a commercial sale price as the goal. And then they shouldn't sell the bloody things off under right to buy!
So while for the last 10 years the actual has been 4-5% lower than that, what did people do with the extra disposable income. Save it for what was coming? – 10 years of putting 3% of income away would be 1/3 of a year’s salary in reserve. Or in many cases, it was spent on shiny things some of which are now owned and OK, the excess is now diverted back to mortgage payments, but in others it was spent on credit and stuff that is still committed and can’t be afforded.
Over the same period, anyone (now) under about 40 has been paying 9% of their pre-tax income in student loans. (Took me 21 years to clear mine, admittedly I was a low earner). That 9% eats up the 4-5% difference you mention, and more. The cost of childcare is up 44% in the last decade. And that's even before you've bought an iphone and an avocado. We can't easily compare the cost of mortgages to years past without considering other changes in society and the cost of living.
Yeah I am not about to push this back as consumers making shit choices, we do what the Daily Mail and Express etc tell us to.
Oh guess who actually runs the country?
There’s more than a degree of getting exactly what they voted for. For those who voted to Leave and now suffering the consequences, suck it up, buttercup.
Nice job demonstrating why they voted leave in the first place. Maybe climb down from your ivory tower? 🙄
What’s wrong with building council estates like we did in the 50s and 60s?
This boils my piss. Yes, sure, we built loads of council estates which eventually became bad places to live. But this wasn't because they were built by the council, it was how society was managed subsequently. Maybe if we didn't set everything up to make low-income lives as shit as possible and trap them there, council estates wouldn't end up bad places to live?
How I would love to have the problem of a mortgage to worry about! I’m still stuck renting in my 40’s and am currently stuck in a cheap flat (been here nearly 10 years with no rent rises!) that the landlord id thinking of selling which is 43 miles away from work. The commute is a drain and killing the car but I cannot afford to move closer to work as the rental market has gone bonkers. Even if I manage to stay in my current place any rent rise will make the economics unaffordable and I’ll be having to move back to my parent’s house. That would mean giving up my job and essentially being back at square one, back to when I was 18 but with 23 fewer years to the end.
In a very similar position - 55 having to rent after the end of a relationship 6 years ago - just about getting enough together for a deposit and the price increases pretty much have taken away my ability to save, further energy increases will take away any chance of putting a radiator on...
Rent review next March, would say Ill downsize but not much smaller than a one bedroom bungalow, just big enough for me and the kids to sleep i nthe lounge when they stay over... and not a lot onthe rental markets at the moment, unfortunately live in the south east so pretty much the highest rent property prices you can find...
Every time you move it probably costs £30k minimum, I know people who have moved 3 times in the time to upgrade, nuts
it doesnt cost you £30k to move, because that money gets hidden away as part of the new mortgage (and barring a price crash, you'll get to keep that value).
it costs future first time buyers £30k for you to move.
How the hell is that going to help inflation?
The biggest effect it will have is to stop people from moving vast amounts of £s into $s, which then weakens the £ and since basically everything is priced in $ at a basic level, increases costs rapidly. The quickest way to cool inflation is to strengthen the £s value.
Why? As higher rates in the US make investing in US dollar Treasuries and other safe, dollar-denominated assets more attractive, capital floods out of other countries like the UK, which is right now, thanks to the B-word and our oh so awesome gov't of the week approach seen as a risky bet. The result is that the dollar gains against against the £. To combat this the BoE must keep within reach of the US base rate to prevent further devaluation of the £.
it doesnt cost you £30k to move, because that money gets hidden away as part of the new mortgage
Having moved at the start of the year, we spent a significant amount of money on the process that wasn't part of the purchase price, like solicitors, movers, estate agent fees, stamp duty, all that jazz.
The houses for a pittance schemes were done in several cities but never in numbers that would have had any noticeable effect on average house prices.
There were several caveats with £1 street. You couldn't move out within 5 yrs, had to work locally and had to spend £30k (I think) on the property. It was a good idea - breaks the 'catch 22' of nobody wanting to make the first move.
Anyhow, there are now two massive, massive schemes afoot to regenerate the docks in Liverpool and Birkenhead/Wallasey.
https://liverpoolwaters.co.uk/
https://www.wirralwaters.co.uk/
This is around $10bn worth of real estate construction and the reason Liverpool lost its status as a World Heritage site. You can't make scouse without lamb...
If these people suffer some financial distress, and these same houses come back on the market at reduced prices, I consider that a win.
I suspect there'll be a fair amount of collateral damage to innocent homeowners too, would that be part of your 'win' too? Its not just going to be landlords hit you know.
Nice job demonstrating why they voted leave in the first place
Stop making shit up.
Anyway.
Cheap credit in this country has masked the fact that middle incomes here are ~ 20% lower than in comparable economies and lower incomes are 25% lower. So long as you can get that German car on 0% you feel like you're doing ok.
A fairly straightforward way of making the housing issues disappear would be to allow local authorities to build good quality social housing and keep the proceeds of the sales through right to buy that they could reinvest in social housing. At the moment any income from those sales goes to central government.
