Of course it’s much rarer to buy a house in all cash but this just shows how much more expensive London is compared to everywhere else! The 2nd most expensive area (South East) is almost 25% cheaper than London
– on an average salary, you were to for example, save for house in the SE at 15x average salary, by the time those 15 years are up, the house would have increaed in price by 7% YoY avg. So likely still unobtainable.
– it doesn’t tell us how much they’re saving. But at 100% cash with those periods, I think it is safe to assume they’re puting their entire salary into it. Which obviously cannot happen lol.
– ‘all cash’ is a bit deceptive. The buying-window of a deposit saver decreases slower than someone aiming for 100% cash purchase.
For the deleted comment asking for a better graph to be made;
I probably could but not enough time until Sunday evening.
But I can tell you what it would look like. Along the bottom line you would see the savers savings creep up over the period, including interest.
The line above that, you would see the Minimum Deposit creep up, over the same period. Now it isn’t as simple as reaching 10%, because an average earning couple would not be able to get a mortgage for the amounts involved, so they’d need to reach a much lower LTV. Starting now at avg SE house of 323k, a couple on the median salary of 31k each (Ima ignore gross/net) would need to reach 44k as a total deposit. The Minimum Deposit required will move at 7% YoY.
At an aggressive 500pcm saved pp (1000 total, 25% of their disposable), and assuming 5% interest, they would reach that in 41 months. However because the deposit/houseprice has changed at 7% YoY they’d then be 11k short.
But as you can see, they’re now only another 11 months off, compared to the original 41 months. The gap is closing despite rises. At 56 months, you’d see the bottom deposit-accured line finally cross the _original_ Minimum Deposit line, allowing them to purchase, you’d think.
Wahey, they can buy a house. But no. Because the house also grew at 7% YoY (now 444k) and their salaries have not, the difference between what the bank will lend them and the house price is 165k. A far cry from the ~60k they’ve managed to accure.
In short. They will never be able buy the house. Ever. Not in 56 months and not in 15 years. Unless their average salaries rise to match.
Essentially the number of years of your life being stolen to make someone else richer.
What happened in Northern Ireland between 2006 and 2010?
This is a bit silly really. Who can buy a house for cash…wealthy people or older people who have paid off a previous mortgage and then sell the family home to downsize.
Comparing regional house prices against average national salary is also a bit silly.
It’s only marginally worse than 20 years ago (20 years ago was already quite bad for a lot of people) in terms of salary, but living costs like rent, energy, fuel. food, public transport have all gone up a lot and definitely gone up by more than wages.
And the “average” frankly isn’t who was struggling before anyway. Those on “average” salaries have always been able to buy cheaper than average houses to live in and sometimes an additional one or two to rent out.
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Of course it’s much rarer to buy a house in all cash but this just shows how much more expensive London is compared to everywhere else! The 2nd most expensive area (South East) is almost 25% cheaper than London
Source: ONS
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Think this graph is a bit silly.
Because,
– on an average salary, you were to for example, save for house in the SE at 15x average salary, by the time those 15 years are up, the house would have increaed in price by 7% YoY avg. So likely still unobtainable.
– it doesn’t tell us how much they’re saving. But at 100% cash with those periods, I think it is safe to assume they’re puting their entire salary into it. Which obviously cannot happen lol.
– ‘all cash’ is a bit deceptive. The buying-window of a deposit saver decreases slower than someone aiming for 100% cash purchase.
For the deleted comment asking for a better graph to be made;
I probably could but not enough time until Sunday evening.
But I can tell you what it would look like. Along the bottom line you would see the savers savings creep up over the period, including interest.
The line above that, you would see the Minimum Deposit creep up, over the same period. Now it isn’t as simple as reaching 10%, because an average earning couple would not be able to get a mortgage for the amounts involved, so they’d need to reach a much lower LTV. Starting now at avg SE house of 323k, a couple on the median salary of 31k each (Ima ignore gross/net) would need to reach 44k as a total deposit. The Minimum Deposit required will move at 7% YoY.
At an aggressive 500pcm saved pp (1000 total, 25% of their disposable), and assuming 5% interest, they would reach that in 41 months. However because the deposit/houseprice has changed at 7% YoY they’d then be 11k short.
But as you can see, they’re now only another 11 months off, compared to the original 41 months. The gap is closing despite rises. At 56 months, you’d see the bottom deposit-accured line finally cross the _original_ Minimum Deposit line, allowing them to purchase, you’d think.
Wahey, they can buy a house. But no. Because the house also grew at 7% YoY (now 444k) and their salaries have not, the difference between what the bank will lend them and the house price is 165k. A far cry from the ~60k they’ve managed to accure.
In short. They will never be able buy the house. Ever. Not in 56 months and not in 15 years. Unless their average salaries rise to match.
Essentially the number of years of your life being stolen to make someone else richer.
What happened in Northern Ireland between 2006 and 2010?
This is a bit silly really. Who can buy a house for cash…wealthy people or older people who have paid off a previous mortgage and then sell the family home to downsize.
Comparing regional house prices against average national salary is also a bit silly.
It’s only marginally worse than 20 years ago (20 years ago was already quite bad for a lot of people) in terms of salary, but living costs like rent, energy, fuel. food, public transport have all gone up a lot and definitely gone up by more than wages.
And the “average” frankly isn’t who was struggling before anyway. Those on “average” salaries have always been able to buy cheaper than average houses to live in and sometimes an additional one or two to rent out.