On the BBC website I saw on the front page that house prices are moving up again. This seems to be portrayed as a good thing, but is it? On the TV this evening I saw some economic expert giving a bleaker view of it. Basically she was saying that interest rates are at an unusually low level and when they start to rise some people might have trouble paying off their debt. I think she said that normally interest rates are about two points higher than the rate of inflation and that the mortgage rate is usually two points higher than that, meaning a mortgage rate of about 7%.
If house prices were lower, then people would have smaller debts, meaning more money to spend in the shops etc. and thereby boosting the economy. Or is it more complicated than that? I take an interest in these things since although my housing costs are zero at the moment, one day they might not be.
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It does seem that way, often portrayed as a good thing. More than one reason i suppose, it's a big asset many people own they may well feel better if something they own is going up in value not doubt others. Although I think it might be better if it's shown that there is two sides to the story.
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I think they're overvalued by about 30% in many areas.
Depends on your financial situation whether thats a good or bad thing, my own view despite being personally well situated is that its not good for most people and wouldn't worry me one bit if a levelling took place.
There's lots of reasons for this price situation, airing some of which causes knickers to get twisted here.
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Somone in the east midlands I know has had a house on the market for 14 months. Price dropped from 350k to 300k and it wouldn't move.
Suddenly since easter, every house in the area has suddenly sold and my friend got an offer of 310k . They completed last week.
My cousin is an estate agent in north kent. He said its as if a plug has been removed and everything has suddenly shifted.
No fiscal factors are at play he says, the rates have been at this low level for the last 4 years, the sudden move in sales happened before the BoE injected money into the housing market and the average lending ratio to house price is still at about 83% He says its just a matter of buyer confidence.
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A friend of mine bought a house in E Lancs 4 years ago for £47k. Quite nice 2 bed terrace, reasonable area. He fitted a new bathroom, new kitchen, rewired, redecorated. On the market for 12 months and just sold for £43k.
He begs to differ re house prices on the rise.
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>> A friend of mine bought a house in E Lancs 4 years ago for £47k.
>> Quite nice 2 bed terrace, reasonable area. He fitted a new bathroom, new kitchen, rewired,
>> redecorated. On the market for 12 months and just sold for £43k.
>> He begs to differ re house prices on the rise.
They are on the rise, it had been considerably lower than that in the intermediate 4 years, and it will be worth more than 47k in three years time. Your friend bought and sold at the wrong time.
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>>He begs to differ re house prices on the rise.
Understandable.
In "far" East Lancs though, all the jobs have (long) gone - other than Rolls in Barlick, what's left?
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Just out of interest - when a valuation takes place on a remortgage application, does the house price fluctuation alter what they value at or do they look at the original purchase price?
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>> Just out of interest - when a valuation takes place on a remortgage application, does
>> the house price fluctuation alter what they value at or do they look at the
>> original purchase price?
A valuation is current value, not past or future.
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Thanks, I'm hellbent on reducing the LTV on my mortgage. Started a 90% and down to 86ish after 2 years - still a newbie to all this.
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>> Just out of interest - when a valuation takes place on a remortgage application, does
>> the house price fluctuation alter what they value at or do they look at the
>> original purchase price?
>>
The mortgagee is only interested in whether they can get their money back, so it depends on the size of the mortgage.
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The economic quagmire we have dug for ourselves by making a basic necessity of life into a major investment medium is that half the population wants prices to rise, and the other half wants them to fall.
So what is a safe and wise investment decision to one is a disaster to the other, whether prices are rising or falling. It's all part of making Britain dissatisfied and ungovernable.
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>>On the market for 12 months and just sold for £43k. He begs to differ re house prices on
>>the rise.
Absolute proof positive of rising prices. That his house has *suddenly* just sold proves that local prices have just that moment risen to the price that he wanted for it.
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>> On the BBC website I saw on the front page that house prices are moving up again. This seems to be portrayed as a good thing, but is it?
No, it is a bad thing.
People don't want to realize that their assets are going down in value. Thus, news of house price going up make them feel better. It also tries to send message to buyers that "unless you buy now, you have to pay even more in future" and thus tempting to buy and keep the bubble floating.
But let's see what happens in long term.
People take huge mortgage and pay a major portion of their income in mortgage.
This makes less money available for other items.
So they have to spend less on not-so-necessary items.
This in turn kills industry (and people's jobs) associated with those items.
One earner family becomes unsustainable.
House wives are forced to go out for work.
Kids are looked after by strangers (also know as childminders, nursery etc.)
Life style suffers.
Next generation finds it even more difficult to buy house (unless they decide to stay in parents' houses).
Why govt. don't want to burst the bubble?
Because
Most people are not capable of thinking in long terms.
More people forced to work means more tax.
Their banker friends can earn more interest on money lent.
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And you end up with a society out of kilter.People don't want to think in the long term,they want it now.Regarding children looked after by strangers,don't forget grandparents.
I agree with you about livestyle,more and more young people are stressed out coping with life.
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>> >> On the BBC website I saw on the front page that house prices are
>> moving up again. This seems to be portrayed as a good thing, but is it?
>>
>>
>> No, it is a bad thing.
No its a good thing. The economy is stagnant, dead, while everyone has negative equity.
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>>The economy is stagnant, dead, while everyone has negative equity.
It is stagnating and dead when people who should be renting because they have insufficient equity, buy house they can't afford to drop in value.
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>>
>> No its a good thing. The economy is stagnant, dead, while everyone has negative equity.
>>
>>
As I said, it's a good thing for people who own a house, it's a bad thing for people who don't but would like to.
The only way to give both what they want is to subsidise the purchase of houses by people who can't afford them. But as we have seen, that's a foolish and endless circular process that just drives prices up again.
Some people have gone to prison for promoting schemes like that.
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>>
>> >>
>> >> No its a good thing. The economy is stagnant, dead, while everyone has negative
>> equity.
>> >>
>> >>
>>
>> As I said, it's a good thing for people who own a house, it's a
>> bad thing for people who don't but would like to.
Buying and owning a house is not a right, nor a necessity. One can rent at similar prices to mortgage payments. Buying is for the fiscally stable, and renting is for those who are not.
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Why a good thing? If your house drops in price, then so will the next one you buy. Even in negative equity you still own the house. Whole thing seems daft to me.
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>> If your house drops in price, then so will the next
>> one you buy.
It can depend on whether you're buying in the same (or similar) area to the one in which you're selling.
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As with cars, it's the difference to change which is the important figure.
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The trouble with house prices consists of two elements:
we are not building enough and our population is growing.
Ain't going to be solved without some kind of prefab building as after WW2..
(House building is actually antiquated in the UK: almost all manual. And no automation of assembly. Like in medieval times plus plumbing and wiring... )
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Too much London centric economy is another reason. It made house price in South East a complete joke.
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>> Why a good thing? If your house drops in price, then so will the next
>> one you buy.
Yeah but you wont get a mortgage on the next one because your deposit is smaller. Its a matter of percentages.
and if you dont sell to move up, your house is not for sale to a new home buyer - at any price.
And while people think they are deep in debt, confidence is crap and NOTHING gets bought and the economy is in the crapper. Its no coincidence that with house buying unjammed the economy is in growth again.
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There are other ways of kick starting economy e.g. reducing tax etc.
If people have more money in hand, they will start buying lots of things and economy will move quickly.
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Not if they are in negative equity on a house it wont. Reducing tax also increases the country's national debt. Some other poor sucker down the line pays for it.
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Who will be able to afford the thousands of houses that the baby boomers are about to downsize from to boost their pensions?
Or will the market collapse?
Last edited by: Old Navy on Wed 14 Aug 13 at 17:57
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Well the family that bought our last house for quite a lot of money (when we downsized) lost their job. And got another well paid job in their area of work... except it's in a former Soviet Union country! And they are renting out the house here.... except it's empty at the moment which must be a worry for them.
But if you get a mortgage of what must have been well over £300k (they only had some equity) you still have to be able to pay it. And people in jobs paying a fair amount still can lose those jobs unfortunately.
And we moved out for them to move in before a deadline so they could get the oldest child into school. And now they're all in one of those countries ending in 'stan :-(
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This is only the front edge of the boomers, the bulk of them are yet to arrive at downsizing, pensions, etc.
Last edited by: Old Navy on Wed 14 Aug 13 at 20:34
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>> Who will be able to afford the thousands of houses that the baby boomers are
>> about to downsize from to boost their pensions?
>>
>> Or will the market collapse?
They will probably rent them out to provide an income.
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Or sell them to a company that will do the same.
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If the rent is about as much as a mortgage payment still not enough people able to afford the rent, and the politicians have realised that the taxpayer is a voter and does not like funding rent.
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Houseshare. My lad is doing it, with his friends - renting a nice house in Theale.
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>> renting a nice house in
>> Theale.
Uh oh. I shall be looking out for shonky old Lancers with their doors hanging off parked in the local Wetherspoons car parks.
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>> >> renting a nice house in
>> >> Theale.
>>
>> Uh oh. I shall be looking out for shonky old Lancers with their doors hanging
>> off parked in the local Wetherspoons car parks.
You'll be walking round there I assume, while the goona is off the road.
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Always walk to the boozer, Z. Real men don't drink and drive.
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>> Who will be able to afford the thousands of houses that the baby boomers are
>> about to downsize from to boost their pensions?
>>
The thousands of upwardly mobile professional couples expanding their families and looking for bigger houses in nicer locations.
Anyway talking as one "boomer", although hating the expression, I have no intention of downsizing. What's the point of retiring but then having less space to move about in? I didn't spend my working life just to end up in a box hardly bigger than the ultimate coffin.
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I'm one of the Silent Generation. tinyurl.com/3m9gx6n
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According to your link, L'es, I am one of your lot. The Boomers are stroppy young brats. :-)
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By definition there are more people in a "boom" generation than the generation that follows. As they die off as they are now starting to do or sell their houses to pay for care costs there will inevitably be more houses available than required by the next.
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>> By definition there are more people in a "boom" generation than the generation that follows.
>> As they die off as they are now starting to do or sell their houses
>> to pay for care costs there will inevitably be more houses available than required by
>> the next.
>>
Not true. There have been several later booms easily matching the scale of the original one.
We are in the middle of another one now, for example.
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>> Not true. There have been several later booms easily matching the scale of the original
>> one.
>> We are in the middle of another one now, for example.
>>
Plus the occasional immigrant arriving to rapturous welcome of benefits, housing, choice of jobs, etc.
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"Not true. There have been several later booms easily matching the scale of the original one."
In the year ending 31 December 1946 there were 820,720 births recorded in England and Wales. The number of births declined steadily for the next 10 years reaching a a low of 667,811 in 1955. The number of births in 2012 was 729,674 which is till far short of the 1946 figure.
The population increase in this country is mainly due to the death rate being less than the birth rate and to a lesser degree immigration. We have an ageing population and the likelihood is that the demand for large family houses will decrease as the demand for smaller houses and flats for young and single workers and care homes for the elderly increases.
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I think it's happening round my way already, CGN. There are a lot of large, 6+ bedroom places here, on an acre or more of garden. It seems that when they come on the market, and it's always old folks downsizing, they go to developers who demolish them and build smaller houses and apartments. Especially the properties on main roads. Young families don't have the means to buy 800k+ houses, and probably don't want the running costs associated either, even in the affluent Thames Valley. There is limited demand for large, prestige houses, even in the most desirable area of this town.
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>> Young families don't have the means to buy 800k+ houses, and probably don't want the
>> running costs associated either, even in the affluent Thames Valley.
Economics me ole fruit
Take one 800k house, knock it down, build 6 smaller "executive city style" houses on the plot at a cost of 150k each, sell for 350k each.
400k profit. More if you "terrace" the exec houses, building costs come down
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Oh yeah, I know. That's what I was saying. There's only a market to sell these houses to developers.
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>> By definition there are more people in a "boom" generation than the generation that follows.
>> As they die off as they are now starting to do or sell their houses
>> to pay for care costs there will inevitably be more houses available than required by
>> the
Not true, easily demonstrated because
A: the population of the uk only goes up every year
B: the number of people requiring housing only goes up every year
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We're boomed I tell you! BOOMED!!
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There was a big jump in the UK population growth rate in 2010. www.indexmundi.com/g/g.aspx?c=uk&v=24
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The study by the Halifax said payments accounted for 27% of average incomes in the second quarter of 2013 compared with a high of 48% in 2007.
The average share of mortgage payments as a proportion of income for new borrowers over the past 30 years is 36%.
www.bbc.co.uk/news/business-23736707
Also reported in todays Times.
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Can’t help thinking that there’s a problem brewing up with all this though. My social circle is quite a wide age group, in the tennis club I mix with people my own age up to late 20s early 30s. I know of four people who have emigrated, two to Australia, one to NZ, one to Toronto (although a company secondment I don’t think they will return). I wouldn’t say that cost of housing was the main reason but it was certainly part of their decision to leave. These are all skilled people who have got Degrees. I wonder if anyone has done any research into the skills leakage compared to those entering the UK.
Maybe we need more State housing. But hasn't that all been sold off?
Last edited by: MJW1994 on Sun 18 Aug 13 at 12:57
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>> I don’t think they will return). I wouldn’t say that cost of housing was the
>> main reason but it was certainly part of their decision to leave.
You checked out house prices in Australia?
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Mega bucks across Oz, mind you I didn't think Toronto was cheap either. Mind you must be something about Oz its the top destination for expats. Per year more than Spain, although it'd be interesting to see how many actually stay there.
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Houses seem to have exceed inflation by a comfortable margin. In round terms, mine cost £20000 in 1973. According to the Bank of England inflation calculator, this equates to £205,000 today, yet similar nearby houses go for half a million.
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Speaking as one whose profession is property, and working in NW London, the price boom (which has been underway all year here) is part confidence, but mostly supply and demand imbalance. Population growth (largely immigration driven) is nowhere near matched by housing supply.
Daily we hear of a new high price being paid for a flat/house in a given road, and we say: "Who on earth is paying these prices?" I dread to think how my kids are supposed to be able to afford a place of their own when their time comes.
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>>>Houses seem to have exceed inflation by a comfortable margin. In round terms, mine cost £20000 in 1973. According to the Bank of England inflation calculator, this equates to £205,000 today
True but many folks can't view it on a 40yr cycle. Those that bought around 2006 with builder incentives, part-ex and shared equity are looking at a painful loss 7ys on.
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>> >>>Houses seem to have exceed inflation by a comfortable margin. In round terms, mine cost
>> £20000 in 1973. According to the Bank of England inflation calculator, this equates to £205,000
>> today
>>
>> True but many folks can't view it on a 40yr cycle. Those that bought around
>> 2006 with builder incentives, part-ex and shared equity are looking at a painful loss 7ys
>> on.
You need to look at a 10 year cycle minimum to be very sure of making *profit or at least recouping your outlay. Over 30 / 60 years the curve is only up - 7% per annum on average.
*profit? Only when or if you down size.
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>>>*profit? Only when or if you down size.
Or improve, sell on and buy low again.
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>> I dread to
>> think how my kids are supposed to be able to afford a place of their
>> own when their time comes.
>>
They'll have to do as we did, which is to save for the deposit and then make paying the mortgage their main priority rather than buying unnecessary goods and chattels and going on expensive foreign holidays. Sadly, these days youngsters don't think that way. I remember mortgage rates of 14%, so today's rates are peanuts.
Last edited by: L'escargot on Tue 20 Aug 13 at 07:24
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They will indeed have to save for a large deposit and prioritise on paying the mortgage. And even though interest rates are a lot lower than they have been, actual house prices compared to incomes are very expensive.
However, at times in the past a mortgage could be had with a deposit of say 5%. To get a mortgage you might even need to pay 25% deposit and on a £200k home that's a £50k deposit which will take some saving. And that leaves £150k to borrow so you're probably earning over £40k as individual to get that mortgage.
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>> To get a mortgage you might even need to pay 25% deposit and
>> on a £200k home that's a £50k deposit which will take some saving.
A £200,000 home is an expensive property and not something I would expect to start out with. If I was starting out on the property ladder again I wouldn't set my sights on buying anything over about £80,000 ~ a flat perhaps, or a 2 up and 2 down terraced house.
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>> my sights on buying anything over about £80,000 ~ a flat perhaps, or a 2
>> up and 2 down terraced house.
Ho Ho Ho
One would have to travel 40 miles to Luton from here to find one of those.
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>>
>> >> my sights on buying anything over about £80,000 ~ a flat perhaps, or a
>> 2
>> >> up and 2 down terraced house.
>>
>>
>> Ho Ho Ho
>>
>> One would have to travel 40 miles to Luton from here to find one of
>> those.
>>
I've always found employment in areas where I could afford the property prices.
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>> >> One would have to travel 40 miles to Luton from here to find one
>> of
>> >> those.
Or find a job in Luton.
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How many employers have you had?
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What if you live in the South East? £80k isn't going to get you much is it? That's why I used £200k as an example. Maybe you don't realise how expensive properties are in some parts of the country.
In our area, a decent sized 3 bedroom house is probably close to £250k (this is the north west so cheaper). A 2 bedroom flat in the same would be over £100k.
So I think for your budget you'd have to admit you're limiting where you can possibly live. For example, the cheapest 2 bedroom flat on Rightmove in Wokingham is £145k.
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>> For example, the cheapest 2 bedroom flat on Rightmove in Wokingham is £145k.
>>
There are 2-bedroom flats for sale in Morley for £80,000. Handy for working in Leeds, where there are lots of employment opportunities. tinyurl.com/n8tqwd5 Also houses up to £80,000. tinyurl.com/lmzpnk7
Last edited by: L'escargot on Tue 20 Aug 13 at 09:07
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>> So I think for your budget you'd have to admit you're limiting where you can
>> possibly live.
When I've been out of work, for whatever reason, I've always moved to where there was a combination of employment opportunities and housing that I could afford. I've never ruled out living anywhere. If someone isn't prepared to do that, then it's no good them complaining that they can't afford to buy a house.
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>> When I've been out of work, for whatever reason, I've always moved to where there
>> was a combination of employment opportunities and housing that I could afford.
Presumably there are other considerations that affect the decision to some degree eg. wife's job, kids' school(s), proximity to other family members etc.?
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Yeah I know some one who works at a special school. Many of them are tied to one area because of their children.
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>> >> When I've been out of work, for whatever reason, I've always moved to where
>> there
>> >> was a combination of employment opportunities and housing that I could afford.
>>
>> Presumably there are other considerations that affect the decision to some degree eg. wife's job,
>> kids' school(s), proximity to other family members etc.?
>>
No, as the main wage earner in the family remaining so was the only consideration. And proximity to other family members never did come into the equation.
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>> >> Presumably there are other considerations that affect the decision to some degree eg. wife's
>> job,
>> >> kids' school(s), proximity to other family members etc.?
>>
>> No, as the main wage earner in the family remaining so was the only consideration.
>> And proximity to other family members never did come into the equation.
I don't understand - if there are 2 wage earners in the family then it makes sense to find somewhere that maximises your combined income. Or didn't your wife work? And you also want to minimise disruption to your kids' lives, and the cost of the school run - not overriding concerns, but surely something to include in the equation?
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I don't understand - if there are 2 wage earners in the family...
You have to put yourself in l'Es's early-1960s timewarp. Then, one decent income could fund a family home, so ensuring the continuity of that income was all he had to worry about. Not that simple any more: the option of a second income, hard-won by feminism during the 60s, has become a necessity for most families, thanks mainly to housing costs and to the detriment of family life and outsourced children across the country.
(I know - family values from a non-Tory! Not everything is as simple as attaching a label.)
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Ok, thanks WDB - I guess I was reading L'Es' post as a suggestion for how the modern family man should look for a job, in which context I don't think it's correct.
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>> >> >> When I've been out of work, for whatever reason, I've always moved to
>> where
>> >> there
>> >> >> was a combination of employment opportunities and housing that I could afford.
>> >>
>> >> Presumably there are other considerations that affect the decision to some degree eg. wife's
>> job,
>> >> kids' school(s), proximity to other family members etc.?
>> >>
>>
>> No, as the main wage earner in the family remaining so was the only consideration.
>> And proximity to other family members never did come into the equation.
>>
Pretty unusual there, nearly all people have some other consideration. Location moving too, kids schools, people still might move but they will have had all sorts of considerations. Where to put the kids into school or similar never even came up as consideration? Or similar issue?
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>> They'll have to do as we did, which is to save for the deposit and
>> then make paying the mortgage their main priority rather than buying unnecessary goods and chattels
>> and going on expensive foreign holidays. Sadly, these days youngsters don't think that way. I
>> remember mortgage rates of 14%, so today's rates are peanuts.
L'es, you have absolutely no idea. Sorry, but you really don't. Clueless doesn't even begin to cover it.
Did you have to save 80% of your pre-tax annual salary to get a mortgage to buy a 1 bed flat, as well as live off that salary to a minimally acceptable standard?
A friend of mine does. She works two jobs and hasn't had a foreign holiday since I have known her. Her social life is about at the minimum level needed for an intelligent human being to avoid a mental breakdown.
The mass labelling of "youngsters" as feckless and irresponsible by a generation of people sitting in comfortable retirement partly funded by a massive house price boom that they and they alone have benefitted from disgusts me.
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I agree with every word you say there DP - the baby boomer generation have had the best of everything the country had to offer, and are now busy pulling the ladder up after them. Rat-bags!
However, one thing L'es says is true, which is that people do have to be prepared to move to where the work is, and incorporating this into unemployment benefits would be a good step.
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>> I agree with every word you say there DP - the baby boomer generation have
>> had the best of everything the country had to offer, and are now busy pulling
>> the ladder up after them. Rat-bags!
>>
>>
>>
How?
All the baby boomer generation did was to go with the flow, as did every generation before and as will every generation afterwards.
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>>How?
I'm not sure that I can accept blamelessness. From a generation which made a lot of noise and fuss in the 60's about living in a better way, I would say that the reality has been starkly different.
While yes, the decisions taken were not taken by the entire boomer generation, generally they haven't been protesting and marching as the privileges they enjoyed have been removed for those who follow.
Every boomer taking early retirement on conditions which aren't sustainable, and now aren't available to those who follow can't escape blame.
Perhaps, just perhaps!, calling an entire generation ratbags wasn't fair, but, they're certainly not blameless either.
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>> L'es, you have absolutely no idea. Sorry, but you really don't. Clueless doesn't even begin
>> to cover it.
Not the first person to point this out...........
I reckon he must be on the wind up, what with this thread and the pensions one. Nice work, L'es.
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Yeah its a good one. ON is good as well, must pass the day for all the retired blokes on here ;)
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>> Yeah its a good one. ON is good as well, must pass the day for
>> all the retired blokes on here ;)
>>
Swings and roundabouts, my savings, investments, and income are being done no favours by the tiny interest rates. Just wait until they go up to double digit rates, and the eventually will, then you will have something to whinge about, but will survive. As Zero, myself, and most of the other "comfortable" pensioners here did. A little financial planning, and retire debt free, its not rocket science, even I can figure it out. If you can't the secret is live within your means.:-)
Last edited by: Old Navy on Tue 20 Aug 13 at 12:20
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Only a bit of fun ON. I'm fine on the financial front thanks ;). As to the past generation I've not got a time machine, so what they did or didn't do isn't something I worry about. All history now.
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>> Swings and roundabouts, my savings, investments, and income are being done no favours by the
>> tiny interest rates. Just wait until they go up to double digit rates, and the
>> eventually will, then you will have something to whinge about, but will survive. As Zero,
>> myself, and most of the other "comfortable" pensioners here did. A little financial planning, and
>> retire debt free, its not rocket science, even I can figure it out. If you
>> can't the secret is live within your means.:-)
Up to a point Lord Copper. I presume you have reasonable pension from your Naval service and possibly something you did after. Zero has mentioned that he took his defined benefit pension before it was affected by closure, cuts etc. I'm working through same process with my Civil Service pension - waiting for confirmation of my redundancy package as I type.
Next to nobody in private sector is getting that kind of benefit now. What's available in the public sector is still good but far less than my generation have had. Our lack of debt is often due to the housing asset boom in both our own homes and our real or presumptive inheritances from parents.
If we get on top of the housing/affordability thing, which essentially is about supply, then prices will fall. The effect of that of course, felt strongly by generation vote, is the politicians lack the courage to even ease the brakes on building never mind take the firm directive action 1940's style that's actually needed.
See Amol Rajan in yesterday's Stannad:
www.standard.co.uk/comment/comment/amol-rajan-why-do-we-tolerate-daylight-robbery-in-housing-8774033.html?origin=internalSearch
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>>>the baby boomer generation have had the best of everything the country had to offer, and are now busy pulling the ladder up after them. Rat-bags!
Hmmm or as in the case of the boomers that I see daily they are helping their children and grandchildren to a massive degree so carrying over their "spoils" to this generation who are finding things difficult.
Last edited by: Fenlander on Tue 20 Aug 13 at 10:47
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at the Moment its with the BBs, but they pop their clogs in many cases it'll end up in their childrens hands.
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>> in comfortable retirement partly funded by a massive house price boom that they and they
>> alone have benefitted from disgusts me.
And I have told you before, you and your generation are not unique.
Have you or your ilk had to struggle with a mortgage with double digit interest rates? going UP monthly? Everybody has to struggle, and always has done, to get on the housing ladder.
As the article above said, affordability is currently BELOW the historical average.
You wanna watch that chip on your shoulder its getting so heavy you might topple under its weight.
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Yep unaffordability can come in many ways.
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Most people have focussed on the size of the mortgage in Lsd not actually the cost of repayments which is what makes it affordable (or not). OK you need to be conscious of any possible increase in interest rates, but some of the interest locked in deals provide a degree of protection. Deposits are frequently funded by the 'drawbridge pulling' babyboomers keeping the market alive and I suppose protecting the inflated prices of their own properties? Little point in taking it with you:)
Last edited by: pmh on Tue 20 Aug 13 at 11:00
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>
>> You wanna watch that chip on your shoulder its getting so heavy you might topple
>> under its weight.
>>
And you wanna watch you don't strain your back as you hoik that ladder up.
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>>
>>
>> >> in comfortable retirement partly funded by a massive house price boom that they and
>> they
>> >> alone have benefitted from disgusts me.
>>
>> And I have told you before, you and your generation are not unique.
>>
>> Have you or your ilk had to struggle with a mortgage with double digit interest
>> rates? going UP monthly? Everybody has to struggle, and always has done, to get on
>> the housing ladder.
A SHORT TERM problem, Z. You had a few years of hardship and then you were sitting pretty.
Are house prices going to fall any time soon? Are pensions going to become more affordable or pay out more? It's only going one way.
And affordability of a mortgage is a just a little bit irrelevant if you can't get one in the first place.
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>
>> A SHORT TERM problem, Z. You had a few years of hardship and then you
>> were sitting pretty.
As does every house buyer, those of my parents generation, those of my generation, those of your generation and those of our kids generations.
>> Are house prices going to fall any time soon?
No of course they are not. Over the long term they never have, and they never will. Thats why you bought one, those of my parents generation, those of my generation, and those of your kids generation will buy one.
Its exactly the same as it ever was.
>>
>> And affordability of a mortgage is a just a little bit irrelevant if you can't
>> get one in the first place.
I had to save 10 years to get mine and I needed to borrow 4 TIMES OUR JOINT INCOME AT A RATE OF 7% THAT REACHED AT ONE TIME 11% I got turned down by nearly every Building society, take out an endowment mortgage.
I could say based on that you have no idea, you never had it so good. But in truth, its just the same.
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>> >> They'll have to do as we did, which is to save for the deposit
>> and
>> >> then make paying the mortgage their main priority rather than buying unnecessary goods and
>> chattels
>> >> and going on expensive foreign holidays. Sadly, these days youngsters don't think that way.
>> I
>> >> remember mortgage rates of 14%, so today's rates are peanuts.
>>
>> L'es, you have absolutely no idea. Sorry, but you really don't. Clueless doesn't even begin
>> to cover it.
:-D
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>> Who will be able to afford the thousands of houses that the baby boomers are
>> about to downsize from to boost their pensions?
As a non baby-boomer, in fact a child of that generation, I though that the baby-boomers were supposed to be 'sorted' on the pension front? Isn't that why my generation are up in arms? Sure downsizing will free up cash, but it's far from essential for many isn't it? It's the many from the generations that follow with, on the whole, inadequate pension provision, that are counting on downsizing I thought...perhaps that'll give a softer landing to house prices as a result ;-)
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Only 11% - pah!
The bungalow we bought in West Wales was strapped at a rate of 13%, which rose to 14% for a while BEFORE we moved in! (Plus a mortgage type pension).
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Yeah I loved it when I wanted to get a mortgage slightly over the multiples on my first house. The figures were something like I could get £10,500 but needed £11,500. The charming building society charged me an extra 1% on the balance - even further into double figure interest rates - kicking a man when he's down or what?
Mind you, we did get some tax relief on the interest on those days.
I don't think house price inflation has made much difference to me but then I've not moved around a lot and have been in my current property for over 20 years. It wasn't quite big enough once the kids were teenagers but we survived. Could have chosen to move but took the line that I'd always have a mortgage, which I didn't want.
Neither of my kids earn more than £30k, both are single and are managing to buy a property on their single salary (admittedly with some assistance towards unexpected costs when they arise, and birthday xmas presents being useful rather than frivolous). They don't moan about it that much, I think this baby boomer argument is more about the "current generation" expecting everything now, and not being happy to start at the bottom and work up.
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>> I think this baby boomer argument is more about the "current generation"
>> expecting everything now, and not being happy to start at the bottom and work up.
>>
smokie, you've hit the nail on the head.
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Pretty difficult to generalise about an entire generation, any one.
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>> Pretty difficult to generalise about an entire generation, any one.
Doesn't seem to worry L'escargot.
I wonder if he knows or has any meaningful relationship with anyone who has the misfortune to be under 30 that he seems to think are such lazy, impatient, workshy pale shadows of his generation.
I wonder if he also realises that it is the guiding hand and parenting of his generation that is responsible for the generation he doesn't seem to have a good word to say about.
Still, far easier to just dismiss with a label than to actually empathise and understand the position of others.
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>> >> Pretty difficult to generalise about an entire generation, any one.
>>
>> Doesn't seem to worry L'escargot.
>>
>> I wonder if he knows or has any meaningful relationship with anyone who has the
>> misfortune to be under 30 that he seems to think are such lazy, impatient, workshy
>> pale shadows of his generation.
>>
>> I wonder if he also realises that it is the guiding hand and parenting of
>> his generation that is responsible for the generation he doesn't seem to have a good
>> word to say about.
>>
>> Still, far easier to just dismiss with a label than to actually empathise and understand
>> the position of others.
>>
:-D
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>>*profit? Only when or if you down size.
Not around here. It is an area very popular with retirees from all over. The market for two-bedroomed bungalows is brisk and their prices high. After paying for the sale and removals, I doubt there would be anything left over.
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Cobblers. Most youngsters would be delighted to be able to start at the bottom, they simply can't.
Prejudice against the young, as is usual from the old.
In my 40s now, I was fortunate to get on the housing ladder before the start of the last big bubble, 1997. I know others my age who didn't do it then and have still failed to do so.
Anyway, you carry on - you're all right, Jack.
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>> Cobblers. Most youngsters would be delighted to be able to start at the bottom, they
>> simply can't.
The reason they can't is because, as smokie pointed out, they want everything all at once.
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Yes "they" do.
How do you know this? What actual grounds do you have to make such a sweeping and ridiculously inaccurate statement?
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>> Yes "they" do.
>>
>> How do you know this? What actual grounds do you have to make such a
>> sweeping and ridiculously inaccurate statement?
>>
Let me turn it around and ask you the question. How many youngsters do you know whose main priority is not having all the latest electronic gadgets, is not dressing in all the latest fashions, and is not having a car?
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>> Let me turn it around and ask you the question. How many youngsters do you
>> know whose main priority is not having all the latest electronic gadgets, is not dressing
>> in all the latest fashions, and is not having a car?
>>
Plenty. This generation of teenagers is acknowledged to be more studious and responsible with their schooling and education than ever before. This is because they know they're going to have it tough when they start work. They are looking for an edge. They will start with 30k debts for tuition to start with.
Tell you what. You tell me how teenagers didn't want the latest fashions and trends in 1964.
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Depends what you mean by youngster, teenagers same as any generation. I think this covers those offer than that. You can't bracket them all together.
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I know a handful who do have those priorities, but I know a heck of a lot more who don't. I daresay not all of your generation prioritised buying a house over having a good time.
The time and effort involved in saving a £20,000 deposit to buy a 1 bed flat out of taxed income while needing to live and pay rent out of the salary a typical 20-something earns goes a bit beyond being upset at not being able to have something now.
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>> The time and effort involved in saving a £20,000 deposit to buy a 1 bed
>> flat out of taxed income while needing to live and pay rent out of the
>> salary a typical 20-something earns goes a bit beyond being upset at not being able
>> to have something now.
I did it, you did it, my parents did it.
Everyone says 'I was fortunate to get in on the bottom of the bubble" in 93.
I was fortunate to get in on the start of the bubble in 83, my parents in 63, and again in 73.
See the trend here? Nothing is different. It was hard to get on the bottom rung then, (and you can choose whenever "then" was) and its hard to get on now. Somehow you do it and you scrimp and fret and worry in the early years.
The only sure thing is that house prices, long term, go UP. Thats not new either.
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I know a handful who do have those priorities, but I know a heck of a lot more who don't. I daresay not all of your generation prioritised buying a house over having a good time.
The time and effort involved in saving a £20,000 deposit to buy a 1 bed flat out of taxed income while needing to live and pay rent out of the salary a typical 20-something earns goes a bit beyond being upset at not being able to have something now.
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>> The time and effort involved in saving a £20,000 deposit to buy a 1 bed
>> flat out of taxed income while needing to live and pay rent out of the
>> salary a typical 20-something earns goes a bit beyond being upset at not being able
>> to have something now.
>>
>>
That's the big problem for 'youngsters' today I think (I'm only 42 myself...!) As a newish (2 years at work) graduate I bought a two/three bed terraced house in Reading in the early nineties for £50k. My annual salary was £18k, and I needed around £5k for a deposit and costs. Looking on rightmove those houses now cost £200k or so. You'd need a 10% deposit as a minimum, so probably nearer £25k when you add in arrangement fees, surveys, stamp duty and solicitors costs.
According to The Telegraph (!) average starting graduate salaries are £25k, so lets be generous and assume £30k after 2 years - that means saving almost a years gross salary compared to just 3 months roughly 20 years ago. That's a big difference, and saving £50 a month by not having an iPhone 5 and an iPad is not really going to make much difference ;-)
I guess the question is, are houses too expensive or graduate salaries too low nowadays... ;-)
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Simple - houses ARE too expensive, certainly for first time buyers in any place where one would want to live.
In our (cheap) town a habitable house in reasonably decent order may be bought for C£50 K, but not in a "nice" area. There are some pretty rough areas in a town once reliant on mining.
In our road, mainly of mid 1980s semis in a quite desirable area, close to open country, (houses let & sell quickly) a tidy two bedder with all the usual amenities, such a CH, DG, will be under £100K. (Ours was, by a decent bit!).
However, 10% is STILL a big whack to find for a young couple.
Last edited by: Roger on Tue 20 Aug 13 at 20:16
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>> However, 10% is STILL a big whack to find for a young couple.
It is, and to get a better rate you might have to find double that or more.
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>> Let me turn it around and ask you the question. How many youngsters do you
>> know whose main priority is not having all the latest electronic gadgets, is not dressing
>> in all the latest fashions, and is not having a car?
>>
Depends what you mean by 'youngsters' I guess. I'd agree on technology, though it's not that expensive nowadays - I think perhaps we forget that. 'Youngsters' of whatever generation have always wanted the latest fashions, and clothes are also cheaper than they've ever been in real terms as well.
Its interesting looking round our carpark at work though; we have a large population of twenty somethings, and if you ignore the company cars they are not spending money on flash cars, or even particularly new ones. Its the mid thirties upwards of us, who've bought our own houses and earn more money, that tend to have the new German metal. And even then in real terms they're cheaper than even 10 years ago. It's really just a reflection of higher living standards surely? Holidays, cars, eating out - all were less common and more expensive. Now those things are cheaper so it doesn't necessarily follow that those doing them are profligate...IMO :-)
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>> The reason they can't is because, as smokie pointed out, they want everything all at
>> once.
>>
And that, as I have pointed out, unless you have some pertinent evidence to support your claim, is prejudice.
Or, are you seriously suggesting that the young want a 4 bedroom family home on leaving education? If not, perhaps they are simply trying to afford a starter home to get them going? And, if it's the latter, which it obviously is, how is that "wanting everything all at once"? Why shouldn't they be able to afford a home?
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Who's they? Someone you know?
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I don't know which is more ridiculous, DP's "Old people ruined my life" or L'es's "Young people should work harder".
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>> I don't know which is more ridiculous, DP's "Old people ruined my life" or L'es's
>> "Young people should work harder".
>>
I've never said they should work harder. I've merely said they should forego the luxuries that most of them take for granted and they should use the money to save more towards getting on the property ladder.
Last edited by: L'escargot on Tue 20 Aug 13 at 15:04
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>> I don't know which is more ridiculous, DP's "Old people ruined my life" or L'es's
>> "Young people should work harder".
Old people have not ruined my life. Where did I say that? I'm doing OK thanks very much.
I just get very offended and yes, a bit emotional when some of them sit there in a cloud of sanctimony, passing judgment on the young when they have absolutely no clue what it is like starting out in life in the modern economy.
I got on the ladder before it went skywards. But I have the good grace to accept my good fortune and appreciate life is tougher for the generation coming through now.
I'm nearly 40 for heaven's sake. Not far off being an old person myself.
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Nearly 40 and a old person? I'm 64 don't feel old, just knackered..:) It wasn't easy for lots of our age group to start out nothing is given in live. Unless you win the lottery rich parents help.
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>> I don't know which is more ridiculous, DP's "Old people ruined my life" or L'es's
>> "Young people should work harder".
>>
:-D
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>> I was fortunate to get on the housing ladder before the
>> start of the last big bubble, 1997. I know others my age who didn't do
>> it then and have still failed to do so.
Me too, by the skin of my teeth.
And as I sit in my 3 bed house which, although not paid for, is comfortably affordable in the present circumstances, I can actually appreciate that the generation coming through now are, without a significant inheritance or benevolent parents, not going to enjoy the same privilege at the same time of life.
They aren't lazy or workshy. I wouldn't swap places with them for anything.
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>> >> I wouldn't swap places with them for anything.
>>
I always find that kind of statement very puzzling. You must be very young indeed to throw away an "offer" to wipe 25 years off your life.
Will you still feel that at 85 and being dragged off into an old people's home? Wouldn't you like to swap with someone of 60?
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tbh I don't think this is all down to attitude or profligacy, though as I said my daughters are both under 30 and have been, in my eyes, sensible in stretching themselves to get onto the housing ladder. And I could quote examples at both ends of the spectrum from their friends - one with the new BMW at 25 on the never never, and those who are even more "sensible" than mine, and have very little social life.
But of course it's also down to wages, and whether they have or are likely to increase - years of depression meant that I suffered virtually no increase in the past 8 years when I was in my last perm job, but I was on a reasonable starting point. Some massively big salaries are out there for the smart kids, but for the rest it is just getting by on an average wage with little prospect of much of an increase these days - and prices always on the up.
And you can hardly blame any one generation for the pensions situation. Maybe those who have retired more than say 5 years ago got the best deal, but it wasn't them who pulled up the ladder. This is surely more about the banks and their high risk gambling strategies going wrong, and completely unbalancing the world economy. Also the chase for ever larger profits by these and other companies.
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>>
>> And you can hardly blame any one generation for the pensions situation.
I don't think you can blame any one generation as a whole for anything.
The blame lies squarely on successive governments worldwide and the cynical way they have pandered to and exploited the electorate.
1) They have peddled the notion that perpetual economic growth can be sustained simply by spending borrowed money, and encouraging individuals to do the same.
2) Closing their eyes to the fact that life expectancy has been rising for at least the last 100 years, and doing nothing to alert either individuals or the pensions industry.
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>> I think this baby boomer argument is more about the "current generation"
>> expecting everything now, and not being happy to start at the bottom and work up.
>>
Now where have I heard this batch of whingers called the "Me, Now" generation? And which generation racked up all the personal debt?
Glad someone actually agrees with me. :-)
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...Someone who's similarly out of touch, you mean? (Even if he does seem to have grasped the significance of 'Ms').
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ooooh, look what I've started with this thread...
The older generation seem to blame the youngsters for wanting everything straight away; and the younger blame the older generation for having had an easier ride in buying property. I suspect the truth is somewhere in between the two extreme views. I think the problem is more London and the SE, my Dad bought a flat three years ago in Notting Hill when we returned to the UK to save him commuting each day. The prices there have gone up a lot in the last three years. Around the Bristol area the prices seem a bit more sensible although Clifton, Cotham and anywhere on the Downs is very expensive.
Regarding whether youngsters take luxuries for granted and want everything now, it's a bit of a generalisation. I can think of cases where that is broadly true, but I can also think of many cases where it isn't. When I think of my social group I probably have the most luxuries, if a three year old Scenic, two bicycles, surfboards, dinghy, gym/sports centre and tennis club memberships and part ownership of a Yamaha PWC are luxuries. I suppose they are but I have worked since leaving school at 16 and live at home. Also things some of my mates do I am not interested in, such as drinking, eating out or buying clothes. I don't need many clothes, office clothes in the week and sportsgear evenings and w/e, that's about it. I will sometimes go out drinking but because I don't do it often my body isn't used to it. Two pints and I'm anyone's…
I do have some mates though who are skint either due to reckless living or just misfortune in some way or another (lack of opportunity, unemployment etc),
But then my brother (almost 16) is about the tightest person you will ever meet although for some odd reason he is very popular.
I also know a middle-aged couple (early/mid 40's) who are extravagant, for example a new leased Discovery that is lucky to be used once a week, wife buys clothes and shoes specially for a party and never worn again, have a new kitchen installed when the old one was perfectly good and a few other things as well no doubt. I know these people well, they're called parents...
I have enjoyed reading this thread and the opposing views in it, sorry if it has caused any bitterness.
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>> I have enjoyed reading this thread and the opposing views in it, sorry if it
>> has caused any bitterness.
>>
>>
Don't worry mate, you're not a true member here till you've caused bitterness and abuse and stormed off in a flounce a couple of times threatening never to return. You're fitting in well ;-)
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Most things can be forgiven, but this...
>>middle-aged couple (early/mid 40's)
What do you think that makes us???!?!?!?!?!?
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>> I probably have the most luxuries, if a three year old Scenic, two bicycles, surfboards,
>> dinghy, gym/sports centre and tennis club memberships and part ownership of a Yamaha PWC are
>> luxuries.
>>
Too right they are luxuries, When things get tough all you need to survive are shelter, water, and food.
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Shelter is for the weak - you're too used to being in a steel tube under the waves, old chap.
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You got the old bit right, I am becoming soft in my old age. :-)
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>>Regarding whether youngsters take luxuries for granted and want everything now, it's a bit of a generalisation.
>> I can think of cases where that is broadly true, but I can also think of many cases where it isn't
The first house we bought in 65...
No running hot water( never had been in the kitchen) , no power sockets, a duff " Gas Light and Coke Company gas cooker, no floor coverings, no curtains just bare walls.
Bed and cooker on hire purchase. No furniture so started scrounging.
That was a 1930s semi in "original condition " in Hounslow
A fantastic buy but we had exhausted all savings.
Second - current house bought when interest rates were 15.5%.
Now that really would make the " I want it all now ! " types cry.i
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>>no floor coverings
You had FLOORS in your first house ????
LUXURY !!!
Last edited by: Number_Cruncher on Wed 21 Aug 13 at 20:48
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Speaking personally, I know several young people, mid/late 20's , four of whom are related, who constantly bleat about not being able to afford a house. Yet they all have good jobs, earning far more pa than I ever did. Yet they blow every penny they earn. Cinema twice a week, eat out three times a week, gym membership, expensive hols all over the globe, and new cars every 3 years.
On the other hand, a young lad who worked for me from the age of 18, never earned much, but his second job, 5 nights a week behind a bar (as my Gran said ''if you're working you're not spending'') allowed him and his girlfriend to save a deposit on a terrace house within 3 years. Obviously we are not talking London prices.
Myself...I had a paper round, delivered milk, caddied, shovelled snow for old ladies and gardened in summer. Aged 17 I passed my test. And surprise surprise had enough ££ to buy my own car. An old Mini Clubman estate.
I then applied myself to saving the deposit for a house. Took me 6 years, and I needed a lodger. Sometimes I had 2 lodgers. Annoyed me intensely but without them in '78 I could not afford the mortgage payments. Second hand or free furniture, tatty carpets, no meals out (ok..the odd cheap Bradford curry) camping holidays both in the UK & Europe. But I was on the housing ladder aged 23 because I wanted it badly enough. Just as the young lad who worked for me did. Tax relief certainly helped, but I have never paid anything but lower rate tax.
If you live outside the SE, have a half decent job and cut your cloth accordingly, live at home or rent cheaply with friends, I see no reason why anyone cannot afford a home deposit by their mid 20's. The important thing is to get on the housing ladder, even if it means a draughty run down property, which in itself is a whole new challenge, as it was for me.
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Part of what may help seems simple to me. Why doesn't the Gov finance the building of pre-fabs for youngsters starting out in married life. Lounge/diner, bathroom, kitchen and one and a half bedrooms in case a baby arrives. Rent them cheap to kids with jobs until they've saved enough to move on.
It would help the building and supply industry a little. Most people who are interviewed about living in them seem to rave about it. We have a few locally and very nice they look.
Modern building, insulation and heating would mean cheap utility bills helping the kids to save.
Or is that too simple ?
Ted
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legacylad, it sounds as if you and I have exactly the same views and experiences regarding starting out on the property ladder.
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>>I see no reason why anyone
>> cannot afford a home deposit by their mid 20's. The important thing is to get
>> on the housing ladder, even if it means a draughty run down property, which in
>> itself is a whole new challenge, as it was for me.
>>
Being on the housing ladder and skint is also an excellent way of gaining and improving DIY skills.
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You had a kitchen??
We had no kitchen in our first property, and no bathroom, just 1 bedroom and a 'living' room with 2 alcoves which housed the cooker in one and a sink in the other.
We had an inside toilet though, where I kept 10 gallon drums of petrol during the petrol rationing in the 70's.
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>> You had a kitchen??
>>
>> We had no kitchen in our first property, and no bathroom, just 1 bedroom and
>> a 'living' room with 2 alcoves which housed the cooker in one and a sink
>> in the other.
>>
>> We had an inside toilet though, where I kept 10 gallon drums of petrol during
>> the petrol rationing in the 70's.
>>
Did you have to lick the road clean with your tongue before you went to work?
You don't know you've lived!
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>>You don't know you've lived!
Oh, I know alright!
:+)
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My approach to paying off my mortgage as quickly as possible was to increase my repayment every time I got a salary increase. My aim was to keep my mortgage repayment a constant percentage of my salary.
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Mine was to upsize to a cheaper house in a different part of the country and buy it outright with the equity released from the first sale.
But that was in the happy days of 1984.
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I went abroad in 1970, worked 2.5 years in Saudi Arabia - saved £8,500+ - the UK average pay was under £1,000 per year then - so about 10+ years average earnings.
Bought house, furniture & MGBGT (as a present to myself!)
Now if I had only worked another year in the desert I would have earned another £5,500 and saved say another £4,500 and could have bought a large detached 5 bedder but then again aged 27 I had seen enough of the sun & sand.
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>> My approach to paying off my mortgage as quickly as possible was to increase my
>> repayment every time I got a salary increase. My aim was to keep my mortgage
>> repayment a constant percentage of my salary.
>>
Yes, I do this too. I try to chuck extra cash into the mortgage as well to reduce the term.
Second plan not working brilliantly at the moment since I bought a shiny new mountain bike last month and then managed to inflict £400 of damage onto it when a screwdriver slipped.
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Mentioning no floors above was only partly in jest. Our first house had rotten and damp floors, and mending them was the first job I did. For a short while, the post which came though the rotten door ended up in the cellar!
It was by far the worst house in the (less than lovely!) area, and living for a while without plaster on the walls and without a kitchen was an early stress test in our marriage.
However, the house was £25k in 1999, and was within 5 minutes walk of my work.
So, I come perilously close to agreeing with Z that buying your first house is never going to be easy, but, I think it's also true to say that it's harder to do now than it was, and that sniping from a luckier generation doesn't help.
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Whats a mortgage??.....................paid mine off several years ago.
Ah yes I remember ....... :0)
A mortgage is what I was paying in the 70's ... in 1973 SWMBO and I could really not afford it but with pushing from my Brother in Law we took a low start mortgage with the GLC at 11% fixed rate for two years just as rampant inflation hit and rates went up to 17% ...... I could not afford the 5% deposit but persuaded my employer at the time to loan it to me...... .
ISTR I was earning £2 K a year and SWMBO around £1200 and the offer was 2.5 times our joint income so we borrowed £8000... repayments were around £56 per month for 25 years....
It seemed like a millstone at the time .....but as others have said , get on the ladder if you can... you have to be very unlucky to lose out on bricks and mortar in the long term.
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>> My approach to paying off my mortgage as quickly as possible was to increase my
>> repayment every time I got a salary increase.
Can be difficult if you're costs of living are going up faster than your salary though.
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I also chuck salary increases against the mortgage in the vain hope it will eventually trim about a month off. Which I will be grateful for at the time.
As to costs of living, yes, true, but you just trim a bit off the fat where you can. At least we're lucky enough that there is still some fat left.
The balance of course is the line between reducing your life to an existence purely to pay the darned debt down and actually allowing yourself something nice on the odd occasion. And we all have different idea of where that line is.
Last edited by: Crankcase on Thu 22 Aug 13 at 11:26
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I myself don't have any money to buy a house, but I am working on a career change as I type and expect to be earning a lot more in the near future. I have about £1k towards a deposit but I doubt I will have the money to buy some where until I am approaching 40 if I am still single.
I agree there is a balance, at the en d of the day I have no kids, nobody to leave anything to, so I see no point on working my guts of not having any social life just to own a mortgage that the state will take of me to fund my care.
On the other hand I cannot imagine living in a rented house with a strict landlord, I don't mind if I had a flat where the landlord will let me do work, I know somebody who does this. They rent the flat but can decorate, the landlord even let them put a new kitchen in it etc (he paid for the materials, the tenant did the work).
Until the last couple of years my parents struggled with debt and were skint, they had no money for anything which meant I had to do a lot of the work myself and learn how to do it. Until recently (pointing last year and new windows being fitted currently) I cannot remember a trader having to come out in the past ten years other than for gas work, which is one thing I will not touch.
If I had kids then I think everything would be different, but hopefully when I get my CCNA and adult teaching qualification I should be able to earn around £25k a year and that will be enough to buy a small flat in a not so nice area.
I am priced out of the area where I live, but then so are my parents, a 1 bed flat here costs £150,000 now and 3 bed terraces can go for £300k+. There is a 4 bed semi just 3 minutes walk from me on the market for just under half a million.
This means I have to look at either the intercity areas or places miles away but then that is life I guess.
I do know a few people who have their own places who are my age but in every case
1) They used inheritance or gift from their parents to pay for their deposit
2) They are married/couple = joint income.
I am sure there are many young people who can buy a house of their own back, but they are either buying in a very cheap area or earn a lot of money.
I am going to have to work very hard over the next few years studying but as now officially in my early 30s I am no longer happy with attitude of a lot of my friends which who seem to be happy doing the same £18k admin job they have done of all their lives. I went to Blackpool for a punk rock festival a couple of weeks back and it was one of my younger mates who is a lecturer who I take a lot of inspiration from.
Last edited by: RattleandSmoke on Thu 22 Aug 13 at 12:44
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>> This means I have to look at either the intercity areas or places miles away
>> but then that is life I guess.
The horror.
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>a 1 bed flat here costs £150,000 now
It's interesting to try to compare the situation with previous times.
I bought a 1 bed flat in Wandsworth in 1975 for £10,000. My father put up the 10% deposit, and my starting salary as a GLC admin trainee must have been enough to support the mortgage for the balance. I can't remember the figure - £2500 perhaps?
Obviously being very fortunate to have the deposit was the crucial point.
So similarly, if you could raise 10% of the £150,000, would the quoted salary of £25,000 be enough to secure a mortgage?
Perhaps not as a single person, as I was then, but for a couple surely quite easy?
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If I was a couple then yes 2 x 25k is doable, but the thing is there is no reason in my right mind to pay those prices. I do like this area but I am not prepared to pay such a premium, I would rather get some where cheaper and still have a bit of a life balance.
It is just finding an area which is not trendy, but also fairly safe. One I jack my business in though I could realistically live any where in the country but really I still want to stay in Greater Manchester but there are plenty of cheap areas on the outskirts.
My grandparents used to own a very nice house in Fulham, would be worth circa £1 million now but they sound it before Fulham and the rest of London became very expensive. They both had ordinary working class jobs.
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"So similarly, if you could raise 10% of the £150,000, would the quoted salary of £25,000 be enough to secure a mortgage?
Perhaps not as a single person, as I was then, but for a couple surely quite easy?"
No, its not easy and for most probably not even possible.
If a couple earns £25,000 each they may be able to borrow around 2.75 time their joint salary if they are lucky which would be £137,500 so not enough to buy a £150,000 house.
Most lenders will actually be looking for a lot bigger deposit than 10%. Around 25% is necessary to secure the best interest rates. You also need to be able to pay the £1,000 or so mortgage admin fee.
£25,000 takes a hell of a lot of saving if you are on £25,000 p.a. especially if you are having to pay rent at six or seven hundred pounds per month and remember all the time you are saving house prices are rising
So a modest £150,000 house is basically out of the reach of most first time buyers without some sort of financial assistant
Last edited by: CGNorwich on Thu 22 Aug 13 at 14:42
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>> £25,000 takes a hell of a lot of saving if you are on £25,000 p.a.
>> especially if you are having to pay rent at six or seven hundred pounds per
>> month and remember all the time you are saving house prices are rising
>>
Far from being one of the 'used to lick road clean' brigade on here, how many on £25k pa are forking out that much on rent? I didn't pay anything like that, but I suppose it depends where you live. Perhaps a down grade for a few years is a good idea, I don't know anyone in that situation. i know some paying that in rent but aren't fussed about owning a house.
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That is what it comes down to really, I do know people my age who own houses but none of my friends do and it isn't even considered an issue. I think attitudes are changing.
The only reason I would want my own place is I know too many people who have nightmares with landlords. You can be very lucky like Pat (PDA) who has a very good landlord but a lot of people can't even hang pictures if you rent a flat, how can a place ever feel like yours.
That is the one good thing about social housing is you can make it your own.
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Like many things, Rats, you pay your money and take your choice, but there's no 'perfect's solution that suits everyone.
SWMBO and I bought our place. Brother and his SWMBO rent theirs - in a different town but with similar prices and rental market to ours. The roof over their head costs more than ours does, but...
We can do as we like to ours, he's not supposed to make any changes to his without the landlord's OK. OTOH, I have ongoing maintenance on my place, anything that breaks in his he just rings the owner.
He can walk away with a month's notice if his circumstances change, we're locked in due to the banjaxed housing and mortgage market.
Owning a house will probably count as having independent means when eventually we look for state support or care, but his rent is 'dead' money. Allegedly, "The Market" will sort itself out again some day and we'll have the option of downsizing or selling up which *should* recoup a share (not all!) of the money spent paying the mortgage.
As for where to buy, we were coldly pragmatic and it worked out well for us:
Get a map of your area
Draw circles on it for the maximum travel time you can realistically mange from:
- work
- your parents' place(s)
- transport links you need - train station/airport/stagecoach inn, whatever
- where you socialise
Next push the following neighbourhoods to the bottom of the list. You might never need these things, but the people you sell on to might...
- No room for kids
- No/bad/too far from schools
- No amenities (think of the basics - shop, doctor's surgery, church etc. Entire towns have been built without them!)
- No public transport
- No scope to extend or remodel if you need more space
- No way you'd walk the street there alone at night (worse again, no way that situation's likely to improve)
Now you've got a search area, so at least you can judge whether you can afford to buy there, and if the effort is worthwhile to you.
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Well you won't get a much in the way of two bedroom property round hear for less that 6 to 7 hundred a month. Absolute bottom of the market would be a studio flat for around £400 per month. Norwich prices are well below South East.
If you lived like the proverbial church mice, and were happy to live in one room and saved all you could I guess you could save £10,000 a year between you but that would be 25% of your take home pay. That's still nearly 4 years to get the £37,500 you would need as a deposit. And all the time the goal posts are moving . By the time you get that £37,500 you might need £45,000
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Well it's been a coupe of years since I lived in Norfolk but have prices hit so high? Again I'd question how many people are in your suggestion, how many are on 25k looking to move in on their own into £150k properties who are at the same time paying £600-700 rent?
Very few as for reasons you explain in your second paragraph. If they are they're pretty dozy, like I said I'm not in the bread and water brigade but equally you have to be realistic. I don't think people in your above scenerio are very realistic.
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Look it wasn't my scenario. I was simply responding to CP's observation that a couple on £25,000 per annum should easily be able to afford a £150,000 house.
I think it's pretty clear that they can't
Living in Norwich they could just about afford to buy something more modest , in a lot of the country they would not be able to afford anything.
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>> Look it wasn't my scenario. I was simply responding to CP's observation that a couple
>> on £25,000 per annum should easily be able to afford a £150,000 house.
>>
Apologies I didn't see that post.
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I believe the multiple used for my sons who each bought in the last 4 or 5 years based on a single income was 4 - 4.5 times salary, but in each case they needed a 10-15% deposit
edit - just seen the post above in each case for my lads part of the drive & logic is that if that's the rent you're better paying it in to a mortgage and having something at the end of it
Last edited by: commerdriver on Thu 22 Aug 13 at 15:14
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>> So a modest £150,000 house is basically out of the reach of most first time
>> buyers without some sort of financial assistant
I assume you live in Norwich, in which case Rightmove has 47 properties for sale at up to £80,000. tinyurl.com/m82rsd4 If I was just starting out on the property ladder, then that's the sort of property I'd be looking at.
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>> I am priced out of the area where I live, but then so are my
>> parents, a 1 bed flat here costs £150,000 now and 3 bed terraces can go
>> for £300k+.
If, as I assume, you live in Salford then Rightmove have for sale 190 properties up to £80,000 tinyurl.com/lk6hod3; 19 of them are up to £50,000.
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>> If, as I assume, you live in Salford
You assume wrong. He doesn't live in Salford. It's up to him if he says where he lives but i do know the figures he says for houses and flats in his area are accurate.
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>> >> If, as I assume, you live in Salford
>>
>> You assume wrong. He doesn't live in Salford. It's up to him if he says
>> where he lives but i do know the figures he says for houses and flats
>> in his area are accurate.
>>
I used to live not far away from Rattle (in fact, I once got one of his flyers through the door) but it's not a first-time-buyer's area. I rented a nice-ish but not fantastic two bed flat for £850/month, which was actually fairly cheap for the area. But the area is fantastic with millions of bars / restaurants / cafes etc and a relatively safe neighbourhood.
For better or worse house prices are governed by supply and demand. You can get small new build properties in Whalley Range for less than 80k, with the council underwriting the deposit.
But you don't have a right to live in the neighbourhood you want just 'cos you want to. I'm lucky enough to own my own place, but needed to move to Aylesbury to get it, right on the edge of what I consider acceptable commuting times.
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Fursty I think you probably miss understood what I meant. I wasn't moaning was just stating at as a fact. My friends are renting a 1 bed flat for £500 just round the corner from where you used to live, but they are very lucky to have got that.
The strange thing now in Chorlton is there is still many people who still live at home, a lot of kids I grew up with who are now my age still live on this street with their parents.
Whalley Range is an area you need to be careful with, there are some very nice parts of Whalley Range but also some very dodgy parts, but with local knowledge you can get a bargain there. I can't even afford to buy in Whalley Range though.
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I did my driving test in Whalley Range. My driving instructor once wanted me to reverse around a corner when there was a prostitute on the pavement touting for business. I decided to drive on - he found it very funny. Not sure if that is still a red light district. BBD would still probably know even though he's overseas.
When I lived in Chorlton a few year earlier (90/91), the house we lived in had a rent of £21pppw (5 of us). And we didn't have to pay over the summer. A bargain compared some houses in Fallowfield at the time. And it was a University managed property (private landlord). So about £420pm for the house back in 90/91 between five of us. Some interesting figures for an identical house on the same street... could have had alterations compared to ours:
- Sold for £82k in 1995
- Sold for £220k in 1999
- Sold for £480k in 2005
- Now valuation/estimate is over £550k
It was a large house and we weren't allowed to use the top floor. But only one bathroom. And if you did a little bit of work it was 5 bedrooms on the top two floors (one room which was huge led to another room up there). Fire regulations meant we could not use those floors and had two bedrooms on the ground floor too. And cellars weren't even half the house depth.
Shows how prices have gone up in the area though!
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>> Can be difficult if you're costs of living are going up faster than your salary
>> though.
A quick back of the envelope exercise suggests that if my pay since 2006 had kept pace with RPI/CPI than my gross would be 10% more than it is. My take home has fallen recently as pension contributions have risen from 3% to 6.67% with a further increase due next April.
And all things considered, as a Civil Servant, I'm well paid and well treated by comparison with others.
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>> >> Can be difficult if you're costs of living...
whoops :)
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I don't live in Salford, I don't know why people on here think I do. I went to the university of Salford and I tend to stick up for Salford because of that.
You can get many properties for less than £50,000 in Salford but I have seen some of these areas some of these cheap places are the sort of area where you would find needles in your back garden hence why I would probably want to move further out for the same money.
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>> I don't live in Salford, I don't know why people on here think I do.
>> I went to the university of Salford and I tend to stick up for Salford
>> because of that.
>>
>> You can get many properties for less than £50,000 in Salford but I have seen
>> some of these areas some of these cheap places are the sort of area where
>> you would find needles in your back garden hence why I would probably want to
>> move further out for the same money.
Have I interpreted correctly what you've said, and that you can get a property further out than Salford for less than £50,000?
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I meant further out of Greater Manchester. Places like Burnley, these places do not have a direct train line to Manchester, and it is a good hour drive so they tend to be too far to be become a commuter town.
www.rightmove.co.uk/property-for-sale/property-42441404.html
These areas suffer from very high unemployment and other social problems but you can buy very cheap properties. The gamble here is that once it does get a planned main line into Manchester all of the sudden it is only 20 minutes away by train instead of the hour and a half it currently takes by train.
However as always with property prices they are this cheap for a reason compare that to this house
www.rightmove.co.uk/new-homes-for-sale/property-42490406.html
Last edited by: RattleandSmoke on Thu 22 Aug 13 at 15:54
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>> I meant further out of Greater Manchester.
It obviously depends on how high you set your sights. If you set your sights too high then I admit you'll have a problem getting started out. Compare it with buying a car. My first two cars were 20 years old when I bought them. My third car was a mere 12 years old. I was happy to start at the bottom, both with buying a car and with buying a property. This is the reason I had no problem getting started on the property ladder.
Last edited by: L'escargot on Thu 22 Aug 13 at 16:04
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>> it is a good hour drive so they
>> tend to be too far to be become a commuter town.
>>
Northern wimps, down here we used to dream of having a commute of less than an hour :-)
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Plenty of people live in Colne, Nelson, and Burnley and commute to Manchester for work - the roads between the two were much improved in the mid 1980's when the M65 and the dual carriageway over the hill at Accrington were built.
It also worked the other way - our partsman commuted over from Bury.
I think it's just Rattle's aversion from using his car for the purpose for which it was built....
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I know plenty of people in the low reaches such as Rawtanstall who commute into Manchester, but the further you go up the more you have the problems of the harsh winters blocking roads etc.
Interestingly the house prices in Rawstanstall etc are about 2.5 x that of in Burnley.
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Burnley to central Manchester is probably an hour because of traffic into Manchester. From say West Didsbury to Burnley it's more like 45 minutes.
There is also a regular bus service from central Manchester (Chorlton Street) to Burnley which seems popular. It stopped outside La Tasca on Deansgate when we were there a few weeks ago and a lot of people got on it. Obviously the bus takes longer than the journey by car.
Some of the cheaper houses in Burnley and Colne are on streets that are not particularly nice with many empty/boarded-up properties. But I've seen property on Rightmove there for under £20k. If you look for properties for £50k and under in the a mile of the centre of Burnley, the Rightmove search returns 194 houses. The cheapest are listed as £10k to be sold at Auction and need work doing on them.
Last edited by: rtj70 on Thu 22 Aug 13 at 17:18
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>>not particularly nice
You have a nice line in euphemism there rtj !!
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If you saw some of the streets/areas I refer to, I am being polite. Some areas around the Burnley area are unpleasant to be in at times. Well that used to be the case when I used to visit friends there on a regular basis.
Checked train times (via Hebden Bridge) and the X43 bus... it would take just over an hour to commute using either to Manchester. The train is probably a bit pricey.
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Is a journey I might have to myself as that is the college I am looking at doing my CCNA at. There are more local colleges but either the price or the tutor is not right.
I have never actually stepped foot in Burnley so I cannot really comment on why it is so cheap but unless it is very rough I am sure it is things which can be fixed.
Chorlton isn't the pretty of places either, but it doesn't seem to stop mad people paying £300k for a 3 bed terraced house. One of my customers is trying to sell a 2 bed one for £350k but they will never get it.
I think parts of Stockport which are not already too expensive (e.g not the Heatons or Cheadle) are good bets but then again the area around Edgely or Brinnington is qyuite rough.
Last edited by: RattleandSmoke on Thu 22 Aug 13 at 17:43
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>>I have never actually stepped foot in Burnley so I cannot really comment on why it is so cheap but unless it is very rough
Grim with a capital G.
As you may have guessed, I'm originally from the area, and so, I know the streets that rtj mentions very well. It's no great surprise that Burnley has seen its share of rioting.
Having said that, there are nicer areas, and a half hour spent driving around will soon tell you where to avoid.
It's not that long ago that an ex-colleague was buying terraced houses in Stoneyholme for £3K each, and accepted that a proportion of them would end up being trashed and the innards ripped out for scrap.
If you are a dab hand with laying wafer thin tarmac drives sold door to door, then, you'll fit in in Colne very well.
On the other hand, the Reedley side of Burnley, and West side of Colne are OK.
As for the road over the top being cut off by snow (the difference Rawtenstall and Burnley), it's not a crazy route to go to the end of the M65, and then back down the M61 in really bad weather.
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There will soon be the re-instatement of the third chord of the Todmorden triangle, allowing journeys to be made by train from Copy Pit and Burnley to Rochdale and Manchester Victoria without the trip into Hebden Bridge to reverse. I think some clearance work has already been done on the old trackbed.
goo.gl/maps/tDqDE
You can buy a house in Salford for a quid if you promise the council to do it up properly and not use it for speculative profit making. Not the nicest place to live though, the Langworthy estate.
Ted
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That sound like it is a good time to invest in Burnley property. Some of the streets I refer to could become (with little money) nice homes.
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I feel I've been lucky compared to today's generation - me being one of myself. 2 years ago I bought my first house for £73,000, a pokey 2 bedder on a modernish development (1999 build) but in an iffy area. I first moved out at 26 to rent for 2 years paying £500 per month. I then was fortunate to move back to parents for a year saving £11000 in that time - lived like a monk. That enabled me to put 10% deposit down and all fees covered and basic furnishings - a lot coming from family chuckouts too. I was paying £360 a month @ 5.49% for the first two year fix and have rate swapped to 3.88% now paying £295 per month, a hell lot less that the £500 is was paying rent. I'm aiming for mortgage free between 45-50 years old, I'm 31 now, the cars paid for (ok its a 11 year old banger!)
I do appreciate its hard, but I do see the type at work who moan but pay £400+ on rent and do the holidays, cars, lifestyle etc.
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"I do appreciate its hard, but I do see the type at work who moan but pay £400+ on rent and do the holidays, cars, lifestyle etc.'
I know a fair number of people in the twenties and thirties age group. Nearly all are renting. None are having much of "lifestyle" in the way you mean and not all have cars.
Not everyone has the ability to live rent free with their parent whilst saving for a deposit and as I have already said £400 a month for a flat will get you a grotty one bedroom or studio round here and Norwich is fairly average for the country cost wise.
It's easy for those of us who achieved ownership of a house worth hundreds of thousands to believe that it was all due to our incredible hard work and financial planning whereas as in all honesty for most of us, including myself, it did have a large element of being in the right place at the right time.
The percentage of owner occupiers in the housing market is shrinking and it will shrink further, not because young people who want a home are spending their money on a frivolous lifestyle but because of harsh economic circumstance.
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>> Not everyone has the ability to live rent free with their parent whilst saving for
>> a deposit and as I have already said £400 a month for a flat will
>> get you a grotty one bedroom or studio round here and Norwich is fairly average
>> for the country cost wise.
A studio flat in Norwich isn't the worst if you are starting off and own your own. I quite like Norwich, very good night life if you're young. Mind you if they stepped foot out of the flat on a night they'd be labeled as profigate on here ;)
>> It's easy for those of us who achieved ownership of a house worth hundreds of
>> thousands to believe that it was all due to our incredible hard work and financial
>> planning whereas as in all honesty for most of us, including myself, it did have
>> a large element of being in the right place at the right time.
Always the case to my mind mixture of hard work and luck. Personally speaking I had cheap subsidised accommodation so building up a deposit was easy, but had to work to get into that position.
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I think the reason some people can't get on the property ladder is that they're not prepared to start on the bottom rung. They see the bottom rung as being unworthy of them. They miss the point that once they're on the bottom rung the second rung is only one step higher, rather than the two steps from rock bottom which they are unable to climb in one jump.
Last edited by: L'escargot on Thu 22 Aug 13 at 17:14
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"I think the reason some people can't get on the property ladder is that they're not prepared to start on the bottom rung. They see the bottom rung as being unworthy of them. They miss the point that once they're on the bottom rung the second rung is only one step higher."
It wasn't so much the property ladder that helped our house buying. It was rampant wage inflation that paid our mortgages off for us.
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There has been some very sweeping generalisations in this thread.
Ian and I rent for a number of very sensible reasons, as do a lot of other people.
We got together some 10 years ago and neither had a property to sell for reasons I am not prepared to discuss.
We explored the possibility of buying a house and found because of Ian's health record any insurance to cover the mortgage in the event of a re-occurrence was going to double the mortgage payment. ( It did re-occur just 6 months later, as it happens).
We so nearly went ahead with a mortgage without insurance too.
We made a decision there and then to seek a long term let, and to prove we were good tenants to our landlord...it works both ways and having done that, we decided to enjoy life and defy anything it decided to throw at us again.
Our rented property is a 3 bed semi with a detached garage and large garden. The rent was £500 per month when we moved in 6.5 years ago. It's still £500 per month.
Pat
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I can think of many reasons why renting makes more sense. In some countries like Germany it is much more common. Leads to less issues for swapping jobs etc as you're not tied to a house like Brits often are.
For many people in the UK now, buying a house might not be a viable option - but that's not necessarily a bad thing.
I can see a downside to buying a house in a not so nice area for trying to get up the housing ladder. If the house price does not go up... and it might not... you've got no more equity for the next house.
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My biggest concern with renting for me would be that in retirement you are still going to have to find the rent every month out of your pension whereas normally a mortgage is done and dusted by the time you get to 65 and that can make a big difference to your finances !
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I know plenty of OAPS who still have fairly big mortgages. That though is my biggest concern about renting all your life.
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You will a bit because one will assume you have paid some of the mortgage of, the problem is the nice house will have probably risen far more than the value of the equality in the house.
Pat and one of my mates from West Didsbury are the two best examples I know of a rented home because the landlords let them make it their own. I have another couple of friends who live in a rented flat in Didsbury and again the landlord is quite flexible.
However I could not put up with this you're not allowed to paint anything or put pictures up crap. Many rented flats end up looking like prisons because they are short term 6 lets which are renewed every six months. My sister has only moved out for two years, yet she has rented three different flats in that time.
I don't mind the idea of renting all my life too much, but I do mind the idea of never been able to make a place my own.
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The two last points would bother me renting too - not making the place your home and renting in retirement. Starting to make me feel guilty when I think we have plans to buy a second place overseas in the near future. I am fortunate that both this house and another would be mortgage free. Perhaps I should buy a street in Burnley instead :-)
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We have been both hugely lucky and somewhat unlucky in our housing. Currently we are VERY lucky!
Lucky in so far as we bought our first house circa 1972 for around £7500 with a nearly 50% deposit by way of an advance inheritance from my father. Within 2 years we sold it for just under £17000, moving to a detached house in Chalfont St. Peter for just under £19000.
7 years later we sold that for £47000! (Last time I looked ,houses in that cul-de-sac were well over £450,000)
A move to Wales followed (long story of silly dreams) and after four moves and a busted business we were in negative equity for a few years! Eventually inflation did its bit and with a bit of equity and at last, the capital release from frozen pensions and the income from our state pensions kicking in, we bought our first flat in Spain for the equivalent of £34000.
Luck arrived in the guise of another inheritance from SWMBO's dad and we sold our flat for a big profit and bought, at the height of the boom there, our very, very nice apartment in which we spent 5 very happy years.
Luck disappeared with the unholy crash of the housing market in Spain and we lost 90,000 euros on the sale of our apartment!
Luck stepped in again as we had enough left to buy outright our current modest 2 bed 1984 semi in a decent part of a cheap housing town - funnily enough for rather less than the amount of Mrs. R's legacy.
You could say we are living in a free house - no, not that sort:-)
Last edited by: Roger on Thu 22 Aug 13 at 19:56
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Up to the age of 23 when I 'bought' my first house, I lived at home in a lovely area NW of Bradford. No way was my deposit sufficiently large to buy in the area so I moved back to Bradford. It was either that or continue living at home, or spending all my disposable fattening a landlords wallet.
I daren't go in the local pub it was so rough, and my rose tinted glasses have forgotten a lot of the bad stuff. But needs must. I had nothing worth stealing, and after 5 years moved onwards and upwards, having learnt an awful lot about DIY!
Property prices in that area are still cheap, for a reason, but for me it was the right decision. At 23 I thought I knew it all. 5 years later I knew a lot more!
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Been interesting reading this thread and the pros and cons of house price rises and also renting.
I have a fairly simple way of looking at how affordable houses, and mortgages, are and that is as a multiplier of income.
Back in 1978 I bought my house that I'm still living in and am still working for the same company so I am able to make a pretty direct comparison between then and now,
In 1978 I paid £12750, paid a £1500 deposit and borrowed the £11250 balance. At the time the maximum I could have borrowed was £11500 decided by the building societies as 3 times my income or 2 times my income plus one and a half times my wife's.
At times the mortgage interest rates rose and we really struggled to make ends meet, we had no TV, no car, no holidays or nights out for several years so I understand the idea of struggling to buy a house and the sense of achievement.
Today my house is valued at £185000, one sold two doors down for that sum 6 weeks ago.
Today a worker at my company at the grade I was when I bought my house has an annual salary of £25250 so if you use the old fashioned building society multiplier then my modern day equivalent should be able to get a mortgage of £75750 and with an equivalent 11.75% deposit of £8522 he should, in theory, be looking to pay £84272.
With the above figures I would say that my house is overvalued by over £100000. Thus house prices need to be reduced by a good 50% to get back to the 1978 figures.
The irony is that even with my promotions over the intervening years if I was to use the 1978 salary multipliers that the building societies used back then then I live in a house that I couldn't afford to buy today by around £65000. Using those multipliers you would need to be earning around £55000 pa to buy my house today.
Incidentally, the average house price in my town is £249000, according to the local paper last week.....
My area hasn't really got any better over the years to justify this increase in value, if anything my area has gone downhill a bit. I live in a seaside town and there aren't too many jobs around here that pay anywhere near £55k pa, the vast majority of jobs being advertised at the moment are between £16 - 19k pa. My son is on £24k pa, with his bonus, and is regarded as pretty well paid for local work, although he won't be for long as he and 800 others in the town will be redundant and out of work a fortnight before Xmas.
He currently shares a rented four bedroom house with three of his old schoolmates, his rent is £1100 per month. Previously he shared several two bed flats with a mate, his lowest rent in the last three years was £475 per month.
I know there is the argument about the affordability of mortgages being better because of the current low interest rates but that won't be forever and I think is another ticking time bomb. I wonder how many people have taken on mortgages at the maximum they can afford to pay hoping that the rates don't go up, if they do I can see us looking at a massive homelessness problem in this country.
And sorry, but for those who say that we should be prepared to move to where the houses are cheap, that's fine but they are cheap for a reason, most of those towns have chronic lack of work to enable the mortgages or rents to be paid. I would also love to see some of these Northern towns handle an influx of millions of housing price refugees and also wonder how the South would get by without all the service workers that would no longer be available.
The only people who stand to gain from higher house prices are those on percentages of the sale or people who own more than the property that they live in. For those of us who own only the property we live in there is no upside to increased prices.
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The only way to make money from a house is to own more than you need to live in. Otherwise you're just selling and buying and price increases hit both.
I don't think I've ever made money from my primary residence, since on the occasions I sell it I simply by another one of similar or higher value. Yes I have more equity, but that doesn't matter one way or the other until I sell it without replacing it or downsize.
On the other hand, buying houses you don't need to live in, need to own, or indeed need to sell, seems a foolproof way of making money. You just don't need to ever *need* to sell.
The only thing that changes are the timescales, not the inevitability of profit.
In any event, it works for me.
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Interesting thread cockle. If you take off 11.75% from the value of our house, then you'd need to be earning a fair bit more than me to get a mortgage for it. If you include the car allowance that I could have as cash (but then need to fund a car still), I'd need a pay rise of about 65% to get the mortgage.
House prices have really gone mad in some areas even in the north west but you can benefit if willing to downsize from say a very 4-bed house to a normal size 3-bed family house in the same area :-)
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>> Ian and I rent for a number of very sensible reasons, as do a lot
>> of other people.
There's nothing wrong with choosing to rent. What niggles me is when well-paid people live the high life and then bleat about not being able to afford to get on the property ladder.
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I think that is the issue, the problem is so many people including myself have just been bought up with the idea that they can't ever afford a house. I am taking steps to change that though by getting my CCNA and possibly teaching qualification so I can at least afford a 1 bedroom flat in a cheaper but not slummy area.
Pat's house is lovely and they have really made it their own but they were very lucky to find a landlord like that, however I suppose with houses they tend to be let more long term than flats, so that might be why landlords are more flexible.
I have often thought of buying one of those so called £20k houses as a gamble in the hope the rest of the street goes up, but if that was that easy we would all be doing it. What my plan is though is to buy some where that needs a lot of modernisation and as longs as it is structurally sound I can do a lot of the work myself.
The other option as well is to to try and buy some where, do it up, rent it out and then move into it at a later date or just buy a touring caravan and setup camp in a football field in Wrexham!.
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>>What my plan is though is to buy some where that needs a lot of modernisation and as longs as it is structurally sound I can do a lot of the work myself.
Have a look at this.
www.bbc.co.uk/programmes/b01l3bhv
St Peter's barn
This is a not the usual barn job.
IMO an amazing protect.
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I think my parents have been very very lucky house price wise, they paid £16,000 for it in 1980 and similar houses on my street have sold for £270,000. My parents house does still need a lot of work doing to it, but it is still easily worth £230,000 even with a quite a bit of work needing doing to it. Of course even 1980 my parents still had reasonable jobs, my dad earned the equivalent of around £30k and my mum around £18k but they could buy that house without any financial trouble, yet now the only people buying these houses are doctors, lawyers, and dentists etc and they are just 110 year old three bed terraced houses.
That said they were looking at a £22,000 house they could afford the mortgage on but not the deposit, that house is now worth around half a million.
I think think they were just very very lucky to choose an area which is now very sought after. I just hope when I finally buy my own place I will have the same luck.
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>> I think the reason some people can't get on the property ladder is that they're
>> not prepared to start on the bottom rung.
Yet again, the same unsubstantiated, prejudiced claptrap. Do you have any evidence, even circumstantial, to support your consistent claim?
The evidence to support the fact that young people are very much prepared to start on the bottom rung is all around us - there wouldn't be a housing market or "ladder" of any kind if young people weren't buying property on the bottom rung, and then moving up when they can afford to do so.
Please stop automatically bashing the young just because you're not one of them and you don't approve of the hats they wear, or whatever it is that so upsets you about them that you feel the need to make up derogatory characteristics and besmirch the entire generation to justify your prejudice.
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House prices on the rise - sooty123
