FTB expectations too high?

SandC

mbga9pgf wrote: »

Well, I tell you what, bring back microwaves costing 500 quid and house prices at sensible multiples and I will swap you any day.

I earn nigh-on 50K, save 80% of take-home (for 4 years) and will still only be able to afford a 40% mortgage. in 1995, on a comparable wage saving a similar % takehome, I could have bought the house outright after 3 years. I work away a hell of a lot, usually 6 months a year in some craphole abroad. I dont own a flash car, have anything on credit, I havent even bought my wife anything to make the home more 'homely' since we moved into our current rented 3 years ago. We paid for our own wedding entirely, and told our guests not to bother with presents. So dont give me rubbish about 'you dont know what it was like in our day'. I know all about saving, believe you me. Its just that house prices are completely, utterly unaffordable.

Now tell me house prices today are reasonable.

I am agreeing with you, hence my above post about nobody ever having everything. But you have to agree that many FTBs over the past few years have not been content with having the house but have to have it perfectly decorated and furnished as well. It will take a big swing in attitudes for people to think along the lines that you have.

There are areas of the country which are very affordable to someone on your sort of salary by the way. Mine for example. In those areas where prices didn't go completely stupid it was mainly down to average wage in the area but also down to the attitude of the population as a whole. It was unheard of for a property to go on the market and be sold same day and have a queue of offers ready if that one didn't turn out for example. Nobody would ever offer over the asking price for another example. Maybe people wouldn't have been so quick to borrow so much for their ideal property if they knew they couldn't furnish it.

chucky

mbga9pgf wrote: »

Well, I tell you what, bring back microwaves costing 500 quid and house prices at sensible multiples and I will swap you any day.

I earn nigh-on 50K, save 80% of take-home (for 4 years) and will still only be able to afford a 40% mortgage. in 1995, on a comparable wage saving a similar % takehome, I could have bought the house outright after 3 years. I work away a hell of a lot, usually 6 months a year in some craphole abroad. I dont own a flash car, have anything on credit, I havent even bought my wife anything to make the home more 'homely' since we moved into our current rented 3 years ago. We paid for our own wedding entirely, and told our guests not to bother with presents. So dont give me rubbish about 'you dont know what it was like in our day'. I know all about saving, believe you me. Its just that house prices are completely, utterly unaffordable.

Now tell me house prices today are reasonable.

i suggest that you look at a decent budget planner or lower your expectations.

you're getting no where very quickly ranting on this forum.

katiegizmo

i think its really hard to compare things then to now... life is just too different!

in the past people didnt go to university or travel the world so much... going out and holidays were not a given... so that cost was avoided. also, when people got married it was more traditional for the parents to pay for the wedding which isnt the case all the time now.... so people then were starting house buying younger and with less possible costs behind them (i know this is a generalisation i'm not picking on anybody or saying everyone is the same)

the main difference i can see is in times gone by you could buy a home or you could have an extravagent lifestyle... in more recent years you could have both... so people wanted both and had both, and now people do have higher expectations. i wouldnt say too high because everyone has different circumstances, but IMO at the end of the day, if you cant afford it you have to change your expectations somewhere or wait longer to get them...

mbga9pgf

you're getting no where very quickly ranting on this forum.

Only 3K off the principal and 7K off the repayable amount in December!

As I said, own outright in 1995 after 3 years, 40% deposit in 2009 after 4.

You are talking rubbish. :cool: House prices are too high. If I have to wait for the boomer generation to expire to pick up a bargain, so be it!

But you have to agree that many FTBs over the past few years have not been content with having the house but have to have it perfectly decorated and furnished as well. It will take a big swing in attitudes for people to think along the lines that you have.

I know what you mean.. Things need to be worked for and earned...

mitchaa

mbga9pgf wrote: »

I earn nigh-on 50K, save 80% of take-home (for 4 years) and will still only be able to afford a 40% mortgage. in 1995, on a comparable wage saving a similar % takehome, I could have bought the house outright after 3 years.

Now tell me house prices today are reasonable.

£50k today = £2955pm assuming no pension contributions, 80% = £2364pm

If you have saved this amount for the last 4yrs, you will have built up a savings pot of £113,472, without interest.

I'll leave out the interest calculation as its likely to be offset against the fact that you have not been contributing £2364pm exactly for the last 48mths due to salary inflation.

House prices are on average £155k at the minute.

I make £113,472/£155k a 73% deposit on that of the average home, a lot more than the 40% you are quoting.

I suspect if you save the same amount for the next 12mths, you will be able to buy an average home outright come this time next year for around £140k

mitchaa

mbga9pgf wrote: »

You are talking rubbish. :cool: House prices are too high. If I have to wait for the boomer generation to expire to pick up a bargain, so be it!

What would you then deem to be an affordable average house price?

Remembering they are currently at £155k (Av of Halifax/Nationwide) the average UK salary is at £26k and the average family income is at £37k

mbga9pgf

mitchaa wrote: »

£50k today = £2955pm assuming no pension contributions, 80% = £2364pm

If you have saved this amount for the last 4yrs, you will have built up a savings pot of £113,472, without interest.

I'll leave out the interest calculation as its likely to be offset against the fact that you have not been contributing £2364pm exactly for the last 48mths due to salary inflation.

House prices are on average £155k at the minute.

I make £113,472/£155k a 73% deposit on that of the average home, a lot more than the 40% you are quoting.

I suspect if you save the same amount for the next 12mths, you will be able to buy an average home outright come this time next year for around £140k

I have not been on 50K for the past 3 years. Had a big payrise last feb.

Saving, as I have said elsewhere, for 40% of 250K = 100K.

Why would I buy joe average property on 50K? I wasnt comparing buying an average house in 1995, I was comparing the typical house I could expect on 50K with a wife that is working as well - and its not a 3 bed semi! Not that you would get one of those for 150K either any more :mad: more like some paper thin walled newbuild flat!

Start using realistic figures please! :mad:

mbga9pgf

mitchaa wrote: »

What would you then deem to be an affordable average house price?

Remembering they are currently at £155k (Av of Halifax/Nationwide) the average UK salary is at £26k and the average family income is at £37k

I reckon 120K would represent fair vale at the moment as an average.

But, again, those are average values and not median salaries.

http://www.statistics.gov.uk/cci/nugget.asp?id=285

thus

Median full-time weekly earnings in London were £613, significantly higher than in other regions, where they ranged from £418 in Northern Ireland to £500 in the South East.

average of the medians above = 460 quid per week = 24K

using the correction of 24/26*37(mean to median for couples salary)
= 34,150 quid

salary multiple of 3 (long term average) = 102,400 without deposit

= 112,700 average for a couple on long term median salary and reasonable mortgage criteria. (10% deposit of around 10K)

155/122.7 = 26% further fall before we are anywhere near decent affordability.

EDIT: Above figure is wrong sorry.

Median house price =144K thus drop I reckon should be 144/122.7 = 17% further fall for decent affordability.

moggylover

mewbie wrote: »

Good, so for once we are all agreed and it turns out I was completely right.

Average couple, thirty years old, with or expecting first child should be able to afford an average two/three bedroom property. They should be able to have time off and devote themselves to their kid(s) and each other, without mortgaging themselves to the hilt to achieve it.

I'm so glad to have my opinion vindicated.

Yes......but with the reservation that they should have either been saving very hard before that baby was conceived, or alternatively they should be moving up to a larger house rather than FTB.

Part of the problem I see is that many FTB who want a 3 or 4 bedroomed house already have their kids and have done it all a*se about face:D . Now, I do realise that SOME of that is due to the very high house prices: but there are other considerations. I bought my first flat (2 beds) at 24 years of age - 26 years ago. It was £27,500.00 - which was 4 times my basic (steady) income. I could not have managed that without various other incomes on top - but I also had the option of renting out the second bedroom.

My friends that got pregnant first went into rented. Most who married and wanted to buy put off having children for quite a period and bought up old properties that wanted a fair bit of work (and I do realise that there are not so many of these to be had now) so that they could afford a slightly larger property.

The BIGGEST change really does appear to be what "else" we thought we could have. For most of us it meant (like Graham) that we could not afford to go out much, and we certainly could not drink much whilst we were out. New cars were still very much something that meant you either had a company car or you were much older. New furniture was something you dreamed of several years down the line (26 years on and I have very few new items to my name:D - but it is still a comfortable home with most of what we need).

This was around the time that lending got more "lax". It was also around the time that places started being built and sold complete with carpets, curtains, cookers which were then "purchased" on the mortgage: and I saw that as bl**dy stupid then and still do - the bricks and mortar and the size and quality and condition of the bricks and mortar are the only thing one needs to be looking to at the time of purchasing, but I had friends who took this route only to find that when they came to sell the houses had not done as well as they hoped because all the "stuff" was now second-hand, and they had paid over the odds for it anyway.

I think the problem is both attitudes actually: a blend of people wanting too much rapid gain on the value of what they already have, and others who lived too hard and loose whilst younger, did not save or invest in property at that stage, and yet still want to buy the "average" house because that is what their income/status suggests to them they should have.

It is not that long ago - but I still knew many a "middle class" person earning a lot of money who lived at home and saved like fury and yes, they did manage to start their trip on the property ladder a bit further up but with sustainable mortgages as well. Most of us (even from working class backgrounds) saved a bit from the day we started earning and that helped as well.

It really IS very difficult to compare the two eras! We didn't have mobile phones, most of us would have died if we had seen the amounts of money people will spend on telephone bills these days! We didn't have sky, or computers or games consoles to spend on either. Clothes were not expected to be "designer" and wardrobes were not full to exploding, and even amongst my very "best off" friends, nothing like the amount of money was wasted on cosmetics and beauty treatments (in fact hairdressing was still pretty low paid in those days). Foods, cleaning products, etc. there just was not the array to choose from (and Supermarkets were much smaller and easier to negotiate because of it:D ). Technology did not change as swiftly as it does now and thus the items we did buy were not massively outdated even if they were 10 years old, and what is more the build quality was (in most cases) far superior and we got many years from things once we had invested in them.

It is like comparing apples and pears! I try not to get annoyed with some of my younger aquaintances who think it was so much easier in my day: because I don't think it was so much easier, just very, very different.

One example, I had a very good friend at school who lived in a very posh house in Datchet, near Windsor (high prices even then). However, the only reason they had that large and expensive house was because her grandparents had both been left houses around the time her father married her mother, and between both sets of adults and the inherited money they had been able to buy one very big old house, in poor condition, and do it up. This was not at all unusual, and both sets of adults were teachers (my friends father a headmaster at a private school, as was his father before him) so relatively "middle class" at that time. This is starting to happen again now but is considered an "innovation" when it is really only a return to things that were common place in earlier generations.

Also, in the 60's and early 70's, only those on salaries (not wage packets) could usually get mortgages, so house buying was the preserve of the middle classes and thus the actual pressure on house prices was probably less before the "right to buy" era came about - but I suspect that some of you would die before you would go into the kind of rented accomodation that many working class young couples had to contend with - bedsits with shared kitchens and bathrooms were the norm, not the exception, and student accomodation was dire.

We do need a house price correction. Certain parts of the market need that "correction" even more than others, and this will be different in different parts of the Country: for instance London probably needs it most at the bottom and middle of the ladder, around here bottom end houses are not too badly priced for anyone on an average wage - but the next level of housing was in excess of double the price, so moving up was extremely difficult, especially since it is an area where there was a lot of pressure from incomers forcing up that middle and high end section and wages around here did not match up at all.

Really2

mbga9pgf wrote: »

I have not been on 50K for the past 3 years. Had a big payrise last feb.

Saving, as I have said elsewhere, for 40% of 250K = 100K.

Why would I buy joe average property on 50K? I wasnt comparing buying an average house in 1995, I was comparing the typical house I could expect on 50K with a wife that is working as well - and its not a 3 bed semi! Not that you would get one of those for 150K either any more :mad: more like some paper thin walled newbuild flat!

Start using realistic figures please! :mad:

Depends where you live in london £50K wage is around average (if not below)
Where do you live?

I purchased a 5 bed detached for £250K?