FTB expectations too high?

penguine

IveSeenTheLight wrote: »

I do wonder why at mid thirties, you are in a position as a FTBer and not as someone who previously bought and now looking to upgrade.

That sounds a bit judgmental. Not everyone wants to (or is in a position to) buy a house in their 20s or early 30s, for any number of reasons. I'm in my 40s and have never owned property before -- my OH bought our flat before we were married.

People should be able to get onto the property ladder at whatever time in their life suits them, so long as they have a good deposit and can get a mortgage. The problem is that in the recent past, even those saving very aggressively couldn't, because prices were going too quickly for interest on savings + salary increases to match.

mramra

:rotfl:

IveSeenTheLight

penguine wrote: »

That sounds a bit judgmental. Not everyone wants to (or is in a position to) buy a house in their 20s or early 30s, for any number of reasons. I'm in my 40s and have never owned property before -- my OH bought our flat before we were married.

People should be able to get onto the property ladder at whatever time in their life suits them, so long as they have a good deposit and can get a mortgage. The problem is that in the recent past, even those saving very aggressively couldn't, because prices were going too quickly for interest on savings + salary increases to match.

Absolutely not intended to be judgemental.
You are right that for many various reasons, people will buy at different times i.e. having children, travelling the world, debts etc etc etc.
It is however reasonable to expect that if you lie within the average, that you meet the same timeline as an average buyer.
What I meant was that usually the process of buying properties, mean that you start with a smaller property and move to a larger property as life adjusts.

For whatever reasons there was a delay in buying younger, surely (if still maintaining the average) that FTBers cannot expect to catch up with those who bought earlier. They will on average still maintain the average mortgage lifetime.

I was speaking to a colleague the other day who is only 23 and has a 2 year old child.
They have bought a family home and are seriously considering adjusting the mortgage to pay off in 12 years i.e. by the time she is 35.

daveb975

IveSeenTheLight wrote: »

I can understand why you would want something a bit bigger.
I do wonder why at mid thirties, you are in a position as a FTBer and not as someone who previously bought and now looking to upgrade.

Not everyone wants to buy at a young age, some people prefer renting all of their lives.

With a £50k joint income, something bigger than a 1 or 2 bed flat should be attainable anywhere outside of London, and in a lot of places inside it as well.

Unfortunately, that sort of income is not going to comfortably buy a 3-4 bed house in a nice part of a sought after area of London, but then it wouldn't have done even before this last boom in prices.

daveb975

IveSeenTheLight wrote: »

For whatever reasons there was a delay in buying younger, surely (if still maintaining the average) that FTBers cannot expect to catch up with those who bought earlier. They will on average still maintain the average mortgage lifetime.

I agree, and I think that this is a point a lot of FTBers forget. In a flat market, the only way they could expect to catch up is if they have saved the equivalent of the repayment element of a mortgage even though they did not actually have one.

The current market changes that a bit, though. For example, I could have bought a flat for £250k in 2006 and that same flat would cost £175k now. So, I would actually be £75k 'ahead' of a 2006 FTB less the amount that they had already paid off their mortgage.

mean_momma

longtimelurker wrote: »

85 year old grandma living alone in a fully owned 5 bedroom family house, while her grandchild, his wife and their 6 month old baby rent a one-bed flat .........

Well, no doubt Granny did her time in a small flat when she was young. Maybe even in barracks, all through the war, if she was in the forces.

penguine

IveSeenTheLight wrote: »

What I meant was that usually the process of buying properties, mean that you start with a smaller property and move to a larger property as life adjusts.

I think this is the idea we need to get away from, if we're ever going to eliminate absurd boom and bust cycles in property prices. It leads to people thinking they have to buy a 1-bed flat with a crippling mortgage to get onto the "property ladder" or risk losing out forever. And when prices fall they end up imprisoned in their cell-like rung of the property ladder.

When I was growing up and in my 20s (I'm from the States) I never knew anyone who bought a flat or a condo (though this has probably changed now). People rented until they were married with a family, then bought their first property, which was usually a 2 or 3 bed house.

IveSeenTheLight wrote: »

For whatever reasons there was a delay in buying younger, surely (if still maintaining the average) that FTBers cannot expect to catch up with those who bought earlier. They will on average still maintain the average mortgage lifetime.

It really should be possible for anyone who's saved up a decent deposit and has a good income to buy a decent sized property (say a 2 or 3 bed house) regardless of what point in their lives they decide to buy. The only reason it's not possible in a boom cycle is because property prices have risen more quickly than salaries and the interest earned on savings.

IveSeenTheLight

penguine wrote: »

I think this is the idea we need to get away from, if we're ever going to eliminate absurd boom and bust cycles in property prices. It leads to people thinking they have to buy a 1-bed flat with a crippling mortgage to get onto the "property ladder" or risk losing out forever. And when prices fall they end up imprisoned in their cell-like rung of the property ladder.

I dont think you can get away from it.
Granted, people who save for years, inherit money, have a good income salary, have a decent deposit can jump to a higher level of property, however this is not Mr or Mrs FTB average I would believe.
Mr or Mrs FTB generally need to start with property that is affordable to them and in general are 1/2 bed properties.

I started out stretching myself for a 2 bed flat and when I left the UK had a 4 bed house. Certainly I could not afford a 4 bed house when I first bought property.
Everyone I know, started with a smaller property, including from older generations.

I take your point about renting until they were married with a family, then bought their first property, but some people may not wish to choose to go down this route, some people wish to live in a flat in town rather than commute and as you say, in Britain, there is a culture to buy rather than rent.

penguine wrote: »

It really should be possible for anyone who's saved up a decent deposit and has a good income to buy a decent sized property (say a 2 or 3 bed house) regardless of what point in their lives they decide to buy. The only reason it's not possible in a boom cycle is because property prices have risen more quickly than salaries and the interest earned on savings.

Agree with the first part although I do not believe this is the general sitation for a FTB.
Have to disagree with the second part. Maybe some areas have become totally unaffordable, however, in others they have not become so unaffordable.

I was speaking to a 23 year old femal colleague with a two year old child. They did not put buying property on hold to have children and started off in a flat. They've recently moved into a 3 bed house and are evaluating if they can become mortgage free in 12 years i.e. by the time this lady colleague is 35 and her daughter is 14.
This example does not spark concerns of unaffordability in their property.

IveSeenTheLight

daveb975 wrote: »

I agree, and I think that this is a point a lot of FTBers forget. In a flat market, the only way they could expect to catch up is if they have saved the equivalent of the repayment element of a mortgage even though they did not actually have one.

Fair enough point, well made

daveb975 wrote: »

The current market changes that a bit, though. For example, I could have bought a flat for £250k in 2006 and that same flat would cost £175k now. So, I would actually be £75k 'ahead' of a 2006 FTB less the amount that they had already paid off their mortgage.

while in your specific circumstance and area you may be able to say that you are ahead of someone in 2006, this is not really the point.
I could counter with saying but you would be behind somone who bought in 2002.

More prevalent and in line with my point would be that if you now bought for £175k, you would be following a similar (not exact) timeline to whoever bought their property for £175k years earlier.

My point is, two couple in mid thirties, one first bought 8 years earlier and may be now looking to upgrade, the other is starting with their first property.
Do you believe all being equal the second couple should be able to jump straight to the upgraded level of property without having previously been paying down a mortgage (unless as you point out that they have been putting away the equivalent capital outlayed in the mortgage, which let me remind you will not be the average FTBer)

daveb975

IveSeenTheLight wrote: »

.

My point is, two couple in mid thirties, one first bought 8 years earlier and may be now looking to upgrade, the other is starting with their first property.
Do you believe all being equal the second couple should be able to jump straight to the upgraded level of property without having previously been paying down a mortgage (unless as you point out that they have been putting away the equivalent capital outlayed in the mortgage, which let me remind you will not be the average FTBer)

I do agree with you. All being equal, there should be a property ladder, and the couple who are upgrading should be able to buy a better property than the FTBs of the same age.

A lot of people on here seem to think that property values should be tied to income e.g. "I earn an average income, so I should be able to afford the average house". In reality, someone earning an average income should probably expect to buy an average house eventually, not buy one straight away. In reality, savings, inheritance and years paid off the mortgage have a bigger effect on affordibilty than income alone.

I think that the massive fluctuations in the market do make a difference, though. Those who bought at the peak of the market in 1990 or 2007 will find themselves at a disadvantage compared to those who bought a few years later.