FTB expectations too high?

daveb975

penguine wrote: »

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.



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.

It depends on the area, though. Where I live, it is quite usual for people on a good joint wage in their late 20s/early 30s to buy a flat and live in it for quite a while. In other areas I have visited in the North, flats are not even considered a realistic first step on the ladder as even those on low incomes have traditionally been able to afford a small house straight away.

The boom has had an effect on this, but even if house prices come off 70% from their 2007 peak, average sized houses in certain areas will still be above the reach of FTBs with a 3.5x income mortgage and a 10% deposit - but then they always were.

SandC

The_Maestro wrote: »

£160K would be a very high price for a 3 bed semi in 1995. I'm sure there were some very expensive areas in the south where such houses existed, but I think they would be a tiny minority of total houses of this type.

In northern towns such houses would average 50-80K (area dependent) in 1995. In 2007 the same houses would have been in the 200-300K area.

You are right though, it is area dependent. Some 3 bed semis could be hugh and be worth £1 million in 2007 (obviously not an average house)

I'm in one such area. A nice 3 bed semi was indeed around £80k-£90k in 1995 but in 2007 would still be under £200k. More like £180k area.

SandC

daveb975 wrote: »

It depends on the area, though. Where I live, it is quite usual for people on a good joint wage in their late 20s/early 30s to buy a flat and live in it for quite a while. In other areas I have visited in the North, flats are not even considered a realistic first step on the ladder as even those on low incomes have traditionally been able to afford a small house straight away.

The boom has had an effect on this, but even if house prices come off 70% from their 2007 peak, average sized houses in certain areas will still be above the reach of FTBs with a 3.5x income mortgage and a 10% deposit - but then they always were.

That's quite right. It's not particularly about going straight for the 2 bed house over a cheaper alternative of a flat because in areas where there were high levels of manufacturing there was (and still is) a saturation of terraced houses and not many flats. Take 1995 as an example, a 2 bed house would be anywhere between £28k and £38k say but a flat would be around £45k.

daveb975

SandC wrote: »

That's quite right. It's not particularly about going straight for the 2 bed house over a cheaper alternative of a flat because in areas where there were high levels of manufacturing there was (and still is) a saturation of terraced houses and not many flats. Take 1995 as an example, a 2 bed house would be anywhere between £28k and £38k say but a flat would be around £45k.

Is that still the case now, with flats being more expensive than terraced houses? Has the recent building of all of these 'luxury apartments' made any difference?

The housing supply does have a massive bearing. In my area, the tiniest Victorian terraced house costs significantly more than a large 2 bed flat simply because there are loads of flats and hardly any houses. I recently saw an example of a 750sqft house on the market for almost 40% more than flats with the same floorspace and 10% more than a flat with over 1,100sqft. The house still sold very quickly.

It is interesting to hear how different it is in other areas.

SandC

No, they built loads of blocks of flats and apartments so generally they are cheaper than an old 2 bed terrace. Many people prefer the older terraces against new build flats and 'starter homes' because they are so much more spacious, so they are comparable now.

That is, bar the monstrosity of luxury apartments built near the centre of our small town - they are ridiculously expensive but whaddya know, loads of them up for rent (you could guarantee if you wanted to rent an apartment there would be a choice in that building at any time) and I don't think the developer ever sold all of them. In this town most of us know a rip off when we see it.

SandC

Actually I've just checked Rightmove and 2 bed flats are substantially more than 2 bed terraced houses (the luxury ones are just plain extortionate!), the 1 bed flats for sale are hot on the heels of 2 bed terraces as well - only around £5k less than an 'average' house in the same sort of area (asking prices).

bluegorilla

A friend of mine fell into the trap of buying a "luxury" 2 bed apartment at the height of the market. The overvalued price (even after their discounts etc) given by the developer meant he has now lost almost £40k from the amount he paid, but worse is that since buying there have been about 20 other developments near by. So he can't sell it - who would buy second-hand when they can buy brand new and have it exactly as they want? Likewise, there are too many for the rental market so he couldn't cover the mortgage renting.
Who said we have to buy property anyway? On the continent, many people rent all their lives.

IveSeenTheLight

bluegorilla wrote: »

Who said we have to buy property anyway? On the continent, many people rent all their lives.

Welcome BlueGorilla,

You will find this topic has been discussed many times.
Variations of sub topics include security on tenancy, BTL, rental prices etc

In short you don't need to buy. If you are more comfortable renting, then continue to do so. Others would prefer to know that their home is theres to do with as they please and that they know in years to come they will not have a monthly outgoing of rent or a mortgage.

izzybusy23

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.

Erm... divorce which led to debt (because I was the one who left the matrimonial home to get away from my ex) at a time when HPI was in full swing, which led to renting, then fell pregnant and thought a baby at 33 years of age was more important than paying out ridiculous money for an overpriced shoebox, after all, my baby would have a roof over its head whether mortgaged or rented.... so to answer you question I actually once was a home owner, but unfortunately situations and circumstances dictated the direction of my life. I cannot see why me wanting something better than a 2 bed flat should be questioned? Ideally I would like a 3 bed house... nothing wrong with that and I am prepared to sit and wait it out for the right time and house when our wages will buy something worthwhile. In the meantime, I am happy to rent.. seems to be the safer option in this present climate.

Any more questions?? :rolleyes:

mower5

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.

Found this article in the Torygraph dated 11 Apr 2002.
Paragraph taken from Facts on FTBs section
"The average age of FTBs was at an all-time high of 34 in 2001. The number of homebuyers in the under 25-age group has fallen from 32 per cent in 1988 to 11 per cent in 2001"

http://www.telegraph.co.uk/property/propertyadvice/propertymarket/3300862/Neither-up-nor-down-the-naked-truth-that-means-staying-put-on-the-property-ladder.html

It a fun read mid-big boom and pre-HPC, very smug reporter!