FTB expectations too high?

mbga9pgf

I suggest you look at median property values vs Median wages if you want to see how skewed this market is.

I am on an above average salary for my age (27 on 48K) wife is on 22K. Yet, a year ago, the best house we could afford was a 2 bed newbuild flat in swindon. We had a significant deposit.

If that isnt a skewed market I dont know what is. Stop complaining and get dropping your prices!

clk299

I'm a FTB and I would LIKE a 2 bed flat (If I won the lottery I would like a 2 bed house but seriously what am I to do with all that space??). I don't think that it is much to ask to be able to buy a 2 bed flat in the very outskirts of London on over 30k salary with a decent deposit yet there is still a way to go before that is possible. My parents' first property when they were younger than me was a 2 bed maisonette which they quickly upgraded to a 3 bed terrace. Unless I find someone to marry then there is no hope of me being able to afford that. I can't even think that far ahead.

MrMalkin

Turnbull2000 wrote: »

None of my parents or aunt's started off in a one-bed flat - it was usually a two bed semi in their mid 20's, with three bed family home at 30.

I think the 'property ladder' is a misconception. Most people don't buy a new flat or house every few years, they will buy at most 3 during their lifetime - a first home, a family home, and maybe a retirement home. People who buy more than that are people who are gaming the system (like aspiring property developers) or have unusual family situations (eg the fallout of a divorce).

With that in mind I don't think it's out of the realms of the acceptable for a FTB to be aspiring to a 3-bed semi, as a first home to start a family in.

chucky

mewbie wrote: »

Surely average wage x average multiple should = mortgage on average house? Better than average wage = better than average house. And so on.

Oh yes, sorry - plus deposit of course. 10%.

so a £1 million house will need a £900k mortgage and a £300k salary for the 3x salary multiplier. how many people do you know earn £300k?

these salary multipliers are too simplistic and totally unrealistic and stuck in 1982.
that's how it was and seemed to work but it needs to change and be developed for modern lending

seraphina

The housing ladder has come totally unstuck because of HPI - if you can't afford to be a FTB until well into your thirties, chances are you've got a family/kids to think about then. So of course you're not going to be looking at 1 bed flats! And once you realise that you need a 3 bed semi as your first home, what's the point in shelling out for an over priced 1bed flat for a few years?

It is depressing to look around at my parent's generation and see exactly what they could get for their money.

lynzpower

chucky wrote: »

so a £1 million house will need a £900k mortgage and a £300k salary for the 3x salary multiplier. how many people do you know earn £300k?

these salary multipliers are too simplistic and totally unrealistic and stuck in 1982.
that's how it was and seemed to work but it needs to change and be developed for modern lending

I dont know anyone who earns 30 but I know a few couples who earn over 150 each

MrDT

mewbie wrote:

Surely average wage x average multiple should = mortgage on average house? Better than average wage = better than average house. And so on.

chucky wrote: »

so a £1 million house will need a £900k mortgage and a £300k salary for the 3x salary multiplier. how many people do you know earn £300k

Chucky, do you think that average houses cost a million squids?

They don't.

Anyone buying a million pound pad should be able to put down half as a deposit surely? Why should anyone lend them a million if they can't afford to pay it back?

50% deposit, and 3x joint income still sees the footballer+wag wannabes needing upwards of 160k salary between them. I come to the conclusion that borrowing to buy a million pound house to be folly for all but the biggest high flyers (and they wouldn't really need to borrow would they?)

Let's look at a normal average house at a corrected price of hmm, maybe 140k, now take off the 10% deposit, they need to borrow 126k, now let's assume a sensible multiple of joint earnings to be 3x (I wouldn't go that high tbh, but I guess it's considered sensible by most), that's a salary requirement of 42k between the two of you which sounds pretty reasonable.

I doubt many typical FTBs are looking to blow a million on their house. You can !!!!! and moan about the SE and London prices as much as you like - but either you earn what you need to live happily there, or you get back in your box and move to somewhere a bit more in keeping with your means.

mbga9pgf

This is why you need to look at median prices as opposed to mean prices... Median prices chop off the first and last quartiles so you get a far more representative average.

Median wages do something similar. I am basing my calcs off 3.5X median salary.

To median house price, it works out we need another 15-20% off to return to neutral affordability.

whathavewedone

I agree with the OP. I bought my first flat when I was 31 and it was a 1 bed flat. I was very happy with it.

I've thought the same thing reading through posts written by people in their early to mid twenties expecting to move straight into a family house because they might want children later at some stage.

My parents didn't get a family home as soon as they got married. They had a basement flat when my sister was a baby, then a 3 bed semi in a grotty area and finally a 4 bedroom house in a nice area. By the time they got to the 4 bedroom house in a nice area my father was 38 years old. This was 1970, the year I was born.

chucky

MrDT wrote: »

Chucky, do you think that average houses cost a million squids?

They don't.

Anyone buying a million pound pad should be able to put down half as a deposit surely? Why should anyone lend them a million if they can't afford to pay it back?

50% deposit, and 3x joint income still sees the footballer+wag wannabes needing upwards of 160k salary between them. I come to the conclusion that borrowing to buy a million pound house to be folly for all but the biggest high flyers (and they wouldn't really need to borrow would they?)

Let's look at a normal average house at a corrected price of hmm, maybe 140k, now take off the 10% deposit, they need to borrow 126k, now let's assume a sensible multiple of joint earnings to be 3x (I wouldn't go that high tbh, but I guess it's considered sensible by most), that's a salary requirement of 42k between the two of you which sounds pretty reasonable.

I doubt many typical FTBs are looking to blow a million on their house. You can !!!!! and moan about the SE and London prices as much as you like - but either you earn what you need to live happily there, or you get back in your box and move to somewhere a bit more in keeping with your means.

that wasn't my point. who lives in these types of properties? not people who earn £300k a year. equity is built up through inheritances, pay rises or even a bonus.

however, i agree with your FTB logic.