Todays events...Any FTBs feeling poor? I do

ukcarper

Equity in a house is built up by house prices rising. No rising house prices no additional equity. I know you are paying of some capital but in the early years its not much.

b0rker

sympatex wrote: »

Ok let's not get too hung up on 'what exactly' is purchased, for this post i'll change it to "A 1bed flat in my area is currently 6.5* my average uk salary, a 3bed semi is 8*" (just to fit in to your world of 1bed flats for FTB's)

It is interesting that you say that a 3 bed semi is 8x of your income and that a 1 bed flat is 6.5x. That sounds like an odd market unless you are comparing in very different areas in your town. I would expect the value of a 1 bedroom flat and a 3 bed semi to differ more greatly.

In my town it plays out like this:

1 bed flat in a desireable area averages £80,000 so 4x £20K

3 bed semi in a desireable area averages £140,00 so 7x £20K

Sir_Humphrey

Cannon_Fodder wrote: »

CPI is 3%.

(Cannot let the Govt off with ignoring RPI while the bubble was inflating, then suddenly RPI is the measure of the day...)

Except some people are doing the opposite too. And inflation is still targetted to CPI.

ModernSlave

A studio on my street is for sale for £205,000, down from £215,000. Six times salary still.

b0rker

ukcarper wrote: »

Equity in a house is built up by house prices rising. No rising house prices no additional equity. I know you are paying of some capital but in the early years its not much.

I suppose it depends on how qucikly you expect to move up the ladder. If you're paying off capital on a 1 bedroom flat for 10 years (between the ages of 25 and 35) on a 30 year mortage then it would certainly build up decent equity. Assuming that house prices do not drop drastically in that time with no recovery. Also add on top of that your original 10% deposit which was instant equity when you bought.

If you are single then I don;t suppose that it is unreasonable to think you may stay in a one bedroom flat until the age of 35. You still have 30 years of earning potential ahead of you.

If you become part of a couple then the whole ball game changes as you are potentially looking at multpiple incomes etc.

b0rker

ModernSlave wrote: »

A studio on my street is for sale for £205,000, down from £215,000. Six times salary still.

London per chance?

JayScottGreenspan

Alan_M wrote: »

Here may be the root of your problem, a 3 bed semi is not a first time property and I don't think there has ever been a time when a 3 bed semi has been anywhere near 3.5 x a single persons salary......

The traditional FTB property for singleton is a studio flat or 1 bed flat....maybe a 2 bed with a partner/friend....a three bed semi? that one or two properties further on unless you had an inheritance or unusually well paid job.....

Hmm... at the peak of the bubble the average house price was 8 times the average UK salary. In the nineties this ratio was 4:1, not 8:1.

Back then an FTB on the average UK salary who had saved a deposit could buy a three bed semi in a lot of areas. Of course, the majority of FTBs would be on below average salaries (probably reflective of their age) and would only be able to be afford flats.

nobblyned

sympatex wrote: »

After todays cut in interest rates which will undoubtedly find its way into savings rates tomorrow, loans sometime never, is any other FTB's feeling poor?

I've been saving for 4years since i left Uni, not in a position to buy a house, constantly rising unreachable unless i fancied taking huge risks or comitting fraud.

Finally last year i get into a position where i can purchase savings are pretty good, got the 10% deposit i've been told plus other money to cover fee's and furniture. have a browse and find i can get very little for my 4years of saving. House prices turn (for the better) and start tanking, so i hold off.

This year my savings earn 70% less than they did. Barred to the mortgage market by interest rates of 6.5% for moajority of 90% mortgages (that still exist) and local housing market stubbonly staying at 2006 prices. (there has been falls but for good properties no more than 10% off peak). I earn an average salary nationally and 3bed semis sell for 8x my salary.

Today with the rate cuts, confirmation of QE (has been happening for a while, see pound devalue vs foreign currencies) I just feel POOR. I am stuck, frozen out of what i want and being told to spend what i've just spent 4 yeas saving. What a waste of time!

/end rant.

Focus on the real (especially vs House Prices), not the nominal value of your savings.

i.e. you are better off in an environment of 0% savings interest and -10%+ house prices inflation,

than you are with 5% interest on your savings and 15%+ House price inflation.

(Especially when you take into account the gearing you will use when you purchase)

aj9648

Yeah - I got £100K saved in my bank account - getting f-all for it !!! I used to get 7% !!!!

b0rker

JayScottGreenspan wrote: »

Hmm... at the peak of the bubble the average house price was 8 times the average UK salary. In the nineties this ratio was 4:1, not 8:1.

Back then an FTB on the average UK salary who had saved a deposit could buy a three bed semi in a lot of areas. Of course, the majority of FTBs would be on below average salaries (probably reflective of their age) and would only be able to be afford flats.

Are you sure about that?

The nineties encompasses 10 years which is a long time in a housing market. Interest rates were also rather high for a lot of the 90's.