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

b0rker

nobblyned wrote: »

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,

It is as if the FTBs want high interest rates on savings, falling house prices and low interest rates on mortgages?

Anyone for cake?

lostinrates

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.....

Not all FTB are singledons in there early twenties. I have been married for 4? years now, am pushing thirty.

jay3_2

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.

Hi, I sympathise with all FTBs in these uncertain times, but honestly I wouldn't give up just yet.

You've done all the right things, and though I'm sure it feels that everything is stacked against you at the moment, markets and economies do turn around eventually, even this one.

My advice for what its worth: if you can manage it, lower your sights a little on the type of property you are looking for; keep saving for the time being - the good news is that inflation is slowing markedly, and house prices are moving in your favour. You can still get a real return on your savings if you shop around - take a look at the best fixed rates.

Above all - please don't get panicked into buying somewhere just to get on the ladder (from what you've said, I'm sure you won't). I know that 4 years seems a long time to wait, but hang in there....

When I bought my first house interest rates were 10%, and we were in the midst of a recession (yes I know get the violin out!). My point is, there are always problems to overcome. Despite this, things have a way of working out in the long term, as long as you hope for the best, but plan for the worst.

Good luck!

jay3_2

ad44downey wrote: »

It sucks. Irresponsible borrowers get rewarded and cautious savers get walloped

Yep, you're spot on. Still, at least we've got the moral highground

sympatex

I'm not rubbishing any previous posts by borker or alan, because i was only using myself as example in reality i'm buying with gf but the situation isn't any better (we both earn the same coincedentally) so we could borrow say 125k + 10% which is 137,500. within a 1mile radius of where we want to live there are 5properties, 1 is retirement flat. the others 1bed maisonettes. So on 2 average uk salaries yes i guess we could buy a 1 bed place.

i guess children, life and everything else is on hold while we've built up equity in the 1bed maisonette. at approx 1k a year @ 6.5% mortgage. I'll get the stop watch because it won't be long.

and taking lostinrates point, im closer to 30 than i am 20.

baileysbattlebus

The Halifax has a table of LA areas where someone on an average salary for that area can buy an average house. The table is for 2007 and 2008, I'm not sure if there are any figures for 2009 or if it's an annual release.

Table 2 on page 3 will tell you those authorities and under it is how it was worked out.

http://www.hbosplc.com/economy/includes/31_12_08FTBAffordability.doc

twirlypinky

I'm 27, single and sick to death of people telling me that i can really only expect to buy a bedsit, studio flat or a maisonette. Just because I'm single, why should I. Why the hell should i live somewhere grim just because I've not found "the one". It's bloody daft.

50 years ago my Grandad bought a 3 bed semi in south london for £6.5k. On his wages alone, my nan's wages weren't taken into consideration. So someone please tell me why these days singltons are expected to live in a tiny space?? The ratios are not right anymore, and they haven't been for a long time.

I'm in the situation now where I'm going to have to find a partner or wait for a relative to die before i can buy a home. I think it's a very sad world we live in.

sympatex

I wouldn't want to speculate on the inflation aspects, my food seems more expensive than it used to be! I need that. HPI seems to be 10% since peak in my experience around here. so i'd still rather have an incentive to save, but point taken and i accept IF house prices selling in this area reflect what the nationwide/halifax indicate then that's good and a valid point. Sales aroun dhere don't reflect that as far as i can tell.

JayScottGreenspan

b0rker wrote: »

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.

Depends on the area, obviously. A three bed semi in a not so nice area was within the reach of 'UK average salary man' in the nineties. The ratio of average salary to average house price was actually fairly stable throughout the nineties. It was only in the noughties that it went completely mad.

From 1995 to 2008:
AEI went up by a factor of 1.73
Nationwide house prices went up by a factor of 3.65

Thus the ratio of house prices to average salary doubled.

An FTB in 1995 with a 3.5x salary mortgage could buy the same house as an FTB in 2008 with a 7x salary mortgage.

When you factor in interest rates the change in affordability is not be so great. But anyone who buys on the basis that interest rates will stay this low for anything more than the short term is taking one hell of a gamble.

Entertainer

b0rker wrote: »

London per chance?

A nice part of London at that. You can get one bed flats for £140k in many places in the capital.