Unemployment & FTBs

Ingsy

Not sure if this has been mentioned in any of the other threads but I just had a thought, and it made my head hurt.

On the news last night they reckoned that 1 in 5 people between 18 and 24 were out of work, with this to get worse. So where are the next wave of FTBs coming from?

You need people coming in at the bottom of the chain, to allow people to move further up. If the people at the bottom don't have jobs, then they won't become FTBs - so what happens then?

So increasing unemployment may not hurt people already in a house, with low IRs and government support schemes etc. But I think it may hurt those wanting to get on the ladder. So will BTL fill any void left by potential lower FTBs, or will the legislation tie this up so tightly that there won't be any new BTLs out there?

Graham_Devon

At the moment, the people who are coming into the chain seem to be doing so on the back of their parents. (not all obviously before I get picked up, I would just guess over 90%). I mean real, young, FTB's.

Now, I have no actual evidence of this. However, the other day on the news there was an item stating the first time buyer now has a 25% deposit instead of 5-10%.

People cannot just save those amounts in a matter of 3-6 months. If they could, may aswell just save for a year and nearly buy the house outright!! I don't know how else deposits have just "jumped" like that.

I don't think there will be any type of legislation on BTL. It would stump out any growth in the market, something that politicians are desperate to avoid. Amateur BTL's are starting to come back to the market, a quick look on the house buying board on here shows that. I'm not so sure what professional BTL are doing at the moment, but theres a couple on here looking to jump in as soon as they think the bottom has arrived, as "normal people should not be able to own homes".

chucky

the single FTB age will progressively get higher i imagine.

arguably the joint FTB age with no children could remain the same or maybe drop with lower house prices IMO...

long term BTL will return to fill the gap of people unable to buy - if a house price recovery comes along they will rely on yield. long term they will have capital appreciation.

if short term BTL are the majority expect price drops or stagnation at some point in the future.

lemonjelly

Ingsy wrote: »

Not sure if this has been mentioned in any of the other threads but I just had a thought, and it made my head hurt.

On the news last night they reckoned that 1 in 5 people between 18 and 24 were out of work, with this to get worse. So where are the next wave of FTBs coming from?

You need people coming in at the bottom of the chain, to allow people to move further up. If the people at the bottom don't have jobs, then they won't become FTBs - so what happens then?

So increasing unemployment may not hurt people already in a house, with low IRs and government support schemes etc. But I think it may hurt those wanting to get on the ladder. So will BTL fill any void left by potential lower FTBs, or will the legislation tie this up so tightly that there won't be any new BTLs out there?

Good question.

I've "Liked" your post. Interested to see the comments/debate on this.

Off for a think...

LydiaJ

Good point. There will still be some young people with secure jobs being FTBs - 4 in 5 aren't unemployed. Also, if prices fall there may be older FTBs who missed the boat by not buying in their 20s (like me ). But I think you're right that FTBs will continue to be the bottleneck in the system.

I'm afraid I'm not too upset about unemployment disproportionately affecting the young. I mean, it's horrible for them, but if I had the choice I'd far rather have a delay in starting my career when I was young and unencumbered and so could do something else for a while, rather than get said career up and running and then lose it once I'd got a mortgage and family to provide for.

Out,_Vile_Jelly

Just anecdotal, but I recently discovered that several mates who bought in London as FTBs over the past 3 years or so had help from their parents, whereas I always thought they had been able to do so because they earn more than me. Talking about personal finances is always a bit vulgar and un-British, but one couple had a dad pay the 10% deposit for them. I guess this is another step towards a two-tier society, as not everyone is going to be this fortunate.

Really2

Ingsy wrote: »

On the news last night they reckoned that 1 in 5 people between 18 and 24 were out of work, with this to get worse. So where are the next wave of FTBs coming from?

The other 4 people 80% of their age group.

sjaypink

are 1 in 5 unemployed, as in actually on the dole, or 1 in 5 economically inactive (at college/ uni/ travelling etc)?

dont know about 18-24s as im in 'the next bracket' *sob* , but imagine it would be the same as my age in that even those in secure jobs, not many will have got their own deposits saved.... if they have good, secure jobs then do they have uni debt? if they didnt go to uni do they owe £££££s on their topshop storecard, credit cards for xboxes and the games at £50 a time, getting p!ssed up every fri nd sat, body kit for their saxo :rotfl:

or maybe they bought all that (bnpl) and owe for uni. doubly feccked then

i know not everyone is irresponsible like that , but many were. rule out those unemployed, those on too lower wage to get a mortgage, those with debt, those not in secure work, those without £20-30k deposits, and theres not many ftb left at all.....

malkie76

thats a good point - university entrance is at it's highest with about 1:3 heading to university (iirc). However, knowing the government they wouldn't include these people in unemployment figures to keep unemployment figures as low as possible (and to be fair they aren't 'unemployed')

I agree that 4 out of 5 in an age bracket with the potential to buy gives a huge wave of new FTBs.

I'd also point out that the average age of the FTB is 33 or so (iirc), so the unemployment figures of those 10 years younger is slightly irrelevant.

If anything the urge to buy property is far greater now than it was 10 years ago, so I'd imagine a steady flux of FTBs compare to the number on the scene 10 years ago.

Graham_Devon

The 1 in 5 unemployed are those on the dole I believe. Does not include anyone else.

Cannon_Fodder

malkie76 wrote: »

I'd also point out that the average age of the FTB is 33 or so (iirc), so the unemployment figures of those 10 years younger is slightly irrelevant.

The average is up around the 30s mark, precisely because younger people are not becoming FTBs to bring the average down...

A few years ago it was 26...

Then unaffordability made them wait longer to build up their deposit/mortgageability.

Now, just as affordability has turned in the right direction for once in a generation, a chunk of them are in no position to obtain a mortgage at all, while the others have that ominous "set to get worse" phrase influencing their propensity to purchase.

"fear of redundancy continued to put up a barrier with 61% of respondents citing this as their main concern when considering a house purchase. The proportion is unchanged from March." June 18 2009
http://www.financemarkets.co.uk/2009/06/18/housing-market-confidence-outweighed-by-unemployment-fears/