Wheres the Eqilibrium

Generali

kriss_boy wrote: »

and went to Australia last year.

If you want to have more cash available to spend on housing then the obvious route is to spend less on other things.

To be fair, I went to Aus a year or so ago but that was to emigrate.

CLAPTON

kriss_boy wrote: »

But the housing market is so stagnant how will extra homes help? Simply by driving prices down because of the extra competition?

I assuming that most people want a house to live in and/or raise their children

So building more houses of various sizes mean more people can own and live in more suitable (bigger) houses

so you could live in that 3 be semi rather than a one bed flat

whether or not it meets your wish for an 'expensive' house created not by your hard work but by inflation is another matter

so what do you want ... a nice sized house suitable for your families needs and asperations or a £1m tiny flat which is the cheapest thing on the market.

Cleaver

kriss_boy wrote: »

Take my girlfriend and I- combined income of 45K but living in a 90K house with a 75K mortgage.

I cant fathom how its possible if houses prices and wage inflation are minimal over the next 10 years how we could ever upsize.

If there is no wage inflation and house prices dont rise then how will people like us build equity other than over paying our mortgage by a grand a month for 10 years.

Your net monthly income is what, about £2,700? And your mortgage is about £450 a month?

I would suggest that if you're keen to move to a bigger house then maybe increasing your mortgage payment would be a good idea and it doesn't need to be by much. If you could afford to overpay it by just over £300 a month (which it looks like you could) then your mortgage would be paid in around 10 years. That's only about 10% of your net income. Not sure if you have kids, but if you don't then this should be possible.

If houses haven't increased in value, but you've done the 'normal' thing of getting better jobs through working hard and qualifications then you'll be earning more in ten years and living in a mortgage free house. Up to you what you do then, but buying a much bigger house would be one option.

I'm sure people will now say "but what about kids, what about losing jobs" etc., but that's where coming up with your own plan comes in.

wageslave

It's a choice thing, holidays and leather sofas versus paying down your mortgage.

You need to decide whether it's going to be jam today or tomorrow.

In your position, I'd be flinging every spare penny I could lay my hands on at my mortgage. You will be amazed at how quickly you can make a real difference.

Cleaver

wageslave wrote: »

It's a choice thing, holidays and leather sofas versus paying down your mortgage.

You need to decide whether it's going to be jam today or tomorrow.

In your position, I'd be flinging every spare penny I could lay my hands on at my mortgage. You will be amazed at how quickly you can make a real difference.

Indeed. And you can still have 'jam' today. A stint in a tent in England can be just as much fun as a luxury trip to Australia if you're with the right people and have the right attitude.

Radiantsoul

Cleaver wrote: »

Indeed. And you can still have 'jam' today. A stint in a tent in England can be just as much fun as a luxury trip to Australia if you're with the right people and have the right attitude.

Maybe if it is a tent with a troop of horny cheerleaders, but in general I would prefer the trip to Australia.

Cleaver

Radiantsoul wrote: »

Maybe if it is a tent with a troop of horny cheerleaders, but in general I would prefer the trip to Australia.

At the risk of sounding cheesy, I have a damn good laugh and a wicked time away with my wife wherever we go. A holiday is what you make of it IMO, not the location.

But I understand your point.

wageslave

I would prefer Bondi beach too but no one can have it all. Once you accept that, life becomes a far happier affair.

We can all bemoan our fate and wait for something or someone to rescue us.

We would have a bliddy long wait though

michaels

Suppose land was free - I suspect to build a decent family home costs about 150k - to finance this at 2% real interest rate over 25 years is 661 per month - note this is all 'real' terms so assuming price and wage inflation cancel out.

Thus there is no way anyone should expect a family home to cost less than this and depending on planning restrictions land cost is obviously going to add to this - even if all planning restrictions were removed the land would have some value for other uses or farming or whatever.

This to me must impact on all the discussion about what income is needed to buy etc and suggests that a large minority of the population will have to be housed in subsidised (social) housing probably of a lower standard (may be apartment, only one bathroom, smaller rooms) than a family would choose.

HAMISH_MCTAVISH

kriss_boy wrote: »

But being our first house we've spent a lot of money on rennovating it and just buying furniture etc. Plus we both bought cheapish used cars to commute to work in and went to Australia last year.

You need a reality check.

Your joint income is only 45K. That is below average income. The median (50% of people make above, 50% make below) income of full time workers for the UK is £25,800. So an average couple on average median income would earn £51,600.

But of course, the overall average is meaningless, because the lowest paid 30% or so of society are not now, and never have been, able to afford to buy a house.

The average income of actual house buyers, is now and always has been significantly higher than the average income of all people.

The reality is that you have below average income for all people, and seriously below average income of actual house buyers.

And yet you are looking to buy a "really nice" family house, something that has always been at the more expensive end of the spectrum. Clearly not the sort of thing that is easily achievable for below average income people.

And thats before we get into holidays to Australia, two cars on HP, etc etc etc......

Now, on a more positive note, it is likely you will end up with such a house anyway, because as you are young, even without significant wage inflation, you will probably end up making much more over the next 10 years or so through career progression. And as you say, you stand to inherit at some point as well.

As for your friends who bought earlier and now have 50K equity, the fact remains that if they are an average earning couple, between that 50K equity and a 3 times joint mortgage, they can easily enough afford your "really nice" 200K houses..... Proving once again that the best way ahead is almost always to buy young and not waste a decade of money on rent.