Why now so hard to get that 1st rung on the propery ladder compared to years gone by?

seven-day-weekend

Iso wrote:

They help to fuel the boom. These TV programmes never take into account the fact that the property market has risen. They never include the expenses that will have to be paid by the "developer" when he sells the property. They get two or three agents round to value the place and then say "so the property is now worth (the average valuation) which means that (after three to six months of hard labour, bank overdraft at peak, credit cards up to the hilt etc etc) joe bloggs is going to make x amount of money."

No, that doesn't mean he's going to make x amount of money. He hasn't sold it yet and when he does sell it he's got to pay loads of fees plus he should calculate how much he has lost in earnings (most have given up their highly paid jobs) and they'd find that they had, in fact made a loss.

What I meant was, it looks good on TV, most people don't question it; in fact loads of people assume because the market has been going up for the last 10 years or so that it will continue to go up and never drop. Many people assume that because interest rates are low and have been low for years that they will stay low.

The media is helping to create a "feeding frenzy". This is fuelled by the "tv show type developers" hoping to get rich quick (see above), second home owners and BTLs.

Haven't read all the thread, but wanted to make a couple of comments.

Firstly, in the not too dim distant past (1980s?) interest rates on a mortgage were 15%. (This was actually how we managed to pay our first mortgage off early - we just didn't reduce the amount when interest rates cane down again). So anyway, be prepared, interest rates go up as well as down!

At around the same time a friend of ours mortgaged himself up to the hilt to buy a tiny flat in London. Two years later, he was in £30,000 worth of negative equity. Be prepared, house prices can go down as well as up!

As for programmes like 'A Place in the Sun', between deciding we were going to buy a house in Spain, and actually buying one (2003-2004), the prices in our tiny, remote village had gone up by 1/3 because it had been on 'A Place in the Sun'. We had to have a smaller house than we'd budgeted for. Be aware, the effects of these programmes is far-reaching.

Haven't got an actual answer to the question, but I think the above points are all relevant to the discussion.

Jim_B_3

Iso wrote:

Surely if we can build on a site that isn't a protected species natural habitat that would be preferable?

All other things being equal, yes. I simply contend that 'protected species' is not a trump card that outweighs all other arguments. However, this is away from the thread again.

Iso

seven-day-weekend wrote:

Firstly, in the not too dim distant past (1980s?) interest rates on a mortgage were 15%. (This was actually how we managed to pay our first mortgage off early - we just didn't reduce the amount when interest rates cane down again). So anyway, be prepared, interest rates go up as well as down!

At around the same time a friend of ours mortgaged himself up to the hilt to buy a tiny flat in London. Two years later, he was in £30,000 worth of negative equity. Be prepared, house prices can go down as well as up!

Why is that journalists all go on and on about how base rates have gone up by more than a quarter (from 3.5% to 4.5%) and how that is putting enormous pressure on borrowers? Don't any of them remember/know about the 1980s? Not only were interest rates at 15% they were hiked by several points in one day - I shudder to think how people would cope with that in today's climate.

vishpatel

SammyLee wrote:

Daft question time, can anyone please shed some light on why it's now so hard for a first time buyer to put their foot on the property ladder compared to times gone by? What factors are causing this? I'm sure our Parents didn't have the same problem and the only sense I can get out of Estate Agents when I ask them is that there are so many First time buyers on the market but why should that be?
Yours confused

Factors:

1) Availability of cheap credit - Alan Greenspan (http://en.wikipedia.org/wiki/Alan_Greenspan) is the man we have to thank for that.
2) Long bull run - as property prices increased, more and more people are drawn in.. its market psychology.

BTW - the estate agent is talking out of his rear end!! - The amount of FTB's is very low right now.

Chrismojam

BobProperty wrote:

Because:
1. Prices are at a historic high.
2. The current generation are driven by an instant "want it now" culture.
3. Combined with 2 they think they "deserve" to be able to buy a 4 bed detached house in Alderley Edge as their first step on the property ladder.

In order to fit in with 2, lenders will lend at ridiculous income multiples to allow 3 while ignoring 1.

The other side of the coin is:
1. Their parents had to save for years for a deposit.
2. The lenders only lent 2.5 to 3 times earnings on repayment mortgages.

Haven't read the rest of the post yet but Bob's hit the nail on the head straight away.....

My next door but one neighbour sold his house for about £115K (3 b/r terrace)....I bought mine for £36k 6/7 years ago...I thought that's bloody ridiculous....if I was looking at these houses I wouldn't pay that!! BUT what choice do people have now?

I was lucky, thanks to this price hike, I will have equity to put down on my next house......(providing I can sell the bloody thing of course!!).....which in turn will have also gone up in price..:rolleyes:

I didn't (rather couldn't) save for the deposit...and went through one of those companies who 'pay your deposit for you'...oh aren't they just wonderful!! The fact that they are making a say £8K profit on a house which I actually found them (DOPE!!!).....it was an auction house sale ...they sold it to me for £36k.....If I had the nouse and the money behild me then I could have bought it for about £28k:o

Still............you only do it once don't you!!

'.............they think they "deserve" to be able to buy a 4 bed detached house in Alderley Edge as their first step on the property ladder'


Much as I would love the 4 b/r house....I'd give Alderley Edge a miss..............have you seen the prices of their 'town houses'!!! Bob's right though.....I hate the idea of buying and selling..........and I've not even done the selling bit yet! I'd love to have the house I'd spend the rest of my days in......But it's not called a property ladder for nothing!!

'The lenders only lent 2.5 to 3 times earnings on repayment mortgages'

I think it is frightening how much the lenders will lend now..........and quite frankly how much people are willing to borrow.........???

When I got mine I could have got a mortgage for about £45/46K....(I know nothing by todays standards..) but back then I thought......ooh no.......if I go for about 2.5 my salary I know I will definately be able to afford it if the interest rates go up....(oh to be soo young and so cautious..is that a sad thing or just sensible?)..........now my salary has changed...and so has my attitude to money...but the cautious me still says be careful...

Jim_B_3

Chrismojam wrote:

I was lucky, thanks to this price hike, I will have equity to put down on my next house......(providing I can sell the bloody thing of course!!).....which in turn will have also gone up in price..

Unless, of course, you're moving to a more expensive house, in which case that house has gone up in price more than the house you live in, all other things being equal, so you actaully have to find more money to be able to afford it.

You're only lucky if you're moving to a smaller house/cheaper area; if you want a better house, you've been screwed over by the house price boom as well.

Chrismojam

Jim_B wrote:

Unless, of course, you're moving to a more expensive house, in which case that house has gone up in price more than the house you live in, all other things being equal, so you actaully have to find more money to be able to afford it.

You're only lucky if you're moving to a smaller house/cheaper area; if you want a better house, you've been screwed over by the house price boom as well.

i thought I said that.....(my grammers's pooh by the way)....I know that although my house will have gone up in value.....what I want to move to will have also......I am only lucky in the sense that I will have a fair wack to put down against my next mortgage....which will inevitably be more expensive than the one I have! which is pooh really, but inevitable?

PabloNeruda

SammyLee wrote:

Daft question time, can anyone please shed some light on why it's now so hard for a first time buyer to put their foot on the property ladder compared to times gone by? What factors are causing this? I'm sure our Parents didn't have the same problem and the only sense I can get out of Estate Agents when I ask them is that there are so many First time buyers on the market but why should that be?
Yours confused

Welcome to the world of free market neo-liberalism.

lynzpower

I read elsewhere on MSE not so long ago, that "first time buyers" also include those who are not first time buyers after all, they are just not selling at the same time. So for example I could sell up, bank any equity coming to me, rent for a while, then buy again - et voila Im a first time buyer.

Now, is this right? Or am I misquoting someone here?

lisyloo

Sorry for coming back so late and messing up the order.

Brownfield sites in cities and towns often provide the only open space available.

That wasn't the kind of thing I was thinking of.
I had abandoned warehouses, closed hospitals in mind etc.
i.e. land that is providing no value whatsoever and can be an eyesore and place for criminals to hang out.

If we're keen on preserving endless green fields, shouldn't we be keener on preserving these open spaces within cities?

I don't think it's endless, I think it's a finite commodity that is threatened.
As above I wasn't thinking of open spaces and they aren't the kind of places we are looking to preseve.
For example Southmead hospital is a large hospital complex is one of the rougher parts of Bristol.
If it's shut down then it will probably be used by joy riders and people taking
drugs.

I wasn't suggesting building on nice green spaces in cities.