Does the property ladder still work at today's prices

RHemmings

What do you all think about the question 'Does the property ladder still work at today's prices'? In the old days, people would buy a flat or a small house as a first time purchase. Then they'd buy a larger house as their family grew. Then they'd buy a big fancier house later on. But FTBs these days often have to stretch themselves to the limit to buy even a small inadequte property. Will they be able to pay off the mortgage and build up enough equity to move up the ladder?

ricflairandy

No.

Personally 5 years ago i baught a 3 bed semi. Nice area, nice garden etc. The only reason i would move, is for a 4 bed house. And for what it would cost me to move, its just not worth it. The problem being that as my house price has tripled in value, so have all the others that i look at, which just makes the ones i would see as an improvement end up stretching financially too much.

The house price increases are only beneficial if you plan to stay there and retire or trade down. For everyone else its a nightmare.

gbmacqueen

Do you think that higher value houses are increasing in value slower therfor the gap gets narrower. As a result the ladder bends higher up?

A_Fool_&_His_Borrowed_Mon

RHemmings wrote:

What do you all think about the question 'Does the property ladder still work at today's prices'?

Indeed it does,
Only for the lending institutions though, who are swimming in the money!

At the expense of ordinary folk......

bobsa1

Not totally sure about the ladder bending higher up. Just got details of what I thought my next house would be and they are truly rubbish. I'm looking at max £600k so maybe I'm not high enough up to see a bend.

PoorDave

Aside from complaints about £600k houses, it seems that the bottom 5 rungs have been removed, compared to the old ladder. You need the long legs of high lending multiples, and the sturdy footwear of saving for 10 years to get there.

With interest rates rising, anyone stepping up to higher rung may find their footing slippery, and be noticing woodworm in the ladder.

F_T_Buyer

The 'Property Ladder' only works with wage inflation, making the debt far less in relation to your income.

I'm sure someone will argue wage inflation is around 4%, so it still exists but at a slower pace. But the problem is the 4% inflation doesn't cover the rising costs of essential outgoings like gas/elec, petrol, council tax, food etc.

This is all thanks to the phoney inflation measure we have.

Stephen_Webber

Sadly, most employers work on the official inflation figures when it comes to pay rises, so it is even harder to move up the ladder, as house prices far outstrip salary increases (excluding promotions).

Cheers,
Stephen

mi-key

I think the property ladder has pretty much dissapeared.

One main difference is that FTB's are a lot older now ( IIRC the average age is 32 or something ) - if you are this age, and have been renting a decent size house for a few years, may have children, be married etc... you arent going to want to move into a poky one bed flat that may have suited you when you were 22 and single.

For me, after having lived in a 3 bed semi in a nice area, there was no way we were even going to look at buying smaller places, or worse areas - the only reason to spend a lot more money buying than carrying on renting was to get somewhere a) detatched b) larger and c) in an equally nice area.

Fortunately our financial position means we can afford what we want, but the place we are getting would traditionally have been seen as a family home, and would probably have been the third or fourth step up the ladder from tiny flat ( when single ) to small 2 bed house ( with wife / girlfriend / one child ) to family home.

I think there are quite a few people who are in a similar situation as us who dont want a starter home or small flat, and can afford to jump the first few rungs of the ladder.

And on the downside, if you look at the very bottom rung of the ladder, and whats available in a lot of areas, FTB's either cant affor them at all, face living in a glorified bedsit, or have to move to a really bad area - no wonder so many are happier renting and waiting.

RHemmings

I only posted some of my points in my first post. In a rather pretentious plan I was waiting for someone to come along and claim that the property ladder was working all fine and dandy so that I could post the second half of my argument. Surely someone believes that the property ladder is working fine, or at least will lie due to vested interests.

Richard146

We bought a place in Turkey as all the pundits were forecasting high price rises. However, we have seen very little rise and with the vast amount of property being built out there, it's hard to see it being a boom area for many years to come. However, we love the place and maybe that's all that matters.