How long can FTB-s afford to wait?

Jimmy_31

HAMISH_MCTAVISH wrote: »

I'll give an illustrative and somewhat hypothetical example, because the actual numbers aren't to hand.

Pre crash, anyone can buy, there is little to no pent up demand building, so sales to FTB-s are, say, 400,000 per year.

Post crash, a lot of aspiring FTB-s get caught out with insufficient deposits. So only, say, 200,000 FTB-s per year can buy, ie, those with rich parents, (access to BOMAD for deposits) or very high income.

The rest have to wait and start saving.

Now, assume that saving the deposit takes 4 years. (which is the number mentioned by a member of the MPC in a recent speech)

Then 4 years on from the crash, that missing group of FTB's from the first year after the crash would have their deposit and enter the market. In addition to the ongoing existing buyers with access to BOMAD.

FTB Sales would then look like the following:

2007 -- 400,000--- All FTB's
2008 -- 200,000--- BOMAD only
2009 -- 200,000--- BOMAD only
2010 -- 200,000--- BOMAD only
2011 -- 200,000--- BOMAD only <---- We are here
2012 -- 400,000--- BOMAD + Savers since 2008
2013 -- 400,000--- BOMAD + Savers since 2009
2014 -- 400,000--- BOMAD + Savers since 2010
2015 -- 400,000--- BOMAD + Savers since 2011

(which isn't that far away from whats actually happened so far, even though we're using nice round numbers for illustration only)

Now in reality, FTB numbers probably won't double next year, but you get the idea.

At some point, be it this year, next year, or the year after, significant numbers of FTB-s that have managed to save the deposit since 2008 are going to start being added to the existing pool of FTB-s with access to BOMAD.

So if someone want's to say there is no race for FTB-s to buy in the next 6-12 months, I'd probably agree with that.

But at some point in the next year or two, a pretty big surge in demand is going to crash into several years of incredibly low housebuilding, and the only possible result is rising prices and real constraints around choice of decent FTB properties.

So there most certainly is a time pressure on FTB-s to get in before that happens.

The question is, when will it happen?

I have most of my deposit and now just need to save a bit more for fees and such and then i will definitely be jumping straight into....................rightmove to see if house prices are down to an acceptable level for me, if not then ill keep saving.

Plus this way i wont get trampled in the stampede of FTBs who are racing to the estate agents on the day YOU think we all should buy a house. have you decided when i should buy a home yet or is it still a prediction, let me know as soon as you have decided so i can start picking curtains.

LittleMissAspie

What about people who started saving before 2008?

illgetthere

100% mortgages are round the corner too...

HAMISH_MCTAVISH

LittleMissAspie wrote: »

What about people who started saving before 2008?

Yes...........


One day they'll enter the market too.

greenbubble

HAMISH_MCTAVISH wrote: »

But the beauty of this board is that with a bit of debate, and a few posters contributing hard data, it often becomes much easier to build a more solid theory.

quite agree , i would especially like to find any data with regards to how much the BoMaD relied on MEW to provide the assistance to their siblings.

greenbubble

HAMISH_MCTAVISH

illgetthere wrote: »

100% mortgages are round the corner too...

Yes, at some point in the next few years lending will increase.

That will add to the pressure.

You'll then have current demand (BOMAD) plus pent-up demand (savers) plus future demand (high LTV borrowers).

All converging at a time when housebuilding has been at extraordinarily low levels for many years.

I wouldn't want to be an FTB when that happens..... The competition will be immense.

greenbubble

HAMISH_MCTAVISH wrote: »

I don't think there's going to be a significant change in the short to medium term..... All housing wealth is ultimately recycled to future bankers.

sorry Hamish , i couldn't resist fixing that one line

greenbubble

LittleMissAspie

HAMISH_MCTAVISH wrote: »

Yes...........


One day they'll enter the market too.

Maybe they already did. We started saving beginning of 2007 therefore by late 2010 we had a 25% deposit.

the_flying_pig

HAMISH_MCTAVISH wrote: »

I'll give an illustrative and somewhat hypothetical example, because the actual numbers aren't to hand.

Pre crash, anyone can buy, there is little to no pent up demand building, so sales to FTB-s are, say, 400,000 per year.

Post crash, a lot of aspiring FTB-s get caught out with insufficient deposits. So only, say, 200,000 FTB-s per year can buy, ie, those with rich parents, (access to BOMAD for deposits) or very high income.

The rest have to wait and start saving.

Now, assume that saving the deposit takes 4 years. (which is the number mentioned by a member of the MPC in a recent speech)

Then 4 years on from the crash, that missing group of FTB's from the first year after the crash would have their deposit and enter the market. In addition to the ongoing existing buyers with access to BOMAD.

FTB Sales would then look like the following:

2007 -- 400,000--- All FTB's
2008 -- 200,000--- BOMAD only
2009 -- 200,000--- BOMAD only
2010 -- 200,000--- BOMAD only
2011 -- 200,000--- BOMAD only <---- We are here
2012 -- 400,000--- BOMAD + Savers since 2008
2013 -- 400,000--- BOMAD + Savers since 2009
2014 -- 400,000--- BOMAD + Savers since 2010
2015 -- 400,000--- BOMAD + Savers since 2011

(which isn't that far away from whats actually happened so far, even though we're using nice round numbers for illustration only)

Now in reality, FTB numbers probably won't double next year, but you get the idea.

At some point, be it this year, next year, or the year after, significant numbers of FTB-s that have managed to save the deposit since 2008 are going to start being added to the existing pool of FTB-s with access to BOMAD.

So if someone want's to say there is no race for FTB-s to buy in the next 6-12 months, I'd probably agree with that.

But at some point in the next year or two, a pretty big surge in demand is going to crash into several years of incredibly low housebuilding, and the only possible result is rising prices and real constraints around choice of decent FTB properties.

So there most certainly is a time pressure on FTB-s to get in before that happens.

The question is, when will it happen?

this is meaningless rubbish.

so much so that it's, well, impossible to debate really.

ruggedtoast

Back in the (other) real world where not everyone is a privileged tartan public school boy who can tap up mater and pater for a nice deposit as a wedding present, this is moot as a lot of want to be ftbs are completely priced out.

I would suggest anyway t that the OP is rather missing the the definition of a first-time-buyer, who would be someone who is in fact, buying already, not waiting. Still, writing that used up another half hour or so of your otherwise barren Wednesday night Hamish so not all wasted.