How long can FTB-s afford to wait?

Jimmy_31

julieq wrote: »

you're going to look peculiar without a nose, but it's your decision

Correct its my decision, good job it cant be swayed by people on a forum with some numbers from a lying banker.

People are now openly defending banks, i give up hope for this country, what next defending MPs for fiddling their expenses.

HAMISH_MCTAVISH

Joeskeppi wrote: »

I see where you're coming from but I can't even begin to guess at what sort of numbers we're talking about.

Indeed, although you'd have to think a fairly large percentage of the missing FTB-s have been staying at home or in a cheap flat share and saving hard.

Almost a third of men and a fifth of women aged between 20 and 34 live at home with their parents, according to the Office for National Statistics.

http://news.bbc.co.uk/1/hi/uk/7999579.stm

HAMISH_MCTAVISH

julieq wrote: »

You missed the point Ruggedtoast, which is that if you buy a house, you're not giving money to a banker to any great degree. If you sit out the market for that reason which a number of people have said recently, you're cutting your nose off to spite your face, nothing more, nothing less.

It's an absolute masterpiece of hubris to pay rent for 60 years in revenge for bankers getting bonuses. Far better to get on with your life and accept that other people earn more than you do really.

Yes it always amazes me that anyone could pursue such a self-destructive course of action.

Yet they do.....

replumbed

HAMISH_MCTAVISH wrote: »

Yes it always amazes me that anyone could pursue such a self-destructive course of action.

Yet they do.....

It always amazes me that anyone could think decreasing house price affordability is good.

Yet, some do.....

replumbed

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?

Never.

---

Orpheo

replumbed wrote: »

Never.

---

This should have been post #2, followed by an immediate thread lock.

quantic

While this example is super simplified I do agree with it in principle, a good majority of my friends started saving in 2008 and are going to have their deposit ready by the end of this year.

Graham_Devon

Hamish does set out his ideas, and explains them, for that you can't knock him.

I'm just wondering though is he can see anything that may actually have a negative effect on house prices?

Always seems to me to be waiting for the next boom....whether that being lenders with too much money wanting to lend (this has now been dropped)....landlords buying up all the houses because they have fallen 10% in price (this has now been dropped)....immigration and people sat on boats floating around the english channel (this has now been dropped)....and now we seem to be onto FTB's with the help of mum and dad salivating to get onto the housing ladder, and this will all start in one particular year....

He's now found a load of other people also who will all start buying in this particular year, which will push house prices up.

He may be correct. BUT.

Hamish states that house prices will not fall too much as homeowners will not sell at the lower prices. What makes him think buyers, sat there salivating on the sidelines will all just pay any old price?

Howcome Hamish, you can see the effect lower prices have on sellers, and therefore they remove the product from the market and you disregard interest rates as a reason for forced sales....but you can't see that buyers have the same effect, and higher house prices will stop the flow of buyers?

It seems all your theories seem to completely ignore the ability to pay. Whether thats rates going up for existing home owners, or prices going up for prospective buyers.

edinburgher

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 generations.

75 year old grandparents die, and leave inheritances to 50 year old parents, who use part of it to help 25 year old children with deposits, for example.

I don't dispute this basic point Hamish, but I think you're not allowing for demographic change. These days it's more like 85 year old grandparents leaving money to 65 year old parents to give to their 40 year old kids. How do you see the delay in the distribution of housing wealth affecting your original example - if you have thought about it at all?

Because in my opinion, chances are it'd mean that the 40 year olds at the bottom of the chain may already have bought their own homes (as they got sick of waiting ) and this makes me wonder 'what happens to 'wealth that isn't needed' - maybe earlyish mortgage payoffs and a new FTB arms race?

wotsthat

Graham_Devon wrote: »

It seems all your theories seem to completely ignore the ability to pay. Whether thats rates going up for existing home owners, or prices going up for prospective buyers.

Existing homeowners aren't first time buyers (the subject of the thread) and anyway it's been established that the effect of rate rises for this group are likely to be limited.

Prices aren't going up for prospective buyers in any significant way and total cost of ownership is manageable.

The OP has a habit of taking any news and drawing a straight line to increased house prices. However, I think he's right - a lot of the people who couldn't buy due to the deposit requirements seem to be getting the money together and ready to move. When they do move they'll have a bigger equity stake in their house and be more secure against future rate rises especially if they can pick up a decent fix.