MSE News: Home ownership dream dwindles for young renters

tara747

littlemrs29 wrote: »

Thanx for everyones replies

How do I manage? I don't know I just do- but it can't go on forever. I figure if I have managed this long I can manage 1 more year and then make decisions. The get out penalty is £5000 - couple that with solicitors fee's and it's a no brainer really (or so far).

What I personally think is needed is better education on financial matters - then maybe everyone would have a better understanding and it wouldn't be possible to get in situations like mine (although obviously to some extent it is my own doing)

Excellent point, and echoes what Martin is trying to do - make financial education a part of the curriculum at school. The younger the better!

scoobyfamily wrote: »

We are selling my Husbands car to free up £200 a month. We intend to get family to loan us or borrow the £10,000 we need and repay about £400 a month back. The car must be sold before we move though, obviously.

I don't think it's worth waiting for house prices to rise while we save a deposit.

The house we want to buy has a home report value of 15,000 more than the asking price.

It's difficult to choose but waiting another 2 - 3 years could be worse than making the move now.

That's incredibly rare...

jamesd wrote: »

Jim, you're a nice candidate for interest only deals that change to full repayment over a few years as pay rises with inflation. Not that there are any of them around. Shared equity via a housing association may be a way to go.


That amount of pay is only a little below the pay that the average tax payer gets. In 2007-8 that was £18,500 before tax, £16,100 after. That's £1,341 a month take home pay. At 3.5 times income multiple the gross pay given is 85% of that.

Shared ownership is a dangerous game imho.

Also, pay rises are not guaranteed in the next few years...

tara747

jamesd wrote: »

Inflation reduces the real value of money over time. What happens in housing crashes is that people tend to try to hold out for the same money price, thinking that a place that cost £150,000 and sells five years later is still worth the same £150,000 that they paid for it.

It's not. If inflation was running at three percent a year for those five years the real value of the £150,000 selling price is just 86% of the buying price, worth £129,400 in Pounds with the same buying power as those at the start of the five years.

But many owners will still think that they didn't suffer a drop in value, just because the numeric value of the price is the same.

Well, yes, absolutely. And in the meantime they've paid huge amounts of interest. But most people still forget about inflation and the 'real' value of money...

Thanks for clarifying what your post meant.

jamesd

Now looks like a fairly good time for shared ownership deals, with a fair prospect of level or even dropping values for a few years in many parts of the country. That should make it easier or at least no harder to buy the remaining portion of the equity, while long term owners may then gain in equity value in an eventual price increase.

Agree about pay rises for many but time will eventually take care of it. Will take longer here than in Germany, where there's already starting to be some issues with labour supply being too low for businesses to like it.

Interest on a mortgage is just part of the rent for a place to live, along with the repair bills.