Is There any Chance for Someone Like me to get on the Property Ladder?

scorpio_princess

movieman wrote:

There is no 'property ladder' in this country: a 'property ladder' requires that your wages increase faster than house prices so you can afford to pay more for your next 'rung'. When house prices are increasing much faster than wages, the 'rungs' just get further apart every day.

If you buy a 150,000 pound flat instead of a 200,000 pound two-bed terrace, and five years in the future prices have doubled, then your flat is worth 300,000 pounds but the two-bed terrace now costs 400,000 pounds. You 'made' 150,000 pounds for doing nothing, but you now have to find 250,000 pounds to buy the next 'rung' on the ladder. If your wages have been static in that time you're _WORSE_ off than if you'd borrowed 200,000 pounds five years earlier.

The whole concept of a 'property ladder' is just being used to drag more 'greater fools' into the property market to try to stave off a collapse. Nor do I believe that it ever really existed: most of my friends and relatives just bought the house or flat they plan to retire in while they were in their 20s or 30s; today's kids seem to have no idea of just how easy their parents and grand-parents had it in comparison, probably because they listen to their parents whining about how they had to 'scrimp and save' for a couple of years before wage inflation wiped out their debts.

Personally I agree with the previous poster on emigration: if you're young and have skills that are generally useful, give Britain the finger and get the hell out.

Exactly what i'm planning to do once I have my degree - of course, the rest of the world might decided to follow Britain's lead by then, and then I really will be stuffed!

BTW, I think you might have put the cat amoungst the pigeons with your 'whining parents' comment! It does seem like they must have had it easier sometimes, but one day our kids and grandkids will probably say that about us - when houses are a cool 1 mill average, and wages are around the 50k mark. It does wind me up how smug some people can be though - as if they've 'earned' their house going up in value! Where is all this extra money floating about coming from?

Kaminari_2

How i'm doing it:

Sorry, going to make this as brief as possible.

Came to this country 7 years ago with a one way ticket and about £200. Everything i had was in my backpack. Lived in Scotland for 8 months earning next to nothing and then moved to London and got a live in job in a hotel - 45 hours/£160 per week (no rent or bills) worked a second job in Pub about another 20 hours/£100. Saved £200 per week. Did this for about a year and a half and then went back to Australia and bought a BTL with the money i saved. Came back to UK, met my OH and such tight savings went out the window, started Temping 35 hours a week/£10 per hour, done this for 6 months. Rented a flat in London and saved about £50 per week. Started a proper job £18k, six months got promoted - £20k per year. Found a house split into 4 flat, freehold in a small city cost 85K. Put savings and personal loan together for deposit and took out 85% BTL mortgage. Rented out each flat for £240 a month. This covers mortgage and loan repayments. Saving again for the next move.
We can't afford to buy anything in the Borough that we live in (Richmond) at the moment but we are well on the way of getting there. By doing it this way we are getting on the property ladder while living in one of the more desireable areas of London. I agree that it is hard to get on the property ladder but not impossible if you look past the standard method of saving for a deposit and if you are willing to work hard.

Good luck to all those that are trying to get there.

virgo149

richdeniro wrote:

With house and flat prices at an all time high is it likely that my generation - I'm 26 BTW - will not be able to get on the property ladder with the ease that our parents generation did? Or even people back in the 90's.

You are absolutely right, it do personally believe it was easier for our parents and those of us buying in the 90's. The answer is pure and simple, house prices are totally bonkers these days.

I bought my first house, aged 26, in 1994 for £46500 and had a mortgage of £38500 at a cost of around £250 per month. That amount out of takehome of around £1500 was more than affordable.

My current house cost £135K in 2001 and we recently accepted an offer of £235K. £100K in 5 years - fantastic for us yes, but just shows what is going on. Until a grip is taken on house prices the problem will never be solved. And unfortunately I guess the only way for that to happen is for interest rates to keep going up and up (which IMO will never happen to the extent of Thatcher's years - thankfully).

I'm sorry I don't have any real advice for you. We are 'unfortunate' to live in a society pre-programmed for home ownership and the scandal of the state of our pensions doesn't make things any easier.

Keep saving, take a good look at sharing the mortgage with someone to at least get you started and good luck.

zag2me

You have to remember when you say it was easy for your parents to get on the ladder you are probably wrong. They where more than likely doing it as a couple, and probably in their mid thirties.

Times have changed of course, but it has always been hard to get on the property ladder.

Kaminari_2

I think we should forget about what it was like for our parents and move towards working out how we are going to get our own little space now. I've noticed that there are two type of people. Ones that say it was easier for our parent to do it and we'll never be able to do it, its not fair etc etc.... and those that accept that the game is different and start to think in a different way. Can you guess which one not only moves towards their goal but are more enjoyable to be with?

mjdh1957

I would question whether it really was easier for parents. Mine never bought a house (my dad was ideologically opposed to council house sell-offs so never bought their council house under the right to buy scheme).

But then my parents migrated here from Ireland in the 1950s and times seemed a lot harder then. Discrimination against the Irish, for one thing. Shoddy substandard houses in the private rental market. Economic hard times in the 1970s....

I suspect every generation needs to make its own mistakes in its own way...

chivers1977

I guess it depends on your priorities.

Living in the medway towns myself, having moved from the area that the OP wants to buy in, I feel much safer. I don;'t hear police cars all the time and I speak to my neighbours. And I live in the undesirable bit!!! I think it is a much better place to bring up children IMHO.

If you looked in another "undesirable" place like Thornton Heath, you could get a studio for around £100k. Depends what you want out of it. We would not move back....

chant1l

I'm with you bargain rzl, I own flats in Sydenham and Selhurst none of which I value above £130k. Look at flats above shops (a neighbouring 1 bed has just sold for £95k) or ex council (try higher level drive blocks - much of which is now privately owned and excellent value) and don't worry about the decor, paint is cheap!
You should be able to get a 90% mortgage with a reasonable rate which leaves you with £12kish to get part of which 0% credit cards will help you with.
Failing that I have a nice big 1 bed to let in Lower Sydenham...........

movieman

You have to remember when you say it was easy for your parents to get on the ladder you are probably wrong. They where more than likely doing it as a couple, and probably in their mid thirties.

My parents bought a four-bed house while my father was a manual worker and my mother did occasional part-time work in between bringing up kids. No-one in the same town in the same kind of job could afford to buy their house off them today... in fact I doubt that any of my friends or relatives could afford to buy their own house today at current prices.

Certainly it wasn't easy for them in the beginning, but it didn't take many years of 10-25% wage inflation before it became so... by the end of their mortgage their annual payment was the cost of a few pints of beer.

And that is the vast gap between people buying in the past and people buying today. In the 70s taking out a huge mortgage and letting wage inflation destroy it made sense; today with minimal wage inflation you'll be paying out most of your income to the bank for decades to come.

brasso

Where did your parents buy, out of interest movieman?

To the OP, I'd say hang onto your money for the moment. It's still possible that the market may avoid a crash for a while but it has to happen within 2 years. I'm not a doomsayer, but the economy is cyclical and prices have to 'correct' at some point. Unless you have a decent lump sum to use as a deposit I believe it's a very dangerous time to be buying. A lot of us remember the crash of the lates 80s when negative equity was everywhere. A lot of people lost their homes.

You could only buy now by really over-leveraging yourself so I just wouldn't think about it. Save your money, perhaps in an equity ISA and you may well find that your saving increase in value far quicker than property will over the next 5 years. By then you should have paid off your student debts and perhaps shacked up with a partner who youcould split the cost of a house once the property crash is over.