Genuine question - how does anyone afford to buy a house?!

s_w

Thanks a million for the replies, everyone – some really helpful and encouraging stuff there, really do appreciate it.

ILW – Ah, but that’d be an interest-only mortgage – we’d definitely prefer a repayment mortgage.

motherofstudents – Absolutely, we’re know we’re very fortunate to have such a decent income – this is precisely what concerns and surprises us, because if it seems prohibitively expensive to us, how on earth do people with lower incomes do it?!

DannyboyMidlands – Believe me, we’d absolutely love to be able to squirrel away £20K a year… As princeofpounds and Idiophreak suggest, even our basic monthly outgoings account for a considerable percentage of what we bring home after deductions (which also include student loan repayments and pension contributions), and while we’re only too willing to make a good deal of compromises, there is only so far we’re prepared to go before it just doesn’t seem worth it…

ViolaLass – Whereabouts are you planning on buying for £85K, just out of interest?

Loopgames – Hmm, haven’t considered buy-to-let, might be something worth looking into…

Van1971 – Again, not something we’d considered, might be worth thinking about.

poppysarah – We’ve been saving for around four or five years, but then we’ve had other things to pay for in that time too, so it’s hard to say how long it’s taken to build up our deposit fund.

But yeah, as I think we’re all agreed, I guess it’s all about priorities and compromise…

hastie

I think that that is the main negative about renting before buying. You get used to a certain quality of life that is difficult to give up. When first bought a home, I had no telephone, no furniture, didn't go on holiday, ran cheap car, and sky/cable was not even on the horizon. It was part of the journey.
To some extent it still is, as we progress through housing market, long term goal of Mortgage free living is in sight, but it has meant massive sacrifices along the way.
When your renting, it seems most people kind of get on with their lives without realising until later years that its built on sand.
Then its too late to buy.
If it was me I would be pouring all my energy into buying right now. seize the moment, whatever sacrifices you need to make. Although I agree, outside of the capital.

thequant

s_w wrote: »

Hi there -

My wife and I are both in decently-paid jobs, have a decent amount of savings, and are prepared to move to a cheaper part of the country - and yet buying a house still seems way, way out of our reach. How on earth does anyone afford this?

Between us, my wife and I currently earn around £60K a year in London, and we pay £955 a month to rent our flat. With our first child due in February and our jobs enabling us to work from home, we've decided to move to the Midlands, due to cheaper house prices (because we'd really like to buy somewhere) and cheap childcare options (since we have a lot of family in the area who are willing to help out). Due to leaving London and my wife going part-time, our annual incomings will drop to around £44K. Our savings pot for a deposit is around £23K, so we've been looking at putting a 15% deposit on a house costing around £150K. With the present low interest rates, that all seems fine and dandy - yet we've been advised to base our calculations instead on the average interest rate from over the last 25 years, to try and predict how our 25-year mortgage would fluctuate. It seems the average mortgage interest rate over the last 25 years was around 8.5%, which would make our monthly repayments even more expensive than what we're now paying for our flat in London (which, of course, we're paying for with two full-time London salaries, and with no children to support). The nature of our jobs is such that promotions/career progressions aren't a realistic prospect, so we can't rely on any significant increases in our incomings. Are we being overly cautious, basing our calculations on this higher rate of interest? If not, how on earth does anyone afford this?!

Any advice welcomed - thanks for reading!

Thousands of houses are bought and sold ever day, if houses were genuinely unaffordable then we would have streets and streets of empty houses, that is clearly not the case.

So if you can't afford a house then clearly you don't earn enough.

If you want a house you first step will be to try and remedy the failures in your life that have led to you having a poorly paid job.

claire16c

DannyboyMidlands wrote: »

In Wallington (SW London) I rented a room for £350 pcm including bills back in 2008. Then "upgraded" to a room in Streatham for £475pcm including bills. Then I moved to the south coast and rented a 2 bed flat with sea view for £600pcm. I now work down here and wages are only around 10% lower than the London equivalent. Property is about a quarter of the price.

Depends what industry you work in. Mine doesnt exist on the south coast, it did used to with one company, but theyve moved to London now, and their wages were much more than 10% less. They increased them substantially when they moved.

Well maybe if you were prepared to live in a grotty area/room and with god knows who, you could pay that little. But I have honestly never seen anywhere ever where I live for that little, apart from one dirty studio flat that stunk of wee, about 4 years ago, which was £480 a month plus bills, on a dodgy road complete with drug dealing neighbours and brothels. No thanks. Even the EA was embarassed to show it to us :rotfl:

chickpea

thequant wrote: »

Thousands of houses are bought and sold ever day, if houses were genuinely unaffordable then we would have streets and streets of empty houses, that is clearly not the case.

So if you can't afford a house then clearly you don't earn enough.

If you want a house you first step will be to try and remedy the failures in your life that have led to you having a poorly paid job.

I clicked thanks because this made me laugh! Not sure whether it is tongue and cheek or not! Either way it's pretty rude (but funny!)

Cheeky_Monkey

OP - you don't say where exactly in the Midlands you want to live but just as an example, there are nearly 1000 3 bed houses in the West Midlands on Rightmove priced between £100k - £110k.

Surely you'd be able to find at least one you like out of that lot and buy it for a lot less than £150k?

ViolaLass

s_w wrote: »

ViolaLass – Whereabouts are you planning on buying for £85K, just out of interest?

3 bed house with garden and (usually) parking in Stourbridge (just west of Brum) but that's a house that would need some work (decorative mostly). To get it already done up, we'd have to spend £100k ish (don't know entirely as discounted those a while ago).

If you worked in Birmingham, you could get in on the train in under 30 minutes.

franklee

Frankly I think property is unaffordable for the average wage earner, it just most people can't do the sums as princeofpounds said. Of course interest rates were higher in the past but then the house price to salary multiple was far more sensible. Now we've got very high house prices to salary in tandem with record low interest rates, so it's not rocket science to see the potential downfall. Add into that household spending being squeezed by high (compared to base rates) inflation and low wage inflation and really I wouldn't want to start from here. The figures are so large that they dwarf the amounts that could be saved from lifestyle changes other than in extremes like holidays abroad. So I think the answer to the OP is simply many people buy but really they can't afford, they are swimming in potentially dangerous levels of debt.

puddy

claire16c wrote: »

Depends what industry you work in. Mine doesnt exist on the south coast, it did used to with one company, but theyve moved to London now, and their wages were much more than 10% less. They increased them substantially when they moved.

Well maybe if you were prepared to live in a grotty area/room and with god knows who, you could pay that little. But I have honestly never seen anywhere ever where I live for that little, apart from one dirty studio flat that stunk of wee, about 4 years ago, which was £480 a month plus bills, on a dodgy road complete with drug dealing neighbours and brothels. No thanks. Even the EA was embarassed to show it to us :rotfl:

yes, its also interesting what assumptions people make about what jobs are where. down here, its incredibly hard to find jobs at all, hence OH still having to travel 80 miles into work each way, and even if he could find the same job down here, its at least 40% less in income. to some extent that is offset by the less petrol he would pay but not enough to make it equal to what he is on now

19lottie82

DavidMorganGuru wrote: »

A sensible salary multiple is the long term 3x single salary for an average house price. At the moment its 4x double salary multiple.

And 25% deposit requirement is way above the norm.

The good news is things always return to the norm. The bad news for some is things always return to the norm.

Why are you pulling up multiple old threads to give word for word advice? There are a couple on other pages with the exact same answers, word for word that have been randomly resurrected after months?