22 year average wait for FTB's

Graham_Devon

Taken from MSE news...

Low to middle income earners will not see their disposable income approach pre-recession levels until 2020 at best, a report from think-tank the Resolution Foundation warned today.

The Squeezed Britain study said households in this bracket, who typically bring in just over £20,000 in take home pay a year, are also facing a 22-year wait to save up enough cash to buy their first home.

The study also charted the "disappearing" property ladder for these households, who typically took four years to save for a first-time buyer deposit in 1991.

By 2001 this grouptook eight years to raise a deposit and by 2011 this wait had more than doubled to 22 years, with those aged under 35 facing being stuck in rented accommodation, perhaps forever.

Researchers put the sharp rise down to house price rises as well as bigger deposits as a percentage of house prices needing to be raised, while wages remain flat.

They based their calculations on a deposit of around 20% currently being needed to purchase a first-time buyer house, typically costing just over £124,500.

http://www.moneysavingexpert.com/news/mortgages/2012/01/22-year-wait-to-buy-first-home-for-low-earners?utm_source=forum&utm_medium=sidebar&utm_campaign=box

Madness. And as the article says, one of the culprits is house prices, not just the deposit.

wymondham

This is all odd as I've seen lots of posts recently telling everyone how great house prices are and people really need to buy now???

moneyinmypocket

It's fact that people want it all too soon - the young are spoilt and wouldn't dare go without for a number of years in order to get a house and do it up slowly. FTB houses didn't used to be done up ready to live in.

Mallotum_X

A household on 20k combined is not the group you would typically expect to be rushing into the property market, Even with a 50% fall in prices its unlikely such a household would be able to save much of a deposit, 20k for two people would not be expected to leave anything much to save.

Prices may be silly, but the lowest salary earners have never earnt enough to buy.

Graham_Devon

Mallotum_X wrote: »

A household on 20k combined is not the group you would typically expect to be rushing into the property market, Even with a 50% fall in prices its unlikely such a household would be able to save much of a deposit, 20k for two people would not be expected to leave anything much to save.

Prices may be silly, but the lowest salary earners have never earnt enough to buy.

The group isn't just the lowest earners at 20k...

The low to middle income group studied includes, for example, couples without children living on a gross annual household income of between £12,000 and £29,000 and couples with two children on between £17,000 and £41,000.

ReadingTim

MSE seem to have stuck the official discussion thread to that article here, to which I can only echo what somethingcorporate had to say:

I am not sure why people on very low incomes should expect to own their own home. Home ownership is not a human right, despite what many think

Graham_Devon

ReadingTim wrote: »

MSE seem to have stuck the official discussion thread to that article here, to which I can only echo what somethingcorporate had to say:

The problem with that is that it therefore suggests that only middle and higher income brackets should be able to afford the absolute cheapest starter homes.

Which doesn't really stack up.

I would assume that sort of sentence comes from someone older who already has a home and rather likes it's value.

moneyinmypocket

People on min wage could get a starter home - I can do a search on right move and find very cheap houses - yes they might not be fantastic or in nice areas but that's another issue Which needs addressing

drc

I think one of the problems is that there is so much uncertainty these days that you will have a job for the 25 years of a mortgage. With so much unemployment and so many changes to traditional employment routes even for the highly skilled, it seems risky to me (as a potential FTB) to commit to a 25 year mortgage with the possibility of high interest rates and high house prices when job security is so uncertain these days in the West.

moneyinmypocket

Good points but you have to live somewhere and if your paying rent you might as well be paying your own morgage

drc

moneyinmypocket wrote: »

Good points but you have to live somewhere and if your paying rent you might as well be paying your own morgage

Of course but I am thinking that it might be better to not have our savings tied up in a UK property. At least with renting we can move abroad relatively easily and have our savings on hand. We would definitely need to move abroad if my other half could no longer find work in the UK as it would simply be unaffordable to us and we wouldn't be able to pay the mortgage.