The younger generation and the future cost of housing?

BobQ

A._Badger wrote: »

Is that true? Fifty years takes us back to 1962.

I was going from memory!:)

In 1961 it was about 40% and in 1951 about 30%. My point was that until 50 years ago most people did not own their own homes unlike the 70% that did at the end of the century.

seven-day-weekend

ukcarper wrote: »

Saving half of take home pay would be £5k a year and you said your son was buying a £40k flat so he would have had a 20% deposit in less than 2 years,

No. I said his mortgage was £40k. The flat was £65k. He could not get a mortgage for more than £40k.

So that actually means that in many parts of the country he could not have bought anything.

paulmapp8306

Zekko wrote: »

Many earn less than £24,000 a year.
There are a lot of people working in minimum wage jobs.
The 'mode UK wage' is probably more in the £15,000-£20,000 bracket.

And thats part of the problem.

Historically, NOBODY who only earned a minimum wage owned their own home. Its part of the culture since the 80s - "I must own my own home", and another example of the "im entitled", or "I should have" attitude I guess.

Personally, if your on minimum wage I cant see how you can afford to MAINTAIN a home, much less afford to BUY one. Its something to work towards yes, but you need a litelt higher income IMO,

paulmapp8306

beckythemadcow wrote: »

I am just starting a career in Education, and yet the job has had no pay rises in years and I have to repay student loan and an increased pension out of my salary. I was actually better off as a student - that is ridiculous!

Good Luck.

i would say:

a. Your pension is still WAY better than anything you can get privately for the same contributions,

b. Wages are quite high - even to start with - compared to many many other jobs (note - not professions).

c. You dont pay anything back from you student loan until you earn above a threshold.

And yes, short term contracts are much more common now - and lenders know this. They also dont descriminate if its a rolling contract, or renewable once you have had one renewed.

Finally, if you were better off as a student - then that just proves that students are the ones out of touch. Ultimately, you had to pay for the cost of living with no income (part time jobs around education excempt of course). How can a full time job make you worse off? or will that be all the subsidies students get?

paulmapp8306

beckythemadcow wrote: »

However, even if a young adult chooses to buy some expensive electrical product. I guarantee that it will save them money as they will be less inclined to pay money to entertain themselves out of the home, I know NOT ONE PERSON who goes to the pub every week!

err - how can it save them money if it COSTS them money to buy it. If your implying that spending money means they dont go out - then if they DIDNT buy the electronic gismo, and didnt go out either they'd have more money. Thats what used to happen.

There are other things of course - fuel and utilities being a big one. Thats a huge outlaty compared to years gone buy - but heres a thought. How much of the electric bill is actually due to running all these electronic gismos? You save more than the cost of the item by not having the item. Id think less than 1% of people actually think about the cost of running an item when they buy it.

ukcarper

seven-day-weekend wrote: »

No. I said his mortgage was £40k. The flat was £65k. He could not get a mortgage for more than £40k.

So that actually means that in many parts of the country he could not have bought anything.

But when was it possible for someone on minimum wage to buy. I was earning a good wage in the 70s but really struggled to buy someone on the equivalent Of minimum wage would have had no chance.

I don't see house prices as being the main problem it's the lack of good jobs available to young people.

paulmapp8306

money_maker wrote: »

Its a choice at the end of the day. They spend money they earn on what they want. Its not that they cannot afford to buy a home, they choose to buy other stuff instead!

!

Absolutely - and thats really the point. If you choose to buy one thing over another - thats fine, no issues. BUT Id wager quite a lot that a decent % of people who DO complain about not being able to get on the property ladder due to cost of a mortgage and deposit levels DO have an array of electronic items.

paulmapp8306

seven-day-weekend wrote: »

Parents might not want their kids living with them for the next ten years whilst they save sufficient deposit to get the mortgage to manageable levels on a small wage!

Theres that word "want" again.

In past generations it was not uncommon for 2 or 3 generations to live in the same house. THAT is the norm - not kicking kids out to fend for themselves once they hit 18/22.

Look at Germany for a medel. Homes are family homes (in the country generally) and house all generations. Mortgages are taken out over 100 years and pass from generation to generation. Homes in the city tend to be rental flats for those working there - who retreat to the family home at weekends and once the working life is over.

WE - generally - in this country want no part of extended family life any more. Much like the "a dog isnt just for christmas" line - a family is for life. If my kids are still in my home when their 30+ thats fine, as long as its because they cant afford to move out - rather than choosing to spend money on entertainement/gadgets etc rather than on actually the cost of living.

paulmapp8306

Chris_Hinds wrote: »

I think every generation will face challenges but those challenges change from generation to generation. People have mentioned the amount spent on gadgets etc today but not the relative fall in the amount of time people spend in pubs (must be down... there are less pubs to prove it).

In 1979 my father bought his first house for £19k at around 3x his salary at the time. In 1980 a Ford Escort cost £3374 (http://www.classicandperformancecar.com/front_website/octane_interact/carspecs.php/?see=4033) or around 53% of the same annual salary. For balance with the argument he was 30 at the time of buying his first home.

In 2012 a new Focus can be found (using your internet connection at £15 a month) for £12225 on Drivethedeal.com. So for a person earning "the national average" it's about 50% of their annual income (hence more or less the same amount of take home pay). The same house in 2010 sold for £195k (having originally gone on the market at £250k) so that makes it 8.1x the same average salary.

As a result of this shift where relatively most other things have either gotten cheaper or stayed around the same as a percentage of annual salary, like electronics, holidays, food, music etc, the house has become much more expensive. Young people logically think that they have little chance of affording a house and the annual return on £180 a year saved not having an internet connection is hardly worth the effort so they might as well have some pleasures/luxuries.

Earning £18k per year means taking home about £1200 a month. On that salary owning a £195k house is not going to be realistic as you couldn't raise the deposit or achieve an acceptable LTV - the furthest you would be likely to be able to go is around £100k or half the necessary value, assuming a reasonable deposit of 10%.

So quick SOA:

Income: £1200

Rent: £600 (lowest priced non-studio flat in same area)
Food: £150 (I know you could go cheaper for a month but lets assume not)
Car Costs: £200 (Insurance, Tax, Fuel, Servicing averaged for a year - assumes car is owned already and a younger driver hence expensive insurance)
Gadgets: £80 (From above = Phone, Internet etc)
Clothing: £70 (From thread = probably about right)

Balance: £100 to save.

Even at best rate of return, saving £10k+costs is going to take 8 years 4 months. Cutting out a phone, internet and all but basic clothing would mean this would be cut in half to say just over 4 years. With the exception of current times when house prices are thankfully stagnating the same person can expect to see prices increase so their deposit needs to be bigger.

If all you can see is the goal being moved away from you then why worry about the time it takes to reach it if it's being pulled back all the time?

Obvious regional prices apply, BUT 195k is quite a bit abouve the average house perice currently - and a lot higher than a starter 1/2 bed house/flat, so those figures dont really fit.

FWIW Im just buiying a 4 bed semi - for £112k, which on £18k is very achievable.

drc

FTBFun wrote: »

An average family terrace is £600k plus? What a load of rubbish. Where are you looking - Hampstead?

Lol. £600k in Hampstead wouldn't even buy you a studio most of the time!