Scared - will I ever afford my own home?

Dreaming_2

Hey there!

I'm a uni student, and have noticed the housing market for the past few years, it's only been going one way. Where I'm studying it's been going up a healthy 10% each year, and the main thrust of this is because it's near the university, everyone wants to buy a property either to speculate / rent it out and pay an interest only mortgage.

Out of term time I live at home and have to pay board, and have only a limited amount of independence. Also, I don't like where I live and my house is getting quite full now with my mum, three adult sons living there, and two teenagers. My older brother wants us to run like a flat where we have our own section of the fridge, and my mum wants to run it like a bed and breakfast where she charges us all obscene amounts (she's currently not working), and my sister who's just a teen is doing an apprenticeship and just wants to marry her boyfriend, or something like that (spends most of her money).

I've always been a natural worrier, and I'd love to move out. I'd work part time during term time and full time during the holidays. I also get a scholarship and a bursary, and have always lived fairly frugally. A brother who has left home has agreed to act as a 'guarantor' to any mortgage I might make. (The area I am looking at is York, which is quite expensive). At first I thought something tiny and 1 bed and cheap - like a studio flat - just to live would be perfect. But it seems they're extremely desirable and expensive. But for 30% more (£130,000) I could afford a 3 bed house, and I imagine I could rent two rooms out for some amount?

I've been told it's not worth it as a student, but with the way property prices are going I'm scared if I don't buy what I can afford now, I'll be priced out of the market when I graduate in 2010, and be forced to rent (which I see as 'dead' money in a way) whilst a landlord lives off my rental income whilst his house goes up in value because everyone wants to jump on the bandwagon.

I'd estimate my annual income included student loans to be around:
summer / p.t jobs - £5,000 -> £5,500
scholarships and bursaries - £3,800
maintence loans / grant -> £5,000

Which doesn't offer a great deal, but if I could rent two rooms out for maybe £50 a week (the going rate for student accom. is a bit higher but it depends on location and also students aren't there all year round - unless I turn it into a B&B too [york is a big tourist destination lol]) then that will help out too.

I don't want to go into this blind, I know an IFA and my brother is very sensitive about financial investments so would check everything over. My question is: is it financially feasible, and if so, is it worth it?

My intention after I graduate would be to continue working until I get a graduate placement as an accountant (I'm already working with a bank as a clerk so maybe I could build up a relationship) and then move to wherever.

nelly_2

whilst his house goes up in value because everyone wants to jump on the bandwagon. <

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Nice irony there mate

lynzpower

If you want to move out of home and I cxan see why you would, could you not use the money you have as an income to rent in a share student house?

This will give you the independence you crave.

others are right you wont get a mortgage on that income, especially as some of the income is debt itself. However, accountancy pays very well ( especially here in london) Ive seen accountancy jobs paying silly money. Yes, they are not straight from uni jobs but they are around to work towards.

Having "owned" (meaning been in debt to the bank) my own flat, and I sold it to rent. I can honestly say it is not the be all and end all.

Romani_Ite_Domum

Are we now so obessed with houses that we are worrying about them before we even graduate?

Get a life!

Dreaming_2

Romani_Ite_Domum wrote: »

Are we now so obessed with houses that we are worrying about them before we even graduate?

Get a life!

Yea, I probably worry too much. I could move out and rent, but I don't think the rent will be much less than repayments on a mortgage really. My brother doesn't have that kind of money stashed away I don't think, but I think he's in a good position with the bank and they will lend him pretty much any amount he asks for. Of course that doesn't mean I should take advantage, but he has offered.

I just envision in 10 years time 10% of the population will own most of the houses and everyone else will have to rent. Overreacting?

Dreaming_2

nelly wrote: »

whilst his house goes up in value because everyone wants to jump on the bandwagon. <

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Nice irony there mate

The difference is (I think) is that I want to buy somewhere to live before prices are insurmountable, rather than buy somewhere to speculate, because they can get a secured mortgage against their own house and they can use it as a pension.

I mean, is it the case that there is not enough property in the UK to satisfy the demand? In a country where we have a greater proportion of graduates and people trying to be independent by being flexible in where they work, we should be expecting to see a boom. However property prices are a massive barrier to this, and because they keep going up people will buy houses even if they don't really want them.

In America, for example, it's not uncommon for students to buy a house between them whilst they're at university (not saying everyone does it) and it is affordable in many places. Near my university, the cheapest I've found was two bus rides away, in need of complete renovation, £103k.

Having said that, next year it will probably be at £115k, and I doubt my income is going to up 10% in a year.

I see what you're saying. But what are the prospects for young people trying to get their first home? Obviously in Scotland and Wales there are houses for £30k, but there aren't any jobs!

poppy10_2

Oh god, tell me you are joking :eek:

Dreaming_2

poppy10 wrote: »

Oh god, tell me you are joking :eek:

How come? If I'm overreacting feel free to let me know.

Malky

Dreaming wrote: »

Obviously in Scotland and Wales there are houses for £30k

Really? Five years ago perhaps but not now. For example, in my area in Aberdeen you could have picked up a one bed flat for around £25K five years ago. The same flat is now in the region of £70K to £80K. A one bed flat near the university commands £100K plus.

Guy_Montag

Dreaming - sooner or later prices will have to stop growing faster than salaries & go through a correction one way or another.

Anyway when I was astudent I had to rent a flat July to July rathr than just for term time. Is it different in York? Alternatively there are always adverts going tound my uni of people offerig a room for a few months over the summer while they go off on fieldwork.

wibble68_2

Guy_Montag wrote: »

Dreaming - sooner or later prices will have to stop growing faster than salaries & go through a correction one way or another.

I've had this point of view for a long time now, although when and how a slow down will occur is any ones guess.

It seems that 10 years of booming house prices have made people conditioned to think that prices can indefinitely out pace wages.

Personally I don't believe this will happen. But when the government has built the economy on the housing boom, anything could happen.