The First Time Buyer - How do they have it really?

thedalmeny

Loughton_Monkey wrote: »

Basically, what I glean from this is that if I were a single person, living rent free at home, and earning £60K, I could probably rustle up the deposit for a house in a couple of years.

If, on the other hand, you were married with 2 kids, living in rented accommodation, earning £30K, it might take you 99 years to save for a deposit.

On average, therefore, it takes us both 50 years.

Far better to say "Some people can afford to buy. Some people can't."

Think you need to adjust your assumptions, the JRF Acceptance Standing Of Living Report does not factor in G&Ts, Cigars or replacing spent shotgun shells used on the homeless.

lazer

I will give you my experience on buying a house

Left University in 2004 (Aged 21)
Completed post Graduate training 2008 (Aged 25) (This was paid but relatively low pay in comparison to normal graduate wages - started on £10k a year)

Bought a house in January 2012 with a 15% deposit and no help from parents with deposit etc.

Realistically - I probabably started saving in 2008 but I saved hard - around £500 a month.

I was renting a one bed flat (That wasn't in great condition) and didn't spend money on rubbish - i found saving to be addictive!
My one luxury was my car - bought a new car in 2007 - but it is just a basic car and have no intention of replacing it for at least another 5 years!

I got a job near my hometown in 2011 and moved back home while looking for somewhere to buy. It took me almost a year to find a house and complete (6 months from offer to completion) and it was dutring this time that I was able to save almost all my earnings and up the deposit from 10% to 15%.
Was intending on overpaying the mortgage significantly over the first few years - but I got married the same year so the overpayments haven't started yet!

In essence I found it pretty easy to be a first time buyer and i hadn't saved for years, just lived frugally and saved £500 a month and more when i moved back with my parents

thedalmeny

chewmylegoff wrote: »

The London figures hide a massive divide between professionals earning loads and low paid workers living in borderline slums. Basically if you are in the first bracket then the "vague myth" you refer to is absolutely true (I earn at least double what I could anywhere else in the country for instance) but if you fall into the latter group then you are screwed and probably earning NMW.

Because home ownership in London is so low (only about 1/3 of properties in inner London are owner occupied for instance) and large swathes of inner London residents are unemployed or on low incomes living in housing benefit sponsored rentals, it skews the figures significantly. If it was possible to get more granular detail then I expect the stats would show it is more like 6-8 years of saving for anyone who actually has the potential to ever own a house in London (I.e. the first group in the example above) and infinity years for the second group.

There will be high and low earners in all regions - this looks at the average earner for a particular region..

Sure you could break it down to which percentile of London earners could afford to achieve a deposit and reasonable income to repayment ratio - but that's looking at who "can" afford rather than the average.

In order to achieve the same Mortgage Repayment % to Net Income as the rest of the U.K in this analysis, you'd need to be earning £120,000 in London.

IveSeenTheLight

lazer wrote: »

I will give you my experience on buying a house

Left University in 2004 (Aged 21)
Completed post Graduate training 2008 (Aged 25) (This was paid but relatively low pay in comparison to normal graduate wages - started on £10k a year)

Bought a house in January 2012 with a 15% deposit and no help from parents with deposit etc.

Realistically - I probabably started saving in 2008 but I saved hard - around £500 a month.

I was renting a one bed flat (That wasn't in great condition) and didn't spend money on rubbish - i found saving to be addictive!
My one luxury was my car - bought a new car in 2007 - but it is just a basic car and have no intention of replacing it for at least another 5 years!

I got a job near my hometown in 2011 and moved back home while looking for somewhere to buy. It took me almost a year to find a house and complete (6 months from offer to completion) and it was dutring this time that I was able to save almost all my earnings and up the deposit from 10% to 15%.
Was intending on overpaying the mortgage significantly over the first few years - but I got married the same year so the overpayments haven't started yet!

In essence I found it pretty easy to be a first time buyer and i hadn't saved for years, just lived frugally and saved £500 a month and more when i moved back with my parents

First of all, well done.

Secondly, you have shown you bought as a single person, but have also married, so theoretically, if there is a second income, you'll be able to massively overpay your mortgage to a point where you may want to up size to an affordable larger property before you have children (if that is your desire)

We'll done, this is what my wife and I did

[Deleted User]

lazer wrote: »

I got a job near my hometown in 2011 and moved back home while looking for somewhere to buy.

And that's the key thing you've left out.

If i had 'moved home' in my 20s, I could have bought a house on my own, with one salary and no parental help. But i didn't - i was in London, and thus needed 2 decent salaries and parental help.

Location, Location, Location. People in the provinces don't know how good they've got it. FTB'ers should only really be strugging in the South East & London. The rest of the country isn't too bad at all.

Any in other news... http://www.thedailymash.co.uk/news/business/if-youre-not-buying-a-house-stop-looking-in-our-windows-say-estate-agents-2013081378587

IveSeenTheLight

ringo_24601 wrote: »

Location, Location, Location. People in the provinces don't know how good they've got it. FTB'ers should only really be struggling in the South East & London. The rest of the country isn't too bad at all.

My S-I-L firstly rented (shared) in London.
Then she bought here own 2 bed flat in Putney.
Now she has a 3 bed flat less than a mile from Canary Wharf where she works.

FTBers still buy in London, granted it may be difficult, but it can be done

lazer

IveSeenTheLight wrote: »

First of all, well done.

Secondly, you have shown you bought as a single person, but have also married, so theoretically, if there is a second income, you'll be able to massively overpay your mortgage to a point where you may want to up size to an affordable larger property before you have children (if that is your desire)

We'll done, this is what my wife and I did

Thats the plan use the second income to massively overpay - although my husbands income is very unstable - (self employed) - so months high earnings and some months nothing, but hopefully after a while it will be more stable.

I'm happy with the size of the house, its a 3 bed semi in a rural area with decent size garden etc, so if we have children it is still big enough - that was my intention when i bought it, didn't want to buy a one bed flat or similar and then risk negative equity and not being able to sell and getting stuck - i wanted to buy a house that i won't outgrow, my first house could very well be my forever house.

lazer

ringo_24601 wrote: »

And that's the key thing you've left out.

If i had 'moved home' in my 20s, I could have bought a house on my own, with one salary and no parental help. But i didn't - i was in London, and thus needed 2 decent salaries and parental help.

Location, Location, Location. People in the provinces don't know how good they've got it. FTB'ers should only really be strugging in the South East & London. The rest of the country isn't too bad at all.

Any in other news... http://www.thedailymash.co.uk/news/business/if-youre-not-buying-a-house-stop-looking-in-our-windows-say-estate-agents-2013081378587

Thats your choice - you have to accept that if you live in London its more expensive and not easy to buy a house.

Personally I wouldn't live in London if it had the lowest house prices in the UK, but its all personal choice.

I moved out of the city (Not London though) so I could afford to buy a house instead of a flat.

IveSeenTheLight

lazer wrote: »

Thats the plan use the second income to massively overpay - although my husbands income is very unstable - (self employed) - so months high earnings and some months nothing, but hopefully after a while it will be more stable.

I'm happy with the size of the house, its a 3 bed semi in a rural area with decent size garden etc, so if we have children it is still big enough - that was my intention when i bought it, didn't want to buy a one bed flat or similar and then risk negative equity and not being able to sell and getting stuck - i wanted to buy a house that i won't outgrow, my first house could very well be my forever house.

Even better to have bought a 3 bed as a FTBer with a 15% deposit.

Just goes to demonstrate that potential FTBers could buy smaller property with a lower deposit if need be.

I bought a 2 bed self contained flat with front and rear garden.
then upgraded to a 4 bed terrace home with 4 king size bedrooms.

We though we were done moving, but are now building a 5 bed detached house.
Just goes to show that best laid intentions and all that.

chewmylegoff

thedalmeny wrote: »

There will be high and low earners in all regions - this looks at the average earner for a particular region..

Sure you could break it down to which percentile of London earners could afford to achieve a deposit and reasonable income to repayment ratio - but that's looking at who "can" afford rather than the average.

In order to achieve the same Mortgage Repayment % to Net Income as the rest of the U.K in this analysis, you'd need to be earning £120,000 in London.

Yes but if you compare an area with 33% owner occupancy to an area with 70% owner occupancy then it is difficult to draw any reliable conclusions by comparing the data. The disposible income (before housing costs) of someone who already owns a house is likely to be higher than someone who is renting one.

Thus when you look at the data for other areas and compare it to London, the average earnings in the other areas is dragged up by all of the owner-occupiers living there and the average earnings in London are dragged down by all the people living in govt subsidised accommodation. The reason the owner occupier stats in London are so low is that the relatively affluent middle class all live outside London and commute in. They could afford to buy there if they wanted to but they have gone to live somewhere else and their absence means that average incomes are dragged down by the population consisting of poor people interspersed with small populations of super rich (who declare no income in the UK).

There is little point trying to assess affordability by looking at average wages in an area. It would be more relevant to look at average wages of people who don't yet own a house but have some sort of hope in help of buying one. (People living in london off housing benefit in minimum wage jobs have never been able to afford to buy and never will, for instance).