For babyboomers housing "has been free"

ukcarper

TickersPlaysPop wrote: »

thanks! That is very useful info. So you paid approx 3.5 times the sum borrowed for the house.

Just one more question.... is this an atypical house i.e. is this value increase unrepresentative of the market in general for that county of the UK? I.e. Was it in a "hot spot"?

The thing you don't seem to understand is that prices do not increase in a linear fashion. A year earlier that house was £5,350 in the following year it rose to £11,000 before falling back. in 1998 one sold for £80k.


The house was pretty typical not a hotspot.


A I said I didn't stay there I'd be surprised if anyone did.

ukcarper

TickersPlaysPop wrote: »

Thanks for making it clear.... I was trying to work out in real terms what poeple in the boomer generation have gained. And that example we have been looking at it is greater 170000 against somebody that rented for the same time.

I know that is equity locked in the property, but down sizing or moving north would release some equity, also selling up to pay for a retirement home is possible.... It also moves down to the family when the inevitable comes.

I really do not think I will see this happen in my life time, I'm 38 and own a 290k 4 bed. Do you really think my house might be worth over 2 million in 2044?

It might not but if it doesn't I doubt that the pound in your pocket will be worth 5% of what it is now.

kwmlondon

Running_Horse wrote: »

And you have to factor in repairs, maintenance, decorating, furniture etc.

I think for the purpose of this exercise general upkeep and maintenance isn't part of the calculation. It may be cost less or more to heat/clean/repair a house now but the critical think to know is how easy it is to buy now vs. then.

Ratio of mortgage payments tof salary would be important. Interest rates have changed massively - some people paid 15% after the ERM crisis.

My parents simply could not get a mortgage because my dad was self employed and the decision was always made by the bank manager who just didn't want to take the risk on my folks. I think it was a heck of a lot harder to borrow money up until the late 80s wasn't it?

Running_Horse

But you cannot just ignore upkeep costs as if they don't exist.

When property bores tell you how they paid £20,000 for a house that is now worth £500,000, they fail to mention the £100,000 they spent extending it, the windows and boilers and kitchens and furniture that had to be replaced. None of these apply directly when renting. Then factor in the they were struggling on low wages at the beginning of their career before working their way up to the top of the company.

It is undoubtedly hard to save a deposit and get started on the housing ladder. But 100% mortgages were only ever a brief aberration in our history.

mumps

My husbands and my parents didn't need to go into a care home, his grand parents didn't, one of my grandfathers did. I think most of us are unlikely to spend a fortune on care.

kwmlondon

Running_Horse wrote: »

But you cannot just ignore upkeep costs as if they don't exist.

When property bores tell you how they paid £20,000 for a house that is now worth £500,000, they fail to mention the £100,000 they spent extending it, the windows and boilers and kitchens and furniture that had to be replaced. None of these apply directly when renting. Then factor in the they were struggling on low wages at the beginning of their career before working their way up to the top of the company.

It is undoubtedly hard to save a deposit and get started on the housing ladder. But 100% mortgages were only ever a brief aberration in our history.

Yes, you're right, of course. However, I would still really like to know the difference in affordability of buying a house now compared with, say, 20, 30 and 40 years ago.

It's hard to make exact comparisons, but if you took a couple of consistent posts, say, a couple on average income buying a house, how long would it take to save a minimum deposit/build up a credit rating/what rate would they have paid and what percentage would it have been of their take-home?

It would help to know something like this when thinking about house price increases.

ukcarper

kwmlondon wrote: »

Yes, you're right, of course. However, I would still really like to know the difference in affordability of buying a house now compared with, say, 20, 30 and 40 years ago.

It's hard to make exact comparisons, but if you took a couple of consistent posts, say, a couple on average income buying a house, how long would it take to save a minimum deposit/build up a credit rating/what rate would they have paid and what percentage would it have been of their take-home?

It would help to know something like this when thinking about house price increases.

Another thing is choosing what years to compare in the early 70s prices in relation to earning rose from 3x to 5x then fell back to 3.5x.

GeorgeHowell

ukcarper wrote: »

Another thing is choosing what years to compare in the early 70s prices in relation to earning rose from 3x to 5x then fell back to 3.5x.

Broadly speaking it's 3-4 times more difficult to acquire a deposit and twice as difficult to service monthly repayments as it was about 35 years ago. Huge generalisation in terms of location, tax issues, definitions of 'affordability' etc.

But it is more difficult, nobody rational can dispute that. On the other side of the coin, there is much more rented accommodation available now, and increased affluence means that the average person has more disposable income to play with in setting their priorities in life.

ukcarper

GeorgeHowell wrote: »

Broadly speaking it's 3-4 times more difficult to acquire a deposit and twice as difficult to service monthly repayments as it was about 35 years ago. Huge generalisation in terms of location, tax issues, definitions of 'affordability' etc.

But it is more difficult, nobody rational can dispute that. On the other side of the coin, there is much more rented accommodation available now, and increased affluence means that the average person has more disposable income to play with in setting their priorities in life.

Although I agree it is more difficult to save a deposit now I would dispute 3-4 times 35 years ago prices in relation to earnings were roughly 2/3rds what they are now so you would need to save 50% more. As for servicing that mortgage in 1989 interest rates were over 13% which would double cost of mortgage compare to a 5% mortgage now.

GeorgeHowell

ukcarper wrote: »

Although I agree it is more difficult to save a deposit now I would dispute 3-4 times 35 years ago prices in relation to earnings were roughly 2/3rds what they are now so you would need to save 50% more. As for servicing that mortgage in 1989 interest rates were over 13% which would double cost of mortgage compare to a 5% mortgage now.

As I said, it it a very broad brush and generalised statement. But average deposits as a percentage of loan values required have been higher in recent years than they used to be (typically 10%), although perhaps reducing a bit now. And although there were periods of very high interest rates by today's standards, that was not continually the case. There also used to be income tax relief on mortgage interest, which was gradually phased out.