Is home owning for young people just a pipe dream?

ArthurOnline

Hi guys,

I'm new to this forum, so just thought I would try and get some opinions on a topic. There has been so much in the news recently about how unachievable home owning has become for young people, partly due to the difficulty of attaining a mortgage. Do you think this is actually the case? If so, do you think that the rental market will see a steady growth in demand?

Thanks in advance! :j

dannim12345

Personally I believe it is difficult to get on the housing market (& yes property is expensive) but I don't believe mortgages are the problem. Banks should be cautious of the amounts they lend and also who they lend to (as in looking into their spending/credit history etc).

I think a lot of people decide they want to buy and then start trying to save for a deposit. I'm 25 and have saved since I got my first minimum wage Saturday job at 16 and now have a good deposit whereas most of my friends have little or no savings.

SerialRenter

As a genuine "young person" (25) who's looking to get on the housing ladder perhaps i could add a few relevant comments.

I think the new mortgage rules could be beneficial to myself, as i've been saving since i was about 10 years old, i'm not doing badly wage wise as i'm an engineer working towards chartership and I'm also very keen on the money saving way of life.
Due to those factors i'd hope any affordability tests would not be a problem, where other's my age might fall down.
however...
I live in Surrey, which is the third most expensive place to buy in the UK according to the land registry's April 2014 House Price Index (if you group London as one place).
As such, even if i could easily afford repayments on a 2 bed property, the amount i'd have to borrow would be a high multiplier, and future interest rates worry me.
So is it unachievable? No, i don't think so, i could get one/two bed flat i believe. Even if there's a risk it could become unaffordable in years ahead.
The main problem in the area is the lack of house building. There's very little choice, every time i look on right move it's depressing because all it shows is mobile homes.

So i shall continue renting for now, and take my time with the decision to buy.

HPI source:
http://www.landregistry.gov.uk/__data/assets/pdf_file/0004/88168/HPIReport20140523.pdf
London average: £435,034
Windsor and Maidenhead: £366,333
Surrey average: £328,328

Marvel1

I think young people are looking at "dream" properties which cost more than they can afford.

Lovelyjoolz

No, it's not just a "dream", although a lot depends on the area I suppose. My step daughter and her partner are in the process of buying their first house and they are both 22. A nice 3 bed semi which needs some work doing on it.

SD is on minimum wage and her OH is earning less than £20k. They have saved and saved and saved. They worked overtime and put it all into the house fund. They now have a 20% deposit.

I'm very proud of them, because they clearly show that it anything is possible with a bit of hard work.

[Deleted User]

Outside of the South East house prices aren't really that bad at all, and certainly achievable.

ALSO - there seems to be a constant redefinition of the 'young' age. At one point it was 25, now it's shifted up to 34 - in my opinion, if you've not got round to buying a property at 34, then it's less an issue with the market, and more your own inability to organise your life.

BillJones

ArthurOnline wrote: »

Hi guys,

I'm new to this forum, so just thought I would try and get some opinions on a topic.

It varies on job and area. Junior trader here (late twenties) just put down a deposit on a nice new flat in Canary Wharf this week, so some people are still managing just fine.

ArthurOnline

Thanks for the comments guys, some really interesting views. I think it does depend on the area, a lot of News tends to focus on London where it is inevitably going to be difficult for young people to afford to buy a home. BillJones, congratulations on the new flat - I think it just goes to show what you can achieve with the right attitude and hard work. Loovelyjoolz, that's a great story, they've clearly got the right attitude!

Maybe the news should focus in on other areas outside of London where housing is more affordable. Although I guess bad news often makes good news so I doubt we'll see that any day soon!

princeofpounds

At the moment, statistically yes. The average FTB is no longer what I would call a 'young person', being well into their 30s.

This will probably correct in time, but it's of little reassurance as some of the young people today will not be young by the time it corrects.

Access to mortages is not the solution.

Access to mortgages and the cheap price of mortgages has in fact been a big part of the problem, because in the short term the amount of housing demand and therefore prices (as supply changes little from year to year relative to the size of the stock) is almost entirely driven by the amount of money people are lent to buy them.

Increased supply would be much more advantageous to the position of FTBs. Supply is largely constrained by planning policy, although in the years following the crisis lending to builders was an issue.

ArthurOnline

Thanks princeof pounds.

I agree, increased supply is what we need. Have you heard about the new Housing Zone scheme? London is set to build 50,000 homes on brownfield land. I wonder how much impact this will have. They are supposed to be 'affordable' houses, but I question this, as not much in London is ever affordable, especially houses.

Anatidaephobia

No, it's not a pipe dream. Saving can be difficult, yes, but it's completely achievable. You have to be realistic about what and where you can afford to buy, and you have to be disciplined about saving.