Housing Shortage Forces Millions of Adults to Live With Parents

HAMISH_MCTAVISH

KnightSmile wrote: »

in 1971 you would need to borrow less than 3 times your earnings. Today you would need to borrow 10 times. .

In 1967, members of my family earned and paid the following......

GPO phone engineer (same as a BT phone engineer today) £1000 a year.

Teacher £720 a year.

3 bed semi-detached house £3900

So an "average" house was 3.9 times an above average wage at the time for the area (and that's rural Scotland, not London!!!), and closer to 5 times a teachers wage, and mortgage interest rates were in double digits.

By 1977, so just 10 years later, the neighbouring semi detached was £11,000, mortgage rates were 15%, and they bought it and knocked the whole thing into one house.

Compare those figures to today.......

At same point in career, BT engineer would earn around 30K. Teacher around 25K. Same size 3 bed house in same town would sell for around 175K. But with mortgage rates at 5%, not 15%.... So while the house is slightly more as a multiple of earnings, it's actually a lot cheaper to buy as a percentage of income.

It's therefore nonsense to say affordability is much worse today than it has been at frequent times in the past.

And when you factor in the structural shift in interest rates, buying a house has rarely been cheaper than it is today.

lisyloo

buying a house has rarely been cheaper than it is today

There are certainly times when it's been easier to get a mortgage though.
I'm not saying that's a bad thing, just an observation which affects trends and prices.

lisyloo

A good garden takes ten years to mature, you do need stability to put roots down, which renting rarely offers.

I understand the desire to buy, however I don't think you should put your career or family planning on hold completely for 10 years (heard of the fertility window?).
Parenting skills are not diminished because you're a "renter".

If it's really really important to own and that's a high priority for you in life, then is it worth considering cheaper areas or even a different country?

Percy1983

Its all very well to say its easier to buy now, but can you say the interest rate will remain the same for the next 25 years or so?

I would rather buy cheaper with a high interest rate than buy expensive on a low interest rate.

HAMISH_MCTAVISH

lisyloo wrote: »

There are certainly times when it's been easier to get a mortgage though.

Indeed.

Mortgage rationing continues to be a major problem, with the number of approvals still at levels well below historical averages, despite the slight recent improvement.

HAMISH_MCTAVISH

Percy1983 wrote: »

I would rather buy cheaper with a high interest rate than buy expensive on a low interest rate.

Well perhaps so, but that option isn't available to you.

Rates will rise a bit as the recovery continues, but nowhere near enough to make house prices fall.

HAMISH_MCTAVISH

lisyloo wrote: »

Parenting skills are not diminished because you're a "renter".

But the ability to provide stability for your family is.

Buying should be a much higher financial priority for young people than they currently make it.

lisyloo

But the ability to provide stability for your family is.

Good health, job security etc. don't come from home owning.
I would agree that owning gives you control over a few minor things (like the colour of your walls), but I think it's being given an imaginary high status if you somehow think you've protected your family from death, sickness, accident, redundancy, divorce etc.

HAMISH_MCTAVISH

lisyloo wrote: »

Good health, job security etc. don't come from home owning.

Homeowners are able to provide a significantly more stable environment for children to grow up in than private renters. I accept council tenants with secure tenancies are somewhat different.

Things like links to the community, children's friendships in the local area, living in particular school catchment areas, etc, are easier as an owner than as a renter that may get turfed out and have to move every 6-12 months.

lisyloo

If you get turfed out, why do you have to move to a new area? Rather than close by.
Do landlords turf out good tenants every 6 months? How do they make money and why do they do that?

Do home owners never suffer the slings and arrows of outrageous fortune?

I think it's being very exaggerated.
Most landlords would want to keep good tenants and if not then move nearby and keep the same schools.
Homeowners are not immune from issues like job relocation or anything that would stop them making payments like job loss of illness.

The security is mostly an illusion.