Priced out people: What % drop in house prices do you need?

pamaris

This question is to those who are priced out. What % drop in house prices would you need to buy a house appropriate for your family and lifestyle (and commensurate with your income) in your area? Feel free to add what area you are in.

Me: Houses prices need to drop by 35% in order for us to purchase a house we would actually want to live in. 25% for a house we could make do in. We are in south Manchester. The "bottom rung" is not appropriate for us because we are a family of 4.

I'll include homeowners in this thread too with this question: Could you afford to buy the house you're living in now? How much of a deposit did you have to save to get on the "ladder" and could you manage to save a proportional amount now?

Romani_Ite_Domum

As rampant HPI has also affected those trying to move up the "ladder" here are my circumstances.
Current 3 bed semi. Price £220K
Would like 4 bed detached. Price £320K Therefore cost of moving £115K approx.

If prices dropped about 22% across the board:
Current 3 bed semi. Price £171K
Would like 4 bed detached. Price £250K Therefore cost of moving £89K approx.

22% drop would make the move possible.

pamaris

Good point! Expanding the "priced out" definition to include anyone priced out of their next step, not just FTB's.

obsessed_saver

yeah, 30% would be good.

arthur_dent_2

nearly moved into a 3 bed semi. Realistically, we would have needed it to be about a third of its price in order to have been able to afford it, if we had not already owned our current property. next step up from semi, will I fear never be possible.

keeperbear

pamaris wrote: »

What % drop in house prices would you need to buy a house appropriate for your family and lifestyle (and commensurate with your income) in your area?

The terms "appropriate for your family" and "commensurate with your income" are extremely subjective, so your question is pretty pointless.

For example, what kind of property should an accountant earning £45k expect to buy? The answer is the property that he can currently get a mortgage to buy. If someone earns 45k, why should they expect to be able to buy a 4 bedroom detached house? Demand and supply will always determine what property your income can get you.

As for "appropriate for your family", I am sure that most parents with four children will believe that they deserve to buy a four/five bedroom property. However, this is completely unrealistic on a small island such as the UK.

If you need a 20%+ drop in house values to afford an "appropriate" and "commensurate with your income" property then, quite honestly, you need to develop realistic and appropriate dreams. Demand and supply is here to stay, and loads of people want to purchase decent properties.

real1314

And what's all this "next step" stuff?

Both of the "questions" are actually directed at the cause of HPI - the desire to "move up" and the idea that a certain standard of house is "appropriate".

As a kid I lived in:

0-2 Rented 3 bed Army house
2-4 Rented 3 bed Council House
4-6 Owned Brand new 3 bed semi
7-8 Rented 3 bed Council House
9-18 Owned 2 bed Terraced

This was for me, bro and mum. It was hardly a climb up the housing ladder, in fact my mum lived in a 2 bed terraced until she was 54.
People now expect to be in a 3/4 bed semi as a minimum by the time they are 40 imo.

Personally I don't expect to move out of the house I'm in now until I'm retired, and I've been here for 10 years, and there's 20 to go until I reach 60.

Nenen

Whilst I do agree with this statement:

keeperbear wrote: »

The terms "appropriate for your family" and "commensurate with your income" are extremely subjective,"

I also think the OP is asking a very interesting question and don't agress with keeperbear's further comment "so your question is pretty pointless".

The replies so far have been from people who have fairly modest desires (we're not talking about people who are fantasising about owning mansions) just ordinary people wanting to live in a decent home.

I think most of us have some idea of what we would realistically have hoped to achieve (given our professions/potential salaries) by our 50s for example if HPI hadn't been quite so enormous!

As a hard-working professional couple in our late 40s with three children, we would have hoped to be comfortably affording a mediaum sized 4 bed detached in the Cambridge area (outlying villages rather than city centre where prices are even more unbelievable). As it is we are struggling to find even a three bed semi we can afford. In our case, prices would have to drop 25-30% to realise our aspirations... so we'll just have to 'make do and mend'!

As a comparison, many of my colleagues who bought in this area on a teacher's salary 20 years ago are now in houses worth over £500,000 and could certainly not afford them if they were just starting out now! Even if prices fell by 33% I doubt whether many teachers could afford to buy the houses they afforded fairly easily 20 years ago if they were just starting!

manhattan

We need a three bed house as we have two children, so to afford a suitable house we would need a 30% drop.

lynzpower

Id reckon on 50% drop, for a modest 2 bed flat with small garden or patio. We have a dog, work from home & need office space, and expect to be starting a fmaily in the next few years.

Running_Horse

It is not just the % drop required, but also confidence that you will not be stretching to the limit just to be in negative equity 12 months from now. It is that fear factor which may snowball, and hopefully allow others in the market in a year or two.