Are houses unaffordable?

bigfreddiel

Are houses really unaffordable, or are people setting their sights too high?

Let's go back a few years, when you coould by a two up one down for £5,000.

Sounds great doesn't it, you could just use your credit card couldn't you?

Well let's put this in context, my first terraced house cost £7,000. And I had to go for as big a mortgage as I could get, I was a graduate aerospace engineer, salary £200/ month. Mortgage repayments, £80/month, then there was the usual rates, car costs, etf's, not much left after paying all that, then guess what, interest rates of 5 or 6%, peaked st 15% at one point.

I don't recall any of my friends also new to being a homeowner ever buying a new house, or any bigger than three bedrooms, no new kitchen, no new furniture, lots of stuff from parents, and so on. That was the way it was, even having a phone was considered a luxury.

So my thinking is nothing had changed, other than people needing their 'forever' home right away, and being upset when they can't.

Cheers fj

hcb42

i first bought in a rough area in 87 and it was £20K then for a Manchester terrace. Mortgage £180 or so, double digit interest rates, salary £400 a month, was def not a credit card debt. Indeed I wouldnt take a £20K credit card debt today!

HappyMJ

Problem is house prices keep increasing and wages don't seem to be increasing by as much making housing seem relatively more expensive despite the very low interest rate.

If you want to buy the average property you must earn the average wage or salary for the area in which you want to purchase and not just one person working both people have to work otherwise it's just not going to happen. It's always been like this. You want bigger and more expensive you get out and work harder and you can get it.

Once interest rates start rising again house prices won't increase as fast as lenders won't be able to lend as they calculate how much they can lend based on the available income a household has to be able to service a mortgage. Higher interest rates equal higher repayments and less money can be lent.

lincroft1710

I bought in 1976 £8,250, modern 3 bed end terrace, salary £2,700, mortgage very affordable - £20 pw.

adsk

When I bought my first house in 1994 for £36k (and put down 20% deposit of £7k) my salary was about £15k. The pay for the same public sector job today at the same age/experience is about £23k. The house sold last year for £90k. (NW England). The 20% deposit would be £18k). Look at the deposit vs annual salary and salary price ratios, housing has become a lot more expensive. i.e. over the 20 years the salary has gone up about 60% and the house 250%.

SmlSave

I don't think so but I've always worked and been a saver, add family willing to lend a few thousand and we've never struggled. First house bought at £125,000 8/9 years ago.

I certainly don't feel sorry for just graduated/young people who can't afford a place. They've been doing what they should be doing, enjoying themselves!

hcb42

the interest rate has also reduced..

dirty_magic

I think it depends on the area. London and the south east are unaffordable for many. OH and I don't have huge salaries and we've bought so it's not unaffordable everywhere.

I do think it's more difficult than it used to be though, and I'm glad we bought when we did because it's only going to get worse if property continues to rise, especially if the interest rate goes up.

Our neighbours sold theirs almost exactly a year from when we bought ours and they've sold it for 7k more. Our wages haven't increased by 7k! A while before we moved similar houses around here were selling for around 5k less than we paid.

Lala2015

SmlSave wrote: »

I don't think so but I've always worked and been a saver, add family willing to lend a few thousand and we've never struggled. First house bought at £125,000 8/9 years ago.

I certainly don't feel sorry for just graduated/young people who can't afford a place. They've been doing what they should be doing, enjoying themselves!

Comments like this really upset me.

I'm 26 (nearly 27) and I have been working full-time since I was 17 and saving every penny I can since I was 17 whilst all my friends have partied and spent their money like water.

I now rent alone due to a relationship breakdown (I am unable to live at home). I have a average salary (29k) but regardless of the amount in the bank, I am unable to afford a home - Due to being a sole applicant / my 'affordability / Loan to value rate.
I live and work in the SE.

Not all young people that can't afford a home have brought it upon themselves.
Some of us save and save and save and can't get on the ladder because we are single, but people are still happy to take 900+ a month rent ALONE off us every month.

Not everyone is lucky enough to be able to live at home with mum & dad rent free.

theartfullodger

Try living with mortgages and interest rates at 17% as provided by Thatcher
http://www.bankofengland.co.uk/boeapps/iadb/repo.asp
from Thursday, 15 Nov 1979 to 3rd July 1980

Now that was "unaffordable"

HappyMJ

Lala2015 wrote: »

Comments like this really upset me.

I'm 26 (nearly 27) and I have been working full-time since I was 17 and saving every penny I can since I was 17 whilst all my friends have partied and spent their money like water.

I now rent alone due to a relationship breakdown (I am unable to live at home). I have a average salary (29k) but regardless of the amount in the bank, I am unable to afford a home - Due to being a sole applicant / my 'affordability / Loan to value rate.
I live and work in the SE.

Not all young people that can't afford a home have brought it upon themselves.
Some of us save and save and save and can't get on the ladder because we are single, but people are still happy to take 900+ a month rent ALONE off us every month.

Not everyone is lucky enough to be able to live at home with mum & dad rent free.

Some banks are also happy to take a £900+ payment each month for interest ALONE off you every month.

I am a landlord and there really isn't as much money in it as people think. That £900 isn't all going into the landlord's pocket. Most of that will be going towards the interest payments on the mortgage and towards maintenance costs of your house.

From the £600 a month I charge in rent for my 3 bedroom house I get about £30 a month more than I would have got had I just put the money in the bank.