Are houses unaffordable?

ManicRower

GoldenShadow wrote: »

I think there is an element of people having higher expectations now, but I think society builds that in. I have friends who think they can't afford to buy so don't even try, they just spend everything they earn.

I agree with this.


For the vast majority of people it is not possible to have all the gadgets, go out every weekend AND save for a deposit for a house, but my generation and younger (born late 80's) seem to struggle with prioritising/cut their cloth accordingly. We seem to be a 'I want it now' generation, or perhaps more accurately an 'I want it on credit' generation.


It is hard work nowadays to save for a deposit no question. Is it harder than it was in the 70's/80's/90's? Not sure, but there seems to be less of a willingness to 'make do' or go without luxuries like holidays and sky tv, which seemed to be the norm during my parents generation.


Obviously this isn't everyone and I have a lot of sympathy for those who save and save and save and get no-where, but I've generally found that the people that moan the most about houses being unaffordable are the ones who just can't be bothered to prioritise saving for a house deposit over getting the latest iPhone and their latest holiday to Marbella.

elverson

You're forgetting historically high rents in that analysis.

ukcarper

AlistairM wrote: »

What was the average yearly earning in UK in the 1960s and what was the average house price?


Compare that with the average income now compared to average house price.


I think it was something like 4 times the income back then and 11-12 times average income right now.

The figures for1983 to now are here http://www.nationwide.co.uk/~/media/MainSite/documents/about/house-price-index/2016/Jan_2016.pdf I believe the figures are based on median full time male earnings. In thee 60s and 70s the ratio varied between 3.5x and 5x when I bought in 1972 it was about 4.5 compared to just under 6 now. The house I bought in 72 was 5.3 x my earnings for someone in the same job it would now be 7.5x.

ManicRower

elverson wrote: »

You're forgetting historically high rents in that analysis.

Agreed, high rent doesn't make it any easier (especially in the South East), but I think my point still stands

ukcarper

ManicRower wrote: »

I agree with this.


For the vast majority of people it is not possible to have all the gadgets, go out every weekend AND save for a deposit for a house, but my generation and younger (born late 80's) seem to struggle with prioritising/cut their cloth accordingly. We seem to be a 'I want it now' generation, or perhaps more accurately an 'I want it on credit' generation.


It is hard work nowadays to save for a deposit no question. Is it harder than it was in the 70's/80's/90's? Not sure, but there seems to be less of a willingness to 'make do' or go without luxuries like holidays and sky tv, which seemed to be the norm during my parents generation.


Obviously this isn't everyone and I have a lot of sympathy for those who save and save and save and get no-where, but I've generally found that the people that moan the most about houses being unaffordable are the ones who just can't be bothered to prioritise saving for a house deposit over getting the latest iPhone and their latest holiday to Marbella.

The big difference between 70s especially the early 70s is most people lived with their parents until they got married and that made it easier to save.

natrapx

Candyapple wrote: »

You and your partner's low salaries are relative in terms to the housing prices in Wales.


All my friends (ranging from mid 20s to early 30s) who own houses/flats only have them due to a) living rent free with their parents since 18 so being able to save large amounts, or b) they have been gifted with a large deposit from either or both sets of parents (couples). I don’t know anyone who has rented over the years and been able to buy a house/flat without the help of bank of mum and dad.

Partner and I were both renters (27 and 23) on a salary just over £20k each. We did get help from an inheritance which paid for 3/4 of our 20% deposit, but if we hadn't, we had budgeted 10% on a slightly cheaper house (House we brought was £178k in West Mids, 3 bed Link-Detached). Without the inheritance, 10% on a 160k or help to buy on the same amount was easily affordable.

I'm not saying it was easy, but at £6k+ a year of saving (we each saved a minimum of £250/month, which we hardly noticed to be honest), a new build of around £160k is affordable in two years on a 5% deposit H2B scheme.

I do feel sorry for people in the south east as prices there are crazy, but for the people we know, I sometimes want to scream at the amount they waste on frivolous things! Now our mortgage repayments are below what our rent was, we've saving even more, and building up equity at the same time. Meanwhile, friends are going to America 2-3 times a year, going out most nights or always seem to have a new car/phone/gadget. Now we're the envied ones for having such a nice house whilst they are still renting!

Pixie5740

Didn't homebuyers get mortgage interest relief at source between 1983 and 2000? Many people in that era (although not the final years) could also have free tertiary education. There was also decent social housing available for those who weren't owner-occupiers but most of the decent stock has been sold off now.

Buyers today can make use of HTB schemes although I'm not entirely convinced that buyers are the ones being helped the most.

It's all swings and roundabouts though. People 20 years from now might think that we had it easy today.

ReadingTim

natrapx wrote: »

Partner and I were both renters (27 and 23) on a salary just over £20k each. We did get help from an inheritance which paid for 3/4 of our 20% deposit, but if we hadn't, we had budgeted 10% on a slightly cheaper house (House we brought was £178k in West Mids, 3 bed Link-Detached). Without the inheritance, 10% on a 160k or help to buy on the same amount was easily affordable.

I'm not saying it was easy, but at £6k+ a year of saving (we each saved a minimum of £250/month, which we hardly noticed to be honest), a new build of around £160k is affordable in two years on a 5% deposit H2B scheme.

I do feel sorry for people in the south east as prices there are crazy, but for the people we know, I sometimes want to scream at the amount they waste on frivolous things! Now our mortgage repayments are below what our rent was, we've saving even more, and building up equity at the same time. Meanwhile, friends are going to America 2-3 times a year, going out most nights or always seem to have a new car/phone/gadget. Now we're the envied ones for having such a nice house whilst they are still renting!

Congratulations on getting on the ladder, but your story rather misses the point: it's taken 2 of you (and a dead relative) to buy what 20-30 years ago could probably have been purchased on a sole income. How affordable are the mortgage repayments on a single income, should you wish to have kids?

I do agree with you that 'nowadays' people seem less willing to make sacrifices to their lifestyles to save up for a house, or even once they've bought one; but when you have price rises such that your house can 'earn' more in a year than you can, there ain't no number of iphone contracts to ditch that can make up for that

'Shiny gadget' bashing is merely a smokescreen for the intergenerational inequality which now exists in respect of property ownership - as shown by graphs plotting average house prices as a multiple of average earnings.

elverson

Yep.

Rents are expensive => Tenants can't save a deposit fast enough => House price increases in the meantime => Rents go up in parallel. It's a cycle.

Indout96

But up north houses (starter home type) are still affordable. A friends daughter is just moving on as they are having a baby and need a bigger place so selling this :
http://www.housescape.org.uk/cgi-bin/full.pl?&pdp1&%2Cfdstylepr&PDP1003059


Now whilst wages are lower up here this has to be affordable as a first time home.