How can anyone born in the 90s purchase a property?

MoneyEM

I am 23 (born 92) and have 48k in savings, and also earn just over 30k a year. I've been told my absolute max i can borrow is £152k which is 5 times my earnings so I can afford just under 200k.

I'm looking in Rochester, Kent which is still thought of as a cheaper area considering it's proximity to London, and it's still at the top of my price range for 2 bed terrace (probably due to unprecedented demand, having already lost out on one house that had 7 other offers on the table).

I went to university in Guildford and yes it's a lovely area, but I have to be realistic and with my money I cannot afford that.

surfer9

chewmylegoff wrote: »

Your salary is £30k, so your net after tax is £23,500... and you can save £20,000pa?

Suggest you set up a website called "moneysavingexpert.com" and teach people how to live off £290 a month. I expect you will be able to make more than £30k from it.

My income situation is a bit complicated as I am employed and self-employed and my income varies month to month in both employments. So the figures I gave are not particularly accurate. I didn't take the tax off both of the sums I gave as I do not earn much in my employed work - so am barely taxed on that income, and I pay my tax in a lump sum which takes approx £6k off me each year.

So based on that I do have around a £30k income before tax, but yes I should have deducted the taxes I pay from the amount I save each year. So I save around £14k a year.

But this years been better than last - but won't really know what I actually made until I sort my accounts out in April/May.

surfer9

Thanks for everyone's replies.

I see that a lot of you have you from the current generation have made the dream of owning a property a reality.....and congrats for doing so.

A lot of people have mentioned people in their 20's purchasing 2+ years ago. But my post was about the present not the past. In the past year house prices have gone up on average £20,000 and have been going up at a high rate for many years now.....and they are expected to rise at the same rate again this year....

I understand different areas vary in price. And the rise in house prices may not affect young budding home owners up north too badly? As house prices are relatively cheap in the first place. Someone mentioned that their daughter had purchased a £100,000 property. I can only dream of houses being that cheap in the South - at least anywhere I live. Prices around here are no where near that cheap. 1 Bed apartments are double that in my local area.

My main point was - Can people aged 30 and under afford to purchase property currently, now, today? Some may, but surely the vast majority can't. And with house prices set to rise again......Once we get to 2017 - surely that is going to practically be the end of young first time buyers as prices will be waaay out of reach?

I can only really assess the area I live in. In other areas of the country it may be a different story, but in the Surrey/North Hampshire regions - I just don't see how young people get on the property ladder from now on, or at least from 2017 onwards.

I suppose the rich will just be buying up properties here anyway, that young first time buyers can't afford.


For me. Yes - I either need to:

- Accept a smaller property in a less desirable area.

- Move a fairly long distance away to snap up much better deals.

- Get a Shared - Ownership property (Probably the best option)

- Get on the Buy-To-Let bandwagon.

- Hope house prices collapse.

- Just give up completely and continue renting, knowing that one day I'll inherit part of my parents properties and therefore don't need to worry too much about owning a property in my retirement years. If house prices keep going up like this - then the inheritance goes up. Not the best or nicest way to think of it. But the main reason for me to buy property would be to be mortgage/rent free in my retirement years....maybe I do not need to worry about that if my inheritance is rising all the time.

Maximum_Saving

I think that in Surrey first time home buyers have a very hard time. The smaller properties seem very expensive to me. I used to live in Kent in a cheaper area. Further up in Kent the prices of properties are way too high. If the person born in the 1990s has been to university he or she will have student debts to pay off.

Generally a first time buyer purchases a one or two bedroom flat. After saving up more money in a few years he or she sells that. Hopefully he or she will have had a profit through the next property would be just as expensive. My first home was a tiny cottage. I sold that and bought a two bedroom house. I sold that and bought a 3 bedroom bungalow by using my own cash and got a mortgage.

surfer9

mwpt wrote: »

The trouble with asking for advice here or posting about your situation is that most people here already own property (everyone?) and humans tend to reshape things in their head confirming their already held views. Hence why you won't find many empathetic posts, you'll mostly get advice that it's always been hard (true in some periods, not true in others).

I feel your pain. I saved for many years aiming for a specific type of property but in front of my eyes I saw that property fall out of my reach despite saving. So in effect this seems to be a broken market to me, it is mathematically impossible for that trajectory to continue. But that's not the same thing as saying that if you just wait it will eventually all reverse. It probably won't.

So for a bit of practical advice, if you are serious about owning a house, think longer term. Trust me, as someone in late 30s, the years fly by. I've owned my house for nearly two years and it's gone very quickly. If I were you I'd look at three options but all of them should be backed up by putting together a spreadsheet and working out the money and equity position through the years. Google "cash flow spreadsheet".

1) Sounds like you still live with your parents if you are managing to save this much each month. Calculate how much you will be better off staying at home vs how much the house you want to own is increasing by each year. It could be that the house you want is increasingly by less than the amount you save and it's better to wait for a couple more years.

2) If you really just want to get out and onto the ladder then perhaps think longer term. As a first step, buy a very affordable flat in which you could rent out the spare room to a lodger. You can make £7000 (I think) tax free per year this way. That is significant money in your budget. You'll be surprised at how quickly the years go by (unfortunately) and it's not such a hardship to 'suffer' in a flat for a few years to hedge against more house price inflation and meaning if houses go up massively, at least yours will be going up too. On the other hand if prices stay relatively static, well, you'll be building equity in the flat and can sell to move up later.

3) If at all possible, something I wish I'd done when I was younger, buy a bigger house than you think you need and rent out two spare rooms to lodgers. Tax free income and they'll be paying off your bigger house and your personal outgoings each month will be roughly the same as a smaller house with one or no lodgers. Getting the mortgage is the problem but perhaps approach a broker and see how they can help with this.

Good luck, there are some nice areas around Guildford.

I haven't read every post yet - but yes - I was expecting some people to be like 'it's always been hard to buy property' and people telling me to live with it or whatever.....I have had that before when I posted about something similar in the past. And yes it is clear that those people already own a property and just want to see their house price rise and rise....but I'm not sure anyone has been like that from what I have seen. It's all been friendly.

I understand I will probably have to settle for a property I may not be particularly keen on if I stay in this area. There are places in my budget, but from recent searches I have not found anything that inspires me. I just feel like I am getting completely ripped off. Tiny places for high prices. That's just the way it is. House prices have risen £18k in the past year. I kind of refuse to pay these prices.

The main point I was getting to in my original post, was not just about my personal situation. But of every young person's situation going forward. Another 10% expected rise in house prices this year - how are any first time buyers going to purchase a property......

I'm just wondering if there will be a house price collapse in the coming years with the way house prices are rising and continuing to rise.

Can anyone here see first time buyers being able to afford a property after another 10% rise this year? and then possibly the same happening the following year and so on?

chucknorris

PasturesNew wrote: »

Somebody's mummy kicked them out at an early age .... and now they're doomed to spending their life trying to impress ladies.

Ladies don't need to be impressed... unless there's a huge flaw that needs to be overlooked.

I seem to remember a poster a while back going on and on about 'man babies', was it Mr Ree?

Jon_B_2

You need to find someone to buy with. I can't imagine purchasing somewhere as a singleton.

My wife and I, born in '87 and '88 respectively bought last year with combined income of £65k, but only a deposit of £14k (5%) of purchase price.

Only £14k you ask? Yes. We rented from around 2009 til the present day. Trying to save money on top of paying rents that are more than equivalent mortgage take a lot of discipline.

It's not impossible for the millennials to buy a home, but if could do it all over again I'd have lived with my parents longer and saved more money.

But then again, living with parents sucks.

mwpt

surfer9 wrote: »

The main point I was getting to in my original post, was not just about my personal situation. But of every young person's situation going forward. Another 10% expected rise in house prices this year - how are any first time buyers going to purchase a property......

I'm just wondering if there will be a house price collapse in the coming years with the way house prices are rising and continuing to rise.

Can anyone here see first time buyers being able to afford a property after another 10% rise this year? and then possibly the same happening the following year and so on?

No, it's an unsustainable situation. It's mathematically impossible for prices to continue to rise at the percentages they are doing currently, and I think we are already finding the ceiling of prices in certain areas in Zones 1-3 in London. Low interest rates have now pretty much been fully priced in, in some of these areas and the only people able to afford the prices in places like Hackney are BTL landlords. Once the tax changes kick in and the extra SDLT, this might soften the rises somewhat. But that isn't the same thing as prices suddenly crashing down for no reason except that people decide to stop paying. There are plenty of people still wanting a house and will pay even at slightly lower prices.

So I can't believe we'll see many more years of > 10% HPI in certain areas, but there are still cheap(ish) areas in London that have room for more growth in my opinion.

Maybe there is a correction (or crash) coming up on the horizon, but almost everyone who tried to predict the timing of the housing market ends up losing out.

thequant

cells wrote: »

What you need to do is find a nice girl/guy who also has a £70k deposit and a £30k wage and then your budget jumps to £400k which I will guess is enough to buy what you are looking for where you are looking for it

In popular places a single wage will be outbid by two wages.

This is OP problem, for some reason they think £30k a year is good salary, but doesn't realise they are going to be outbid by a pair of shelf stackers who work in Aldi.

GunJack

thequant wrote: »

This is OP problem, for some reason they think £30k a year is good salary, but doesn't realise they are going to be outbid by a pair of shelf stackers who work in Aldi.

yes, 30k is a good salary, the pair of aldi people may earn slightly more combined, but doubt if they could put a 70k deposit together.....