How do people afford expensive houses

Davesnave

ringo_24601 wrote: »

I had to laugh at the spiritual development bit. Like you can't grow as a human being because you've got a mortgage.

I didn't say that the two things were mutually exclusive.

In fact, I have a friend who managed to do both, by going to Africa and performing 'good works,' while others back here paid off her mortgage.

yertiz_2

So what happens if couples want a family in all of this? If two people can only get a mortgage on joint incomes, how can they afford the childcare? Then what would be the point anyway if someone else is looking after them all day?

[Deleted User]

yertiz wrote: »

So what happens if couples want a family in all of this? If two people can only get a mortgage on joint incomes, how can they afford the childcare? Then what would be the point anyway if someone else is looking after them all day?

Welcome to the modern family paradox. We went down the route of my wife going part-time with family helping to look after the kids as babies. Your large childcare costs are 'only' for 4-ish years.

ukcarper

GDB2222 wrote: »

The real answer to this is that house prices have grown far faster than earnings. That means it is genuinely far harder for someone to buy a house now than it was say 40 years ago.

At that time, mortgages were controlled, and the maximum was around 3 times earnings. Hence houses generally cost around 3 times earnings. Now, there are no (or at least very different) controls on mortgages, and houses cost much more.

For example, the Nationwide reports that for FTBs in London, the average property they bought in 1995 cost 2.6 times earnings. Now, it is 10.1 times.

http://www.nationwide.co.uk/~/media/MainSite/documents/about/house-price-index/downloads/ftb-hper.xls

Sure, interest rates are lower, but in real terms there is 4 times as much capital to repay on the mortgage.

Personally, I blame the government for relaxing mortgage controls too much. They claim they do this to help buyers, but in practice it doesn't help, as it just makes houses more expensive.

That's 20 years ago 40 years ago they were much higher but not as high as now. Properties prices in relation to warnings were the lowest they had been since the 50s.

Person_one

yertiz wrote: »

So what happens if couples want a family in all of this? If two people can only get a mortgage on joint incomes, how can they afford the childcare? Then what would be the point anyway if someone else is looking after them all day?

The bolded bit applies to nearly all fathers...

lush_walrus

In my opinion it really is a matter of starting to buy young and maximising your earnings, and most importantly spotting the uniqueness of your times.

people in every generation seem to think the one before had it easier, that works well as an excuse but not as a reason. Embrace the times you live in, rather than hark on the past and you will get there.

My parents brought in the 60s as a young married couple at 21 and 23. I brought in the late 90s at 20 on my own. In their generation, mortgages only considered the mans wage, and most mothers lost their jobs to pregnancy and were left with careers that were hard to recover.

In mine both wages were considered, anyone from any background was able to attend university and aim for any career path they wished and borrowing incredibly easy.

That one fact proved a blessing and a curse for the generation buying on the back of it. I worked part time from 16, studied and managed to borrow what I needed to buy a small house that enabled me to rent two rooms to my friends from uni. My profession requires a 6 years study all together. For the remainer of those years I rented the rooms for far more than the mortgage, carried on working part time for the duration and over paid the mortgage. When I finished studying most of the mortgage was paid. I still have that house rented and it's probably worth about 450 at the moment. My money if you like has never paid for it.


So now, its harder to borrow so that model may not work and part time jobs have morphed into zero hour contracts. But, earning money has never been easier. Websites are potentially quick businesses to set up. eBay makes anything sale related very easy to start without much cash. Far far easier than my youth. Shared ownership helps affordability as do other government schemes. Renting out a room within your own house is now tax free, when I did it I had to work out how to submit tax returns (via the post not easy and online like now). Interest rates to pay back a mortgage is very very low. Zero rate credit cards exist and if prudent can be used to massive benefit. More and more inherit money from parents or grandparents.

I could go on, i hate reading people so defeated on here. People walk into the uk with nothing and manage to accomplish massive amounts. If you accept and reflect back you will not reach your goals. I had goals and actually getting there wasn't that hard, anyone could have done the same and many did. And the young now also can, just think what is available in your generation piece it together and do it. Of course if you don't wish to own and want to rent that's fine too, but think you can't if you want to do something is a sure fire way to make sure you won't.

adonis10

yertiz wrote: »

So what happens if couples want a family in all of this? If two people can only get a mortgage on joint incomes, how can they afford the childcare? Then what would be the point anyway if someone else is looking after them all day?

If they plan to have a family then they should plan for the drop in income; if they can't afford it then they either buy a cheaper property or don't have a family until they can afford it.

That's it, really. Simple, in my opinion.

marksoton

I think it varies from person to person.

The girlfriend bought young with her ex husband. As their salaries rose they moved up the market. When they divorced she was able to buy him out with help from her parents. At 33 she's now the sole owner of a 3 bed house worth 400K.

At 37 i've only just got on the property market with a one bed flat.

silvercar

adonis10 wrote: »

If they plan to have a family then they should plan for the drop in income; if they can't afford it then they either buy a cheaper property or don't have a family until they can afford it.

That's it, really. Simple, in my opinion.

Life is never that simple. It involves compromises.

SG27

adonis10 wrote: »

If they plan to have a family then they should plan for the drop in income; if they can't afford it then they either buy a cheaper property or don't have a family until they can afford it.

That's it, really. Simple, in my opinion.

Which is exactly why people are having children much later in life.

Lots of people earlier in the thread saying you meet up with a partner and have two incomes to help move up the ladder. Well today its the reverse, you need two incomes to start with. Then when you want to start a family in your early to mid 30s you drop back to one income. Or one and one part time. And suddenly you can barely afford the home you currently have let alone somewhere bigger

This is what has happened to us. Not that it was a shock. We knew it would happen. We are effectively stuck in a fairly small two bed house. We would need to save/borrow around £50,000 to get 3rd bedroom. On one income we cant save anything! And no way we could borrow anymore!

But thats life. We were pretty comfortable on two incomes. But both wanted to start a family before age made it too difficult.