FTB's Up.....

GreatApe

kinger101 wrote: »

you're being rather bullish.

I would definitely buy right now if I were a FTB and not put it off

Many FTBs are now talking out 30 or 35 year mortgages.

so what? It makes perfect financial sense. You can always overpay to get the term or debt down so I would always go for the max term offered.

And the average age of the FTB is now 30.

That seems fine

I think a trend going forward is that people will make fewer steps up the ladder

The average home transacts only once every 23 years which means moving up down or sideways is not all that common

Of course, it's probably been explained to you many times why increases in property prices that exceed inflation benefit very few people.

sure many people have posted lots of theories however in the real world no one seems to want to move to cheap areas nor do areas that are getting cheaper seem all that desirable

kilby_007

GreatApe wrote: »

so what? It makes perfect financial sense. You can always overpay to get the term or debt down so I would always go for the max term offered.

You've missed the point. The post doesn't show that there are no affordability problems, it shows that the goalposts have had to be moved to allow people to be laden with more debt to buy the same properties on their income. Whilst it is technically still affordable on a month-to-month basis, stretching the mortgage to 35 years means that most first time buyers will be paying off their mortgages for all of their working lives and are likely to wind up with little or no savings for retirement. If the mortgage was unaffordable to them over 25 years, they're not going to be able to overpay to bring the term down to 25 years are they...

GreatApe

kilby_007 wrote: »

You've missed the point. The post doesn't show that there are no affordability problems, it shows that the goalposts have had to be moved to allow people to be laden with more debt to buy the same properties on their income. Whilst it is technically still affordable on a month-to-month basis, stretching the mortgage to 35 years means that most first time buyers will be paying off their mortgages for all of their working lives and are likely to wind up with little or no savings for retirement. If the mortgage was unaffordable to them over 25 years, they're not going to be able to overpay to bring the term down to 25 years are they...

Most FTB, if they haven't already, will get an inheritance which will clear the mortgage

in the crash wisher land no one gets married or has a partner to help finances, no one gets an inheritance, no one earns fantastic money, no one sets up businesses and sells them off, no one gets gifts from parents. no none of that happens what is normal in crash land is that a 30 year old on £25k thinks he is entitled to a property and not just any property but a 3 bed average property in an average area with no partner no help no inheritance.

the crash cheer leaders need to wake up and see that property is not just an income game, it is income + inheritance/gifts game. While they draw their nice pretty graphs showing house prices are going up relative to income their friends are going out and buying homes leaving them to ponder over their graphs and lost decades waiting for homes to be 2 ha penny. Dont be them

kilby_007

GreatApe wrote: »

Most FTB, if they haven't already, will get an inheritance which will clear the mortgage

in the crash wisher land no one gets married or has a partner to help finances, no one gets an inheritance, no one earns fantastic money, no one sets up businesses and sells them off, no one gets gifts from parents.

Are you kidding me? MOST FTB? The average parent will have spent most of their kids inheritance on their own care and what's left will be split between siblings (in my case there's 5 of us). The elites of society will no doubt inherit millions and that's how it goes. Inequality (i.e. the gap between rich and poor) is increasing and this is widely known. You've got your head in the clouds if you think that the AVERAGE FTB is going to clear their mortgage debts with inheritance or through business deals and big cash gifts. Yes, there will be a minority of people who benefit in this way, but certainly not the AVERAGE FTB by any stretch!

GreatApe wrote: »

what is normal in crash land is that a 30 year old on £25k thinks he is entitled to a property and not just any property but a 3 bed average property in an average area with no partner no help no inheritance.

I'm not in "crash land" as you put it - I'm just a fairly logical person who sees things as they are, and I think that the AVERAGE FAMILY earning AVERAGE SALARIES should be able to afford an AVERAGE FAMILY HOME in an AVERAGE AREA with AVERAGE HELP/INHERITANCE.

BobQ

iantojones40 wrote: »

So only about 3-6x the size of current average deposits of 5-10% then

All I am saying is that if I raised a deposit in 1988 that is about the same as the average today (making no inflation adjustment) why cannot FTB today raise the same amount? I was not gifted the money, I worked hard got a second job, saved it up, managed without a car till I was 25 and then had an old banger, did not waste money on technology, and bought a house that needed some updating.

One explanation is that rents are higher. But interest rates are much lower.

BobQ

GreatApe wrote: »

Most FTB, if they haven't already, will get an inheritance which will clear the mortgage

Statistics on this may exist but I think the idea that most FTBs will get this type of inheritance is fanciful. Some will of course.

Many people in their 20s have decided they cannot afford to buy. Some will be justified in making that assumption others will simply have chosen to enjoy the present and let the future take care of itself. The trouble is that neither group who get an inheritance will probably think they are able to buy in their 50s so will just spend it. Those who have a property may be more likely to use their inheritance to pay down their mortgage.

the crash cheer leaders need to wake up and see that property is not just an income game, it is income + inheritance/gifts game. While they draw their nice pretty graphs showing house prices are going up relative to income their friends are going out and buying homes leaving them to ponder over their graphs and lost decades waiting for homes to be 2 ha penny. Dont be them

I think this is a point well made.

GreatApe

BobQ wrote: »

Statistics on this may exist but I think the idea that most FTBs will get this type of inheritance is fanciful. Some will of course.

Many people receive inheritances, I have done a thread on it on the past here. I wont go into it in this thread but it looks like there is an annual £100 billion left and inheritances and possibly the same again as gifts before death. So ~£200 billion a year. That plays a huge part in the housing market and its often completely missed by the house prices are going to crash brigade. also the obvious, as house prices go up so do inheritances values which means a significant portion of people are to some degree insulated from house price inflation even if they do not own (they may pay more for their home but they will also receive a bigger inheritance). Likewise if the opposite happened

Many people in their 20s have decided they cannot afford to buy. Some will be justified in making that assumption others will simply have chosen to enjoy the present and let the future take care of itself. The trouble is that neither group who get an inheritance will probably think they are able to buy in their 50s so will just spend it. Those who have a property may be more likely to use their inheritance to pay down their mortgage.

well we know that almost 20% of the housing stock is social so 20% of the 'kids' will never buy as they will be put into this 20% social stock. We know that we need a bare min of 10% of the housing stock as private rental for students and others who need or want to rent temporarily. That means 'only' a max of some 70% of people can be owners.

Some of that 70% will buy on their own merit. Some will buy once they partner up or get married. Some will inherit a house and live in that (or sell it and buy another) and some will be gifted help.

The housing market actually works very well. The confusion is simply people on less than average incomes and less than average situations trying to buy the average home solo and seeing its difficult to do so. While the couple getting married and working full time with two incomes and £50k gifted by the parents just get on with it.

GreatApe

kilby_007 wrote: »

Are you kidding me? MOST FTB?

Here is the problem. You only know your own or confirmation bias
I think I went to half a dozen weddings last year and all of them got significant early inheritances one getting a whole house gifted to him outright. So while the crash cheer leaders are scratching their heads about income graphs others are moving on.

Anyway google inheritance data the most recent stats are £72 billion for 2013 but the housing stock and bond markets are all a good deal higher since then plus there savings rate has been positive for the last 3 years which means the figure today is higher than £72 billion its probably higher than £100 billion now but go with that. That is very significant sums each and every year and people also give gifts or early inheritances

The average parent will have spent most of their kids inheritance on their own care and what's left will be split between siblings (in my case there's 5 of us).

well this is the 'problem' with having more than 2 kids the accumulated wealth is diluted. Also your assertion that the care home will take it all simply does not seem to be true on average because 1: inheritances are increasing and 2: the savings rate is still positive. So while your statement might be true for you or some people you know its not true on average. On average the opposite is true people are leaving ever more each generation each year

The elites of society will no doubt inherit millions and that's how it goes.

Sure they will, but the middle class the 2/3rds of society will also leave life significant amounts often sums that would buy a 3 bed house outright (if said house was in Birmingham)

Inequality (i.e. the gap between rich and poor) is increasing and this is widely known

Maybe the rich are getting richer faster than the middle class, but the middle class is also getting richer and as a middle class person I dont quite care if the very rich are getting richer than me so long as I am getting a better life as time goes on which when I look around seems to be the case.

You've got your head in the clouds if you think that the AVERAGE FTB is going to clear their mortgage debts with inheritance

I don't know a single person among my friends who wont get at least 1 house worth as an inheritance and I also know a few who will get millions and most my friends are from working class stock although most of them have managed to get into middle class professions themselves. My observation, and your observation are probably not representative of an average but something in the middle is.

In the normal scheme of things a family line only needs to buy 2 homes and every subsequent generation gets housing for free. So if your parents and Grand parents own their own home and they each had 2 kids then the kids can get the grandparents home and the kids-kids will get your parents home etc (or rather they will get a cash value and buy one off the market)

or through business deals and big cash gifts. Yes, there will be a minority of people who benefit in this way, but certainly not the AVERAGE FTB by any stretch!

It is a significant minority I would put it at 10%

I'm not in "crash land" as you put it - I'm just a fairly logical person who sees things as they are, and I think that the AVERAGE FAMILY earning AVERAGE SALARIES should be able to afford an AVERAGE FAMILY HOME in an AVERAGE AREA with AVERAGE HELP/INHERITANCE.

And they can quite easily. The problem is people well under the average thinking they are at or above the average and being disappointed when they feel that they cant buy the average when they should be aiming lower as they are not the average.

Actually your statement is also silly/wrong because nearly 20% of the housing stock is social. So you need to knock the poorest 20% of households out and then conclude that of the 80% that remain the average among them should be able to afford the average private home

BobQ

kilby_007 wrote: »

Are you kidding me? MOST FTB? The average parent will have spent most of their kids inheritance on their own care and what's left will be split between siblings (in my case there's 5 of us).

I partly agree, but I also see older people who sacrifice their own savings (that might be used for care) to help their children buy a house when they have long since flown the nest.

The elites of society will no doubt inherit millions and that's how it goes. Inequality (i.e. the gap between rich and poor) is increasing and this is widely known.

Very true, but then it was true for centuries. Little point in moaning about it. Vote for a Government that has a redistributive tax policy.

I'm not in "crash land" as you put it - I'm just a fairly logical person who sees things as they are, and I think that the AVERAGE FAMILY earning AVERAGE SALARIES should be able to afford an AVERAGE FAMILY HOME in an AVERAGE AREA with AVERAGE HELP/INHERITANCE.

The thread was about FTBs, many of whom can live in a flat, to assume that they should be able to buy a house or even an average house may not be realistic in many areas.

What do you mean by an average area? Boston Lincs is an average area that has average properties of less that £200K. Or do you mean an average area of the town you want to live in? Say Reading at £420K.

Why assume that a FTB should necessarily expect to live in an average area? Some areas of any town are cheaper than others. Someone has to live in a below average part of town?

One thing I have noticed is that some young people decide they cannot afford to buy, yet then decide to rent an above average house in an above average area with an above average rent. No wonder that they cannot afford to save for a deposit.

Average help? Nobody should expect to get an inheritance or a parental contribution. Both are gifts to adults not entitlements.

So I think it would be more realistic to say that an average couple on average earnings should expect to be able to buy a flat or a small house in a below average area of an average town having made some sacrifices to save a deposit (including any money they are lucky enough to be gifted). Then when they have built up equity in a property should if they wish look to move to a better house in a better area and not keep spending their equity on the assumption they will get an inheritance.

Some people will never be able to afford to buy an average home, this was also been true for decades.

BobQ

GreatApe wrote: »

Many people receive inheritances, I have done a thread on it on the past here. I wont go into it in this thread but it looks like there is an annual £100 billion left and inheritances and possibly the same again as gifts before death. So ~£200 billion a year. .

Did you manage to ascertain how this was distributed. Surely much of it will be left by the very wealthy to their offspring? How much goes to the average person?