UK Affordability still very good

ukcarper

Graham_Devon wrote: »

I'd have to disagree with this, well, the "save "£1,000 a month" part.

Again, this sort of savings level requires you to have very small outgoings, and I doubt that's the case for a couple bringing in £45,000 per year.

To earn that sort of money, unless you are very fortunate as part of a couple you'd need two cars at the very least.

So we could assume car loan debt (unless they have paid out of their savings, in which case, car's need replacing, they don't just go on forever). Car repairs, servicing, fuel etc.

Needless to say they need somewhere to live and I don't think it's reasonable to suggest a couple of 45k would be house sharing as per your argument. Life just doesn't work that way. Just insuring 2 cars will likely cost them £100 a month.

With 2 cars, £150 per month on fuel, servicing, repairs, household bills, rent and everything else life brings you are looking at around £1,600 per month, and that's before any real living starts. Already we are only left with £900 per month before we have started on any discretionary spending or any unknown bills like the washing machine breaking.

We haven't allowed this couple any debts (bar car loans) and haven't allowed them any pension. We also haven't allowed them any children (which I realise is standard in all of these discussions).

£500 a month, yes.... but £1,000 a month? It's not real world living ...not on those wages when you are talking about them being a duel income and all the extra expense that brings.

Looking in my area you are spending £830 per month on renting a 2 bed house and paying council tax each month before you have even started with anything else. Hence why I look at your figures and just dispair at the lack of reality in anything stated.

I don't see the point in these calculations which rely on distorting the norm (i.e. pretending normality is couples of 45k flat sharing, within walking distance of work and never suffering any unknown spending requirement). It makes a mockery of this place and cocoons you into this sense that it's everyone else that's wrong based purely on your mythical sums.

There are plenty of SOA's on this forum on the debt board showing real life living costs. Why pretend all these SOA's aren't the norm and normality is the stuff that can't be found anywhere?

I'm glad your figures aren't correct other wise I would stave.

Life might not work that way but if you are determined to buy you have to alter your lifestyle in the short term to achieve your goal. That was true in the 70s as it is now the only time when that was not the case was when 100% mortgages were freely available.

lisyloo

GreatApe wrote: »

So how does 15/20ths of grandparents owning their own hones result in 1/20th receiving a significant inheritence?

Some homes will have care charges against them and some will be split between several siblings.
The 6 parents I have with modest homes will get split between 2-6 siblings so none will be significant. So for example £240k home in bristol split between six is £40k each.

I believe I'm much more average than those with million pound homes in London and the SE.
National figures will give you the average home and some of the more eldely will have downsized to small flats.

ukcarper

GreatApe wrote: »

No that's not what I said I said baggage of winds 10% of 1.6 million is a set of data that includes 'proper' inheritences and also mini side inheritences.

If you look at the table I posted and extend it out 30 you will get a Much better idea of how inheritances play out. For instance 200,000 estates are left with £100k+ multiply that by 30 years and it shows that over a generation 6 million estates are left worth £100,000+

Since most estates are split between two primary inheritors (often the Two kids) that shows each generation 12 million 'kids' will inherit from their parents a figure of at least £50,000+ each

Where baggage winds analysis falls is that of the 7.5 million estates left each generation (250k estates x 30 years) many of the estates will have non primary beneficiaries. These people who inherit £500 from their great aunty twice removed will skew the data especially if you o my look at 2 years and take a sample of 3800.

Simply put each generation at least 12 million kids get a significant £50k+ inheritence. If you split the population into 3 you get about 22 million in each group. So 12/22 million that is more than half the population inherit significant sums

Take FTB age as 26 to 35 there are over 8million people of that age in UK divide your 12 million by 3 that's 4 million. But some of those estates will be left to other partner if we assume deaths are evenly split between men and woman using figures you posted earlier that will be 33% so that 4million will be reduced to 2.6 million. So if all that went to people of FTB age about 33% would receive an inheritance but of course most of those will have parents aged between 50 and 60 and as life expectancy is 84 they will not inherent.

GreatApe

15/20ths of the old own their own home mostly outright. They will pass that onto the younger population. Yes mostly the home will be split by two or perhaps more siblings but most households will get two significant inheritances in their lifetime. One themselves and one for their spouse.

Overall a lot of housing passes from old to younger. Its not 5-10% as speculated by bag of wind and ukcarper its likely closer to 3/4ths of the population

GreatApe

ukcarper wrote: »

Take FTB age as 26 to 35 there are over 8million people of that age in UK divide your 12 million by 3 that's 4 million. But some of those estates will be left to other partner.

Why do you think Inheritences need to go to older people to have an impact on the housing market?

Already we know the housing market is about 1/3rd FTB 1/3rd second time buyer and 1/3rd other.

Second time buyers in their 50s typically not only have one house fully paid off but also often an inheritences plus the ability to take on more debt via a new mortgage.

So a second time buyer couple earning the median income has a £200k house has a £200k inheritences and has the ability to borrow another £200k from the bank giving them a budget of £600k. Some may decide to spend £600k on a nice house (which means as median earners they can buy well above the median house) others may decide to stay put not borrow more and invest the inheritences on an outright BTL (or if the inheritence was a house let it out rather than sell it)


8 UK regions are cheap FTBs don't need inheritence/gifts only really London is where I think it plays a big part for FTBs.

ukcarper

GreatApe wrote: »

Why do you think Inheritences need to go to older people to have an impact on the housing market?

Already we know the housing market is about 1/3rd FTB 1/3rd second time buyer and 1/3rd other.

Second time buyers in their 50s typically not only have one house fully paid off but also often an inheritences plus the ability to take on more debt via a new mortgage.

So a second time buyer couple earning the median income has a £200k house has a £200k inheritences and has the ability to borrow another £200k from the bank giving them a budget of £600k. Some may decide to spend £600k on a nice house (which means as median earners they can buy well above the median house) others may decide to stay put not borrow more and invest the inheritences on an outright BTL (or if the inheritence was a house let it out rather than sell it)


8 UK regions are cheap FTBs don't need inheritence/gifts only really London is where I think it plays a big part for FTBs.

If you are arguing that inheritance impacts on housing market I agree it does but that does not mean it helps the affordablity of FTB which is what I thought we were talking about in fact it could make it worse.

8 UK regions are cheap by your calculations I don't agree and you need to go deeper than region to get a true picture.

ukcarper

GreatApe wrote: »

15/20ths of the old own their own home mostly outright. They will pass that onto the younger population. Yes mostly the home will be split by two or perhaps more siblings but most households will get two significant inheritances in their lifetime. One themselves and one for their spouse.

Overall a lot of housing passes from old to younger. Its not 5-10% as speculated by bag of wind and ukcarper its likely closer to 3/4ths of the population

You said that over a 30 year period 12 million people received an inheritance that is not 75%.

norsefox

Graham_Devon wrote: »

I'd have to disagree with this, well, the "save "£1,000 a month" part.

Again, this sort of savings level requires you to have very small outgoings, and I doubt that's the case for a couple bringing in £45,000 per year.

To earn that sort of money, unless you are very fortunate as part of a couple you'd need two cars at the very least.

So we could assume car loan debt (unless they have paid out of their savings, in which case, car's need replacing, they don't just go on forever). Car repairs, servicing, fuel etc.

Needless to say they need somewhere to live and I don't think it's reasonable to suggest a couple of 45k would be house sharing as per your argument. Life just doesn't work that way. Just insuring 2 cars will likely cost them £100 a month.

With 2 cars, £150 per month on fuel, servicing, repairs, household bills, rent and everything else life brings you are looking at around £1,600 per month, and that's before any real living starts. Already we are only left with £900 per month before we have started on any discretionary spending or any unknown bills like the washing machine breaking.

We haven't allowed this couple any debts (bar car loans) and haven't allowed them any pension. We also haven't allowed them any children (which I realise is standard in all of these discussions).

£500 a month, yes.... but £1,000 a month? It's not real world living ...not on those wages when you are talking about them being a duel income and all the extra expense that brings.

Looking in my area you are spending £830 per month on renting a 2 bed house and paying council tax each month before you have even started with anything else. Hence why I look at your figures and just dispair at the lack of reality in anything stated.

I don't see the point in these calculations which rely on distorting the norm (i.e. pretending normality is couples of 45k flat sharing, within walking distance of work and never suffering any unknown spending requirement). It makes a mockery of this place and cocoons you into this sense that it's everyone else that's wrong based purely on your mythical sums.

There are plenty of SOA's on this forum on the debt board showing real life living costs. Why pretend all these SOA's aren't the norm and normality is the stuff that can't be found anywhere?

Why are they renting a two-bedroom house?

My wife and I saved £18k over two years. During that time I was on 20k for 18 months, and 25k for 6 months. She was on 20k for the period.

Our rent was £600 + £120 on council tax.

It's entirely possible to save for a house deposit, but it's all about what you prioritise. If you have a two-bedroom house, when one would do, have car finance, sky TV and go out every weekend, then yes, of course it will take you longer.

Graham_Devon

norsefox wrote: »

Why are they renting a two-bedroom house?

My wife and I saved £18k over two years. During that time I was on 20k for 18 months, and 25k for 6 months. She was on 20k for the period.

Our rent was £600 + £120 on council tax.

It's entirely possible to save for a house deposit, but it's all about what you prioritise. If you have a two-bedroom house, when one would do, have car finance, sky TV and go out every weekend, then yes, of course it will take you longer.

Normally because there is an abundance of 2 bed houses.

Very few 1 bed homes.

Your 18k over 24 months works out as £750 a month. Not quite the £1,000 per month that was talked about.

As I've always said, some people will of course be able to save these sorts of sumes - my point was, it's not the norm.

GreatApe

ukcarper wrote: »

You said that over a 30 year period 12 million people received an inheritance that is not 75%.

No I said/estimated over 12 million inherit a portion of an estate valued at £100,000+

That estimate was done using estates that were valued at £100,000+ in 2013 which means we ignored a lot of homes in the north and Scotland and wales etc. For instance in 2013 the average terrace in the north east was £91k.

I think that explains much of the difference between my estimate of 55% receiving an inheritence and the info about 75% or so of older folk owning their home.

I will update using lower estates but I feel the higher figure 75% is more likely to be correct than the 55% estimate especially when gifts are factored in