Houses are affordable!

ukcarper

moneyistooshorttomention wrote: »

That just had me doing a quick google re my parents first house - I don't recall which one it was in the road (I was too young). Think it must have been one of the 2-bedroomed ones there. Most recently sold (passably modernised standard) was £135,000. My mother wasnt earning much at all - my father, I think, would be on around £40,000pa if he wasnt long-retired. So I don't know the position in relation to them being on equivalent income to what they had when they bought it - but they could afford it now if he were still working (and in a mortgageable agegroup).

My first house I do know is around £210,000 now - and, if I were still working etc I would be on somewhere between £18,000 and £20,000 income I guesstimate. I'd be nowhere near being able to afford it.

EDIT; Just calculated - I'd have to have a mortgage for £145,000 to buy my first house again now with same percentage deposit as I put down. In other words "That's a no then".

EDIT; Second edit was spotting poster saying mass immigration started 2004. Would be interesting to see figures on that. So I did quick google re when Tony Blair came to power - 1997 (that would make the start of this 7 years after he came to power). It feels like about the beginning of this century that "things started changing far too fast etc".

The thing I was trying to point out in the post you criticised is that it depends when in the past you bought. In 1972 there was rampant house price inflation and the houses like the one I bought were selling nearly £11k six months later, while a year earlier they were just over £5k.

aneary

ukcarper wrote: »

The thing I was trying to point out in the post you criticised is that it depends when in the past you bought. In 1972 there was rampant house price inflation and the houses like the one I bought were selling nearly £11k six months later, while a year earlier they were just over £5k.

My parents brought in 1979 after the rampant house price inflation.

ukcarper

aneary wrote: »

My parents brought in 1979 after the rampant house price inflation.

Prices quadrupled in the 70s doubling between 1971 and 1973, although it’s not as bad as that looks as there was high inflation over that period.

Davesnave

ukcarper wrote: »

Prices quadrupled in the 70s doubling between 1971 and 1973, although it’s not as bad as that looks as there was high inflation over that period.

Correct. It was the inflation of prices in the first half of the decade that spurred me into drastic saving action.

I remember because at that time I rented via an EA whom I'd met through work, so almost a friend. In 1975 he assured me, "Don't worry, we won't experience such high price increases again."

Rather glad I took no notice!

cloo

OP is also neglecting student debt, the cost of renting etc. My first job, I took home £800 a month after tax; plenty of first jobs pay no more than that now.Two-bed houseshare in London today? Probably hard to find for under £1500, and you'll still be paying £200+ to commute to it. Plus you're probably looking at a five-figure uni debt. Saving anything significant unless you live at home? Not likely. And a sandwich or two fewer a week won't help. Houses aren't just a tad too expensive, not 10%, not 20%.... more like 75%+ too expensive for most people. I don't think young people are spendthrifts at all, many will not be able to save for a home that will meet their most basic needs during their whole working life.

As has been said there *are* cheaper houses, but guess what - they're not near jobs, they're not near transport links.

starting_again_in_the_sun

Many young people can afford mortgage payments; they are paying their private landlords' mortgage.

What they can't afford is to save for a deposit whilst paying high rents.

If they do manage to save up, they often fail mortgage affordability checks, despite the fact the mortgage would be lower than the rent.

( Sorry if I'm repeating, haven't read whole thread!)

LadyL2013

Whilst I agree with you to a degree in that people often will prioritise having luxuries over saving for a deposit, it's also very true that many are thrifty and save hard but due to geography still can't afford a big enough deposit.

I saved a 35k deposit on my own but only because I had saved since I opened my first bank account, put half of my earnings away every month and lived rent free out of sheer good fortune. Many have to pay rent which renders you unable to save much if on your own. For example where I live rent is double s mortgage payment without bills.

So whilst it certainly can be done, it's nowhere near as easy as you make out.

Waterlily24

ukcarper wrote: »

Prices quadrupled in the 70s doubling between 1971 and 1973, although it’s not as bad as that looks as there was high inflation over that period.

We bought our first house in 1968 for £5,900 sold it in about 72/73/74 for £16,500 so you are quite right. Houses in that street similar to the one we had are now on the market for the high £600 thousands. That was North West Kent - West Wickham.

It was a three bed 1930s semi, it needed a lot of work and we renovated it to a high standard

GreatApe

cloo wrote: »

OP is also neglecting student debt, the cost of renting etc. My first job, I took home £800 a month after tax; plenty of first jobs pay no more than that now.Two-bed houseshare in London today? Probably hard to find for under £1500, and you'll still be paying £200+ to commute to it. Plus you're probably looking at a five-figure uni debt. Saving anything significant unless you live at home? Not likely. And a sandwich or two fewer a week won't help. Houses aren't just a tad too expensive, not 10%, not 20%.... more like 75%+ too expensive for most people. I don't think young people are spendthrifts at all, many will not be able to save for a home that will meet their most basic needs during their whole working life.

As has been said there *are* cheaper houses, but guess what - they're not near jobs, they're not near transport links.

Houses are affordable by any reasonable definition

One way to look at affordability is to look at reinstatement value vs price
The reinstatement value is the cost to rebuild a house if it is totally destroyed and in most the country the two are close which shows good value. For example I had a survey done recently and it came back with a reinstatement value of £350,000 vs a price of the house of perhaps £450,000

Another way you can look at it remortgage payments. In most the country a starter home can be had for about £120k for instance in Birmingham you can buy a 3 bedroom terrace for £120k the repayment mortgage on that would be about £400 per month. That is very affordable very cheap its a similar figure to renting a council house but at the end of 25 years you pay it off and your mortgage/rent goes to zero.

Another way to look at it is to look at ownership vs renting. And in the UK private rentals for uk born are just 14% which is a very low figure. Even those who are in private renting the majority do so temporarily while students/young-adults before they go on to the other tenures

Houses in most the country are cheap/affordable.

GreatApe

starting_again_in_the_sun wrote: »

Many young people can afford mortgage payments; they are paying their private landlords' mortgage.

What they can't afford is to save for a deposit whilst paying high rents.

If they do manage to save up, they often fail mortgage affordability checks, despite the fact the mortgage would be lower than the rent.

( Sorry if I'm repeating, haven't read whole thread!)

That problem is one of the governments own making

Before the recession you could get 100% mortgages at reasonable rates (vs the BOE rate) and you could also get self certified mortgages. That meant if you could afford the rent you could afford a 100% mortgage and you could buy without having to save up for years

After the recession the government and regulators over reacted and now 100% mortgages at low spreads are not available and self cert has disappeared altogether. The result is people have to save for longer before they do finally buy.

My only advise for anyone in that position is that in their shoes I would probably ask family and friends. It might be a bit embarrassing to ask for help but if you are MSE about money and can pay them back in due course then why not.