For those who think we had it easy...

Lazy_Runner

I do think it was easier back then (note I do not say easy) because as well as economic factors there are demographic factors.

1) People are living longer (I have no mortality statistics to back this up)
How many in your 20 - 40's still have grandparents living in their own house?
For people who bought their house in the 1970 - 1980's, how many of you had your grandparents living in their own home, at the time?

2) There are more singletons around, whether that is young people wanting to get away from home, or divorced parents wanting to get away from each other. That is potentially 10 properties for two divorced grandparents and their two adult children plus exes plus the four grandchildren (I have no statistics on divorce/families to back this up).
Admittedly todays shoe box house design couldn't hold more than a single person, but then house developers build houses for their customer's needs.

Turnbull2000

titewad wrote: »

A house costing less than twice joint annual wage!!!!!!!!!!
My god I wish we had to suffer like that.

Not only was property much cheaper in 1987 (in real terms, and by some margin), he also bought on a lower than average salary.

And of course, those high interest rates were temporary. In addition, lower mortgage debt with higher average interest rates is far more desirable than high mortgage debt and low interest rates.

beingjdc

franklee wrote: »

This is a point I fear many on this thread are refusing to see. What we really need is a graph ...

http://forums.moneysavingexpert.com/showpost.html?p=6759228&postcount=9

A graph! I can do graphs!

Here's the mortgage payment you would face on the average property, on a mortgage at the BoE base rate, once inflation is factored out. The red line is as of July this year. The lines after that are if rates went up again.

jamesd

The people are the same. The big differences are from inflation, interest rates and unemployment. The interest rates kept prices low because people just couldn't afford to borrow huge amounts. The inflation meant that wages rose rapidly so the effective cost of a mortgage dropped very quickly compared to now. Interest rates and unemployment meant that some couldn't buy or had to sell, particularly if they hadn't owned the mortgage for long enough for pay rises to make it relatively small.

End result is that if you did buy during the high interest rate and high inflation years and could keep up with the payments, you've probably done very well from it, with mortgage payments becoming a small fraction of income and property values rising rapidly recently as low interest rates have made higher loans practical.

In effect there's an ongoing huge transfer of wealth from the children to the parents via the children's mortgages. The early baby boomers who got on the ladder are perhaps the most blessed generation the country has ever had, gaining from inflation, the growing state benefits schemes and property price growth, combining to produce great increases in living standards. They weren't so good at the start, though!

Those who suffered from unemployment are a different story. The Thatcher years were not at all fun for huge numbers of people, myself included.

looby-loo_2

We bought in 1982. We couldn't afford this same house now on the same basis. ie bought with 10% dep + 3x DH salary, mine not included. He was a teacher aged 29, Head of Department.
My house has just been valued at £485K, but take off £20K for garage = £465K. Then minus 10% = about £46K for deposit :eek: Divide the reminder (£418,500) by three and a Head of Department teacher would need to be on £139,500:rotfl: :rotfl: :rotfl: :rotfl: :rotfl: I wish!

TTMCMschine

Poppy9 wrote: »

Interest rates were high and you could only borrow 2.5 times the main earner wage as women were expected to give up work to raise their families. We wanted a house in a nicer area that needed little work but it cost £23k and we couldn't borrow it, no lender would give us a mortgage even with our 10% deposit. I think back and think we should have held out for the better house by getting more cash together as we were completely broke paying for damp courses, replastering, rewiring, central heating, new roof etc. It was a real money pit.

In the long run this has paid off for you, but you can see why some of the financial commitments put today's people off, although it's could have cost you money for the endowments. My mother has a shortfall with her endowment, due to not being warned about the risks, and she won't be recompensed for it. It is too risky to buy now.

TTMCMschine

notatroll wrote: »

Hands off the government by the way – they are doing a brilliant job.

I'm afraid i don't know where you live, i live in England, this isn't the case here.

Zebedee69

TTMCMschine wrote: »

I'm afraid i don't know where you live, i live in England, this isn't the case here.

I heard the government of Magic Roundabout land is going great. Chocolate and Ice bun output is up 25%..... Should please dougle

TTMCMschine

pamaris wrote: »

Well, I have read this entire thread and I must say I am really put off by the sweeping generalizations about young people. However I don't even know if I'm considered a young person any more, since I'm 31 now... though I am a priced out FTB (though I have actually bought twice before, albeit in a different country... but nevermind). I could make a list of all the frugal things I do and the holidays I have never had, etc. etc. But I won't waste my time.

I could also give examples of family members who purchased decent family homes in the 70s in nice areas on one blue collar wage. But I won't waste my time.

The fact is that this is a vastly different economic landscape than was the case in just about any time in the past, even the peaks of previous booms. Many young whipper snappers really are making even bigger sacrifices than their parents and grandparents were required to do just to create a stable and secure home situation.

Another fact is that the current situation is precarious and transient. There are heavily weighted macroeconomic factors stacked on top of house prices at the moment which are going to have to be dealt with sooner or later. I just fail to see how the catastrophe that has been unfolding in the credit markets will not fundamentally change the way things have been done in the housing market the past few years. Essentially, if huge sums of money are not available to fund massive mortgages, prices will fall to match the modest sums that are there.

Count me in as one of the youngsters (young-ish anyway) who have never had an exotic overseas holiday, who spends £10 every 3 months on a pay as you go phone which was a hand me down, who has a pub or restaurant meal once every 2 to 3 months, who does not have name brand clothes (unless picked up on the clearance rack at TK Maxx)... oh and who has no debt... a freakin Toyota Yaris (sexy)... living with my OH & 2 kiddies in my mother in law's home... Dang I just made that list I wasn't going to waste my time doing.

I hope that some of the smug oldies in this thread do realise that priced out FTBs are not necessarily lazy and materialistic. I also hope that the priced out FTBs realise that the situation with house prices is at a breaking point and the long lost partners of wages and house prices will meet once again in the near-ish future.

Good post. We are in crazy territory.

I think also, the older generation tend to forget, they didn't buy ipods, playstations and flat screen tv's, not because they made great sacrifices, but because all these things weren't around. A video player was not cheap. Most people i know would baulk at something like that that was £300, whereas I don't think there's many of them out there if they could have spared it, that would not have bought a £20 dvd player even. The only people who don't have tv's now (that i know of) are those who are morally against them. They are so readily available, we have one we bought, and three that were given to us (we use two, i gave one to granny, one in storage).
They go on about how they never ate out, again like they were making great sacrifices. Nobody ate out back then (unless it was fish and chips), i've been told by various, it just wasn't done. I remember when i was little on holiday in wales when camping, how amazed i was when my parents took me out for breakfast, it was just the strangest thing.

I also remember years ago having to buy an interview outfit for £10 (i'm also 31). I trawled the second hand shops and just about managed it. I think i saw george doing a suit for less than a tenner recently. I hate the phrase - "it was so cheap i couldn't not buy it" btw.

And hang on a minute! how stupid us youngsters are in not realising that these so called oldies have also jumped on the cheap credit bandwagon, and spend like there's no tomorow. They are not more savvy than us. There they all are going "look at you lot, how stupid you all are buying farraris and helicopters, and not being sensible by stretching yourself so much to buy a house, you can bearly afford the oxygen you breath!" I wouldn't mind if they could actually afford all this remortgaging for non essential stuff "oo look brian, we've enough left for an exotic holiday", but a lot of them them have wasted their equity (some i know paid their credit cards off), and if house prices did drop in value, particually as some have remortgaged to the hilt, they could find themselves in serious trouble. And all these raises in equity have been wasted on guess what stupid things that you moan about the younger generation doing (obviouls not the ipods bit). So we'll see just how clever you've all been when credit tightens up and and house prices drop. We'll see how clever the 50 year old cleaner's buy to let empire idea was, that she's subsidising was when it all goes pear shaped. You all sit there from your remortgaged ivory towers! Of course i hate to generalise!;)

And poppy - don't assume your children will see a penny of your inheritance, because it might just all have to go on nursing home fees (i am now in the process of selling grandma's because it has to fund her nursing home fees, as we have no choice).

beachbeth

Zebedee69 wrote: »

20 Years ago you didnt have to loan £20000+ to go to university JUST TO GET A JOB! All you did was go to the nearest factory and ask!

The job situation wasn't quite like this 20 years ago. Maybe in the 1970's, yes. But from the 1980's onwards there would be hundreds of people chasing one job and they were hard to get. I was lucky in that I went for a job as a secretary in a bank, amongst 400 others, and I got the job.

However, I agree with everything else you say. I am worried about my teenagers and how they are ever going to be able to buy a house in today's market. My eldest is at university and will have to pay loans off once she starts work.

The price of houses is ridiculous. I live in a 3-bed semi with no garage and would like to buy something possibly bigger, preferably a detached with a garage or a bigger semi but there is a huge gap between the cost of my house and the cost of a detached house. In the 1980's the gap would have been about £5,000 but now its more like £40,000!