For those who think we had it easy...

Running_Horse

Thanks for clearing that up, it is amusing how abusive some people get when you tell them a simple truth. Most the threads on here claiming they can't afford to buy a house, turn out to really be saying they can't afford the house they want, in the area they want, at a price they are willing to pay. Which is a slightly different thing.

Anyone not borrowing 4 times income, saving a deposit, doing overtime or a part time job, cutting back, looking further afield, or living modestly, is putting themselves at a disadvantage to thousands who are willing to do that.

If they decide such things are not for them in the current market then I respect that decision, it could turn out to be very wise, just don't tell me its not possible for those determined to make it happen.

carolt

Running_Horse wrote: »

Anyone not borrowing 4 times income, saving a deposit, doing overtime or a part time job, cutting back, looking further afield, or living modestly, is putting themselves at a disadvantage to thousands who are willing to do that.

You're welcome.

Still disagree with the above paragraph - I'd be inclined to say that those who choose to enjoy their lives now and not encumber themselves with unrealistic levels of debt at this point in the economic cycle are putting themselves at an advantage - both in terms of their present quality of life and their longer-term home-owning potential. I would argue that those who stretch themselves to buy now - which we both agree they would have to do, by saving like mad, downsizing, getting extra jobs etc etc - will actually be in a far worse position longer term than those who haven't ie facing negative equity, possibly trapped in a too-small place and unable to take advantage of any of the (relative) bargain prices out there as they cannot sell their existing property at all or without incurring heavy losses.

I did have another look back at your original post, but we obviously read it differently - to me, the moral to be drawn from the example quoted was not that 'buying houses has always been hard' but that 'buying houses AT THE PEAK OF THE MARKET JUST BEFORE PRICES CRASH is hard' - and with that, I am happy to agree.....

Turnbull2000

This thread seems to be going round in circles! Whether it's currently harder than ever to get started perhaps is open to debate. But what isn't debatable in my view, is that if you stretch yourself now, then prepare to be stretched for a very, very long time.

Running_Horse

And if you wait for the day when you can buy a property in London or the south east on 3 times your income, then be prepared to be waiting for a very, very long time.

Running_Horse

carolt wrote: »

You're welcome.

Still disagree with the above paragraph - I'd be inclined to say that those who choose to enjoy their lives now and not encumber themselves with unrealistic levels of debt at this point in the economic cycle are putting themselves at an advantage - both in terms of their present quality of life and their longer-term home-owning potential. I would argue that those who stretch themselves to buy now - which we both agree they would have to do, by saving like mad, downsizing, getting extra jobs etc etc - will actually be in a far worse position longer term than those who haven't ie facing negative equity, possibly trapped in a too-small place and unable to take advantage of any of the (relative) bargain prices out there as they cannot sell their existing property at all or without incurring heavy losses.

I did have another look back at your original post, but we obviously read it differently - to me, the moral to be drawn from the example quoted was not that 'buying houses has always been hard' but that 'buying houses AT THE PEAK OF THE MARKET JUST BEFORE PRICES CRASH is hard' - and with that, I am happy to agree.....

Let me clarify that paragraph then.

If prices do crash quickly, then yes you are right, as I have acknowledged, you would be better to wait. So why don't they wait and save, instead of coming on here complaining about it as if it is our fault, or as if we can do anything about it? And doing this at the same time as saying they can't even save a basic deposit.

Of course if prices don't crash, and there are not yet the numbers needing to sell as in the early 90s, then someone (say in his mid 30s) who waits and waits, may find he is too old before conditions become more favourable. In a free market, there will always be someone more willing to go that little bit further.

IveSeenTheLight

carolt wrote: »

I'd be inclined to say that those who choose to enjoy their lives now and not encumber themselves with unrealistic levels of debt at this point in the economic cycle are putting themselves at an advantage - both in terms of their present quality of life and their longer-term home-owning potential.

Let me start by saying I agree that in some areas (maybe the majority at the moment) it is probably not the best time to buy

Referring to your above paragraph I have a question for you.
You type about people choosing to enjoy their lives now and not encumbering themselves with unrealistic levels of debt. I was wondering why you did not buy earlier?

From reading some of your posts it would seem that you are of a similar age to me, maybe even slightly older (I'm 34), therefore I am wondering why you did not buy 10 years ago. Was it because you chose to go out and enjoy yourself?

I was a FTB 7 years ago of a nice little 2 bed flat, I moved 3 1/2 years ago to a 4 bedroomed house and possible could be mortgage free within the next 2 years. I have still enjoyed my life so far, although I admit I was not down the town / pub every weekend.
I made a concious decision to be the sole owner of my property as soon as possible and made decisions on how I could maximise this.

I guess the point is, it would seem that we are of similar age, but have made different decisions in our lives. I aim to be mortgage free in 2 years, while you will possibly just be starting your mortgage if the house prices drop to meet your required levels. We are from the same generation and have lived through the same economic timeline so no need to compare now with the 80's.

People will make decisions they think are best for them and rightly so. There's just no point moaning about how hard it is when the options are there and have always been there

TTMCMschine

You cant just compare interest rates of 15% for a brief spell in the 80's to historically low interest rates today & claim it was harder back then.

Firstly, 15% on a house price of £60K was better than 5% on a house priced at £200K today.

Secondly, although wages have gone up in that time, so have costs of living. We now pay more in tax than at any point since the war (the second world war that is), and food, fuel - the basics are more expensive in real terms, so disposable income is lower - making buying large value items like houses harder. Hence why so many people borrow so much money.

Finally, interest rates won't be this low forever - inflation is on the rise again (& would already be much higher if it wasn't for certain goods being conveniently removed from the inflationary basket), so what happens when over extended people with huge mortgages & other debts are suddenly faced with 7-8% interst rates?

They all default & go bankrupt, banks, building societies, pension funds & other financial institutions have to write off huge bad debts, people stop spending money, companies see their income & profit drop like a rock, the stock market gets hammered, people get laid off, & the economy in general goes pop & we ALL suffer as unemployment suddenly rockets, theres little money in the economy, & we have a depression for 5-10 years where everyone struggles. The Northern Rock is just thetip of the iceberg & some banks will go bust.

Its all been caused by poor finacial & economic policy of the Labour govt. & we're all going to feel the pain for a very long time. There is no magic pill to make it better or to avoid it, so saddling yourself with huge debts is idiotic.

Its far worse today than its ever been, you just cant see it yet.

Turnbull2000

Running_Horse wrote: »

And if you wait for the day when you can buy a property in London or the south east on 3 times your income, then be prepared to be waiting for a very, very long time.

Who's expecting 3 times income in London or the South East? Not even those on HPC.co.uk are expecting that.

Is this combined or single? If single, then as you know, both regions are far beyond your much preached 4 times income. So what's your point?

Running_Horse

Turnbull2000 wrote: »

Who's expecting 3 times income in London or the South East? Not even those on HPC.co.uk are expecting that.

Is this combined or single? If single, then as you know, both regions are far beyond your much preached 4 times income. So what's your point?

lieutenant_dan wrote: »

He claimed he could still do a non standard (over 3 and a half times salary/mortgage multiple) 4 or 5 times salary mortgage

My point does not need clarifying, so here it is again:

And if you wait for the day when you can buy a property in London or the south east on 3 times your income, then be prepared to be waiting for a very, very long time.

carolt

IveSeenTheLight, I refer you to post no. 161.

Running Horse, I think it all depends on where you see the property market heading in the short term as to which of us is right.

I am 100% convinced that prices will fall in the short term and do actually believe that multiples of 3-4 times income in London are quite feasible - as property is an illiquid investment, and people wouldn't willingly sell at those levels unless seriously distressed, I'd expect it to take a few years though - predictions of 40% drops in one year seem unlikely to happen to me, but over a few years perfectly possible. Look at how price falls are gathering pace in America, despite there being no problems with economic fundamentals. They have suffered from similar speculation and similar lax lending conditions to the UK, and I fully expect their experience to be mirrored here.

I am happy to base my own decision to NOT buy at the moment on my judgement.

Likewise, you and those such as IveSeenTheLight obviously have decided that longer term, at least, prices will continue to rise. Longer term, you may be right but that is where the difference in our circumstances matters. I would be buying at the peak of the market without the benefit of having previously built up equity from rising house prices. I would be one of the first to suffer - really suffer - if prices fell. You, however, have a substantial cushion of equity to shield you, and would face substantial selling charges if you did choose to sell now - so staying put makes much more sense for you than me entering the market as a FTB would for me. In that sense we are comparing apples and pears. I am not of the opinion that all existing owners should sell up now! - far from it, unless they have vastly overextended themselves and realising profits now is the only way to stave off imminent bankruptcy - but I am of the position that FTBs are well off out of it until prices have fallen a lot.

You are right, Running Horse, that those of us who choose to sit and wait for prices to drop will be a few years older by the time it has happened - but given that the resulting quality of life gained from NOT buying at these prices will be so much better, I'm prepared to make the 'sacrifice' of not owning my own home in order to enjoy that. Life need not stop just because you are not a homeowner. Obviously, some on here fear that unless they can buy now at a reasonable price, their lives need to be on hold. I would disagree with that and urge all would be FTB's to enjoy the strange historical anomaly which currently makes it cheaper to rent than to buy, enjoy your landlord subsidizing your monthly costs and stop worrying about buying at all at these levels. The sacrifice involved in buying at the moment would be very real and stay with you for many, many years to come.