Will the next generation be able to buy their own house?

BikingBud

itwasntme001 wrote: »

Do not forget that usually people buy a home as a couple - a couple obviously has a lot more purchasing power then a single!! London prices are not a bubble, i do not think they are even that expensive in a lot of areas.

There is nothing obvious in any of this:rotfl:

How much does childcare cost? A family with young children may not be able to afford childcare and mortgages so one has to go.

Childcare

Parents of children under the age of two are paying up to £9,100 a year for part-time childcare,

How much of a dent in a mortgage would that make?

itwasntme001

BikingBud wrote: »

What does many mean? >100? >1000? >100k? Express as a percentage of the population, 8.8 Million, or if we use terms such as median it sorts it out:



I am not suggesting they should have an entitlement but if they cannot afford to buy, and or rent, and therefore cannot live locally, then who will do all those jobs, especially those below the median wage, especially the next generation until they gain experience and increase their worth and earnings potential?

Those that live with their parents, in illegal HMOs, in stealth vans? Or in tied housing, upstairs/downstairs stylee?

So we should decide upon a reasonable definition for affordable and then see where the median income sits in comparison with this.

Why are these stats just focusing on inner London?? Keep in mind there are a lot of council estates in inner London and that will only bring down the median wage.


Also the median wage does not tell the full story - there are many with businesses, many who are pension age or approaching pension age who decide to work in less stressful jobs earning a lot less, many young people who are just starting out in their careers so earn lower wages etc etc. It is no good using median wages for the whole population. You need to provide stats only for those who want to buy a first home.


And do not forget gifts like i have said many times. This will obviously help those who want to buy a lot!!!

itwasntme001

BikingBud wrote: »

There is nothing obvious in any of this:rotfl:

How much does childcare cost? A family with young children may not be able to afford childcare and mortgages so one has to go.

Childcare

How much of a dent in a mortgage would that make?

Usually couples buy a home before they have kids. This means mortgage affordability would not even include child care costs. After they have kids they can afford whatever they can afford in terms of child care costs. After the usual maternity leave, many have the grandparents look after their grandchildren. And child care does not have to cost 9k a year. Many parents have their friends or other family members look after the children for a small cash in hand payment.

robinwales

No.


The ratio of house prices to earnings has only been higher at the height of the 2000s bubble as you can see here https://images.app.goo.gl/FX54cNrm4JGSbfKK9 The long-term average is quite a bit lower. That's not to say that house prices will stay as they are - with a no-deal Brexit who can say what will happen. If prices did fall considerably that might help first-time buyers, but would cause its own set of very bad problems in other areas.


I think your definition of 'normal wage' is very wrong. You are talking about a low wage job. A 'normal wage is probably the average wage which is about £26k a year. people on low pay have never been able to own a house, and they never will.


By way of an example of house prices, I was looking on Rightmove the other day (as one does) and found the old house I used to live in which is just west of Cardiff. I bought it exactly 40 years ago for £28k - a luxury 4 bed detatched village location house. They are selling it now, 40 years on, for £420k. That's 6.6% increase (compounded) every year over 40 years. I don't think wages have increased that much. My second wife and I bought a small cottage in Cambridge in 1990 for £95k, and sold it in 2000 for £132k - a reasonable gain for 10 years. It was on the market last month for £250k!!! In 2000 we purchased our current house (in Wales) for £140k. It's now worth about £400k (we have made no improvements to it) I don't think wages have kept up with that rate of increase. That is why more people are renting.

itwasntme001

The fact is that London house prices are where they are because someone can afford them. If you are trying to find out why they are so high given supposedly low wages, maybe it is you who is looking at it the wrong way.

robinwales

itwasntme001 wrote: »

The fact is that London house prices are where they are because someone can afford them.

London is a very weirdly skewed example. A lot of the properties are owned by investors, many of them from overseas. But your argument is correct even for other places. Evidently Edinburgh has become very expensive recently, and Cambridge (were I used to live) has gone completely off the reality scale, not due to foreign investors but just general expansion. There are a lot of people there who can afford it, but a lot of the poorer ones can't.

ProDave

A few random thoughts.

I grew up in an over priced part of the SE. It was only by the narrowest of margins that I actually managed to buy a house at all, in the mid 1980's only achieved by literally buying the cheapest house for sale in the county in a poor location, borrowing as much as I could, and selling everything possible to scrape together enough deposit, and then several years of a very frugal existance, that few would tolerate these days.

In contrast we now live in a much more reasonably priced area where you can buy a good basic home for £100K or less (far better than the tiny thing I started out with) and a mortgage to buy that should be within reach of an ordinary salary around here.

And by the time my daughter is ready to buy her first house, we will be retired with good pensions and a substantial pot of savings, so well placed to help her buy if needed, contrast to my parents who only had basic state pensions and no savings and could not help at all with my house buying.

So overall I think my daughter is far better placed to buy her own house than I ever was.

And because we didn't have children until a bit later in life than most, she will have the other benefit of a substantial inheritance, and an early enough age that it will be of use to her.

Hectors_House

robinwales wrote: »

No.


The ratio of house prices to earnings has only been higher at the height of the 2000s bubble as you can see here https://images.app.goo.gl/FX54cNrm4JGSbfKK9 The long-term average is quite a bit lower. That's not to say that house prices will stay as they are - with a no-deal Brexit who can say what will happen. If prices did fall considerably that might help first-time buyers, but would cause its own set of very bad problems in other areas.


I think your definition of 'normal wage' is very wrong. You are talking about a low wage job. A 'normal wage is probably the average wage which is about £26k a year. people on low pay have never been able to own a house, and they never will.


By way of an example of house prices, I was looking on Rightmove the other day (as one does) and found the old house I used to live in which is just west of Cardiff. I bought it exactly 40 years ago for £28k - a luxury 4 bed detatched village location house. They are selling it now, 40 years on, for £420k. That's 6.6% increase (compounded) every year over 40 years. I don't think wages have increased that much. My second wife and I bought a small cottage in Cambridge in 1990 for £95k, and sold it in 2000 for £132k - a reasonable gain for 10 years. It was on the market last month for £250k!!! In 2000 we purchased our current house (in Wales) for £140k. It's now worth about £400k (we have made no improvements to it) I don't think wages have kept up with that rate of increase. That is why more people are renting.

My first house was £33k back in the early nineties. We sold it for £116k about fifteen years later. That shocked me. It turns out it was in the catchment area for a good school.

And it keeps going on that way. I got myself mortgage free as soon as I could when I saw how things were heading.

BikingBud

itwasntme001 wrote: »

Usually couples buy a home before they have kids. This means mortgage affordability would not even include child care costs. After they have kids they can afford whatever they can afford in terms of child care costs. After the usual maternity leave, many have the grandparents look after their grandchildren. And child care does not have to cost 9k a year. Many parents have their friends or other family members look after the children for a small cash in hand payment.

There's that phrase many again:)

Usually? Show me the figures as I can just as easily state "but they usually can't afford to then have kids as so much of their income is going towards housing costs!" State the source of, or figures supporting your opinion.

Cash in hand! Unlicensed? Uninsured? Incompetent? Not paying tax?

And I could just add if we want to throw in opinions, if houses were more affordable fewer people would be living with their parents into late 20s, early 30s and then finding that by the time they can afford and they decide they want kids its too late.

itwasntme001

ProDave wrote: »

A few random thoughts.

I grew up in an over priced part of the SE. It was only by the narrowest of margins that I actually managed to buy a house at all, in the mid 1980's only achieved by literally buying the cheapest house for sale in the county in a poor location, borrowing as much as I could, and selling everything possible to scrape together enough deposit, and then several years of a very frugal existance, that few would tolerate these days.

In contrast we now live in a much more reasonably priced area where you can buy a good basic home for £100K or less (far better than the tiny thing I started out with) and a mortgage to buy that should be within reach of an ordinary salary around here.

And by the time my daughter is ready to buy her first house, we will be retired with good pensions and a substantial pot of savings, so well placed to help her buy if needed, contrast to my parents who only had basic state pensions and no savings and could not help at all with my house buying.

So overall I think my daughter is far better placed to buy her own house than I ever was.

And because we didn't have children until a bit later in life than most, she will have the other benefit of a substantial inheritance, and an early enough age that it will be of use to her.

This is just one example of many families in London in similar positions. I am not sure how much your household income is/was, but even families on modest incomes throughout the decades would have saved a considerable amount to then gift to their children. People forget the rising wages of the baby boomer generation, the high interest rates and high stock market returns and put all this together with the power of compounding and you have many wealthy families with the ability to gift hundreds of thousands.