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

lisyloo

Nothing to be sorry about, I was just pointing out that expecting to have a family home instantly is sometimes (not always) related to entitlement.

Many people over the generations (including boomers) have started off with smaller houses and hand-me-down furnishings.

Yes if 3 beds are affordable then that’s probably ideal straightaway but some people in some areas might need to go up the ladder more slowly.
It’s far better to make slow progress than none at all.

Im in my 50s now and I’ve done the right things partly by luck.
The “snowball” effect is pretty startling when you get to the stage that your pensions and house earn more than you.
We ought to teach this in schools.

spadoosh

lisyloo wrote: »

Nothing to be sorry about, I was just pointing out that expecting to have a family home instantly is sometimes (not always) related to entitlement.

Many people over the generations (including boomers) have started off with smaller houses and hand-me-down furnishings.

Yes if 3 beds are affordable then that’s probably ideal straightaway but some people in some areas might need to go up the ladder more slowly.
It’s far better to make slow progress than none at all.

Im in my 50s now and I’ve done the right things partly by luck.
The “snowball” effect is pretty startling when you get to the stage that your pensions and house earn more than you.
We ought to teach this in schools.

I was just pointing out that in some areas of the country an above average occupation (doctor) cant afford an average house(3 bed semi). Thats the fundamental problem with our housing market.

Theres nobody in Preston who complains about house prices, not a single person. If you work full time and are in a couple you can afford to buy a decent house. Conversely, the south east, every one complains about house prices, the situation is youve either inherited money (through property value increases or actual inheritance) or youre in the top percentage of earners to be able to afford a property.

And what you say of boomers is tru of other generations. Some will cut their cloth, others wont. Should i consider myself hero worthy because i bought a £40 returned washing machine (hadnt remove the transit bolts) and am still using the sofa my parents donated to us after being here for 8 years? My wife just says im a tight !!!! buuuuuttttt mortgage free at 40 is the goal.

A lot of what i learnt in schools is out of date now. One thing that seems to have followed suit with that is that houses earn money (or anything other than a few percentage return)
Bought for £104k, 8 years later its apparently worth £121k (2% per year... and getting beat by inflation).

Last time i checked my pension based on minimum contribution from the auto enrolment scheme im due to get about £2.5-3k per year. As mentioned earlier im desperately waiting for the terrible days of high interest rates to come. Its absolutely essential for me to be able to retire.

AG47

lisyloo wrote: »

That’s not optimism.

We don’t get downturns without other significant economic effects (mainly bad) including sometimes people taking their own lives.
That is not optimism.

It’s unicorn thinking that the housing market can take a significant downturn without people, jobs and the economy being badly effected.

I’m not saying it can’t happen but that it’s not optimism.

It is optimistic to think that broken markets will correct

lisyloo

AG47 wrote: »

It is optimistic to think that broken markets will correct

You’ll only get a correction is bad circumstances for a lot of people.

Jitter

spadoosh wrote: »

A lot of what i learnt in schools is out of date now. One thing that seems to have followed suit with that is that houses earn money (or anything other than a few percentage return)
Bought for £104k, 8 years later its apparently worth £121k (2% per year... and getting beat by inflation).

I think that the view that houses are for making money came at about the same time as the new millenium with a rising market and the popularity of "Location, Location" etc.

I always saw a house as a "home" and a welcome change from some dire rented properties rather than an "investment".

We bought our first house in 1990 for £40k, sold it in 1998 for £38k, average inflation in that time just over 4% and it took us 18 months to sell.

But that was all proportional and the price of the house we moved into (still here now) had dropped as well.

The value has gone up since then of course, but unless I sell up and move to a cheaper area there's no extra cash in my pocket.

spadoosh

Jitter wrote: »

I think that the view that houses are for making money came at about the same time as the new millenium with a rising market and the popularity of "Location, Location" etc.

I always saw a house as a "home" and a welcome change from some dire rented properties rather than an "investment".

We bought our first house in 1990 for £40k, sold it in 1998 for £38k, average inflation in that time just over 4% and it took us 18 months to sell.

But that was all proportional and the price of the house we moved into (still here now) had dropped as well.

The value has gone up since then of course, but unless I sell up and move to a cheaper area there's no extra cash in my pocket.

You just talked about snowballing and property, that sounds like an investment to me. And im not sure the sentiment of what youre saying matters that much. Lets say i bought microsoft shares in the 80's the reasoning behind buying those shares doesnt matter, i mean i couldve liked the logo and you just need to pick a company you like the logo of and youll make billions too? It doesnt really work like that.

My parents bought their first house at about 35, mid 90's. They sold it two years later for £60k having paid £32k. They then bought a house for £60k and sold it in 2002 for £104k. Bought a house for £98k and then sold in 2015 for £165k.

So in 20 years they went from having £3200 in wealth for the deposit (im deducting what are essentially non assets, so things like cookers, basic cars, clothing, jewellery etc all of minimal value). Now lets assume they stuck with the initial mortgage and its all still outstanding, theyd have a wealth of ~£136k. Thats a 4150% increase in their wealth. It was a 3 bed basic terrace house, to a basic 3 bed ex council semi to a 3bed semi bungalow.

I get my views will be skewed slightly having that on my doorstep but its really difficult of me to think that this isnt fairly widespread. Also during that time, they had average incomes, my dad was a Sgt in the army and my mother for the most part SAHM with the odd bit of part time work. Also during that time, we went away every single year without fail. I got bought playstations and PC's for christmas. There where newish cars ever 4/5 years, i wore branded clothes, somehow my dad managed to save hard for his pension which means he can now take home as much as he ever earned actually doing his job.

Now us spend thrift millennials. Have houses that increase in value by a few percent a year, have inflation that sits higher than wage inflation and property inflation. Have pensions that are incredibly affordable and funded, its just they pay sod all out well because there isnt 20% interest rates boosting them or defined benefit schemes knocking around anymore.

All the good while you had it offers are finished, weve had to gro up a bit and be a bit more prudent economically. For the last few decades weve had an insatiable desire to vote in governemnts who kept offering free stuff without ever stopping to think how things could be paid for. And the people who did this have temerity to suggest that young people cant afford things because they like avocados and coffee or need a 3 bed semi, its ludicrous.

People as a whole can be really really good or really really rubbish and they can even be both. Its not dictated by the generation you where born in to. We can pull out anecdotal evidence all day long but it doesnt change that theres a supply issue in the housing market leading increasing demand and thus increasing prices. This will (and is) price more people out of the property market. You either need to get fewer people wanting to buy property to the levels of how many houses were building now or you need to increase the number of builds to meet current demand.

One of the big issues im seeing with this, at least locally, is that the numbers seemed to be aimed nationally and forego any local thikning. Eg weve got thousands upon thousands of houses being built in a pretty cheap area as it is. Whilst great for drilling prices down locally, its doing nothing for the massively overpriced and massively in demand areas that are desperately in need of new houses in the south of the country. Maybe HS2 will make regional variations moot, im not convinced though.

spadoosh

Ive just worked out to get the same wealth creation ill need to be in a £3.7 million house in 20 years.

seven-day-weekend

Round here on the West Midlands/Staffordshire border, a decent house can be purchased for £150k or less:

https://www.rightmove.co.uk/property-for-sale/property-60597714.html
https://www.rightmove.co.uk/property-for-sale/property-72373072.html

However, 10% deposit (£15k) may be unaffordable to some people. Mortgage £706 pcm which should be do-able for most couples.

Hectors_House

I’ve never been able to buy on my wage alone.

The two mortgages I’ve had were joint with my sister.

We managed to get ourselves mortgage-free at last but that factors in both of us being able to work full time with no career breaks due to both being childless.

First house back in 1990 had a mortgage of £33,000 with interest rate of about 16%. Sold in 2005 for £116,000. Second house taken on in 2009 with a mortgage of £62,000 - a repossession that took £11,000 to put right. Probably worth £150,000 on a good day with the wind in the right direction. Wages veered between £18,000 and £23,000 at their best. The first mortgage was taken on when was earning £6,000 a year full time.

I don’t see how one person, working full time even on the so-call average wage of £26k could afford it unless they are able to take on a repro or a real doer upper.

PasturesNew

I think, years ago, if you were starting out and looking at studio flats and 1-bed flats you were much more likely to find more available for sale. These days you're more likely to be the only owner/occupier in the block because it wasn't until about 1997/98 when ASTs started to be used that lenders were happy to lend to BTL LLs. Before that they would struggle to get tenants out as they had more rights. Since then they've lent on the basis that tenants can be evicted with a Section 21 if the lender needed to repossess.

That hasn't helped because it has lead to many people retaining their first home to let it out - and many more wealthier people buying up studios/1-beds as investments.

If one could afford a home back in the 1980s, 1990s, then the living experience was more likely to have been a better one, knowing that it was highly likely most of your neighbours were also owners with a vested interest in living a good life/maintaining appearances.

A lot of the bottom end of the market these days you'd not want to touch with a barge pole to be saddled with!