What will average house prices need to fall to for the next generation to buy own home?

AG47

What will average house prices need to fall to for the next generation with normal jobs to be able to buy their own house with about a 5% deposit and a mortgage about 3.5 x income?

Without help to bubble or any other crazy schemes


Either wages need to skyrocket to meet the elevated property bubble, or the long awaited property correction comes.

westernpromise

Why would "average house prices" fall to the level of what a first time buyer with a 5% deposit can afford?

When were FTBs ever able to afford the average house?

The average household has two earners, 45% equity, and access to long mortgage fixes at 2% or so. Prices reflect this.

PasturesNew

It's often not "people" that buy houses, but "people who inherited money", or "people with a huge gifted deposit", or "people who want to buy a BTL with some spare money".

An average house isn't what a FTB buys. They buy a starter home, else what are they for?

AG47

If an normal job for the next generation is around £20K then the bank will give a mortgage for around 3.5 x that, then £70K plus a 5% deposit average property for young first time buyers should be under £80k for the next generation to be able to afford their own homes.

This is the normal long term ratio of property to wages. Then interest rates can be normalised to the long term normal about 7-8% and the emergency temporary 300 year low interest rates won’t be needed anymore because the crisis is over.

Or we can carry on the road we are on and head straight for the next Great Depression almost exactly 100 years after the last one.

spadoosh

westernpromise wrote: »

Why would "average house prices" fall to the level of what a first time buyer with a 5% deposit can afford?

When were FTBs ever able to afford the average house?

The average household has two earners, 45% equity, and access to long mortgage fixes at 2% or so. Prices reflect this.

This is me exactly. Im 32.

AG47, i invite you come and live in Preston. You will be able to afford a house, you will get a job that pays enough for that house and its not too bad of a place to live. A bit wet but if you can get past the temperamental weather it should tick all the relevant boxes for a good standard of living, all be it less than average in terms of national house price and wages.

spadoosh

AG47 wrote: »

If an normal job for the next generation is around £20K then the bank will give a mortgage for around 3.5 x that, then £70K plus a 5% deposit average property for young first time buyers should be under £80k for the next generation to be able to afford their own homes.

This is the normal long term ratio of property to wages. Then interest rates can be normalised to the long term normal about 7-8% and the emergency temporary 300 year low interest rates won’t be needed anymore because the crisis is over.

Or we can carry on the road we are on and head straight for the next Great Depression almost exactly 100 years after the last one.

Youre using a single persons wages.

If youre doing that, ill show you single person houses that are affordable in my area.....

So you cant post rightmove links with restrictions. Just look at Preston on rightmove with a max budget of £80k.

Theres 238 of them in Preston. None are shared ownership or require help to buy.

Again, please come to Preston, youll afford a house. And you can get a job.

lisyloo

AG47 wrote: »

If an normal job for the next generation is around £20K then the bank will give a mortgage for around 3.5 x that, then £70K plus a 5% deposit average property for young first time buyers should be under £80k for the next generation to be able to afford their own homes.

This is the normal long term ratio of property to wages. Then interest rates can be normalised to the long term normal about 7-8% and the emergency temporary 300 year low interest rates won’t be needed anymore because the crisis is over.

Or we can carry on the road we are on and head straight for the next Great Depression almost exactly 100 years after the last one.

It's never been normal for a single person to buy a home on their own (I'm not saying there aren't exceptions).

And contrary to popular belief it's not historically normal for women to stay at home it was an exception. During most of history women have worked even with no maternity leave until modern times.


Double your figure and you could get a starter home in most places in the UK even in Luton which is not the nicest place in the world but commutable to London.


People who can't afford to buy should look to move.
If they don't want to move for whatever reasons then they should accept the priorities they've decided upon and quit moaning.
There is nothing less attractive to new partners, new employers, new friends and investment partners than continuous negativity.
If the moaners want to quit being losers they need to stop moaning and start graftnig.
Moaning does not beget success, grafting does.
All of the people no their boards who done well have done so grafting.
Those who think it's gifts and inheritances are in denial about their own failures.

Crashy_Time

Sterling crisis anyone? Will they be forced to raise rates? That should put the cat amongst the mortgage pigeons.

lisyloo

Crashy_Time wrote: »

Sterling crisis anyone? Will they be forced to raise rates? That should put the cat amongst the mortgage pigeons.

This doesn't have to be an issue.
People can just get a fixed rate mortgage, in fact many people already have.


They might have to grow their own veg and get a wind turbine in which case they are better off with a freehold house than a rented flat.
Once again (as always) those who invest and graft are the winners and the moaners are the losers.

Crashy_Time

lisyloo wrote: »

This doesn't have to be an issue.
People can just get a fixed rate mortgage, in fact many people already have.


They might have to grow their own veg and get a wind turbine in which case they are better off with a freehold house than a rented flat.
Once again (as always) those who invest and graft are the winners and the moaners are the losers.

But future buyers will have to fix at a higher rate, how does that help someone hoping to cling on to bubble price gains now? There is no "graft" in buying just before a credit bubble takes off to the moon and expecting the returns to always be there.

westernpromise

How's the BCR Crashy? When's the 130% price crash coming that will finally put your catastrophic STR bet of 23 years ago into the black?

I'd love to see a 130% price crash. It would mean, if I sold my £1,300,000 house, that I'd have to sell it for £0 and leave £400,000 behind in an envelope for the next owner to find. On the other hand, I could buy a £10,000,000 mansion for £0 and the seller would have to leave me £3,000,000 in my envelope!

Sounds great! Bring on the 130% price crash, Crashy - you'll finally break even from shorting property, and I'll get a house upgrade and a load of free money*!

* unless real life's not like that, obviously