Help me understand why house prices and rent won't rise faster than wages forever.

zagfles

CreditCardChris said:

This isn't about London.

We all know that the housing market rises significantly faster than wages and there's no sign of that changing any time soon.

Do we? House prices are lower in real terms than 15 years ago.

jay213

zagfles said:

CreditCardChris said:

This isn't about London.

We all know that the housing market rises significantly faster than wages and there's no sign of that changing any time soon.

Do we? House prices are lower in real terms than 15 years ago.

Could you explain that?

benbay001

Buy a small flat for £100k, £5k deposit.
Use it as a stepping stone and somewhere to build up equity.
If you cant save £5k over 3 years, then quite frankly you arent committed enough to getting your own place.
Once you have lived there for a few years and paid down the mortgage, move up.
Or just moan about it on a forum.

CreditCardChris

benbay001 said:

Buy a small flat for £100k, £5k deposit.
Use it as a stepping stone and somewhere to build up equity.
If you cant save £5k over 3 years, then quite frankly you arent committed enough to getting your own place.
Once you have lived there for a few years and paid down the mortgage, move up.
Or just moan about it on a forum.

OK say I take your advice and live in squalor for 10 years in a little run down flat on a council estate. This won't help me to buy somewhere better later because in 10 years when I sell the flat, the price of everything else has gone up in parallel so sure I can sell the flat for £150,000 but the house which was £250,000 10 years ago is now £350,000...

silvertooth

Maybe property would have risen more than inflation if it wasn’t for recession and crisis like the pandemic the world is facing right now

Retireby40

CreditCardChris said:

benbay001 said:

Buy a small flat for £100k, £5k deposit.
Use it as a stepping stone and somewhere to build up equity.
If you cant save £5k over 3 years, then quite frankly you arent committed enough to getting your own place.
Once you have lived there for a few years and paid down the mortgage, move up.
Or just moan about it on a forum.

OK say I take your advice and live in squalor for 10 years in a little run down flat on a council estate. This won't help me to buy somewhere better later because in 10 years when I sell the flat, the price of everything else has gone up in parallel so sure I can sell the flat for £150,000 but the house which was £250,000 10 years ago is now £350,000...

In 10 years their situation may be completely different. They may have matured and become avid savers. The may have got promotion. They may have found a partner. By heck they may have won the lottery. Nobody can predict where they will be in 10 years but what they can do is make the best of their current situation with the aim of improving their life and situation little by little in the long term.

If this person in 10 years is still working in a minimum wage job because they haven't bothered their !!!!!! to up skill or make more effort in work which could lead to promotion, they haven't saved and basically lived hand to mouth each month then why should they deserve to live in a house that is clearly out of their price range and frankly ambition range?

CreditCardChris

Retireby40 said:

CreditCardChris said:

benbay001 said:

Buy a small flat for £100k, £5k deposit.
Use it as a stepping stone and somewhere to build up equity.
If you cant save £5k over 3 years, then quite frankly you arent committed enough to getting your own place.
Once you have lived there for a few years and paid down the mortgage, move up.
Or just moan about it on a forum.

OK say I take your advice and live in squalor for 10 years in a little run down flat on a council estate. This won't help me to buy somewhere better later because in 10 years when I sell the flat, the price of everything else has gone up in parallel so sure I can sell the flat for £150,000 but the house which was £250,000 10 years ago is now £350,000...

In 10 years their situation may be completely different. They may have matured and become avid savers. The may have got promotion. They may have found a partner. By heck they may have won the lottery. Nobody can predict where they will be in 10 years but what they can do is make the best of their current situation with the aim of improving their life and situation little by little in the long term.

If this person in 10 years is still working in a minimum wage job because they haven't bothered their !!!!!! to up skill or make more effort in work which could lead to promotion, they haven't saved and basically lived hand to mouth each month then why should they deserve to live in a house that is clearly out of their price range and frankly ambition range?

Did you even read my original post? I make £40,000 a year which I consider a decent wage but due to my line of work this is pretty much the max I can earn. Still even with an above average wage I have to live in squalor because the bank will only lend me £190,000 which is just about enough to buy a !!!!!! run down ex council property. How is this ok?

It's ok for you guys who bought your homes when house price to salary ratio was 2x or 3x, now it's 8x! And sure the interest rates are very low which is great but it doesn't help when the maximum you can borrow still only buys you a depressing home. 

I'd much rather pay 15% interest a year and buy a very nice detached house than pay 3% interest in be forced to live in a run down ex council terraced home / flat.

Retireby40

CreditCardChris said:

Retireby40 said:

CreditCardChris said:

benbay001 said:

Buy a small flat for £100k, £5k deposit.
Use it as a stepping stone and somewhere to build up equity.
If you cant save £5k over 3 years, then quite frankly you arent committed enough to getting your own place.
Once you have lived there for a few years and paid down the mortgage, move up.
Or just moan about it on a forum.

OK say I take your advice and live in squalor for 10 years in a little run down flat on a council estate. This won't help me to buy somewhere better later because in 10 years when I sell the flat, the price of everything else has gone up in parallel so sure I can sell the flat for £150,000 but the house which was £250,000 10 years ago is now £350,000...

In 10 years their situation may be completely different. They may have matured and become avid savers. The may have got promotion. They may have found a partner. By heck they may have won the lottery. Nobody can predict where they will be in 10 years but what they can do is make the best of their current situation with the aim of improving their life and situation little by little in the long term.

If this person in 10 years is still working in a minimum wage job because they haven't bothered their !!!!!! to up skill or make more effort in work which could lead to promotion, they haven't saved and basically lived hand to mouth each month then why should they deserve to live in a house that is clearly out of their price range and frankly ambition range?

Did you even read my original post? I make £40,000 a year which I consider a decent wage but due to my line of work this is pretty much the max I can earn. Still even with an above average wage I have to live in squalor because the bank will only lend me £190,000 which is just about enough to buy a !!!!!! run down ex council property. How is this ok?

It's ok for you guys who bought your homes when house price to salary ratio was 2x or 3x, now it's 8x! And sure the interest rates are very low which is great but it doesn't help when the maximum you can borrow still only buys you a depressing home. 

I'd much rather pay 15% interest a year and buy a very nice detached house than pay 3% interest in be forced to live in a run down ex council terraced home / flat.

Considering I'm 30 I most certainly didnt buy my home in the times you are referring to.

What area in the UK are you referring to where a say 1 bed council flat is nearly 200k?

Is it not possible for you to move to another part of the country and find a job in your field?

Was/is it not possible to live with parents/house share for a few years and have a much bigger despoit. If your earning say 30-32k after tax and were living frugally for 2 or 3 years surely you could save half of that. Meaning you could have a 45k deposit instead of say 10-15k.

Could you work overtime to boost your salary or take on a weekend job short to medium term?
It is undoubtedly hard to get on the property ladder as an individual but it often requires huge sacrifice. Either moving area or working 2 jobs. Are you prepared to do that to have the house you want?

CreditCardChris

Retireby40 said:

CreditCardChris said:

Retireby40 said:

CreditCardChris said:

benbay001 said:

Buy a small flat for £100k, £5k deposit.
Use it as a stepping stone and somewhere to build up equity.
If you cant save £5k over 3 years, then quite frankly you arent committed enough to getting your own place.
Once you have lived there for a few years and paid down the mortgage, move up.
Or just moan about it on a forum.

OK say I take your advice and live in squalor for 10 years in a little run down flat on a council estate. This won't help me to buy somewhere better later because in 10 years when I sell the flat, the price of everything else has gone up in parallel so sure I can sell the flat for £150,000 but the house which was £250,000 10 years ago is now £350,000...

In 10 years their situation may be completely different. They may have matured and become avid savers. The may have got promotion. They may have found a partner. By heck they may have won the lottery. Nobody can predict where they will be in 10 years but what they can do is make the best of their current situation with the aim of improving their life and situation little by little in the long term.

If this person in 10 years is still working in a minimum wage job because they haven't bothered their !!!!!! to up skill or make more effort in work which could lead to promotion, they haven't saved and basically lived hand to mouth each month then why should they deserve to live in a house that is clearly out of their price range and frankly ambition range?

Did you even read my original post? I make £40,000 a year which I consider a decent wage but due to my line of work this is pretty much the max I can earn. Still even with an above average wage I have to live in squalor because the bank will only lend me £190,000 which is just about enough to buy a !!!!!! run down ex council property. How is this ok?

It's ok for you guys who bought your homes when house price to salary ratio was 2x or 3x, now it's 8x! And sure the interest rates are very low which is great but it doesn't help when the maximum you can borrow still only buys you a depressing home. 

I'd much rather pay 15% interest a year and buy a very nice detached house than pay 3% interest in be forced to live in a run down ex council terraced home / flat.

Considering I'm 30 I most certainly didnt buy my home in the times you are referring to.

What area in the UK are you referring to where a say 1 bed council flat is nearly 200k?

Is it not possible for you to move to another part of the country and find a job in your field?

Was/is it not possible to live with parents/house share for a few years and have a much bigger despoit. If your earning say 30-32k after tax and were living frugally for 2 or 3 years surely you could save half of that. Meaning you could have a 45k deposit instead of say 10-15k.

Could you work overtime to boost your salary or take on a weekend job short to medium term?
It is undoubtedly hard to get on the property ladder as an individual but it often requires huge sacrifice. Either moving area or working 2 jobs. Are you prepared to do that to have the house you want?

I work 50 hour weeks so no there's not a chance in hell I'm taking a second job even if I had time and I'm 35 years old, I'm not moving back in my with parents.

So this is what it's come to huh? Even when you earn above average wage you're forced to move up North away from where you were raised, where your family and friends live and where your job is just to be able to afford a damn home. Completely pathetic the government has allowed the housing market to become this out of control.

Anyway we're getting off topic here, I actually wanted to know why (economically / socially) that the housing market won't continue to rise above wages forever, becoming more and more unaffordable to the point where people are forced to spend 50% - 75% of their wages on rent.

Retireby40

But where you live obviously 40k before tax isnt really that good. Especially if your working 50 hours a week when a standard contact is 37.5-40 hours. So either that's 40k which includes over time or your hourly wage isnt that great for where you are. If the cheapest house you can get for 200k and your saying that it's a council house in a dump of estate your talking about London. Or very close to it.

So while your above average salary of 40k is above average nationwide how does it compare to the area you live in? I would assume not very well.

I dont know your history or situation and there is no easy answer. If you've been working for say 12-13 years from graduation or whatever you should have a fair chunk of savings. 

You've got a decision to make come onto a forum board crying about the government this and the government that or you can do things within your power to improve your situation. 

I had to work 50 hours a week(37.5 contract 12-13 overtime) for 3 years onto of 10 hours a week travelling. I could only go out once a month with friend for beers. I didnt smoke, didn't eat out too much, didnt have nice holidays. Now I am able to enjoy abit more but I most certainly cant have my cake and eat it.

On the other hand I have a friend who earns slightly more than me, lives with parents, goes out every weekend without fail, buys clothes and goes on 3/4 weekends away to Spain to watch football.

It's all down to the choices you make. Earning above the national average does not entitle you to a lovely detached house unfortunately.