How will the next generation buy?

Joeisaware539

This is a question I think about.
We bought our house 4 years ago and it was a challenge then. 

Do you think the next generation need to come off Instagram and get into the real world? 

I have friends that want to buy a house but would rather finance a car when living with parents just to show on Instagram and Facebook etc?

Joeisaware539

With the way house prices are: our first house we paid £178K we sold it for £301,000. How can anybody on a good salary afford it?

enthusiasticsaver

There have always been people who prioritise other stuff like cars and holidays above buying a house. It isn't for everyone but I imagine people will still be able to do it in years to come.  Depends on area of course and job situation and maybe the bank of mum and dad will be called on to help with deposits where possible. To get a mortgage of £270k on a £300k house (assuming 10% deposit) the joint income would have to be around £60k so £30k each if a couple. Still doable. 

Sounds like your friends are not really bothered about buying a house if they are choosing to spend on a new car instead.  

Thrugelmir

The next generation will do exactly what earlier ones did. If buying a property becomes a want. Make sacrifices and changes to their lifestyle. 

hippocrates1

I think you’re overreacting. Going on a holiday won’t empty your bank account. There are plenty of middle aged people with car finance. You can’t blame young people. 

Having said that I’m a doctor on 50+k and I’m struggling to buy. So god knows how anyone else will manage it!

Joeisaware539

hippocrates1 said:

I think you’re overreacting. Going on a holiday won’t empty your bank account. There are plenty of middle aged people with car finance. You can’t blame young people. 

Having said that I’m a doctor on 50+k and I’m struggling to buy. So god knows how anyone else will manage it!

This is exactly what I mean. 

RelievedSheff

The next generation will do exactly what every other generation has done. Make sacrifices to save for the deposit and then buy something that fits within their budget. This may not be in their preferred location and it may not be the perfect property. But it will get them on that first rung of the ladder.

They can then do as other home owners before them have done and move up to that next rung on the ladder when the time comes.

Buying a first house has never been easy and it never will be easy. Those that want to do it will make the sacrifices to be able to do it. Those that don't want to do it will just sit and moan about house prices being too high.

strawb_shortcake

I think in part, it all depends on where you live, people seem to assume Bristol is expensive yet go to some of the suburbs and it's much more affordable.
People's expectations need to be more realistic, starter homes and flats seem to be a thing of the past, I see many younger people buying their first home and it's no longer a 2 bed house or flat but 3/4 home, this is what a lot of first time buyers aspire too.
Not many people want to make do, credit is to easy and they just want it all now, so what could have been a house deposit turns in to nice fancy things. 
Buying as a couple may be more achievable than trying to buy as a single person going forward unless you are on a really good wage.

My niece bought her first home 4 years ago aged 21, she had been left the £20k deposit as inheritance, whilst that gave her a get out of not having to save her deposit her lifestyle was quite wasteful and if she really wanted to save for a deposit with time and dedication it wasn't far out of her reach, this was with her and her partner earning a joint income of £40-45k. 
They easily spent £5k a year just on takeaways and eating out, plus several holidays a year and weekends away. Nights out, taxis, the cinema at least once a week, her partner had a car on credit so you can see that with different choices a deposit could have been found 

robinsonad86

I think the bank of mum and dad are going to be bigger influences, which will make it harder for people “working class” and below.

I’m in my 30s and never even had a sniff of saving for a deposit until now. Even now buying a house is probably 3 or 4 years away and that will be with help from my girlfriends dad when he takes his early pension. This is partly down to some poor life choices when I was alot younger which I have no problem admitting to, however a huge part is my family background. Council or housing association housing going back at least 2 generations and my parents not having the means or funds to help me even if I asked.

It is getting harder for people from my background to get on the ladder. Perfect example my girlfriends parents home cost them £45k and they are still in it 28 years later. The deposit they needed was minimal the house is now worth aroiund £250k. That was their “first step” on the ladder. For my family (me partner child) we need atleast £25k as a deposit. We earn a good income and arent frivilous however once rent is paid, other household bills and living expenses plus child maintenance to my ex the chance of raising 25k is minimal and decades away. We arent frivilous we dont eat 6 avocados a week or have take out coffee every day. It’s easy to look at one example personal to you and think it’s the same for everyone believe me it isn’t. Stop living in bubbles and see how people are struggling to even put food on tables never mind save thousands to help better their kids lives through property and investment. If you can do that dor your family great but dont think its just a case of “lower class” people not wanting it enough.

I think it will become more of the haves and have nots of your parents can help no problem but those at the bottom will always struggle to get on the ladder. Hopefully I will be one of the lucky ones who can rely on a gift to buy a house which will be our forever home

[Deleted User]

RelievedSheff said:

The next generation will do exactly what every other generation has done. Make sacrifices to save for the deposit and then buy something that fits within their budget. This may not be in their preferred location and it may not be the perfect property. But it will get them on that first rung of the ladder.

They can then do as other home owners before them have done and move up to that next rung on the ladder when the time comes.

Buying a first house has never been easy and it never will be easy. Those that want to do it will make the sacrifices to be able to do it. Those that don't want to do it will just sit and moan about house prices being too high.

The problem is that this simply isn't reflecting reality and doesn't address the problem of house price inflation, the farcical situation in the UK that a house being a year older somehow automatically makes it worth 10% more.

In the 90s - fair to say that's the time the last generation were starting buying (i.e. Gen X born 1965-1980) UK FTB house price to earnings ratio was around 3.4, dipping as low as 2x in the mid-90s (even London was under 3x). Post 2009 crash the numbers have just gone up an up - London passed 7x in 2013, UK average passed 5x in 2014 and even in the North it's been well over 3x since 2011 - no use saying move to the North if there are no jobs available or your industry is not based there. (source). Up the 1980s, mortgage interest used to get tax relief and 2.5x was the normal loan - something a single worker in a family could cover, not two salaries each at or above the UK median salary. Yes in the early 80s mortgages were 14-15% but savings were paying 10% and only for a year (October 1989-October 1990) the base rate was 15% but by 1992 it was in single digits.
Millennials and Generation Z will need to get 10% deposit upwards of 30k saved and a mortgage that is 5-6x combined earnings just to get an average priced house somewhere that isn't a rat infested sinkhole while Boomers and Gen X buy houses to rent out while sitting on houses that have easily doubled or tripled in "value" based on them being older.

The house I live in is owned by my partner, it was just shy of £99k in 2000 iirc, the house next door to us sold for £250k 2 years ago, our house is not worth 2.5x what it was in 2000, if anything, logically, it's worth less - it needs work doing and cosmetic changes that would be nice, but how can you sell it for 100k again when that would stop you getting anywhere on a new house purchase when all the other houses have gone up.

Housing market needs a major crash and bring it down to sensible levels, if it wasn't for the Tories wanting to keep their core voters happy, we could have been building 200-300k houses every year and ideally more, would really bring older house prices down to sensible levels.

RelievedSheff

For there to be a house price crash there has to be some major upset in the economy that forces house prices down. This means economic misery for most people. Are you really suggesting this would be a good thing?

Despite what people think there are large swathes of the country away from the south east where housing really is very affordable for first time buyers and for people moving up the property ladder.

I work with most of the major house builders in my line of work. There is no way that we can currently build 200-300k homes a year in this country. The local authorities and water authorities are just not geared up to get the highways and drainage approvals through on that scale. It just couldn't happen as things currently stand and without major investment these figures for house building are just pie in the sky figures.