How will the next generation buy?

SpiderLegs

There is no issue with affordability in terms of mortgage payments. The nationwide index is equivalent to mid 1980s levels.
This is primarily a consequence of lower interest rates netting off higher prices.

The difficulty today is deposit levels.
This is due to irresponsible lending by financial institutions and govt policies during the Blair/brown labour govt of the 2000s. This caused a major increase in prices, and the subsequent issues in 2008. 

Today’s issues in deposit sizes is entirely due to that period.
And the maintenance of affordability rates is entirely due to govt action since 2008.

Please do not assume that this is Tory flag waving. It is not. It is however, clearly the case if anyone wants to look at nationwide’s trend data.

Deposit requirements are not significantly different to historic levels, but it is clearly harder to save a larger absolute amount these days.
this is not a single factor issue. There are multiple reasons, including -

More people renting after moving out, more people living alone, more alternative spending, people starting work later....etc

BOMAD balances some of this but that is not sustainable long term if we get another 2000-2008.
HTB schemes are theoretically a good way to go. However, the current method has disproportionately benefitted developers rather than buyers, so needs to be redesigned.
The only long term solution to this is build more housing, which is appropriate to social demographics.
I think the current moves we’re seeing  towards build to rent from volume players in the private sector will increase. A govt supported RTB scheme to transfer these properties from developer to occupant over the longer term can work, but we need to see much greater rolling supply and much more local acceptance of new developments.

csgohan4

RTB reduces housing stock for those in need and can be counter productive. Who benefits? Certainly not those in need, but the pockets of the those who can afford to buy at discounted rates at the expense of the tax payer, then sell it on for a nice profit 5 years on. 

SpiderLegs

csgohan4 said:

RTB reduces housing stock for those in need and can be counter productive. Who benefits? Certainly not those in need, but the pockets of the those who can afford to buy at discounted rates at the expense of the tax payer, then sell it on for a nice profit 5 years on. 

RTB on council owned stock does indeed reduce numbers, mainly because it was purposely intended to reduce numbers. There was never any intention to replace like for like.

I am talking about the possibility of an RTB option being built into future privately funded build to rent agreements, where the developer most certainly is interested in reinvesting in building more properties.

MWT

csgohan4 said:

Life is full of sacrifices and hard work, this won't change whatever generation. It's the perception that changes, that some generations have it easier.

Very true, my parents had a £1500 mortgage when they bought the only house they ever owned, that seemed like a crazy low amount to me when I was buying my first place for £20,000 in the early 80's...

Our children will need to buy at around £350k given where they live and work but they can do that since the multiples that can be borrowed and the salaries they earn still work at that price level.

I'm not saying it hasn't changed, it used to be possible to buy on one good salary but back then the multiples were usually something like 3x the highest salary + 1x the lowest, and 100% or even higher LTV's were available, but now you'd expect to get 4-5x both and in the current climate 90% is as good as it gets and the rates are not cheap at that LTV..

fred246

We sold a family house very cheaply in 2000. I remember thinking that there were just too many houses available and not enough buyers. I think something happened to the UK population in the years that followed.