What makes you think housing is going to become ''easily'' affordable?

mitchaa

Turnbull2000 wrote: »

If you believe wanting a lower cost of living is "warped", then I suggest you leave MSE.



Umm, how will everybody afford two if the mortgage finance on offer fell 40-50%?

He will have twice as much disposable income surely.

If his £180k mortgage costs him £1500 just now and he is paid £2500 salary then he has £1000 left over.

If his £90k mortgage costs him £750 and he is paid £2500 salary then he has £1750 left over

Either way, he still has £750 to invest. (Probably in a 2nd property as a BTL)

Banks are reducing the LTV, NOT the income multiple.

cupid_s

Dan: wrote: »

I wouldn't take too much notice of the nonsense that is sometimes aired in this forum.

It is always going to be difficult to buy your first home, but that has always been the case - it makes me laugh when some people reckon it was a piece of p!ss to buy a house 10/20 years ago.

These days FTB set their expectations way to high. They come out of Uni, get a job with a salary of 25K and expect to be able to buy a 3-bed semi with a double garage. When they discover they can only afford a 1-bed in a less desirable area of town they complain they are priced out of the market.

Start at the bottom.

I just compare prices now to when my parents bought, though this was 35 years ago! They didn't go to uni, and had less than average wages but their first (and current) house was a large 3 bed semi in a nice area bought when they were 20/25.

So why, when DH and I earn significantly more than my parents did and have a much larger deposit, should we not want to buy an equivalent house?

boinging_2

mitchaa wrote: »

He will have twice as much disposable income surely.

If his £180k mortgage costs him £1500 just now and he is paid £2500 salary then he has £1000 left over.

If his £90k mortgage costs him £750 and he is paid £2500 salary then he has £1750 left over

Either way, he still has £750 to invest. (Probably in a 2nd property as a BTL)

Banks are reducing the LTV, NOT the income multiple.

Plus two lots of buying costs, arrangement fee's, maintainence costs etc etc...

mitchaa

And before you say the obvious, i very much doubt banks restricting lending to 50-60% LTV criteria otherwise no-one would get on the property ladder.

I doubt it will move much from the current 90-95%

But my guess is only as good as yours

Dan:_4

cupid_s wrote: »

I just compare prices now to when my parents bought, though this was 35 years ago! They didn't go to uni, and had less than average wages but their first (and current) house was a large 3 bed semi in a nice area bought when they were 20/25.

So why, when DH and I earn significantly more than my parents did and have a much larger deposit, should we not want to buy an equivalent house?

if you can afford it, you can buy an equivalent house.

PasturesNew

When my sister/brother in law bought in the late 70s they were young professionals, mid-20s. They had saved their deposit up.

They had to meet with the manager of the building society lending them the money and he then took their savings book from them as the deposit (to make sure they didn't spend it). They had no credit cards or other debts.

They were allowed to borrow a MAXIMUM of:

[2.5x largest salary] + [0.5x smallest salary]

Now think ... if everybody was limited to that and always had been ... how much would houses be valued at now?

boinging_2

mitchaa wrote: »

And before you say the obvious, i very much doubt banks restricting lending to 50-60% LTV criteria otherwise no-one would get on the property ladder.

I doubt it will move much from the current 90-95%

But my guess is only as good as yours

They already have moved to 75% for the best rates (or should I say rates that were available across the board in 2007).

nicola1982_2

At 25 you should remember pre the housing boom. I know at 18 I could afford a small 2 bed terrace on a single entry level income. Today it would take at least 3x that salary to afford the same house. Entry level salaries haven't tripled since 2000/01. So houses have been affordable in the past.

abaxas

cupid_s wrote: »

I just compare prices now to when my parents bought, though this was 35 years ago! They didn't go to uni, and had less than average wages but their first (and current) house was a large 3 bed semi in a nice area bought when they were 20/25.

So why, when DH and I earn significantly more than my parents did and have a much larger deposit, should we not want to buy an equivalent house?

It's called democracy.

In any democratic state, the goverment panders to the largest demographic. You parents are in the largest social group (ie baby boomers) hence policy will be tailored to their needs. Higher house prices makes them feel weathly, free bus passes etc etc.

You are in a smaller social demographic hence cannot compete with your parents, hence you are discriminated against via the democratic process.

Turkeys dont vote for christmas etc. Your parents generation are plucking you to pay for their retirement. :eek:

LittleMissAspie

mitchaa wrote: »

A FTB couple with an ''average'' today mortgage of £125,000 will then be able to jump straight onto the ladder into an average 3bed semi detached home and skip the 1bed/2bed flats/terraces/maissonettes etc below them.

Yes that is exactly what has happened in the past. I fully agree that 50% drops seem way over the top but lets look at the following two examples.

1. Woman I work with, bought her first and only home with her husband when they were around 20-21. It's a 3-bed semi detached and they are both on lower than average wages. This would have been maybe 14 years ago. They finished paying the mortgage on it last year.

If we assume they were on the equivalent of 20k each (seems about right for a lower paid 20 year old today) then they would have paid 120k at 3x joint salary (I believe that past criteria was something like 3x one salary plus 1x second salary, so could have cost as little as 80k). The two houses currently for sale in their road are 175 and 185 on Rightmove. So would have to drop 33% to 120k or 55% to 80k.

2. In 1997 my sister bought her first home, a 2-bed flat in South East London. She was a single Social Worker and the flat was 3x her salary at 60k. Today that flat is worth some 250k. She has progressed in her Social Work career but I doubt she earns more than 35k. So her flat would have to fall to 105k (or less because I am comparing junior and senior salaries here) to be worth the same as it was in 1997. That's a 55-60% drop.

The percentages seem outrageous but when you look at the numbers, I wonder if those crazy drops are possible after all.