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To wonder how people are going to actually buy houses?

(391 Posts)
slatternlymother Tue 29-Jan-13 09:08:56

There's going to be a whole generation that can't, isn't there?

What about those people who rented due to circumstances/not knowing if they wanted to live there long term/work commitments etc, and then hit the wrong end of the financial crisis?

We rent, and have (luckily) really well paid jobs for our age. We are 25, and between running a car, putting DS through nursery, and just living, I doubt we'll have enough of a deposit to buy anything reasonable before we're 30. 28/29 at an absolute push. And that will be pressuring us to make a choice on where we're going to be living, but we won't be able to leave it much later because otherwise we'll be tied up in a mortgage forever.

But we are so, so lucky. Actually, it was blind luck that got us here.

And if we're struggling, how the hell is everyone else coping? Tbh, I'd happily rent all my life, but I worry about retirement age and no longer being able to pull in a decent wage.

AIBU to think that long term, more and more elderly people will have been in rented accommodation their whole lives, so when they do retire; they're going to have to fall back on the state, aren't they? To put them up in council accommodation?

Isn't this just a massive time bomb for the future?

Sorry for rambling thoughts, I just have been thinking about this quite a lot recently blush

fridgepants Fri 01-Feb-13 08:18:28

OP isn't saying that they can't buynwhere they want. They're saying they are unlikely to be able to buy. At all.

Also, house sharing isn't a new phenomenon, no, but people doing it in their 30s and 40s, or with resident/visiting kids (guy in DP's old place had his kids visit every other weekend, it was a bedsit so not sure where they slept) is. People on decent salaries or without expensive habits. Because rents and deposits are so expensive. I'm not sure why this sounds so unbelievable.

ILikeBirds Fri 01-Feb-13 09:53:46

So many people seem to assume that if you think the current housing situation is a problem it's because it affects you personally. I have a house, bought a couple of years ago, I still think the way people are priced out the current market is ludicrous and unsustainable long term not to mention hugely damaging.

expatinscotland Fri 01-Feb-13 09:56:54

'Could say the same to you though, you've been spinning the same yarn for at least 5 years !'

Yes, and I'm actually I'm alright, Jack. Just actually have concern for other people and, oh, yes, don't live in Australia!

But continue on bringing up things from years ago, and other threads. That always makes for great amusement from HQ.

expatinscotland Fri 01-Feb-13 09:58:15

I don't hide behind name changes, either, but hey ho! hmm

mondaytuesday Fri 01-Feb-13 11:51:35

An interesting topic,I have just registered to give my view. Im mid 30s and rent and always have done. My response to some of the views on here,

Buy somewhere cheaper!
Prices vary across the country, and that's for a reason. Up until the inevitable crunch in 2008 prices were flying up as people borrowed as much as the banks would lend them. They went up higher in places where higher loans were available, and that was governed by local salaries. You can buy somewhere cheaper yes, but in order to live there you will have to work somewhere that pays you less. That will not make them more affordable. If you buy further out of london for example the commute will take care of any saving you could make. If you are not yet retired prices are just as unaffordable all over the country.

Other people are buying whats the problem?
The number of properties changing hands has halved since the 'crunch'. Those that are buying for the first time, and this is what we are talking about here, usually do so with money given to them by family. That obviously disadvantages those without that option, and can cause family strife for those that take that option. People that buy without help are stretching themselves, and in most cases I would say they are being irresponsible with their and their families financial future. Interest rates are low, they can only go up from here. The base rate may well stay at historical lows for the foreseeable future but the cost of a mortgage is going up regardless. When people stretch to just about afford a low fixed rate they are storing up real problems for themselves when the rate on offer is higher later on. Who can claim to be responsible when taking such a gamble with their families home. In my view right now most people buying for the first time are those that cannot afford it.

It's always been hard, I did it, just work harder!
This view is usually based on ignorance of the current situation. Thats ok, you don't have to follow the market and keep up to date but if you're judging other people you would look less foolish were you to first at least gain some idea of the current situation. And to those who say it was hard before so what's changed? I would simply point out this.. if you struggled before this bubble, understand that it is now much harder. A greater struggle than yours. Also consider the point that it is actually possible for something to be unaffordable. If houses were a billion pounds each the advice to save up like you did is plainly not going to help. They aren't a billion pounds each, but there is a level at which they cannot be purchased. What would the market look like if that level had been reached? Look around you, what does the market look like today?

Times are tough, it's hard for everyone and people are just getting on with it!
It is not hard for everyone. If you have already bought your costs are a lot lower than someone renting. That is not because you are clever and deserve it, it is because of the luck of when you were able to buy. You can't help your birthdate and those born later have much reduced social mobility now.

The priced out have every right to be angry at the way this market has been allowed to get out of control. The banks lent too much from 2001 to 2008 and house buyers borrowed too much. It was never sustainable, prices cannot just gallop up and up relative to earnings and their not be consequences. A renting life is of a much reduced quality compared to that enjoyed by a mortgage holder. I for example know that I will never have children due to this crisis. I have to move whenever a landlord decides to sell my home. I have been evicted several times, and yet I have always been a good tenant and paid all of my bills on time.

For some of you to pretend their is no problem is insulting. I hope to emigrate, but it might be too late for me. If you are in your 20s I urge you to look into that option.

Mosman Fri 01-Feb-13 11:56:47

And where exactly do you plan to emigrate to that you think might be the answer to your problems ?

MummytoKatie Fri 01-Feb-13 13:20:10

Mondaytuesday I don't think you are quite right about house prices throughout the country being completely proportional to salaries. I live in the North and people with equivalent sort of jobs to those who have said they will never be able to buy in London do seem to be getting themselves on the property ladder.

It's not utopia by a long way - I work for a company that is the only one you can do my job in for 50+ miles (in London there are 20+) which makes restructures terrifying and salary negotiations less successful than I'd like - but life does seem to be easier here.

olgaga Fri 01-Feb-13 14:10:22

According to the Council of Mortgage Lenders loans to first time buyers have increased by 6%, and two thirds of them get parental assistance from their baby-boomer parents.

So it seems that the benefits gained by the baby-boomer generation are being shared with the younger generation.

Without FTBs there is no property market - so it makes sense to help your children if you own a property you hope to downsize.

But don't be too hard on the baby-boomers! I'm in my 50s and most people when I was young had to move out of home into a grotty room in a shared house. I lived in one where the cooking facilities were on the upstairs landing! No-one I knew was able to buy a house until the late 1980s when the financial markets were deregulated - and single people (especially women!) couldn't even dream of owning their own property before then.

House purchase activity increase driven by rise in first-time buyers

However, almost 40% of property buyers don't need a mortgage anyway - which is why prices have been pretty stable while wages have fallen in real terms over the past 5 years.

I think the only way forward for those without a large deposit is to move to cheaper area, shared ownership or rent to buy.

GrimmaTheNome Fri 01-Feb-13 14:12:40

ILike - yes - I'm 52 and in the north, so we were able to buy without much difficulty and we've just inherited MILs house - and as I've said, I think prices still need to drop considerably. I don't like living in a country where young families have such a hard time getting established - even though my own DD should be ok (as we have an asset worth, whatever the markets do, One House) - 'I'm all right Jack' isn't a nice attitude.

That of course is horrible for people who stretched themselves to buy, and end up with negative equity - but this is what always happens, this is the third bubble I've seen. People never seem to learn from history and this time round the banks made it worse (I suspect that many building societies converting to banks didn't help)

noddyholder Fri 01-Feb-13 15:52:42

Spoke to an estate agent I know today and he says that he has not sold to one FTB in the last 18 months to 2 years who wasn't getting at least the deposit and mostly the deposit plus from family.

tomverlaine Fri 01-Feb-13 16:24:12

I do have sympathy with the level of deposit/stamp duty required but I do think sometimes people are asking too much. I have read scenarios where couples of 20-23 with children are complaining that they can't buy a nice two bedroom place in a good area but I don't think this was ever the case- or not for a long time. Young couples/people bought 1 bedroom places and or places in a bad area as a compromise- or rented in house shares for years to save money. And having children restricts your ability to earn money /save or to live in a one bedroom place while you save

noddyholder Fri 01-Feb-13 16:28:28

We bought our first place in our 20s 2 beds london garden excellent schools etc 2x dp's salary and I stayed home for a couple of years It has got a lot harder.

EIizaDay Fri 01-Feb-13 23:54:53

*Mosman "But that was the point in 2002 you didn't need to save at all, a 100% mortgage for three times your salary would buy you a 3 bed semi at 5.5%, where could you go wrong ?
Evidently some did and those are the ones you're a bit at when they bemoan house prices, they had their window and missed it."

You really don't get it Mosman, do you?? You were not smart to do that, you were lucky. Very lucky. At any other time in the past you would have been very stupid.

Thankfully that type of lending has stopped now. It's stopped so that stupid people don't keep trying to borrow stupidly.

EIizaDay Fri 01-Feb-13 23:55:48

*Mosman "But that was the point in 2002 you didn't need to save at all, a 100% mortgage for three times your salary would buy you a 3 bed semi at 5.5%, where could you go wrong ?
Evidently some did and those are the ones you're a bit at when they bemoan house prices, they had their window and missed it."*

You really don't get it Mosman, do you?? You were not smart to do that, you were lucky. Very lucky. At any other time in the past you would have been very stupid.

Thankfully that type of lending has stopped now. It's stopped so that stupid people don't keep trying to borrow stupidly.

Mosman Sat 02-Feb-13 00:32:03

How funny, I was stupid borrowing less than 3 times my salary to buy a three bedroomed property at 24 ? I think not.

However nobody has yet answered my question ? House prices haven't dropped 50% since 2007 (even then where we lived in the UK a three bedroomed house would be £125,000 with 50% off and few people earnt £40,000), so as that hasn't happened what is the solution because if you think you're broke now how are you planning to pay rent on your state pension - few people have enough of a private pension to live on - so what are you planning to do ?
Go on any of the benefits threads and see how much housing benefit a single person or a couple gets.
If you haven't got children to look after nobody will care about where you live.

Mosman Sat 02-Feb-13 00:36:35

Yes Noddy but did you have a couple of kids in tow at the time ?

That's what makes it harder I think if you have the children early you do scupper your chances of owning a house.

Parents are giving their unearnt equity to their children - and so they bloody well should - who else should benefit from it ?
People are aware of the nursing home costs potentially going to stop their children inheriting and giving out the deposits instead and why not.

JoanByers Sat 02-Feb-13 01:15:19

House prices dropped over 50% since 2007 in Ireland, FWIW.

noddyholder Sat 02-Feb-13 09:16:57

Yes my son was 2

mondaytuesday Sat 02-Feb-13 11:57:27

"House prices dropped over 50% since 2007 in Ireland, FWIW"

America have had their correction as well in many parts, spain too. For the UK it is a question of when. That will be how it works out in the end. To the person that asked me where I'd emigrate to, it would be somewhere that has already had their correction.

Unfortunately the 'powers that be' are trying to prevent the much needed correction here, too many snouts in the trough making good out of renters misery with the influence to affect policy. But it will come, in any market if something is not selling because no-one can afford it, the seller simply has to reduce their price. No other choice. That process has been at work since the peak of 2007 of course, but its quite a gradual grind at the moment. When the cost of borrowing increases more and lending tightens further that will accelerate. We are seeing that now.

If there are any people out there reading this who still think its the same now as it ever was, and everyone is making a fuss about nothing, here's a cold hard fact for you. If you started out today, even with your self proclaimed superhuman living within your means super powers, YOU WOULDN'T STAND A CHANCE.

That anyone can deny their is a problem when we are in the biggest financial crisis since the 30s is amusing more than anything else. Even more amusing when you note that in most cases those that deny their is even a problem are only in their current situation as a result of benefitting from the bubble themselves! All you can do is patiently smile at such people.

Mosman Sat 02-Feb-13 14:18:27

For the UK it is a question of when. That will be how it works out in the end. To the person that asked me where I'd emigrate to, it would be somewhere that has already had their correction

Unfortunately some have been waiting for that correction since 2004 so it's looking unlikely at this point.
The house we bought in 2002 doubled in price by the time we'd sold in late 2004 but the houses on that street never did sell for any more.
With inflation you could say they have been quietly dropping 5% per year ever since but they will not be returning to 2002 prices any time soon (and if they did I would buy 2 and that would push the demand back up again).

mondaytuesday Sat 02-Feb-13 14:50:01

Unfortunately some have been waiting for that correction since 2004 so it's looking unlikely at this point.

It's inevitable, it always happens, boom then bust as sure as night follows day. If buyers can't get the money to pay a sellers price they just aren't going to sell. So the prices are coming down. It happened in ireland, the US, spain, etc. It will happen here.

they will not be returning to 2002 prices any time soon

Ask yourself what people can afford to pay now if you want to know how far down they will go. They went up 250% in ten years, that is absolutely crazy! There is no reason at all why they shouldn't go back down to their pre-bubble levels. Only then can the economy start to recover.

It's very simple. Buyers can only pay what they can pay. Sellers can ask what they want, if a buyer hasn't got the money it isn't going to sell.

Any investors piling in when prices fell in ireland hasn't stopped their correction reaching over 50%. Corrections do happen. The UK isn't magic, the same rules apply.

It will be for the good of everyone, because without a correction, everyone is stuffed. Those sitting on gains will have to give it to their children, so they've not gained from it. The real economy will be supported again as people have more disposable income when they aren't forced to hand so much of their income over to greedy landlords. Young people can stay in their own home, afford to have children, have a stake in their community, improve their homes, etc etc. This bubble has been a real drag on us all and has bankrupt the country! Only the very few have gained, the banks from all the interest on all that irresponsible lending and a few greedy buy to let people buying up entire streets and pricing out the young.

We should all hope for prices to fall sharply and welcome it when it comes.

Mosman Sat 02-Feb-13 15:21:18

I'm sure you're right.

I am of the opinion if it was going to crash it would have happened in 2005 and then in 2007. The powers that be have made a decision and will ensure that demand remains high controlling planning laws and land prices. In 10 years time I doubt there will be much in the way of increases but the situation will remain the same and many people who bit the bullet and got on with it will be mortgage free.

andubelievedthat Sat 02-Feb-13 15:42:09

When i lived in Germany many years ago , initially i could not understand how people could afford what to me was such grand homes, my at the time partner explained they have"100year" morgages i.e. parents take on the debt ,kids pick it up later, interest rate ,small. Admittedly, these homes were huge, and kids ,as in late teens, stayed with parent(s), but did not have too.Perhaps that is way this country must/will go ,assuming people still want to spend most of their 20years and 10 slaveing to "own," eventually, in their dottage, a pile of bricks?cos u dont own it till the final payment is made> bigger percentage of population in Germany ,rent.

ILikeBirds Sat 02-Feb-13 16:17:47

"they will not be returning to 2002 prices any time soon"

Depends where you are. The house we rented was sold in 2010 for just £500 pounds more than it was bought for in 2002 and that's despite having an extension added.

mondaytuesday Sat 02-Feb-13 17:32:15

The powers that be have made a decision and will ensure that demand remains high controlling planning laws and land prices

The powers that be can only do so much. Crashes wouldn't happen at all if markets could be controlled to that extent.

Also remember their interests can change over time. With every passing month more and more people are crying out for low house prices. The boomers that used to cheer when the press headlines boomed House Prices Up! are increasingly questioning the wisdom of that being good news when their children in their 30s can't afford to live, or when they start wondering why they still haven't got grandchildren.

The electorate soon will wake up to the damage it has done, and will want a party in power that understands that high house prices are just as bad as high fuel prices, or high food prices.

Every year thousands of young people reach an age where they want to leave home and start out on their own and find house prices are too high. Thousands of voters swell the ranks calling for lower house prices every year. A tipping point will be reached, the mood is already changing.

Lower house prices will be a vote winner. Noises in this direction are already being made, see the tightening of lending, the talk of housebuilding programmes, etc.

The correction will come. It is up to the individual to decide if they want to wait here for it or emigrate to where it has already happened. This is something I am pondering myself.

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