To wonder how the next generation will afford a house?

[Housepricewoes]

DH and I want to move to what will hopefully be our family home, in 2 years. Work commitments means we can't do it sooner but I'm stressing about how much house prices might rise in that time.

That got me thinking about how today's children will ever be able to buy a home.

I know it's a very British thing to aspire to home ownership but rightly or wrongly it is the norm.

Many of my friends and extended family have only been able to get on the property ladder with a significant hand out from the bank of mum and dad, but unless their circumstances drastically change, they are not going to be in a position to do the same for their children.

What do you think will happen about houses with the next generation?

Dilys the majority of businesses are small, owned by 1-2 people. I'm in the middle of closing mine (headhunted by a large company). Why should you be more eligible for tax relief than me?

cats 'Everyone a homeowner' is what got us into this mess in the first place. Margaret Thatcher - Right to Buy. Before that people on average and low pay had secure social tenancies at affordable rents. That's what we need more of now. (Along with regulation of the private market.)

Most of those ex council houses and flats are now in the hands of btl landlords, in London, anyway. Some families had a windfall, to the detriment of millions of others. In my family, an uncle had a ground floor council flat within sight of Blackheath station, v desirable area. His niece bought it in his name, he continued living there, paying rent to her. When he died, she did it up and lets it to high earning City couples. It's her pension.

There is a shortage of properties to buy. You'd need to massively diminish the private sector to go even half-way towards meeting the expectations of would-be owner occupiers. How would you do that? And what would be the unintended consequences of doing it?

ISeen - it looks like most lenders (if not all) will include student loans, also pension contributions, PPIs, health insurance etc.

Yes I guess it does, but property is an investment and it is perfectly reasonable to look to invest if property if I can. Although it didn't work out that well for me, I am still glad I did it. You could just as easily say, when selling a property you have lived in, that you don't need to go for the highest possible price when looking to sell, as that pushes up prices for other people, but no-one is going to do that. We all have stuff we need to pay for.

Regarding the rent, it really wasn't about being big hearted. I just wanted to keep decent tenants. When you have one BTL you are dealing with yourself you just want a hassle free life. They gave me no hassle, they got cheap rent, everyone won (well, I would have made less of a loss on the rent had I been more grasping but life would have been harder and I am essentially lazy, despite embarking on the endeavour in the first place). And yes, a large bit of me didn't want to have a conversation with them where they couldn't afford what I was asking them for and they had to leave. No-one wants to do that, for the sake of an extra 100 quid a month.

I think in 12 months time the new lending criteria will relax a little bit as the big financial players realise this is hurting their balance sheets by excluding so many people. But that won't make much difference to the majority of people.

What these rules will do will make home ownership the exclusive reserve of the 'have's'. To be a member of that group, all you really need to do is be lucky enough to have parents who benefitted from the boom years and who die and leave you to inherit before their assets are liquidised to pay for their care in old age. Ironically, earning a fabulous salary probably won't be adequate unless there are two of you and you don't have any other costs to be taken into account (e.g. childcare).

Those who benefit from a modest inheritance, along with the more traditional 'rich', means there will be enough people to sustain our housing bubble. It will simply be the case that there will be a smaller number of people who own property overall but more of those will own more than one property.

Ok Dilys, property is an investment for small btl landlords, but you get tax relief on mortgage interest, which you wouldn't if you borrowed money to invest in shares for example-you can't have it both ways!

An increase in interest rates will put a cat among the pigeons.

And bring house prices tumbling down. Prices are only high because borrowing is cheap and these high prices can only be afforded because of interest only mortgages and low interest rates.

When borrowing becomes less affordable then house prices will come down.

Home ownership is a misleading term. You don't OWN a house when most of the money is borrowed - the bank or building society owns it. Home ownership nowadays is more akin to long term renting except you pay to maintain the property.

Although most buyers round here have cash. It's extraordinary, really, but local estate agents are asking for cash buyers only for the best properties. I live in commutable distance of London (still quite a way) and families are selling in London in their droves and moving out. Ironically the prices here are no lower (in fact in the prime roads worse) than much of "nappyland" in south London.

Agree with the inheritance issue. You have to be "lucky" to have parents who die before needing care. As I posted earlier, the pil have ploughed through their savings and are now halfway through the proceeds of their house. Still it sticks in one's craw when you know someone who has just trousered a £1m inheritance acquired by parents who happened to buy a house in Ealing in 1970 for £15K.

The Hoopy challenge..My test case on showing how many people can buy if they really want to.

1. Your family come first. The local person who chooses not to trust some other for their care and to whom you "need" to be available occasionally I am afraid is going to have to be ditched. Get a male relative to do that. Why do women have to carry the can all the time?

1. Work full time. You only work part time now. The 3 year old can go to a child minder or nursery when you are working or your husband can adjust his hours a bit like loads of men do particularly if he works for himself. Consider a full time night job if needs be.

1. Move somewhere cheaper and your husband can commute to where the work is. Surrey is expensive.

You have no savings now for the deposit so you will be looking for the help to buy scheme unless you can save more with the full time work (95% loan) based on your husband's and your earnings (your full time earnings when you find the full time job). Start with a 2 bed flat somewhere like this - Portsmouth 2 bed flat £62,000.
www.rightmove.co.uk/property-for-sale/property-43337323.html

You need 5% - £3100 deposit if you can get on help to buy. That is £1550 each. You probably will get back £1k deposit when you cease your current tenancy so are already almost there. Hey presto.

I doubt if they will be able to put interest rates up enough to send prices 'tumbling down'. Stabilise the market, perhaps.

If rates are too high, you end up with repossessions and evictions and the huge social impact, and cost, of that.

Home ownership has always been akin to long-term renting, not just 'nowadays'. But you miss out the pay-off of living rent-free at the end of the mortgage and having a sizeable asset to pass on to your children.

Tunip the division between the regions is unsustainable. However London is only 10% of the UK population.

A lot of people working in London are young singles and sharers, many of whom are not British and don't have the needs of someone who wants to settle and build their nest. They don't need a lot of space and see their life here as temporary.

I think London will continue on in this vein, be a place where only very few people actually settle forever and they will be the moneyed or those who are happy to live in a tiny space for a high rent. Businesses will only relocate when they have to - at the moment they have cheap labour done by people who are happy to share a room with friends just to be given an opportunity to work. Unless this flow of cheap labour is stopped the wealth will stay in London. London is in a 19th Century timewarp where equality is concerned.

That's a little naive though. Interest rates are not just about house prices. They will go up and lots of people are on the edge of affordability as it is and will find the increases too much.

If interest rates double then the interest element of your mortgage doubles. Double would still mean we had incredibly low rates. 4 times what they are is still astonishingly low for interest rates. Who out there would be happy if their mortgage payment increased fourfold.

The average is closer to 6 per cent. We will go back there.

Maths fail - London is more like 18% of the population.

but property is an investment and it is perfectly reasonable to look to invest if property if I can.

That is a perfectly valid sentiment dilys but you cannot argue that that does not add to house price inflation and in turn perpetate the problem we are discussing.

Basic supply and demand theory dictates that if a significant number of people chose to have 2 of a commodity that has a finite supply (houses) there won't be enough for everyone to have at least one and that lack of supply leads to price rises.

The fallout from an increase in interest rates ought to be dealt with by making banks kind of Landlords who would then be renting property back to the mortgagee. This would need government intervention but it would be a feasible way for banks to take back their properties without taking a loss and without the social turmoil of people having to move out. Once interest rates are increased this will be a better option for the banks than making people homeless and having to sell the property at a loss.

Are you sure that isn't a typo Maria? All other two beds within half a mile of there are triple the price

OK what's 8 million as a percentage of 63 million? Big maths fail.

Ballsed: that one is part buy/part rent

Hi maria it's 50% that flat, not the whole flat for £60kand no details on what the lease is currently at
It's £315 rent a month on top of whatever your mortgage would be.

PMSL at mariajenny's 3 suggestions!

I bet Hoopy is kicking herself for being so stupid now- not!

Which part of- her husband has built up his business in Surrey- did you think meant they could move to Portsmouth mariajenny?

Likewise- how many full time jobs pay enough to counter the addtional childcare costs.

As for the first suggestion- words fail me

(Ignoring the whole moving away from the jobs, schools, community, friends, family and caring responsibilities thing)

Yes Maria's post is absurd. I hate this notion that 'you can do it if you really want to'. Making people feel even more inadequate and desperate than they need to.

12.5% of the UK population lives in London. :)

Houseprice, I am not arguing that I am not adding to house price inflation, albeit it in an incredibly minor way personally. I'm not going to never consider it again though because of that. Perhaps some people wouldn't consider buying a second house when they can (when property tends to pay back better than other forms of investment) because they don't want to add to house price inflation, but these people sound saintly.

Regarding tax relief, perhaps I am trying to have it both ways. I still think that private landlords with one extra property shouldn't be taxed any more than they are now. Most that I know (with only one additional property) are not rich by any means. I scrimp and save to do my best (e.g no holidays for last few years etc)

I am not arguing that I am not adding to house price inflation, albeit it in an incredibly minor way personally

But everyone who has more than 1 property 'adds to house price inflation, albeit in a minor way' which adds up to a major way.

I'm not blaming you personally but this 'I'm alright Jack' mentality is a big part of the problem.