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?

[ballinacup]

It's just as difficult to save outside of London, you know.

Yes, housing is cheaper here in the NE but wages are considerably lower which balances out that particular expense. Other than that, we pay the same utility bills, our children still need to go to nursery full time to allow DH and I to work, food costs the same at Tesco whether you're in Chelsea or Durham. I don't see how people outside of London have any greater disposable income tbh.

[IfNotNowThenWhen]

I guess, in a way Back forGood, but I live in the North, and it's still tough. I have an OK job, so the thought that I still cant afford a 2 bed Ex-council house somewhere where I might not be stabbed is just depressing.
The disparity is bad everywhere, between income and housing cost.
I did the sums once, and, if you look at what a home cost in the late 60's when my parents bought their first house ,and adjust for inflation, going by the national average income(26k?) the national average house price should be around £130k.
My mother still refuses to believe it is harder now, even when presented with the figures!
Except, due to the gold rush on "property" in the last 20 years, it is about double that now, putting homes out of reach of "hard working families" like mine.

[IHaveAFifthSense]

It is doable, but people get too reliant on expecting handouts, and forget about hard work.

Really? I never expect handouts because I have no idea where to expect them from. I do nothing but work hard and hopefully one day it will pay off. But at 22 with not even half of what will be needed for a deposit on a small two bed flat - not to mention other expenses - saved after four years, it's seeming that I'll be working hard for a bloody long time before I can even consider buying.

[Apatite1]

Indeed. The new mortgage rules have a stress test where they see if you can survive an interest rate of 7%.

[SuzzieScotland]

The price of houses doesn't always go up. Once rates rise, as they have to, houses will go down.

[SuzzieScotland]

7% historically isn't high, its just the average! A real stress test would be 15

[Minifingers]

I just wonder what will happen to that generation of renters with crappy pensions when they hit retirement. My mortgage will be paid off by then, hopefully. We'll still have to maintain the property but that won't be as expensive as paying rent.

[SuzzieScotland]

Mini that generation will never retire. Retirement in your 60s will seam like a fantasy.

[Minifingers]

If interest rates go up so will rents, given that many renters are living in properties with mortgages on them.

Rents reflect property prices and the cost of servicing a mortgage. Mortgages become more expensive, so will rents.

[GuybrushThreepwoodMP]

The NEXT generation? What about THIS generation? DH and I are in our thirties, earn descent salaries and we still rent. We will never be able to afford a house. Ever.
The concept of property is odd.

[Minifingers]

I'm not sure how I feel about people working longer.

My mum was still working as a carer into her early 70's - part time. She loved her work and it kept her active and engaged with society.

My dad retired at 65 and immediately lost a lot of confidence.

[TinklyLittleLaugh]

To be honest I think the days of widespread property ownership are behind us. It will increasingly be a case of the haves and have nots.

DH and I are fortunate to have a successful business. We are approaching 50 and could retire tomorrow and be comfortable for the rest of our lives. We have decided to put another five years in to generate some capital for our four children. Although they are bright and hard working, they would have to be pretty lucky to do as well as we have. A decent chunk of money when they are starting out will help them immeasurably.

[Housepricewoes]

People saying it's cheaper to buy are only looking in the short term. Interest rates are the lowest they've ever been! Mortgages are long term debts, interest rates could triple.

And it will still be cheaper in the long run to buy than rent.

Landlords don't buy properties and rent them out for love- they do it to make money so (unless there's a massive house price crash - and even that will be in the short term) it is cheaper to buy than rent, with the massive added advantage than you have an asset at the end of it.

[uselessidiot]

"Forget about hard work"

WTF makes you think I don't work hard?

[SuzzieScotland]

Most new "landlords" these days know nothing about economics and just bought a property after watching all this property porn on TV.

When rates rise, as they need to, many of these armature landlords will be repod.

[Housemum]

the problem with house prices, which obviously have risen as demand outstrips supply, is that the prices are so far out of touch with income. When I bought my first house in 1989, a typical mortgage multiplier was 3 x main income plus 1 x lower if you bought jointly. So we could just afford our 1 bed house at £46k (mortgage of 40k with salaries of around £11k/£8k). DD1 and her boyfriend are at a similar salary range to what I would have been on at her age. Applying that multiplier they could have a £72k mortgage. With the £15k they have saved for a deposit over the last couple of years, that gives £87k. The cheapest property to buy within a 10mile radius of where they work is £100k for a 1 bed flat not on any public transport links (her boyfrend doesn't drive). £120k would buy somewhere on a bus route (1 bed flat). We are in the South but not even near London (there is a train route to London but a flat near there costs £180k+)

[Apatite1]

That's the crux: no matter how hard you work, normal houses are no longer affordable for those on normal wages.

What hope do our children have?

[flummoxedlummox]

When I rented twenty years or so ago the term BTL wasn't in common usage, however, the numerous properties me and my mates rented were just that. What I do hear much more of now is the costs to the tenant of initially renting, especially via agents.

Renting in London and the SE is in a mess, what suprises me is that none of the main political parties are focussing on this. It's an obvious vote winner given that "middle Englanders" in the SE are probably now as likely to be renters rather than home owners.

[Housepricewoes]

Most new "landlords" these days know nothing about economics and just bought a property after watching all this property porn on TV. When rates rise, as they need to, many of these armature landlords will be repod.

I think that was certainly the case pre the house price crash but less so now.

And as a PP has said- if interest rates go up, the cost will be passed on through the rental price anyway and rates aren't going to shoot up in the short to medium term anyway.

[BigChocFrenzy]

I've lived through house price crashes and 15% mortgage rates where too many ended up deep in debt.
I remember the horrible struggle I had in my early days of ownership: no holidays, meals or nights out, new clothes, or even a car or a phone, couldn't move for a better job .... but I'm still glad I bought - back in the 80s.

My (theoretical) profit now came from my decision then; I wouldn't buy another now, because I can't afford the £1 million+ properties that are a fairly safe bet to continue shooting up in value.
I'm dubious about how ordinary properties can rise much with so many on zero-hrs or frozen pay.

[weatherall]

People have referred to the German housing market. A German friend told me that if you own a home in Germany and sell it within 10 years you have to pay an extra tax. So people only buy 'forever' homes and don't think in terms of a 'property ladder'.

[Housepricewoes]

It is income multiples that are the problem.

Houses are ridiculously over priced compared to 30 years ago.

I remember my parents house costing £75k and my Dad earned £24k a year and that was expensive then.

That house is now worth the best part of £1m so pro data, I'd need to earn £320k!

In my dreams!

And that's not London or the SE.

A lot of this 'we did it and our children will too' is far too simplistic.

It's not just about hard work.

[BigChocFrenzy]

Before Easter, I was talking to a German banker who organises mortgages in both countries.
He quite rudely described UK borrowers as "insane" and our housing debt as toxic to UK society, potentially to the entire EU banking system (but he has no problem trousering his fees)

[CurlyhairedAssassin]

The rentals market and the sales market are both fucked because house prices are way too high. If house prices came down then rental prices would too and more people would then have a choice whether to rent or buy, depending on their circumstances (age, stage of career, whether they have kids or not etc)

I'm sick to death of hearing my parents' generation sitting comfortably in their nice big detached homes that they bought for a pittance years ago, going on about how they've worked for it, interest rates were high at one point and the mortgage got expensive for a while blah blah. They are living much longer in homes that are way too big for an elderly couple causing stagnation at the top of the market. Families have nowhere to move up to so are stuck in small terraced houses which were traditionally either starter homes for newly married professional types or long-term homes for working-class manual workers/less skilled administrative posts.

There is no movement up or down anymore. Stamp duty is to blame for a lot of that too - it should be scrapped or at least altered to reflect the cost of the most expensive homes, which is what it was originally designed for. We ourselves are choosing to extend our current home as a) with stamp duty costs it wasn't worth moving somewhere bigger and b) there just aren't enough houses which are slightly bigger because retired people seem to be sitting in them for YEARS. I don't really blame them as I can see myself wanting to hang onto this house for as long as I can.

But the point is that there is no movement up and down the ladder anymore and that is why our housing in this country is fucked. There just aren't the houses at the bottom of the ladder, and the people at the top of the ladder are clinging onto their property for as long as they can.