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?

Its harder now than in the past but not out of the reach of many. It all depends on your work ethic, lifestyle choices and spending habits.

The problem seems to be that many want it all and want it now rather than starting slowly to get a stable base.

I meant to say that young people will have a double whammy when their grandparents and parents generation live longer. They will hold onto their houses longer and keep their jobs longer too. The people at the bottom (the children) will struggle to get a JOB never mind a house as well. All very depressing.

Well I'm in my 30s and rent. I have no savings. This is because I lived and worked throughout my 20s in an expensive town for low wages, then had a child. I will be able to buy a house in 20 or 30 years when my parents die as they have a house worth a few £££.

IMO, housing growth will slow when interest rates inevitably rise. Then the will be another injection of properties into the rental market and rents will stabilise as they did in 2009.

Private renting MUST be regulated. The next labour government will do it I think as they can see it will be a vote winner. The Tories are still trying to pretend that more home buying is the answer to private renting problems but that's stupid.

Private renting has never needed to be regulated before now, it has never been perfect but never as bad as now.

Weatherall Yes, that's quite correct. If you sell within 10 years, you pay tax on any profit. However, some scientists I know there who have changed jobs after a few years said they sold at a loss anyway.

Add to that, you need to add 7-10% fees, tax etc to any house purchase there. Puts off speculators.

I honestly don't know. DH was telling me last night about a lad (well about 29) who works for him so we know his salary who is newly married to a girl who works for a magic circle firm. Between them they are probably on about £150,000. They have just bought a flat for about £670,000 in a London suburb with a £500,000 mortgage and a bit of help from their parents. It absolutely beggards belief and they are the lucky ones.

Its harder now than in the past but not out of the reach of many. It all depends on your work ethic, lifestyle choices and spending habits.

Ok then- please tell me how, in the example I quoted previously, I could afford the equivalent of my parents £75k home 30 years ago on our salary of about £80k combined (and that's above the average)

And then how, if the trend continues, my children can afford to do the same, just by having a good 'work ethic'

My answer was re German property

Yes, housepricewoes, we're forever told on MN that if you are on about 40k or above household income then you're well off.

If wages had kept pace with house prices since 1970 the average wage would be £87k a year. Instead, it's £26k.

It feels as though there will have to be some structural change, possibly legislated, to fix this clear anomaly. Maybe in 10 years some party will stand on a home ownership platform. Everything old is new again...

I'm with housepricewoes here. It's utter bullshit to suggest that just by working a bit harder, or making a few sacrifices you'll get on the ladder.

Nearthewindymill, our combined salary is £150k plus. We didn't want any help from parents, but it now looks like if we can't pass through the new tighter mortgage rules, my parents will have to step in, simply because they want us to live in a safer part of London than we can afford on our own. It's utterly ridiculous that we can't afford to do this on our own even though we are now saving every last penny. A huge deposit is needed for anything decent.

I do consider myself fairly well off but 3 times our salary is £240k which doesn't stretch very far where we want to move to.

It certainly wouldn't buy the equivalent house to that of 3 times my parents income 30 years ago but it will buy something nice.

The point of my thread is how the next generation will cope and what plans people had to manage if things continue as they are but unfortunately it all sounds pretty bleak to me.

The people who found themselves with houses worth significantly more than they paid for them will be the ones helping out the next generations with house buying.

Other than that, people will move to cheaper areas if they are sure they want to buy rather than rent, or will at least buy in those areas and still remain tenants in the areas they choose to live in.

But mostly I think attitudes will change and renting will be something that people are happy to do rather than something that makes so many feel hard done by.

There are advantages to renting, and while rent can be more expensive than paying a mortgage, I think it probably evens out when you think about how much it costs to adequately maintain a house. I know many renters like to think that isn't the case and people are so much better off if they own, but considering that a property can be sold out from under you to pay care home fees in old age, there are no guarantees that buying is going to work out better long term.

My dm can't understand how we can't buy a decent sized house (instead of flat) and afford for me not to work while the dcs are young. That example from thinkaboututtomorrow really helps me understand why!

Ehric - private renting was regulated from just after WW1 until John Major's govt. There was a concept of 'fair rents' and rent tribunals where bad landlords were brought to book.

The tories have always wanted to encourage private developers and private landlords. When the Right to Buy came in, councils were not allowed to use the money from council house sales to build more social housing. My local council invested a couple of million in Icelandic banks. Often wonder what happened to that.

Or perhaps houseprices won't stay high in relation to wages once the babyboomers start dying off? The situation was very different 15-20 years ago, it's not unreasonable to expect that in 15-20 years time, when those who currently have a lot of assets, start dying, and find they can't keep selling property to each other plus a forever decreasing group who can afford it, there will be a reajustment downwards... (if not a complete house price fall, more a slowing of the increases until normal wages can buy normal houses)

You wo'nt get back to 70s levels though, because that assumed 1 wage would buy a house, now we assume 2. Unless large % of the female population go back to being SAHMs as previously, then that won't change.

We bought this house when I was 30, my parents bought our main family home when Mum was 35 which by the time they sold it 25 years later, they had gone from £65k to £350k. I don't expect to make anywhere near that sort of multiple of the price I paid for this house even if we keep it for a similar length of time. Those golden days of making a huge sum from just owning something for a few decades has gone.

The advantage over renting though is the same as my parents, they paid off their mortgage within 15 years, so for 10 years they lived housing cost free. If they'd rented, their rent and mortgage might have been about the same monthly costs to start with, but renting costs never stop. We should clear our mortgage in 15 years, I will still have DCs at secondary school then, and expect to keep this house for another 10 years, which will mean when DCs are at uni (if they go) I'll have no housing costs.

Thing being Housemum - it does depend on where you are. I can quote figures for similar times that show it's easier to buy now.

When I first bought - 1990 - I was on £9.5K salary, and the 2 bed flats in areas I was looking were going for around £43,000. (around about 4.5 x my salary). Now, someone in the same job as me, same level, is on £23.5K, and the same flats are going for around £86,000 (or around 3.5 x the salary of someone doing the same job).
Of course I was having to pay 15% mortgage rate then, not the very, very low rates available now.

It was a time when people said it was ridiculous and no-one would ever be able to buy, etc.,etc., but now I'm in the rather lovely position of knowing that my mortgage will be paid off next year, when I'm 50. Hopefully I've got another 30 odd years when I'm not paying mortgage or rent, and will then have an asset to sell to pay for care home fees if I need it, or something to leave to my children if I don't.
It was very hard at the time - yes, I lived with parents after college, yes I did extra jobs like babysitting rather than going out spending when I was saving, yes I had a budget of £10 a week for my groceries, no, I didn't have a tele, no, I didn't have furniture except that which I was given, yes, I then took in a lodger to help the economics of it all, but it was something I wanted, so I made it work. There are thousands of people of my generation that did.
Some people won't ever be able to afford to buy - this has always been the case. A few will be able to buy with gifts / inheritance /lottery win. A few will be able to buy on their earnings. For a lot, it will depend how important it is to you.

The difference when I bought was the deposit was the easy part, it was the repayment that where difficult. I lived in the box room and had lodgers. So whilst the first few years where crap, it was a short period of time and nothing compared to the saving for deposits that people have to endure now. I do worry that poverty is getting harder to escape. But if you get disadvantaged at school, disadvantaged at employment and transport options then all the hard work in the world is going to get you out of it.

The people who found themselves with houses worth significantly more than they paid for them will be the ones helping out the next generations with house buying.

But woowoo how will they release the capital without selling and if they do that where will they live?

Many of our parents benefited from being able to pay off small mortgages early then build up significant savings and having fabulous final salary pensions.

Those days are long gone- This generation are stretching themselves to capacity to buy now and don't have much chance of building up similar nest eggs.

If house prices increase, yes they'll reap the benefits but only if they downsize and if they didn't buy big properties in the first place- what can they down size to?

i think some peoples thinking as a little skewed, not everywhere in the country is really really expensive like london - its a completely different market than the rest of the UK.

some of the figures on mentioned on this thread are quite high and of course you can find a house for that kind of money - its just you want more house than your money can buy - maybe you need to change your outlook on what you can afford.

people speak of what their parents afforded when they were younger but when my parents started out they lived in a 1 bed flat with an outside toilet but as they saved more/earned more they moved from that into something else and so on, they eventually got to where they wanted to, they didnt get it all in a flash.

Those people are today's grandparents, and like you say, they will release money as they downsize, or as they die and allow their children or grandchildren to inherit.

backforgood I'm intrigued to know what area it is that house prices have only doubled (£43k to £86k) in 24 years? That's certainly not the norm in much of the country.

By the time our mortgage is paid off, DD1 will be at least 35 and she hopes to have moved by then! And what about her 2 younger sisters? We had to take out a 30 year mortgage to afford this house, we don't plan to move but it will still take us 15 years to finish paying for it, perhaps 10 if we manage some overpayments. I'd love to be able to help her by borrowing more on our mortgage to lend to her, but we can't afford it now and by the time our mortgage is repaid we will be too old.

I read a study stating that the disparity in both incomes & wealth in the UK & USA is now at pre-WW1 levels.

Around maybe 1955-1995 was a golden era of opportunity for all, re education, job opportunities and buying property.

I grew up very poor, but enjoyed free uni to PhD level and managed to buy a tiny property in a cheap area with my first job, on a very moderate salary.
It was a real struggle for several years, but I was debt-free at 50.

I worked hard and saved, but I just don't think I'm more virtuous or iron-willed than younger folk who can't do this now. It is still possible to rise from poverty, but so much harder than before.

BigChocFrenzy he was spot on. Absolutely right.

There was a house price crash in the 1970s - that affected my parents, who lost a lot of money on the tiny, crappy terrace they had just bought for four times the price it had been just two years prior.

There was a house price crash in the 1980s - most of us remember that one. Several friends of my parents and my uncle had their houses repossessed at that time.

There was a house price crash in the 1990s - my colleague bought a terrace which promptly lost a third of its value three years later, leaving her in negative equity for nearly ten years.

There SHOULD have been a massive house price crash in 2007 following the insane over-leveraging the banks did between 2000 and 2007 - and there was, in Ireland, the US, Spain, you name it.

But not here, because the government frantically printed money and bailed out the banks - something you are paying for via your taxes, by the way.

And why did they do that? Because this asset bubble was allowed to become so vast, so absurdly over-inflated, that the yawning chasm between the true value of the property on the banks books and what they valued them at would destroy the financial system completely if house prices were allowed to fall.

I'm not worried about housing - I'm worried about colossal hyper-inflation, as per 1930's Germany.

I worry about how painful the correction will be, although we soups move fairly permanently in the next few months (buying) and as long as our incomes don't both drop drastically we should be mortgage free by 40 (currently in our mid/late twenties). That should mean a good couple of decades earning with no housing costs as ds starts leaving home.

But we're a dual professional household and had parental help. My parents made it clear that they feel as a family we work best if wealth is passed down and expect repayment by us doing likewise for ds. This only works if there is spare money though.