To be aghast at current house prices?!

[tiredoflooking]

I have been looking at houses for sale in the city we live for about 6 months now. We are a professional couple, we currently own a small city centre flat and have a good deposit saved. I can't find anything even vaguely affordable for us in a relatively decent area. I know there is a housing crisis but what is the story??! Who is able to afford these prices? Are house prices likely to fall? And are we to be flat bound forever or should we move out to the middle of nowhere (where it is only slightly more affordable?) I really dont know what to do anymore, should we just use the deposit to pay off some of our current mortgage and accept we will have to stay where we are? We are trying to conceive and I find constant searching through moving websites and the feeling of potential upheaval quite stressful. I find it really hard to believe that as a hardworking professional in my 30s a house is totally out of my reach!
I would love to hear other peoples thoughts/experiences

YANBU.

It's obviously worse for people who can't afford to buy at all, but we are in a similar position to you OP where we look at our careers and our income and then are just amazed that we can't afford anything we would consider with 3 bedrooms, and we don't even live in a particularly naice area but prices are just ridiculous. The only people I know with your 3-bed semi type property are serious high earners in finance with six figure bonuses, or people who bought before house prices went crazy. People in my situation in their thirties who have great jobs and possibly children are utterly screwed at the moment and I can't see things improving. Times have passed when two middle class salaries would get you a detached family home and garden - that would cost upwards of £450k where I live and would require a deposit of at least £45k and income of £120k. Unless you're a banker and have made money already from the property lottery, you're screwed.

YANBU

I know someone who has just accepted an offer £5k under the asking price, but which is still £35k more than it was worth a year ago. And the house is in worse condition than it was when the seller bought it some years ago, as they've done nothing to keep it nice, bar the absolute basics.

it depends where you are, round here you can get a nice 3 bed semi for 140 - 160 K ish. A nice area with good schools and Mway links. Are you in the SE?

We earn 6 figures between us and still have only been able to afford a small bungalow in the area we wanted plus enough to extend it a bit. Hoping we can afford to extend it further in the future. But we got the area we wanted which was most important to us and are adapting the house to suit us over time. We live in zone 6 and didn't want to take our kids out of their school when we moved from renting to owning so this was the best we could do.

It does annoy me but we just have to make the best of it!

YANBU it's terrible. Where are you? I'd consider moving away if I were you. Living in a flat with DC is awful. I know....I'm doing it.

It is madness and my heart goes out to anyone trying to get out of the rip off rental sector and into a place of their own.

In my 20s I bought a fairly basic flat in a not particularly lovely part of London for 46K, which was roughly three times my income at that time. That same flat was sold (not by me!) last year for 320K. It really is a first time buyer type of flat, but can't see how any first time buyer could buy it.

Nobody apart from those with parental support or a load of money can buy at the moment. Unless you're talking about severely depressed areas with many social issues...then there are cheap houses available.

It's shocking. But people will soon be on to tell you to move 'up north' and to give up foreign holidays, going out and phones (because no one needs them) and you will suddenly be able to afford it.

Yanbu. I'm living in a 3 bed HA house and they only way I could ever get on the housing ladder is if I buy my house.
BTL homes have destroyed my village. Every time a cheap house comes on the market it's snap up by investors from out if the area which means locals cannot buy here.

OP are there areas a little way out from the city you live in which you could imagine living in? My friend has a nice house in Chester...she's selling it to move to North Wales where she can buy a much nicer place...huge in comparison...but she'll have a longer commute. She's just decided that it's worth it.

I have given up hope of me and my partner ever owning our own house unless there's a lottery win involved.

Hahaha, expat! Just wait for the smug posters who will tell you it's all those lattes and easy jet flights you bought and it's all your fault blah blah blah

We have v high salaries, mid thirties, v secure jobs and we only bought last year, after saving a six figure deposit. Yes, we had been saving for two decades between us.

Well I don't believe that only people who parental support or buy in severely depressed areas with social issues can afford to buy. In some regions that might be true but it isn't true of everywhere.
I live in a very respectable area where unemployment is high, schools are good and most people are either in professional roles or are self employed and you can buy a nice two bed terrace for £130k, 3 bed terrace for £150k, 3 bed semi for £180k. If you go five miles down the road where it is okay but not as nice as where I live you can buy a 2 bed terrace for £90k.
5 miles in a different direction a 2 bed terrace will cost £300k.
It's all about postcode.
Too many people want to buy in the areas where a 2 bed terrace costs £300k so demand outstrips supply and prices keep on rising there. I wouldn't even want to live in that area because crime rates are much higher than where I live.

That should have said employment is high, not unemployment.

Happening is it up North? Not being snarky...genuinely curious.

Have you been hiding under a stone? How is this a surprise to you?

We managed but only with a shared equity mortgage. I prefer this to renting as it gives us security, but know that we may lose out eventually and be stuck here for longer then we want. We live in the North East in a nice area but not thought of as being naice if you see what I mean. Terraced new build large four bed house. Small garden. We are both professionals with good jobs.

If yabu so am i.

These prices are sustainable only in the short term. Q/E has pumped a lot of money into the property sector and in London in particular this is having an effect. Foreign money has poured in also compounding the problem because UK property is perhaps the least regulated in the world and capital can flow freely in and out (generally). Foreign money has poured in from growth economies that still lack at this time sound legal systems to protect wealth creation. Money is parked here in property to protect it more than produce an income.

Residential portfolios yield very little in income - rents are a low comparative yield to values. In a perfect market this is unsustainable to investors. It is normally possible to make 6-7% pa long term post inflation returns on the stock market, so in theory investing there should in the longer term outgrow property prices. Remember that corporate earnings underpin wages and investment returns which in turn underpin house price growth. If business is not performing then house prices cannot. This is why stocks and shares, the very essence of where we spend 90% of our money, have historically outperformed property by around 1%.

The value of anything is in the personal satisfaction that it gives or the income it can produce. Chasing property on the basis "it will always go up" is a fool's dream and capital growth is only someone else's perception of future incomes. As most people are not lottery winners and cannot afford to outbid at any cost another purchaser for the 'chocolate box' cottage, then houses are generally underpinned by UK earnings. If earnings do not grow, then house prices will fall, all things equal and particularly if interest rates rise - which they will eventually - and also particularly if earnings growth is not allowed to take place (yes - allowed - because it is in Osborne's hands to unfreeze public sector pay and in Carney's hands to create some inflation so that growth and debt reductions in real terms take place).

I forecast a more structural fall in house prices in due course. When - I don't know, but in the current generation. We had a soft landing in the 2008+ economic crisis due to low interest rates and Q/E. That will not last for ever.

There are a lot of generalisations above, but I do not have time to post much more. For now I would get some even balance and try to invest in broad stocks and share ISAs for a few years if you can. Don't get despondent, we have seen these cycles before but for different reasons and it always comes back to the market.

Yes, it is up North giddy. I am aware that people in the South East have very different housing price problems but the UK as a whole does have some affordable property not necessarily in rough areas. I sympathise with anyone in the SE trying to get onto the property ladder .
Even up North where affordable properties exist in decent areas people complain that they can't get on the property ladder but they are only trying to buy in the expensive Cheshire belt areas or didsbury.

I forgot to add that supply is also a factor. With the housing National Planning Policy Framework in full swing local authorities are having their 10-20 year housing supplies thrown out as being un realistic and told to build significantly more houses on reclaimed land and green land on the edges of settlements from villages to cities. The supply of more housing, at all mixes, in the quantities we need is also now likely to happen.

I live in Cambridge. It's completely insane. I don't know how anyone gets onto the property ladder in the first place. I feel ridiculously lucky that I bought my first house 13 years ago for £130,000. Similar houses are now going for £400,000. It wasn't even a particularly nice house or in a good part of town.

I keep seeing adds in estate agents windows for nice first time buyer properties costing £400k+. Saw one this weekend, which was £450k and supposedly just perfect for a first time buyer.

It's crazy.

We bought two years ago with a large deposit which was due to an inheritance, years and years of savings and some family assistance. So basically luck. We have a large mortgage but it's not huge relative to the value of the house.

Good to know I'm not the only one feeling this way!
Even if I could afford it I think spending £450,000 on a house that a few years ago was worth much less seems crazy