The reason young people can't afford to buy houses

[GrabtharsHammer]

Is because they all have iPhones and Sky telly.

So sayeth my mother.

Nothing at all to do with the ridiculous house prices then? They are baby boomers and bought their first house for a few thousand quid on my dads modest salary.

Apparently the youth of today just need to get rid of their gadgets and telly subscriptions and then they will easily afford a deposit and mortgage.

Are everyone's parents this judgemental and out of touch or am I just particularly lucky?

(Fairly lighthearted) AIBU?

I am about to turn 40. I own my own house. I didn't go to university (though I was the last year that got a grant.

Maintenance grants were gradually replaced by loans from 1990/1991 onwards. This means that anybody about to turn 40 who went to university actually did have to take loans (unless parents could afford to pay). I certainly did.

Another thing, older people have no clue regarding childcare costs. I'm living in the US, just outside NYC. Around here spending $3k on daycare per month is not a sign of you going to some flashy private nursery. It's about standard for 7-7 care, which is needed for nearly any job in this area. We pay less using the government daycare but we still pay $1500 a month plus another $750 for a helper to cover those excess hours. In total, for 3 DC, we will spend $40k on childcare in 2017.

Just this weekend I had family tell me how trump should limit how much the wealthy can deduct for childcare. When I asked 'What's wealthy?' I was told anyone paying over $2k a month in childcare. I just shook my head. When I told them what the rates are they told me DH and I should plan our time so no help needed after 5:15pm. Easier said than done.

One bed flat in Kent commutable to London with no car needed here for £125,000. www.docksidekent.com/properties-for-sale/property/6544563-boundary-road-chatham

Lots of mortgages available at marginally under 3% giving monthly repayments of about £550 with £7,000 deposit.

£119,000 loan easily achieved on 2x average national salary, though the property gives access to the south east jobs market.

One coffee per working day each year approx = £2.50 x 5 x 45= £562.50
One Vogue magazine per week for a year = £4 x 52 = £208
One pret sandwich per working day each year approx = £3 x 5 x 45 = £675
One takeaway for 2 people per month for a year = £25 x 12 = £300
One meal out for 2 people per month over a year = £60 x 12 = £500
One pub night out (for two) per month over a year = £40 x 12 = £480
One annual mobile phone contract maybe £400
One lot of annual car depreciation, road tax, and insurance maybe £1000
One annual holiday for 2 people including all spends maybe £2000
£25 per month on new clothes / jewellery / makeup x 2 people for a year = £600

The above items add up to £6725.50, pretty close to the required deposit for the above flat.

I think this is why people say that you shouldn't expect to have exactly the house you want exactly where you want it as a first time buyer, and it is possible to economise on small things consistently to scrape together a deposit.

So a couple earning average national salary make cutbacks on luxury spending and buy the flat. (Although I'm not convinced that a typical such couple is really spending £600 per year on coffee i.e. that they can really save £7k in a year just by cutting down luxuries.)

But anyhow. What happens next? Presumably couple hope the value of their flat increases, so as to increase their equity, which would then fund the deposit for a bigger flat/house. But as their flat value increases so do the prices of 2 bed flats/houses, making them even more unaffordable. On average incomes they can't increase their mortgage much further, particularly if they plan to have a child (so childcare costs/reduced working hours for one parent).

Is it really reasonable to expect people on average incomes to raise a family in a 1 bed flat?

elodie I think you've touched on something very important. There is no doubt that in terms of house price to average salary ratios things have got very very out of whack. But it's also the case that a working couple in 20s or early thirties now have vastly different expectations about what constitutes an acceptable minimum standard of lifestyle.

I am around 50 so not quite a baby boomer but old enough to remember when getting into the housing ladder was easy, even for people on very modest salaries. From observing my grandparents and parents, through to my own peer group and now young couples and families just starting out, I have seen a huge change in attitudes and levels of expectation and entitlement where material possessions and standard of living are concerned.

I got onto the housing ladder very young but it was years before I had any brand new furniture of my own and a car, or regular holidays. When DH and I were expecting our first baby we bought a second hand pram. They were not really a 'thing' back then, but I would not have dreamt, for example, of budgeting every single month for expensive acrylic nails or high maintenance hair highlights or spray tans etc. Things like that were for your wedding day, not every day!

When computers became a thing we had one per household and it was a shared desktop. These days since iPads and smartphones many people seem to end up with more than one device each, including iPads for 3 year olds, iPhones for 10 year olds, and we don't consider that to be especially indulgent, when in truth we could all manage with one laptop per household and a simple Nokia brick. But we don't, because that would feel like poverty.

The average house price in London is now 13 x the average wage. So best ditch the iPhone and get a job paying above average

To an extent, she's being unreasonable.

But she's also not.

I know someone who is a full-time lawn mower (or, four days a week, so less than full time), and his wife is currently unemployed but would normally be a kitchen hand. They're currently "planning" their kit house, and it'll have five bedrooms, two living rooms, and a media room. What the fuck do they need all of that for? Same guy that drives a fuel-guzzling Commodore, but complains about not being able to afford care for his kids in the holidays.

House prices are rapidly increasing, with houses in area increasing by roughly $150k over the last 12-ish months, but there's no denying that a lot of "necessities" young people have are not necessities. A lot of people do not know how to live within their means, or to save.

I'm able to give a direct comparison. I bought my first house in 1987 for exactly 3 times my salary. I was a civil servant at an EO grade so easy to work out what the equivalent salary would be now. The same house is now worth 5 to 6 times that salary. Nearer to London things woukd be massively different then and now.

I did have to contend with interest rates of 11% for a while but I had no student loan to worry about, having had a full grant thankfully.

And as for things like takeaways, I have probably had a takeaway once a week or once a fortnight at a push for the whole of my adult life.

My parents did have occasional takeaways but much less often. I am not sure my grandparents ever ordered a takeaway in their lives and eating out was a rarity for very special occasions only. Such indulgence as weekly takeouts would have seemed beyond the pale to them.

My grandmother made all her own clothes and all my mothers. She made her own wedding dress and my mums.

My mother made most of her own clothes and lots of mine. She made my wedding dress and it cost a couple hundred pounds tops.

I have never made a garment in my life, for me or my children.

My grans food cupboard contained salt, pepper, flour, sugar and a few tins of peaches or corned beef. Everything else was bought fresh each week form a local grocer, cooked and eaten immediately and they probably ate the same six meals on rotation their whole Lives and they were simple, plain and cheap.

My mum was more adventurous, splashed out on slightly niche (at the time) ingredients and bulk bought at the new supermarkets. You would think this would be cheaper but actually it probably just encouraged people to stockpile crisps and biscuits and fancy non-essentials then later, wine and booze whereas previously those things were only bought for Sunday tea and Christmas.

My cupboards are heaving with jars pesto and harissa and bottles of Balsamic vinegar and four types of nut oil and if my 5 a day consisted of cabbage and carrots I'd feel pretty hard done by. My fruit and veg bowl is like the United Fucking Nations of fruit and veg. We have an expectation that a bottle of wine will probably be drunk between us most nights of the week. My parents only drank if they went out and my grandparents had the ubiquitous dusty half full bottle of sherry wheeled out at Christmas.

I probably have more money's worth of unused fancy store cupboard ingredients in my kitchen right now than my gran spent on her entire food budget in six months or even a year.

slottedapoon I've been thinking of other things my DP didn't do... They never ate out, unless it was a big birthday, books and LPs were borrowed from the library not bought, hair and nails weren't done, Mum would have her hair cut once in a while but she cut ours...
It was a frugal life without the consumerism that goes with today's lifestyle. We lived in a big house in a nice place and it wasn't odd, a lot of people lived that way as far as I could see.

I can also do direct comparisons. Famous university town in SE. Flat bought for 80k in late 90s. (Around 3 times salary for somebody a couple years post graduation, earning 25-30k). Current value of flat 350k. Salary of somebody doing the job I used to have: around 40-45k. So in less than twenty years it's gone from 3 times salary to 8-9 times salary.

No amount of cutting back on luxury food items or iPads is going to finance that difference.

My parents first house in the 70s was three times my dad's (very average) salary (although my mum was working too). That is pretty affordable. Nothing available like that now.

Ratios of income to house price are higher now. Huge difference!!

However today people say they are skint but still have holidays abroad, screens, various materialistic stuff.

When saving for a deposit and in the early years of owning, we had no holidays, no screens, second hand clothes, walked everywhere, no meals out. We had a laugh still and enjoyed different things.

My mum says the same, that YP lifestyles are so much more extravagant, that she never bought all the things I do now she hen she I a small my age. Wouldn't solve the problem but I do think she has a point.

Exactly elodie and you didn't have to be poor to live like that, it was how almost everyone lived. It was perfectly normal.

The slow creep of consumerism has normalised pretty indulgent behaviours and spending patterns and it seems no one can do delayed gratification any more. We feel feel that certain things ar essential in order to have 'standards' and that we should be entitled to them and then people wonder why they earn good money but never feel financially comfortable and have to rack up loads of credit card debt.

Part of the reason that younger people can't afford to get on the housing market IS poor budgeting. But some of it is also being priced out the market.

I was lucky enough to get on the property market in my early 20s. Then my circumstances changed, and due to an influx of brand new houses being build in the area, I couldn't shift it. And my only option was putting myself in to negative equity due to expectation and what people wanted/were willing to pay

Buying material and making clothes was cheaper than buying off the peg. You could walk into a department store and there would be a great choice if material, even JL in Oxford Street in the 1970s had almost there entire floor dedicated to swaths of material for sewing

Now off the peg is cheap and disposable and buying material an expensive way of buying clothing, if you can find the material to make the clothing.

Londons houses cost more but wages are much higher also

Budgeting is key.

Clothes were so much more expensive back in the 80s!

The whole economy now is based on increased consumer spending (on cheap credit) and the housing bubble.

I am afraid we will live through a mayor economic crisis at some point, not like 2008 but more like 1929

It is unsustainable

I was watching a tv documentary about this and it said that if salaries had gone up in line with house price inflation the average wage would be 86 k " it is no wonder people cannot afford to buy when most people are earning less than half.
I consider myself very lucky yo buy in 1996 before prices got silly, pure luck I couldn't afford my home now.

Cucumber, London houses are 13x London average wages

User 72 - that is not a direct comparison. First homes are always smaller, cheaper, in the less popular areas. This changes generation to generation. A first time buyer does not expect to be able to buy a house similar to what their parents first bought.

I have worked for the same organisation in the public sector for more than twenty years. My starting salary in the mid nineties was around £19,000, the national starting salary today is "between £19,383 and £22,962,". I bought my house (two bedroom, mid terrace), with my DH, a few years after I started work, Zoopla estimates that it is now worth over half a million pounds. I can not see how a young person who joined my organisation three years ago could afford my house today. Wage suppression combined with huge house prices has been devastating for young people.

Ivy - that's better then expected. The rest of the uk is about 10 I think