The reason young people cannot afford to buy houses Part 2

[EnormousTiger]

www.mumsnet.com/Talk/am_i_being_unreasonable/2791154-The-reason-young-people-cant-afford-to-buy-houses?pg=40

In case anyone wants to carry on what is a very interesting thread.....

I think we all agree that in the South in cities which have jobs it is very hard to buy for young people and rents are very expensive indeed. Very difficult times.

The headline average house price is only part of the picture. Critically important is the month to month affordability of the mortgage as a percentage of your disposable income.

I live in the south about an hour from London, but I'm spending the weekend in Staffordshire. Walking past a few estate agent windows I'm amazed at how much house for your money you can get further out. It's a huge difference. If I sold my 2 bedroom gardenless flat I'd be looking at a 4-5 bed detached. Tempting. It doesn't help with the first time buyer problem but there is a huge affordability divide across the country.

Wait for an army of posters to come along to tell you that houses in Staffordshire are 'cheap' because no-one wants to live there, there are no jobs, no culture, it's all a shithole and all the houses need tonnes of work to make them habitable.

One thing that's telling is that as well as a huge affordabilty divide, there's also a huge divide in prices compared with 10 years ago.

Where I am in Leeds and probably in a lot of places outside the south east, prices are pretty much the same as they were just before the 2007 crash, they went down a bit and only in the last couple of years have got back up to pre-crash levels. A poster in Northern Ireland said on the last thread that prices there were still significantly lower than pre-crash levels.

But in London and the south east, prices have gone up massively in the last 10 years - a poster near the end of the first thread said he house had gone up £100k in the last 10 years. Round here, many houses aren't even worth £100k.

Barbara, that's true. We ended up having to sell our parents house (in the NE) for about £100k than we thought we might get and had estimated on the probate form. London has had big increases whereas in the 90s we sold a London house at a loss and people were not flocking to London. Now they are so prices are being pushed up and 2/3rds of babies born in London have a foreign parent - massive massive number of people here from all over the world all fighting for housing. My London borough has mroe "beds in sheds" than any borough in the country - not that that's a good thing. We don't want people put up in sheds and garages in gardens.

We lived in the U.K. And moved to the USA. England was getting expensive and we figured we would never be able to afford the life we wanted. We had a starter home we were in for 7 years. We would have been trapped there all our lives

I'm always slightly bemused by the 'but you can't get decent jobs up north' argument. I live in Manchester and bought a 4 bed semi for 200k four years ago. There are plenty of decent jobs here. I do accept that there are some very specialised niche fields in London but these tend to be better paid anyway. My brother works in London a niche field but his basic is over £100k and his bonus is greater than my entire salary.

I think sometimes this is what southerners tell themselves to justify why they stay in the SE and pay their over priced mortgages. Of course, there are many other reasons not to move namely family ties and history with a place, but lack of decent jobs anywhere north of Watford is not the reason for most people.

South West is also an issue. A colleague is looking to buy a 1 bed flat with his partner, their budget is £130k and they are struggling. We are lucky to have basically inherited a house, would still be renting otherwise.

Young people can't afford houses because the ability to save with the cost of rent and living on relatively low wages does not exist.

I agree with you completely Maggie but any suggestion of decent jobs and culture in Leeds, Manchester, Newcastle etc is usually met with suggestions that I am a simple country bumpkin who doesn't have a clue.

Leave them to it I say. They can keep their unaffordable housing and overcrowding and we can have our affordable housing, cities, coasts, countryside, culture and everything else that makes living in the north a great option for the majority of people who aren't millionaires.

A range of reasons prob already mentioned - huge debt, enormous house price rises, significant deposits required, move towards casual and temporary contracts

I think the issue of large differences between north and south is the same for all age groups - myself and DH have for a while considered moving south (wish we had done in 10 yrs ago) and despite having earnings of c£130k we have decided against - we were not looking at exclusive areas just parts of Hertfordshire including hitchin and tbh even £500-700k down there doesn't seem to be buying very much. And like I say I am not talking about posh areas we were looking at just commutable to London

I think it has now got to point that to but in London and parts of SE you will need to have bought already years ago or be part of a family who has already bought down there and you will inherit the wealth created by property boom.

It's not easy. My son's house cost £325k a week ago (just bought, on the very very very outer reaches of the tube). (He doesn't work in central London although plenty of people commute in from where he bought).

Cornwall and other holiday type destinations can also be expensive but loads of people work in commercial professional careers in places like Edinburgh, Newcastle, Sheffield, leeds, Manchester, Liverpool and can access relatively inexpensive housing compared with London. Those are not slums. They are just places lots of people most to for a better quality of life and houses they can afford. it has always been a trade off. Even 30 years we could not afford to buy in central London so bought in zone 5.

With regards to budgeting, there are a lot of couples I see with a household income of about £60-80k a year who don't save much. I do think there is a lot of money spent on alcohol that our parents just didn't spend. Same with going out and buying chocolates etc.

One thing I do to save money is a trick from my grandma. She would buy full fat milk and water it down. With 3 kids it saves me a fortune. Also my kids have a choice of milk or water. We do not have juice, squash or anything else. I have my tea bags for myself and DH has a six pack of beer and a bottle of wine a week.

You might think this doesn't add up but for us it does. In a month I save $8-12 on milk, about $20 on juice and in a year this adds up to about $360 a year. Do this in other areas of your life, buy before you have kids and rent the spare bedrooms/lounge out and you have a chance to buy something better sooner.

What's wrong with our system is that those making less than £60k a year don't have a better rental market to rely on.

It's not just a London/SE problem. Yes it's worse there, but house prices have increased relative to income levels across the country. And that means the cost of renting increases, too, so it's even harder to save for a deposit.

My parents bought a 2.5-bed house in a medium-sized Northern town for £9k in the late 70s. Houses like that now go for upwards of £200k there.

I live in a city that's not London, and we should finally be able to buy somewhere next year - I'll be in my mid-30s and it'll be the first mortgage I've ever had.

I read in an article this week that the proportion of 25-40 yr olds owning their homes has fallen from nearly 60% in the early 2000s (i think) to less than 40%.
. That is a huge change in society, concealed by the overall figures for owner occupation which have not changed so dramatically. Some of those will 'just' be delayed - in that the 26 yr old will now be an ftb in her 30s instead of her 20s, but i assume some will now not buy at all.

It would be interesting to know if those percentages have changed as much outside the south east or whether it is still easier outside the south east.

The other argument made against moving is that it can't work if everyone does it because that will push prices up outside the south east. There is some truth in that if masses of people moved - so that option may not even be there for the next cohort. But while it is there, i think if i were in that position and in a couple with no dc i would think about it very seriously if i had a movable job like teaching or nursing. Single, it would be much harder to leave friends; with dc, existing 'support networks' are an important tie (if you have family close by).

Yes, but people tend to move where there is work. My family moved to the NE for all those very high paid mining jobs from about 1880 to 1914. Some organisations have moved - the Met Office down to near Exeter from London, much of the law society I think it is was up to the Midlands, the BBC to Salford and I bet loads to the NE where I am from over the years never mind all those call centres in places like Liverpool and Scotland. I agree however that it is not easy to move. Supposedly the Government has the "Northern Powerhouse" plan. I was in Harrogate recently and that certainly is its own little microcosm of wealth but is probably execeptional in the way Aberdeen is exceptional and Cheshire too.

People use to be shoved out as early as possible - aged 13 into service or into work at 14 with all wages given to parents and then early marriage. When I was a teenager 15% went to further education and the rest into jobs so not surprising they married younger (the non university ones) and bought earlier. If you graduate at 21 or 22 with a gap year and then do a masters and then professional training then you end up settling down later. As 50% of people go to university now that is also part of the reason for people buying a property later including outside London.

First time I've tried a picture.... anyway the gist of it is 23% owned in 1918 and we are nowhere back down to that yet.
1971 equal owning and renting 50% each. My parents not too long before that after 10 years of both working full time putting off babies all that time managed to buy and I bet it wasn't 50% in the NE by the way.
Still not that much over 50% when I first bought in the 1980s.
Then 69% own in 2001 - peak time I suspect. Probably a lot of 100% 120% loans offered to people who should never have bought and then the credit crunch in 2008 and tighter lending and now down to 64% home ownership in 2011.

The Guardian has slightly different figures:
"Home ownership across England reached a peak in April 2003, when 71% of households owned their home, either outright or with a mortgage, but by February this year the figure had fallen to 64%, the Resolution Foundation said."

It's all very interesting ( and difficult for people) - here is a very recent ONS quote:

" On average house prices have increased by 7% per year since 1980.
Since 1980, the greatest annual increase in house prices was 25.6% in 1988.
In 2015, the average price (mix adjusted) of a property in the UK stood at £279,000.

There were seven years between 1980 and 2013 where, on average, UK house prices fell – the majority of which occurred during the recession of the early 1990s. The biggest drop, however, was 7.6% in 2009."

Given my great ability to get things wrong we sold our last house in the 90s at less than we paid for it in London.

I must get on with some work to help these children of mine buy a property but here is more data

"The reduction in the numbers of first time buyers has subsequently had an impact on the age of homeowners.
In 1991, 67% of the 25 to 34 age group were homeowners.
By the financial year ending 2014, this had declined to 36%.6."
visual.ons.gov.uk/uk-perspectives-2016-housing-and-home-ownership-in-the-uk/

^^ a very interesting diagram EnormousTiger it does show to a certain extent that these things go in cycles. There aren't any 'blips' on the graphs there so if there is a downturn now in home ownership and/or an increase in renting according to the diagram it's likely to be a long term trend.

On the first part of this thread (part 1) a few people were saying renting isn't always unwise as you get housing benefit if you need it and your landlord has to do the expensive stuff. That certainly is true for some. My son is going to let his house out of the first year and it will take 12 months of rent just to cover his purchase costs - stamp duty, solicitor, agents' fees, decorator, furniture costs etc. So he will have no profit at all in year 1 and he and I are pretty sure prices will go down this 12 months but he just had to get on and buy this year. It is just too hard to predict the exact year which is top of the market or wait for it to fall. SO if prices drop 5% in his area this year h e will be about £28k down all in after a year of letting the property out and his tenants won't have wasted £28k.

Meanwhile at the other end of the spectrum elderly pensioners are being "asked to leave" their sheltered housing scheme.

www.liverpoolecho.co.uk/news/liverpool-news/tears-anger-100-pensioners-told-12260144