House Prices

[ladymary86]

DP and I are hopefully going to be buying a house together soon.

We are both teachers so have a good income and we have a very healthy deposit also.
We have been renting a 3 bed house for 2 years now at just under £1k a month. This is ok for us and we can still afford to do other things.
In the process of looking and considering properties (we will probably buy a new build) we noticed that there is so much out of our price range and it got us thinking - who CAN actually afford them?! I know we are not the highest earners but we are certainly not anywhere near the lowest. We are looking at around £295k for a 4 bedroom house which will have us paying roughly the same a month as our rent just now.
I am just being nosey really, but AIBU to ask - what's your mortgage a month? What kind of home do you have?

When people bought their first house will have a huge impact. We bought our first 10 years ago and moved to our (now 4-bed but was 3-bed) semi-detached house 7 years ago. We bought it for 273k; a loft conversion and ground-floor extension later (plus the market growth), it's worth almost 600k. So our mortgage is 750 a month.
If starting now with the same deposit and salaries we had 10 years ago, we would be looking at a 2-bed flat with no garden in this area.
You're going straight into buying a 4-bed, which would be very unusual around here without a substantial inheritance.

£295K for a 4 bed sounds like an absolute dream. I’m in the SW and we pay £850 for a a 2 bed terrace ‘starter’ style home that cost £220K a few years ago. We were hoping to trade up soon but even 3 bed family homes in poor condition are £300K upwards.

You’re lucky 🙂

On another note I do agree with you that prices are bonkers. I have to friends that are both lawyers and I’d have expected them to buy an amazing house on their salaries but they bought a bog standard 4 bed new build. Expensive obviously but just goes to show. I think most people have worked their up way up the ladder but even that’s difficult now.

*two friends

I would consider buying if you are ready to exchange (or can keep due diligence costs affordable for you to waste) the mortgage is same/less than your rent and you have well founded confidence of ongoing income (e.g.stable, essential employment). I would not buy any of the marginal, "up and coming" areas or anything requiring significant or structurally essential work as these properties will be hit hardest.

Banks will evict but will be slower to evict than many landlords. If your circumstances indicate that you should continue to buy, you could he in a slightly more secure housing position than renters.

Be alert to the possibility of ending up underwater/negative equity position and the implications of that.

Good luck. Fortune favours the brave, but do keep mindful of the financial gallows awaiting some.

Do check the Council Tax.
Ours went up 4.9 % this year. Now paying £328 a month. Its Surrey but even so !

Bought ours on a 20 year mortage for 172k, 3 bed semi, double drive, extenstion so big kitchen and extra reception room in the north west, nice area..

been shaving off some years to pay off quicker so now its down to 13 years (well 12 and half) mortage payments gone up from 742 to 846 a month but that's fine as sooner its paid off ill be much better off overall in general. Hoping to have it paid off within 10 years at the most..

Our mortgage is £2500 for a 4 bed, 4 reception room detached house. We live in a relatively expensive town 30 minutes north of London by train.

You have to buy and sell in the right market to work your way up, though. We bought a 4 bed town house (£200k) as soon as we graduated in 2008 when property prices crashed. We sold it about 5 years later for a 66% increase, and bought a 4 bed, 3 reception room house for about £420k in the same town. We sold that a few years later for a 37% increase, moved a few miles down the road to a 4 bed/4 reception room detached for £825 and have renovated it entirely, but it is a "forever home" and won't make us money when we come to sell like our previous properties did. We saw our first few homes as homes we could stay in (size wise) if we needed to, but stepping stones to something more permanent, if the market and income allowed us to be more choosey on style, location etc. That said, our mortgage is large, and we could have chosen many cheaper houses which would still make lovely homes.

We bought a 4 bed detached last year we pay 630 a month over a 25 year term but we over pay each to bring this down we are both 30 and wanted a forever family home and fell in love with home rentals around here are 1200 a month ish so we would not have even considered that or have been able to afford it with out cutting back massively on disposable income and quality of life. I think it is all dependent on your circumstances but I think you should go for it house prices can go up they can go down but it will be yours rentals can go up and can go down but if you have a substantial deposit get a mortage broker and it will be cheaper than renting x

If you save money on a mortgage over rent if you are staying put through a recession and downturn then it doesn't matter if your house price drops.

You will still have an asset at the end versus no asset when renting. The savings over the years would always prompt me to buy and if I'm staying put then a fall in value is of no consequence.

Im not saying to buy at the top of market and overpay but if you are paying a fair price at that time and you are going to live there for at least a few years then a drop does not really affect you. A fall in house price affects those who have to or want to sell.

Also if you can afford to buy, why would you not buy? Especially if your job was as stable as you can get.

OP, where in the country are you? It’s all about locations, even within regions. Southeast is expensive, full stop. In the north of England, there are places where you can get a 4 bed new build detached for £250k, 5 miles away the exact same type of house may be £500k.
Also buying your first home has always been the hardest part of the property owning experience, unless you have help from family. Upsizers and downsizes are the ones that drive up prices since they have more leverage.

Do you actually need a 4 bed? The average person can’t afford it because it isn’t an average house

I have a 3 bed semi
Mortgage is £800 per month
I am the only wage earner

who CAN actually afford them?!
People who inherit. People who are financed by parents. People with jobs paying £50-60k plus in regional areas like Scotland where that salary is well above average.

My house is worth about the same as yours. I inherited otherwise we’d have been unable to buy. My mortgage is £115k on a £300k house. If I hadn’t inherited we’d still be renting in our 40s.

We are hoping to be first time buyers soon too. Combined income of 55k. Currently only pay 575 rent, and save £500 per month into deposit savings, and don't have a huge amount left over. Only one car, not on finance and we hope to have two cars after we buy. No childcare outgoings, no debts, average phone bills. We just don't see how we would be able to afford a higher mortgage than the rent we are paying now. We want buying to give us more disposable income, so we can obtain a mortgage for 230k ish, but we won't be going anywhere near that (plus don't have a big enough deposit saved). We will go for something around 150k (doeable in the northern city we live) so we would only be paying similar to what we do now in rent.

We are also looking at Help to Buy since 95% LTV mortgages have been withdrawn. I figure that using the Help to Buy equity loan would give us the security if house prices plummet. We would get the house valued when prices are predicted to be at their lowest and then pay off the equity loan at that point.

We need 4 beds too, so my prices are based on that.

There is a cap coming in to play on New Build houses that offer Help to Buy next March. It varies by area and average house prices.

We have a joint income of around 50k. We have a 4 bed house which is worth about 300k I think. Our mortgage is about 500 per month because it is only for 100k - we had a lot of equity going into it because we moved out of London. We were very lucky to have the value of our London flat more than double in the 4 years we owned it, then we moved to an area where we could buy a 4 bed house for the same as we sold the flat.

In my area, new builds are ridiculously over priced. You can get more for your money for buying an older property and more space. New builds seem to be tiny box shaped houses with no extra storage space

£700 for 4 bed Victorian terrace but we’ve got a shorter Mortagae term so we could have made it cheaper

It totally depends on area.

I have just sold a 3 bed 1920s semi with a large kitchen extension for £400k. Bought 20 years ago for £110k. House was in an afluent suburb of major northern city.

I have moved half an hour north of previous house, semi rural and have bought a 4 bed 250 year old Weavers Cottage for £345k.

watch out for fleecehold with Bellway.

who CAN actually afford them?!

Second time buyers.

We bought our first house (tiny 3 bed) for £130k, in an "up and coming area". It upped and came, we redecorated and sold it for £200k 6 years later. Instant 60k to put towards the next house. Plus the £10k we'd paid off the mortgage, our original deposit and money we had saved up meant we had £120k deposit on our second house, which was £380k.

When we bought our first house, we were 2 years out of uni, one teacher, one social worker combined income £40k. Tent was £550, mortgage £750 (£110k). Because it was recession and mortgage rates were high.

Second house £380k, run down house in an up and coming area. Large 4 bed but needs £100k of work. £120k deposit. £260k mortgage combined income £70k. Housing market bouyant and mortgage rates low. Our current mortgage is only £970 despite it being more than twice as big!

As has already been said, new builds are priced artificially high, because of help to buy. They know that people who need to use the scheme often just want desperately to get on the ladder, so they take advantage I think.

FWIW, our house is a 3 bed, mid terrace, which cost us a little over £400,000 a few years ago. We are in the commuter belt though, so properly prices are bonkers here a lot of the time.