To think most property owners don’t understand how hard it now is to buy a house

[Boredfromboredshire]

DP and me earn 40k between us and our rent is 1200 a month for a 3 bed house. We don’t have rich relatives, we are in our early 40’s and circumstances (ill health) meant that we didn’t buy a house before. We can’t save a deposit & houses are expensive by us. We have stable jobs & our kids are happy so moving in the current uncertain time’s isn’t an option. Life has happened to us & some of it has been out it control.

Cue well meaning friend (who bought their house for peanuts) asking me why we couldn’t afford a house when we could get a house in a cheaper area for ‘only’ 400k. I’m so fed up of it. We really want a home of our own & we would move but in the current recession, it’s not a good idea to give up a job. And we can’t afford to save. My friend (whose deposit was 12k can’t understand it and looks on pityingly while telling me the house they bought for 120k is now worth 700k.

For many of us, the housing market is closed for ever. I’m so tired of the pity and the complete cluelessness- I quite often feel utter despair about it. It makes me feel such a failure for no real fault of our own. Some people were lucky because they happened to buy at a particular month in time & then some of us couldn’t & it’s over.

I don’t think people who own really understand what it’s like. Low interest rates, cheap mortgages, everything weighted in favour of owners while renters are treated like the Victorian poor.

Aibu to be sick of it. We are a normal family in normal jobs.

I am 51. I remember in the mid 1980s when the Tories wanted to bring in university fees and we protested and marched against them, we were aware it would make younger generations much worse off. Same with selling off council housing stock, it was very openly discussed at the time that it would impoverish future generations. Now we have had economic policies worldwide which has reduced the value of fiat money and investors have turned to hard assets, such as housing to protect their savings. As a result house prices have shot up in the UK, Ireland, USA, Australia and New Zealand and I am sure many other places. House prices have become completely uncoupled from wages which have stagnated in most western countries. I lived in Germany from 2009-2015 and I was pleasantly surprised at how reasonable house prices were in most places. Some cities such as Munich were very expensive. Renters were also protected by strong laws that gave them security and stability. For example you couldn't evict someone in they had been paying rent unless the home owner or their family were moving in. I am pretty confident that rents were regulated too. So much of this comes down to government policy and it was KNOWN that future generations would be substantially worse off when decisions were made in the past.

I don't really understand why people go into have dc though before owning a house. The only way me and dh got on the property ladder was by planning to save for years and years before dc. I'm glad we did. We saved anything and anywhere we could.

It was very hard but it is possible. I think if you choose to have dc before though then the odds are against you because the banks take into account dc. I had saved £20k before I even met my dh since I turned 18 (all minimum wage jobs and no benefits) admittedly I had a few jobs on the go, then together we continued for 4 more years and reached £40k deposit. We rented while we saved as well. No family help whatsoever.

I think if you have health problems that's the only reason you can't save for a deposit unless poor life choices are involved and you leave it too late. It's very very difficult but absolutely possible.

What noone is mentioning either is that in markets like London and other big or fashionable cities foreign investors have also affected the market. I know that in my own city the estate agent was telling me she had just closed the deal on a house for a foreign investor who already had two other rental properties in the city. Due to changes in monetary policies people in other countries have been looking for safe havens for their money. They may be on the luxury end of the market but they distort the market as a whole., as it pushes prices up in the next tier down and has a knock on effect.

Also in the 1980s when they were selling off council houses the population in London was shrinking. Now the population has exploded and there is less housing stock available than there was a generation ago. When a greater % of the population could access council housing, it kept a lid on private rents. Now a much larger % of the population is forced into the private market which has pushed rents much higher. I have lived outside the UK for some time. I was shocked to find that in 2015 my best friends son was earning LESS money per hour as a hairdresser in London than I had been earning in 1985 as a 16 yr old waitress! Stagnating wages is a huge factor.

When I was growing up in London in the 1970s and 80s it was very typical for people to get married by 25 and have a couple of kids and a house by 30. They may have had to make sacrifices but it was doable. They may have saved from 20-25 as less people went to university. Noone had to "give up" on owning a home. Noone had to decide they could only afford one child. When my friends were getting married in the early 1990s NOONE was having those conversations. Many of us had gone to university when there were no fees, so nobody had student loans. It is really wrong and unfair to blame people for economic factors outside their control.

@Oliversmumsarmy I guess we can always tell OP to move to Thailand in old age. I mean, that is retirement sorted and we tell her it's about choices and we should just move out to cheaper places. In fact if all our old people move to Thailand, it would save the British state a lot of money as the state doesn't pay for so much care and the care homes there are cheaper than in the uk. Old people shouldn't complain that the state pension is so little as they can just move out to Thailand, it's not like they need to worry about getting jobs and leave the houses for the economically productive people.less stress for the NHS. If you ask me this is a better proposition than asking economically productive citizens to move out of their place of work .

Thailand is incredibly cheap, my FIL doesn't even have a pension and he lives a good life over there. He doesn't own a home there, rent is cheap.

/Sarcasm for the people who don't get it.

OP at the end of the day, your income is very low for where you live, you are choosing to live in an incredibly expensive area.

I find it interesting to see how you scoff at others for making different choices from you, you seem convinced that the housing market alone is to blame for your predicament.

Obviously this is not the case. It is not a popular concept on here, but like a few other posters, we scrimped and saved when we were very young. We had low incomes so we both took on 2nd jobs and lived a very frugal lifestyle. We had no internet, no landline, no tv for a couple of years and didn't eat out etc. It was only a couple of years of our lives and was totally worth it. We didn't have dc until we were financially stable. I later retrained into a new career to further boost my income. We moved to a more affordable area.

We are very lucky we didn't encounter the problem of ill health that held you back, but life hasn't always been rosy either with my youngest dc having health complications and the eldest having ASD.

We are now late 30's and living in a 4 bed detached with a lovely garden. We live in a very cheap part of the UK, I think in many areas of the UK, you would only get a one bed flat for the cost of our house!

Obviously I empathise with your situation, obviously you won't ever buy a family home in Oxford on your income. I think it is a bit short sighted to scoff at how others tackled things whilst at the same time assuming none of the rest of use understand how hard it is to become a homeowner

Have you considered retraining? Yes it is tough with dc but many of us get through it.

This thread is just like this..

I own a 2 bed flat and we still save but I don't go on endlessly about my 'frugal' lifestyle and all the sacrifices I made.

But maybe cos i am young. maybe when i am the age of many of the posters here, I would tell my child- I used to dream of living in a corridor.

EI: 'E was right. I was happier then and I had NOTHIN'. We used to live in this tiiiny old house, with greaaaaat big holes in the roof.

GC: House? You were lucky to have a HOUSE! We used to live in one room, all hundred and twenty-six of us, no furniture. Half the floor was missing; we were all huddled together in one corner for fear of FALLING!

TJ: You were lucky to have a ROOM! We used to have to live in a corridor!

MP: Ohhhh we used to DREAM of livin' in a corridor! Woulda' been a palace to us. We used to live in an old water tank on a rubbish tip. We got woken up every morning by having a load of rotting fish dumped all over us! House!? Hmph.

EI: Well when I say 'house' it was only a hole in the ground covered by a piece of tarpolin, but it was a house to US

Guess it never changes, the younger generation are always feckless idiots. Somehow we turn wise when we become 40 :)

The choice here is...

Wether you want to keep protesting, about house prices...

Or just, adjust your life, save and buy.

If house prices fell 50%, defaults and poverty would increase. Hard working millennials would definitely lose faith in capitalism.

The state would then have to tax individuals like yourself, even more heavily, to provide social housing.

You gripe would no longer be with housing but taxes.

I prefer the current model, invest in land and infrastructure for a return later in life.

Even, if a house falls by 30%, you would often do better, as the mortgage would be much cheaper, than renting.

Weigh up the hard decisions you need to make, stop expecting the goverment to hand you others wealth.

If the goverment acts to remove my wealth and hand it to you, I will remove my wealth before the goverment does so.

So recently, Coronavirus has shaken the market, its likely to lead to some reduction in house prices.

The government and banks responded by:
£200 Billion QE, which will push up house prices long term.
Mortgage holidays for 6 months.
Some banks will not reposes for 1 year.
Created a new scheme for first time buyers.
Lowered interest rates.
6 months furlough.

I suspect interest rates my go negative or if they don't, expect plenty more QE to pump up assets prices, such as houses even more so.

An opportunity may present itself later this year or early next to buy at a discounted rate. Then in 2-5 years expectvan even bigger boom.

Desiringonlychild

Bored wants a house in Oxford. She can’t afford a house in Oxford.
She can afford a house 1 train stop away in Didcot or Abingdon

Why would she move to Thailand? What has Thailand got to do with anything?

@Oliversmumsarmy the main argument for home ownership is retirement. A mortgage free house enables one to live on a much lower income. Inflated rents and retirement in the uk don't really go together; housing benefit can often be axed or insufficient. There is no indication that OP can't pay her rent now in a location that she doesn't want to live in. Also no indication she is at risk of being evicted (the fear of getting evicted was what prompted me to buy my 2 bed flat).

Actually bored isn't very interested in ownership anymore. she is already over 40 and feels it is past her time. she just requests that people don't look at home ownership as the be all and end all. . Tbh what everyone is advocating on this thread is move out of an ideal location to a sub optimal location from age 23, so that one can retire at 67 (state pension age which keeps rising). That is over 40 years of living in a bad location for the sake of 20 years of living in a mortgage free house. I assume the last 10 years are going to be spent in a care home, probably at death's door. Which is to be paid for using the proceeds of the aforementioned house. Doesn't seem very smart for OP to take on all this debt so that she can spend 20 years in a mortgage free house in a bad location. .

That is assuming she is able to retire at 67. Some people can't even with a mortgage free house.

What I was actually getting was that people keep pushing OP as a younger person to move to sub optimal locations to get on the ladder, but why doesn't anyone push the pensioners to move to cheaper locations so their pension doesn't need a triple lock. Its a bit unfair isn't it?

Pensioners on a state pension only of about £150 a week are not really living in clover but I certainly agree with higher taxes on those of them who are tax payers (eg if we merged NI and income tax that could then be applied to those pensioners whose pensions are more than the single person allowance).

I also did not support lock down as we are sacrificing a few mostly older people for the many young in an unfair way.
I have given my children and HMRC my pension when I turned 55 for housing and all my savings and funded them so they have no student loans so obviously my 5 have had things a lot easier than I did but I accept they are execeptional not least because their mother has worked full time since 1983 without a break even for giving birth so I have more money than women who work part time or have never really worked at much out side the home after having children.

Some of the areas people want to live now were grotty when older people bought there. Eg I remember going to a law firm partner's house in somewhere like Notting Hill he had just bought (very expensive even then) and he had a sitting tenant in the house even - she came to the party). Another commuted from Brighton (in the 1980s) because of an expensive divorce which is not an easy journey for every day. Another whose house I went to was in Oxford I think it was as they could not afford a family house in London even in those days.

Desiringonlychild

Buying a house is about so much more than living mortgage free for a few years after you retire.
It is about paying less to live somewhere each month than renting.

It is having the ability to be able to paint the walls to suit yourself.
To know that one day the payments stop.
It is having the ability to remortgage and help your children, help family out or just renovate and put in a new kitchen and bathroom to make your life easier.
The ability to be able to sell up and move to a cheaper area and buy a holiday home where you can have family holidays or just random weekends to relax without having to bother with booking somewhere and being disappointed when you get there

The majority of us have had to scrimp and save and go from one job to another each day to be able to afford to buy a roof over our heads.

The fact you think university graduates earn between £70-100,000 per year and can afford £800,000 houses and people are able to put away 20% of their income each month (a lot of people are lucky to be able to find 20p just before pay day) makes some of your comments come across as either not understanding people live very different lives to you. (You are probably from a well off family if your father is a property developer dealing in luxury flats in Singapore) or quite rude when you compare peoples experiences to a comedy sketch.

@Desiringonlychild

Rents increase with market competition, if other more wealthy/able individuals move in, her rents will rise. Risky strategy.

You would not live in a suboptimal location for 20 years, possibly 5-10 years max.

You would have more disposable income, to pay down capital or enjoy life.

If histroy continues to repeat itself, you would most likely make alot of money also and can pass that wealth onto children.

You would possibly end up in a much more superior house/area than you could ever afford to rent.

E.g. 100k house, average rent £600. Average mortgage £300.

Appreciates to 150k in 5 years, extra saved from rent (£300) is used to pay capital, also, by year 6 you owe only £50k. You now have 100k if the price inflates, wish is extremely likely.

You are now able to buy a house for 300k, 100k deposit, mortgage £791... possibly looking at £1800 rent a month?

You do not have to use your house to pay for care, if you sell it earlier and not everyone dies within a carehome.

As pensioners have earned their right to own that property, they paid down the capital... why should they be forced out? The triple lock is a controversial policy, I agree, however they've all paid their taxes, that was the deal.

@Oliversmumsarmy my father is a property developer in commercial property, but DH and I saved for our flat together, no money from him. You would find the recommendations for 20% savings in any site offering financial advice; its common knowledge that people should do it, of course many people don't but it doesn't mean that its weird or unusual.
I don't get the continued virtue signalling. OP's post was about how people are constantly thinking about buying property as a be all and end all; and renters are looked down on. I was a bit sceptical about this but i think this thread proves it.

Btw my views on property are from my dad- he told me that buying property as a primary home was overrated and people sacrificing their career prospects for owning a home was dead stupid. This is from someone who makes money from property. I was looking at houses in high wycombe(grammar school territory) and he said that the commute would just make it a terribly stupid decision. Owning property only makes sense as an investment (when you have plenty of money) or if you buy when the market is super low. Which is why when i bought my flat, i bought it primarily cos i wanted it for the school catchment, not because i needed to.

A lot of people are going to get stung and lose their homes even after scrimping for a deposit for an overpriced home, at least OP probably isn't one of them.

@TheGuruishere london house prices would not rise. I bought my flat for 400K last year, am expecting it to fall to £250K by next year. It is in zone 3 too. Am glad i took out 5 year fixed and would try to repay as much as i can over the next 5 years so as not to end up in negative equity.

Hopefully the houses depreciate too. In my area of east finchley, the terraced houses and detached depreciate at a faster rate than the flats since 2016. though this may change as london rents have dropped 15%. Good time to be a renter.

If you simply do the maths, anybody who can see how finance and markets works, would buy and adjust.

Only those whom have to live in a certain location due to work, let's say a specialist steel worker. Even then for it to make financial sense, your pay would need to cover the difference between renting and a mortgage. Plus more pay, for savings otherwise it's a bad decision financially.

If you enjoy your career that much, that your willing to sacrifice financial prosperity, that is a bad choice.

I'm a university grad, I could earn easily 70k if I really pushed myself. I'd probably end up with health alignments, psychological problems and hating life. However I chose to earn under half of that, to preserve my health, be a responsible parent (no childcare) and enjoy life. What's the point in earning 70k, if a good chunk of that is spent on childcare and I'm taxed at 40%? The more you earn, the more your average hourly wage goes down.

Owning a business and avoiding tax, well that's a sensible idea 😉.

So it's alot more complicated than just chucking figures around, its about balance and value, value for your money earned and spent.

Oxford has one of the biggest disparities between the average wage and the average house price. You will need to compromise. Bicester?

@Desiringonlychild

Where you've bought is the problem...

The riskiest place to buy is at the top of the housing market. Any negative sentiment or financial implications, will impact there firstly.

The lower/middle ground is safer and less likely to see the same price falls, due to there being more competition. More people can afford to buy houses in Birmingham and Manchest compared to London, so demand is greater...

Even if house prices fall, it will only be temporary, you now have to hold that property for 2-3 years, allow the £200bil of QE to kick in, other future stimulus policies and they will move above there current price.

London is a well developed city, Birmingham and Manchest have far more scope for higher returns. For example Birmingham will host the common wealth games and have HS2, loads of redevelopment and cash will be flowing in. This will act to push up prices and buyers in these cities will see greater returns.

YANBU.

Exactly, so if the whole market falls together, the people who come out worst, are those who have over leveraged themselves and decide to sell. Don't sell at this point.

If all property falls by 20% and you have significant equity, you're a winner, if you played the game correctly.

If two people buy, John buys a house for 100k and Jill for 200k. They both pay off 50k by year 5, after putting down 10k deposits.

However house prices fall by, 20%, 100k to 80k, John with 30k equity. 200k to 160k left Jilll with 10k equity.

Who won, the game?

Then John sells his property for 80k and buys a house for 160k by Jill, with 30k, mortgage at 130k....

Jill, however is now nearly in negative equity, she must not sell, she can only sell when the market recovers. John is essentially winning because of Jill, theres alot of people within the area like Jill. They wont sell, John moves in. Now when the market recovers back to 200k. They both pay off 30k over 2 years.

John now owns 100k of the property and Jill owns 70K.

Jill essentially transfered wealth to John by over leveraging herself.

Those with the most capital win and tend to always win long term.

That's why we are all advising that the original OP, buys a cheaper house and moves up.

Yes, that makes sense and we paid off the two mortgage on our "buy to lose" flats and on our previous house by 1996/1997 when we sold them at a loss so had a lump of equity to go into my current house which I hope never to sell and on which I no longer have a mortgage.

One big change between my and my children's times is stamp duty even after recent reductions is much higher now in London than it was so an intermediate move can mean you are paying what is a year's rent in stamp duty alone. That is one reason two of my children whilst property owners ended up letting their places and renting for a time.

@TheGuruishere

But if property prices go up Jill wins.

@Floatyboat

Jill is winning, if property prices continue to go up forever, however the higher you are to the top of the market, the less demand and competition there are for properties. So really John always wins 😉.

I'll explain why, Jill bought a property in a wealthy area of Birmingham for 200k (everyone wants to live there, but cannot afford to), John on the other hand bought, on the edge of that wealthy area for 100k.

There are 50 buyers, with deposits scanning the area for their first house, they all have 10k deposits.

Now, most of these buyers do not have the income, to borrow a loan from the bank for 190k, however much more can get 90k, some more can even get 130k.

25 buyers view John's house and would like it (it's not quite as ideally located as Jill's) they dont stay on the market for long due to competition.

Only 5 first time buyers view Jill's house and decide it's out of reach (sensible decision), Peter reminds his wife that if he loses his job, they wouldn't be able to pay the mortgage.

Now out of the 25 that view John's house, 10 decide they are interested, they get into a bidding war and the final price is £125k.

So as you can see, if house prices went up all at the same % then Jill would always win, but that doesn't really happen. Unless you've got subprime mortgages, mass corruption in the banking industry, goverment infrastructure changes or a new high paid industry emerges in that area.

The housing market has cycles, we look to becoming to the end of a recent patched up boom from 2008.

They might not really fall that much tbh, it all depends on jobs and how over leveraged people are. Tbh I cannot call it, Covid19 could bring us a second wave and that would cause mass defaults but I suspect the government will prop the housing market up.

You will find, that

If they do fall, the more your house is worth, the more it's likely to fall, due to supply and demand.

Those looking to move up the ladder are best placed when we are at downturn.

Those looking to down size are best placed to do so, when the market is booming.

So by the goverment allowing wealthy investors, to buy up property in London, they are actually giving you wealth also. As this acts to push up the price of your property.

my father is a property developer in commercial property, but DH and I saved for our flat together, no money from him. You would find the recommendations for 20% savings in any site offering financial advice; its common knowledge that people should do it, of course many people don't but it doesn't mean that its weird or unusual

The privilege you had in growing up in a household that was obviously wealthy. It doesn’t matter that your father didn’t give you a penny. He and your mother gave you the ability to earn money.
You I presume didn’t have to go to work to help your family out or miss out on university because you couldn’t afford it.

As for saving 20% of your income.

Have you ever been on benefits.
Have you ever had to struggle with low paid jobs
Do you know the reality of people’s lives.
One of my friends has brought 2 children up on a combination of p/t work and benefits on £1400 per month in London.

By your account she should have been saving £280 per month and was financially reckless for not saving anything.
Do you understand that for a lot of people it isn’t possible. They don’t choose to not save money. It just can’t be physically done

It might be financially advisable but most people are just trying to keep the bailiffs from their door and trying to pay people something each month whilst keeping a roof over their children’s heads.

What I have noticed is auction properties usually give a signal of things to come.

We are moving soon and have been looking at auctions as well as through estate agents.

So far of the places I have been interested in at auction they have gone for way above the guide price and even more than the beautifully done places that sold in the latter part of 2019 that are in the same road

Atm the prospect of prices falling doesn’t seem to have been got through to the cash buyers yet.

One place went for double the guide price which I thought was a pretty fare price and £23,000 more than its next door neighbour and needed gutting as well.

I have seen similar that are being sold through an estate agent that are £125,000 more than the previous sold price in the road in November 2019.

I thought I had found a buyer before lockdown.
We had all but agreed a price. But his partner needed to see it.
From what I am seeing I think I need to raise my price not lower it.

OP, I started from scratch with 3 children. Typical rents were £1200 and I struggled to afford so I decided I'd buy. To do this, I lived in a really awful rough place, not enough room for half of typical rents, got my outgoings super fine tuned, credit rating 999, hot rid of phone contracts - let them expire, got rid of other extras, and ensured my bank showed minimal outgoings compared to incomings - and saved like crazy. I got a mortgage for £780 a month for 14 years. We literally lived so poorly for a couple of years and I didn't have a bedroom.

Don't listen to people boast. See if you can make s temporary adjustment to allow you to save. I too have never had a penny from anyone. You can do it!