How can you save enough for a house when house prices keep getting higher?

[grannyinapram]

when I moved out, house prices near my parents house were 90-100k
now those houses are £160-200k
I can't afford to live there anymore.

I live in a really horrible area, ex council houses are 130-140k We can almost afford it. BUT every time we get to that magic number, suddenly house prices go up and we have to save more. By the time we have saved more, we look again and house prices are up again.

Well our savings are worth less now than they were when I started saving.
When I started saving I needed £5000 (plus fees) to get a mortgage.
now I have 10k behind me but we still need £5000 to afford smaller houses than when we first started.

And our savings are just sat there losing money.
The interest paid this year is half of what was paid in last year, despite the amount doubling.
I don't know what to do! I don't know how to get there.

How do you get on the housing ladder when the ladder has been put on the back of a truck and is driving away from you?

any advice?
we are saving as much as we can. A third of our income goes into the savings.

It's completely nonsensical, isn't it? I wonder whether in 30 years' time only people considered high earners will be able to afford to buy at all.

@Ifailed

OP, you decided to have children first, and then look to buy a house?

Well, I'm 41 and won't own a house for years, if ever. If I'd waited to own a house, I would've missed the boat on a family.

@kizzykat91
we have asked our mortgage advisor about using the isa top up as deposit and she said it is up to the lender, and apparently computer says no for us, but we have a low deposit as it is, only 10% so maybe they accept it on higher ones?
worth asking again though, who was your lender? I know some mortgage advisors favour certain lenders so maybe we could shop around a bit more.
looks promising

@Ifailed has to be trolling. @grannyinapram has already said she's 41 (if I read that correctly).... What was she meant to do? She could be waiting to buy a house for another ten years.... imagine if she had reached fifty without ever having a child because she was saving for a house. Bolllllllocks.

@KizzyKat91
I just accepted the MAs advice as gospel. I will call her today!

The worst advice I see on these sort of threads is 'wait for a crash and buy a house cheap', that advice will see you never owning a home.
If a crash dies happen, as they di, prices drop, not by 50% as the dreamers state, but a bit .

If there is a crash, buying a house is then hard, stock becomes limited as people won't sell, lenders really tighten their criteria, making it impossible for an average earner to be accepted. The stock then gets bought for letting investment, then we go round in a circle again

@Ifailed

OP, you decided to have children first, and then look to buy a house?

Odfod!

Houses are being artificially inflated at the moment by the government.

Save the extra cash needed. Lots of houses will be coming on the market soon through covid linked probate so it may be more of a buyers market this coming summer.

Aim for a 35 year mortgage and a compact modest house which needs work or can be extended. Aim for the best area you can afford, even nice areas will have cheaper ex council properties for sale.

[quote AllTheWayFromLondonDAMN]**@Ifailed* has to be trolling. @grannyinapram* has already said she's 41 (if I read that correctly).... What was she meant to do? She could be waiting to buy a house for another ten years.... imagine if she had reached fifty without ever having a child because she was saving for a house. Bolllllllocks.[/quote]
Absolutely!

We bought our first home (tiny flat, still living there...) when we were in our early 30s, AFTER having children (gasp!), because before having children, the idea of being so tied to one area made me break out in a cold sweat. The idea of buying had never crossed my mind, as it didn't tie in with my values pre-children. Not everyone can or wants to live such a prescriptive life.

AllTheWayFromLondonDAMN
certainly not trolling, don't understand why someone would complain about how hard it is to save money at the most expensive time of family life, with growing children, child-care etc.
It's hardly news that people tend to save up to buy at the time when they have the least outgoings, at the start of their relationship. My parents did it 70 years ago and they were hardly trail-blazers.

70 years ago house prices compared to salaries were much much less so that's no comparison at all, it was much easier to get on the housing ladder then.

We are in a similar position OP with our help to buy ISAs although only been saving for about two years. We plan to max the gov bonus out on them and then buy but we are know we are being gifted a chunk of money from my DPs too, without which we definitely couldn't afford to buy in the area we live in. We want to stay in this area as it's my local area, close to my immediate family (who help to provide childcare), close to good schools and in catchment of the only decent community comp in the whole city. If it wasn't for the lack of good comps we would definitely consider moving to a few other areas of the city where value for money would be much better but I can't risk my children going to a terrible secondary school, it's too important to me and they wouldn't get in to any of the faith schools as we aren't religious so unless they turn out academic enough to go to the grammar school, that local comp is our only other good option so we need to stay near it. House prices in this area have been increasing at a ridiculous rate over the last two years. I don't know how anyone could afford to buy in this area anymore without financial assistance from family and I don't know a single person my age (twenties) who own a house around here except one of my siblings who was gifted some money by my DPs too. The average age in this area has increased and it is also very popular now with people moving from down south bringing their extra money with them to overpay for houses here pushing the prices up so locals can't afford them anymore. Very frustrating.

You say you have 4 children - well each child costs about £150-200k to raise according to google. That’s quite the house you could afford if you’d had less.

Before people tell me to FO - I’m not saying op shouldn’t have 4 children or should have had less but there has to be an acknowledgment that our choices and priorities impact on other things. I have 3 children and really wanted 4. DH was the voice of reason because we knew that certain holidays and lifestyle choices would be out of our reach with four.

So it’s swings and roundabouts.

You could move to where property prices are lower, and look at smaller properties; perhaps a flat.

Don't expect your first purchase to be similar to what your parents have. Don't expect to be able to live near family. We moved wherever we could get work AND afford local housing.

Lower your expectations about quality of interior fittings. Sp long as ithe building is a safe solid structure, oldfashioned fittings and hideous decor can all be changed later. Learn how to DIY .

Buy solid old furniture (cheap) ; scrub floor boards and put down IKEA rugs; kit out your kitchen from charity shops.

Save a fortune on food by learning to cook from scratch.

I haven't read all the replies, but I feel for you op.
My sons are both single and in their 20s and they are aware they probably will never own a home. They both work full time but not high earners and prices in our area are huge.
I find it sad so many people are struggling to buy a place.

It is very difficult. The deposit for some is the big issue so if people buy as a couple and before babies come (my parents put babies off for nearly a decade so they had 2 professional salaries and bought before I came as the only way to do it in those days for them) and we did the same- bought before we had children and with 2 full time professional salaries and my child has done the same. However it is certainly not easy.

95% loans mean many more people can buy as it means you need 2.5% saved each which is about £7500 each to save to buy a £300k.

Then even if you can raise the £2.5% each you still have to have enough income to borrow enough to buy. My grandparents' house in Bishop Auckland (NE England) which was a 3 or 4 bed terraced with cellar sells at £143k - just looked up their road www.primelocation.com/for-sale/details/57116853?search_identifier=1defb04785d260a50883dcdcf9b00066
My son bought last month in the SE (outside M25 but on the tube, only just on the tube) £350k - small 2 bed terraced house with garden. His older brother got a 3 bed new build detached in Oxfordshire for about £310k last year which is very nice.

They are obviously very very lucky their mother has worked full time without a break since 1983 not even for maternity leaves and I picked law rather than some other career so can help them out. it does however mean I have a mortgage at my age and no pension however as I am paying it forward and to HMRC.

@BrieAndChilli

I don’t think it’s unreasonable to ask why someone who is complaining they have been saving for a long time but can’t afford to buy a house because of the deposit required (from her sums it looks like she has been saving for a 10% deposit) didn’t just buy a house two years ago with a 5% deposit when those mortgages were readily available.

[quote grannyinapram]@kizzykat91
we have asked our mortgage advisor about using the isa top up as deposit and she said it is up to the lender, and apparently computer says no for us, but we have a low deposit as it is, only 10% so maybe they accept it on higher ones?
worth asking again though, who was your lender? I know some mortgage advisors favour certain lenders so maybe we could shop around a bit more.
looks promising[/quote]
@grannyinapram

My mortgage is with nationwide and my deposit was 15% but they included the isa top up in that 15% 😊 you should just need to show them proof that you have a help to buy isa.

To the OP, the housing market behaves not that dissimilarly to stocks and shares. For some reason a lot of people have some special confidence in the housing market (it only ever goes up, can't go wrong with bricks and mortar etc). If you truly believe house prices will only ever go up, you could seriously consider investing your savings into a tracker fund that replicates the UK housing market. In that way, if house prices go up, so does your deposit. Obviously this will work both ways, if house prices crash then so will your deposit. Depends on your risk tolerance.

It’s so hard! We had the help to buy ISAs and I would keep them going. Use the money after for fees. We scraped enough for a 5% deposit by moving most of our wage into the savings account (not the ISA as we had two places to store money as we were saving just over the amount for the help to buy ISA) and put an offer in. We had to go for a fixer upper and go below the asking price (which thankfully they accepted). Then move a little bit back out of the savings to cover bills that month and topped it back up over the months as the house sale went though. Surveyor fees went on the credit card and whatever we saved after we put that little bit back, went on fees. The solicitors claim the amount back from your ISA but basically kept ours for their fees. It’s far from an ideal way but basically just offer when you have the minimum you need and work out fees after.

35 year old daughter and her partner live in London and have just purchased their first property (1bed flat) this week ... yaay.
But she's worked two jobs for the last 10 years and had a sizable contribution from my pension pot. She sacrificed having a family and I suspect now we won't have grandchildren sadly.
Unless her wages drastically improve she won't be able to move up the property ladder until we die though

I bought a studio flat (5 years), bought a 1 bedroom flat (3 years), then bought a 3 bedroom house.

Start off small, then worn your way up. Also, I lived on 40% of my wages for the last 9 years and saved 60%.

While friends were buying new cars and going abroad, I was saving. I haven't been abroad in 9 years, every £1 counts.

Now, they complain they cant afford a deposit for a better property, and im like, I wonder why....

You can't. Not whilst renting. We are in a similar situation and have savings and help to buy ISA's. Every time we start to think we can start looking, prices rocket again. Without family help or financial windfalls it's impossible.

Plus the stamp duty holiday keeps getting extended which only makes it more difficult for first time buyers. As for slashing deposits from 10% to 5%, 5% of an overpriced property is still unaffordable for most first time buyers.

Similarily, had to work 1000 of hours of overtime....again, because I knew there was no other way.

I do get annoyed when people complain they cant afford houses. It takes years (in my case 9 years) of hard work, working night and day, planning and sacrifice.

Me and partner also waited on having kids and combined our finances towards this goal.

@Stellaris22

You can't. Not whilst renting. We are in a similar situation and have savings and help to buy ISA's. Every time we start to think we can start looking, prices rocket again. Without family help or financial windfalls it's impossible.

Plus the stamp duty holiday keeps getting extended which only makes it more difficult for first time buyers. As for slashing deposits from 10% to 5%, 5% of an overpriced property is still unaffordable for most first time buyers.

Yes you can.

Before I bought my studio flat, I was renting a room in a shared house. Because I knew that renting an entire flat or house would have taken up all my money.

People need to think and plan ahead. If you dont, thats on you.

@TangerineGreen

We’re in the same boat... Be careful with the help to buy isa... we did this for a few years, factored the government top up into our figures then DH says it can only be used on a property with value of £250k or less... (haven’t seen it myself but he quite reliable usually) but around here they are all higher than this so we can’t use the top up.

Or 450 K in London.