Page 8 | Let's do the math for Kirsty regarding an affordable home

Rewis · 07/02/2022 15:42

We can list all the tips how to afford housing. But the options shouldn't be to either to let go anything and everything that you enjoy in life, giving up independence and live with your parents till you're 30 and plan your lifestyle around where you can buy property or being able to buy property

LemonCake79 · 07/02/2022 15:45

Agree with these observations about how hard it is but wanted to add a note about the cost of university education. When I graduated I had to pay a fee of £1100 or so a year and everyone got a loan.

My parents paid my fees and my rent (yes, I was lucky but this cost them about £4K a year so accessible for those on a reasonable wage, not like now) on the basis I saved the loan for a house deposit. I had a job for my living expenses and books.

I graduated with £10k on almost zero interest. Used it for a house deposit and had paid off the student loan by the time I was 29.

Now I'm heading to have my mortgage paid off by 45 all because of the good fortune to have had an affordable university experience.

This is totally inaccessible for young people now, even without Netflix and coffee.

Hopeful201 · 07/02/2022 15:47

I bought at the time when the house prices suddenly fell and mortgage rates went sky high. I had negative equity and couldn't afford to eat. Bloody awful.
I wouldn't wish that on anyone, my DS are going to have a hell of a time buying a property. But they are lucky as we will downsize and give them something as a deposit-or they return home and can save.
The issue is the huge mortgage deposit required along with ridiculous house prices.

Poor kids is all I can say.

Hadalifeonce · 07/02/2022 15:49

When I bought my first property, my mortgage consideration was 2.5 times joint salary, with 5% deposit. This actually had the impact of restricting house prices, as lenders were not very flexible, so vendors could not price themselves out of the market.
Then 0% deposit came about which seemed to inflate house prices temporarily, then people were left in negative equity, which should have kept prices low, instead, lenders decided to loan more times annual salary, allowing house prices to rise more and more.

NoNameNoGane · 07/02/2022 15:51

@notacooldad

£90k now would get you nothing at all Depends where you are. Presumably you are in the SE?Not everyone is living in the overpriced bubble. Most of my friends children are buying houses in that price range. Ds aged 25 has bought a semi for £170,000. Ds 21 has bought a 3 bed semi for £140,000. Both houses were ready to move into. No financial help from me or Dh needed

You really don't want to suggest that people from the SE start buying in your area. Believe me, if they do you won't find anything for £140K ever again. All of the "cheaper small towns" in our area (not SE) are now too expensive. Everyone I know who is my age (mid 30s) and owns a house either a) lived with parents into 30s and still had an extra bung (from desperate parents) for the deposit or b) inherited I have been looking for a 1 bedroom flat to rent (for myself and DS) and cannot even afford that in a 15 mile radius, let alone buy. Am I supposed to move all the way across the country from friends / family / support network / job?

Gingernaut · 07/02/2022 15:52

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Rewis · 07/02/2022 15:53

I think it's also important to remember that people are older when getting on the property ladder so mor elikely going to have spouse and kids already or soon. Traditional starter home is nood appropriate anymore. So then again more expensive to buy property.

Also, I don't know anyone thay buys coffee and croissant every morning. And giving up gym entirely is ridiculous suggestion. Maybe find a cheaper tha £150 Spa gym. But nit having hobbies or doing physical exercise you enjoy sounds miserable.

Calennig · 07/02/2022 15:54

Living with my parents wan't an option I was offered.

I was lucky to get the sofa in short gap between finishing masters and starting new job as rooms were full of siblings. I had some debt from undergraduate degree but not much and fair bit from masters then had to take another loan out to move to area where my new job was.

DH lived with his parents 6 months to finish PhD - then had job he got was hundreds of miles from them as found nothing near them.

I'm not sure if we'd manage having all three children back as DH would love to move jobs - which in his career likely means a move - he can't till DC finish exams but will possible be to more expensive area thus smaller house.

TheFairyCaravan · 07/02/2022 15:54

DS2 & DDIL bought their house at 23 &24. They’re both nurses. They were saving for it while they were at university. DS1 rented a house for the first year after he qualified and they lived with her parents, rent free, for the second year so they could save as much as possible. They did literally nothing. They took packed lunches to work, didn’t have holidays, asked for clothes for their Christmas & birthday presents, didn’t have contract phones. The house they’ve bought is a doer upper and DS2 is doing most of the work themselves.

DS1,27, has a deposit saved to buy a house. He’s in the army so obviously he’s got minimal housing costs atm however he’s a saver. When he got his first month’s pay he opened an Isa and he’s put money in there every month ever since. When he’s away he saves almost all his wages.

It is much easier for some people to save than it is for others. My kids know they’re in privileged positions. DS2 wouldn’t have his house if it wasn’t for his PIL’s putting them up rent free, and DS1 wouldn’t have the money he has if he had to pay average housing costs for his room.

Original poster

kirstyalslap · 07/02/2022 15:54

@MyDcAreMarvel

I agree with you on principle op , but that’s one cheap gym membership

To be fair to everyone DH just told me it was actually £18 for the gym! sorry, that's where the extra £50 grand came from! Apologies Kirsty!

OP posts:

XingMing · 07/02/2022 15:55

I tend to agree with much of what @Pazuzu has raised regarding population growth and the demographics. It's not a conspiracy by the elite to suppress everyone else, although I can see why GenZ might consider it so. QE has ensured there's a lot of cash chasing assets, and prices have rocketed.

Where we live, in the rural SW, wages are low and opportunities limited, the rush to buy family houses outside of major cities has seen prices surge since the pandemic. Ours (the only one I watch closely) has gone up £300K since my NDN sold in 2018. And there's not a single house for sale in this village.

Lockheart · 07/02/2022 15:58

Thing is, people can bitch and moan about "young" people (which in this instance includes people into their 40s!!) being feckless and spending money, but they're ignoring the serious problems coming down the line that a lack of home ownership among younger people will create.

People will have fewer children, and later in life. You can't start a family in a flatshare. This is going to have major consequences for the economy and society in the future.

More people will be retiring without owning a home. The current prices of rent mean that this is a truly scary prospect. How can you pay £150-200/week rent on a state pension of £150/week?

People live longer and need more care. This is often paid for in part by the sale of houses. But if they have nothing to sell, the state will have to foot the whole bill.

It is going to cost our Treasury (and by extension, us) a phenomenal amount of money if we don't address the serious lack of home ownership in the younger generations.

5128gap · 07/02/2022 15:58

If you live with parents for free or even paying board its doable, but for people who are renting with all the expenses that go with it, I don't know how they do it. All the young people I know with houses went straight from parents home to buying. Those who got a rented place are still renting. Relatively cheap area too.

Rewis · 07/02/2022 16:00

Kirstie also suggested moving back in with parents
I just can't really wrap my head around this. Maybe it's because its not common alongs my peers but shouldn't your 20's be about learning adulting, gaining independence. I really couldn't imagine livign kn my own for 4 years in uni and then moving back to my childhood bedroom and still becoming full blown adult. Maybe other people's parents are different but there is no way we could have had a flatmate relationship amongst the 5 of us (parents, 3 kids)

onlychildhamster · 07/02/2022 16:00

@Rewis I don't see it changing tbh. I mean, the nuclear households we see in the West are very unusual to me. And when i read about history, it wasn't so long ago in Victorian times that people lived communally as well. my husband's grandfather is German and after the war, he lived with his new wife with his mum. When DH and I married and we lived with his mum to save up to buy our flat, he commented' oh just like in the old days'.

Why is it so unusual with the stagnation of living standards in the west that we become more like our Asian counterparts who live communally. My father bought his house with his parents; this was in
Singapore in the 1980s. Vast majority of Singaporeans do live with their parents until they buy in late 2 0s and early 30s. It is normal in China hence why house prices are 30X average salaries (cos you are looking at 4 incomes, not 1). It is a sign of a rich country that everyone has their own nuclear home, but maybe it is a luxury we can no longer afford. This might feel unjust but then against the UK has been a rich country for a long time; empires do rise and fall.

FixTheBone · 07/02/2022 16:01

You only have to look at how much it costs in materials to build a house, compared to how much they sell for to realise the real problem is is a shortage of houses.

Developers don't want to build loads as it will inevitably narrow their profit margins. Why build 100 houses for £50k profit on each, when you can build 50 for £100k profit?

Catswhisky · 07/02/2022 16:02

I live “up north” in an average market town just outside a big city. I’ve just looked and the cheapest flat (1bed) for sale is 150k and the cheapest house (2 bed, no garden, on a busy road) is 245k.

Most jobs in the town are low wage.

I’ve also looked at the cheaper areas this side of the city centre, where I bought before I could afford to move back here, the cheapest 2bed, awful street) house there is 160k.

So all move up north, good luck finding your dream house for 90k near here.

notacooldad · 07/02/2022 16:06

Also, I don't know anyone thay buys coffee and croissant every morning
I do and I am always puzzled why!

Well, every work morning, they stop at Starbucks and buy a coffee and a cake. I'm puzzled because we have free tea, coffee, squash, fruit juice, hot chocolate and sparkling water at work. We always have cake, biscuits and chocolate in ( also free). So why spend when we have nice stuff in. We have instant coffee, filter coffee, coffee pods, honestly we are spoiled for choice.
Each to their own and all that but it does seem wasteful. I have been with them when they have given me a lift in and asked if I was getting anything. Was I heck as like!!

onlychildhamster · 07/02/2022 16:06

@Rewis Oh I lived with my MIL for 3 years with his 3 sisters. I left my country at age 18 for university so I am used to being independent. DH did his masters in Europe and we rented a little studio for a year after getting married. When we moved back to london after his masters, we went straight to his mum's house where we stayed for 3 years and saved.

One of his sisters moved to israel and is still renting. They have their own housing crisis, (most expensive city in the world); and I have watched as they move from rental to rental- first in a snazzy area of tel aviv, then to a crime heavy neighbourhood in tel aviv and then finally to bat yam ( a city 30 minutes from tel aviv). The rents in tel aviv (and surrounding areas) grow at 10% per year . in the same time, we were lucky enough to live in london zone 3 and we also managed to buy there. There is no right or wrong but if you don't earn a lot of money or fix your housing costs, you will probably end up being outpriced by richer people. That is the reality.

notacooldad · 07/02/2022 16:08

So all move up north, good luck finding your dream house for 90k near here
No one expects a 90k house to be a dream home. It can, however be a great starter home for a young person setting out.

Happyhappyday · 07/02/2022 16:09

Children. Having 3 children is a luxury. I’m not saying it should be. But to posters saying “how will I have 2-3 children in a one bed”, there is a reality that having children AND buying your own home may be mutually exclusive. It’s great to say it’s a right & why should I have to choose but wishful thinking doesn’t change the math.

Currently weighing up whether we want to continue to pay £3-4k/month here to have a second child on childcare (not UK). DH and I are high earners and could make it work but we would not be able to afford a house with a garden (currently in a big terrace in a neighborhood we love but only a roof garden) anywhere near where we live if we do. It’d be great if wishful thinking meant we can do both. But we can’t.

Rewis · 07/02/2022 16:13

@onlychild Oh, i know people move in with thei parents. And I know I elsewhere in the world it's the expectation. And there is nothing wrong with it. I just kinda meant it how that is the go to suggestion when talking about people needing to save money in the UK. I'm not British so could be one of those lovely cultural differences where it is considered to be the norm.

BluTangClan · 07/02/2022 16:13

Coffees! Don't forget the coffees!

Ozanj · 07/02/2022 16:14

@kirstyalslap

I'm sure everyone has heard that kirsty Allsopp has came out saying that people can afford homes if they only cut out netflix, the gym and takeaway coffees.

I just worked out a meal deal costs £3 a day. X that by 5 days a week 52 weeks a year is £720. Netflix is £8 for 2 screens (?) so times that by 12 months is £96 a year.
Let's add a £20 takeaway every 2 weeks for good measure. £520. Gym costs £14 a month so £168 a year.

So in one year of cutting back on netflix, lunch for work and takeaways I can save £1504
Wow
Now I need 14000 for a deposit so I'm only 10 years away (probably a little but more actually including fees.)

Right now let's think about increase in property value.
My parents bought their house 8 years ago for £90 thousand. A massive 2 reception with 4 bed and 2 huge gardens with a drive.
Bad condition.
Last year the neighbours sold for £230k
This year the other neighbours has been valued at £280k. My parents are thinking of selling for approx £290k.
So in 8 years their house has increased by £200k
(this hurts me as I started saving 8 years ago, nearly 9 and was looking at saving for a smaller house for about 80k needed 4k at the time and had a 5 year plan to get there. No family helping with deposit)

£90k now would get you nothing at all.
Also you need a 10% deposit.
Also rents back then was £500pcm for 2 bed flat. Now they are £700+pcm for same flat.

So how can we do it? How? Please tell me!

Oh also, everyone I know saving for a house has already cut out take away, meal deals, gym (first to go come on!) and much much more.
Batch cooking, shopping around for deals, having friends round rather than going out.
Every thing is rising in price now, I don't know how my children will afford to live away from us, it is scary because as much as we are okay now, we won't be able to have 3 grown adults living in one bedroom until they are in their 30s! Or will it be 40s or 50s by then?

I come from an Indian background. All of my younger cousins (under 30), whether graduates or not, were home owners by 25 (3 last year) and none of them had family help. This is how they did it:

Leaving school at 16.
Working 2-4 jobs while renting in dirt cheap house shares.
Not having kids
Not eating more than 1 meal a day.
Buying a second hand car and burning petrol for every trip (it allowed them to get a better variety of and better paid jobs).
Not doing anything remotely fun. No takeways, no night outs, no coffees, Netflix was shared amongst huge groups of friends & it was potluck whether you got to logon or not. Saving every penny in many cases literally.
Moving hundreds of miles away from family
Buying 2 bed houses
Postponing uni for later.

Now I personally wouldn’t want to live like that & wouldn’t want my DS wasting his 20s like that. They had to do it because family support was zilch but I fully plan on supporting my DS as much as possible to get his first place.

Applesonthelawn · 07/02/2022 16:15

House price inflation is significant though, driven by loose monetary policy, government income support schemes and the desire for gardens and more space at home for working since the pandemic. House price inflation is less in UK than in Germany, Canada, US, Australia and China.

If no-one could afford it, it wouldn't be happening. Someone is buying those houses.