To wonder where the money is coming from to buy houses?

[00100001]

So, if houses used to be (say) 4-5x average annual salary back in the olden days of the boomers.

And now house prices are 10 X average salary... Bit they're still being bought, and people want to buy...

Where is this money coming from?

Are boomer parents artificially inflating house prices by giving huge sums of money by releasing equity etc?

Who is buying the expensive houses??

Or is it that back in the good old days, there was often one income coming in? And now there's two? So there's more buying power, as basically two adults are pooling their earnings?

There was a thread a couple of days ago asking if people had help to buy their first house. A surprising number did.

I think most buyers are just swapping around within the market tbh. Prices have keen kept artificially inflated for nearly two decades now, and it isn’t sustainable for much longer.

I get you OP.

I have heard of houses recently that have been on market for offers over £270k and they’ve been sold for £340ish k 😬😬

I don’t get where people are getting £70k from as well as deposit. I know of two couples who have paid an obscene amount over the asking price and neither of them are in particularly well paid jobs or have made huge amounts on what they’re selling. I’d love to know if it’s beans on toast living or they’ve been heavily subbed (which I thought lenders were trying to curb)

I think often it's inheritance from grandparents.

My son has just bought a house with his girlfriend. 70 thousand deposit. They worked their arses off, didn’t spend on false nails, hair, etc. They lived at home and they didn’t decide to have children and then bleat on about how the ‘Boomers’ had it so easy. They didn’t! They were also prepared to move to a cheaper area.

@Seashor

My son has just bought a house with his girlfriend. 70 thousand deposit. They worked their arses off, didn’t spend on false nails, hair, etc. They lived at home and they didn’t decide to have children and then bleat on about how the ‘Boomers’ had it so easy. They didn’t! They were also prepared to move to a cheaper area.

Ah, bingo! So early in the thread, too!

I’m guessing they never even had a teeny smidgen of a mashed avocado or a sniff of a shop-made flat white.

A number of different factors have contributed to the house price inflation:

• market value naturally rises
• double income = higher mortgage pot
• inheritance being used as deposits
• parents helping out.
• gentrification of areas *better transport links and facilities than before

dame why would lenders want to curb subs?

I have wondered the same. Those very very low interest rates have encouraged more borrowing and caused house price inflation.,

@Seashor

My son has just bought a house with his girlfriend. 70 thousand deposit. They worked their arses off, didn’t spend on false nails, hair, etc. They lived at home and they didn’t decide to have children and then bleat on about how the ‘Boomers’ had it so easy. They didn’t! They were also prepared to move to a cheaper area.

Yeah, but they had help being able to stay at home to save the 70k deposit .

@00100001

So, if houses used to be (say) 4-5x average annual salary back in the olden days of the boomers.

And now house prices are 10 X average salary... Bit they're still being bought, and people want to buy...

Where is this money coming from?

Are boomer parents artificially inflating house prices by giving huge sums of money by releasing equity etc?

Who is buying the expensive houses??

In these discussions it’s always boomers who are the villains of the piece despite Gen X having had the same access to housing in the “olden days”. What about people who bought their council houses at a huge discount?

Yeah those avocados are so expensive. 🙄

OP house prices don't have anything to do with wages and haven't for a long time.

A lot of people in the UK don't earn very much. So they rent. They rent from the people who buy property. Owner occupancy is at the lowest point it's been since the mid 80s and it's dropping. We're moving back to being a rentier economy which is what we always were, minus a little post war blip for a couple of decades.

Houses go for what people pay for them. In the cash fluid economy we've all been living in now since 2008 when the banks started printing money and haven't stopped people pay a lot, because money works differently now.

If you can get yourself a slice of it, good for you.

Inheritance, cheap mortgages, 2 incomes, more moves up the property ladder.

When DH and I bought our first house in 1991 we were able to get 100% mortgages and that's what we had. We borrowed £1000 from my PILs to help with moving costs etc. We had what I would consider an average income - DH was a young police officer and I was a PA. It was a struggle but we managed somehow.

The worst of it was when interest rates went up to 15%, then it was crippling and we also went into negative equity. Somehow we kept going and now are extremely lucky to be mortgage free thanks to an inheritance.

Fascinating

Lots of “boomers” are in pretty dire straits too, these days: whilst at the same time expected to be bank of mum and dad and Sunnydays residential home for elderly parents, too.
It’s not all fun and games and sports cars.
Dismissing a group of people as boomer is about as accurate as labelling another group as snowflakes.

People who are 40+ may have bought when prices weren't so crazy and it was easy to get 100% mortgages. 20 years ago it was easy to get a house of some sort for £160k in most of the country.

They are then on housing ladder.

I imagine most FTB these days are either good earners, have help eg inheritance or living at home to save - where their parents have already paid off their relatively small mortgages or are higher earners because they are further into their career - or use shared ownership schemes.

Big mortgages too. Ours runs until we’re over 70. I look very enviously across the street at owners who bought their (same) houses for a fraction of the price of ours a couple of decades ago and are already mortgage free!

There will be a lot of comments on this thread about how buying a house is simply unaffordable for most young people. It’s not. There are vast swathes of the country where people can still buy a starter house for 3x joint salary, even on low incomes. Full time joint salary is the key. As for expensive parts of the country, it’s not exactly a shock that London and the southeast are expensive. UK house price inflation has been fairly muted compared to many other countries in and outside Europe in the last couple of decades. The narrative around this issue does have a whiff of hysteria sometimes.

To save £70k as a young couple is just massively out of reach for some and it’s disingenuous to pretend it’s easily achieved.

Not everyone has family to live with or a job that affords them the ability to save hard and a decent enough job that they can then get a mortgage.

It’s a fucking ludicrous state of affairs but I have no idea how it will end.

And yes, obviously you can move area but that involves building a completely new life which isn’t always practical. Family responsibilities and ties often keep us in one area.

@Alrightqueenie

A number of different factors have contributed to the house price inflation: * market value naturally rises * double income = higher mortgage pot * inheritance being used as deposits * parents helping out. * gentrification of areas *better transport links and facilities than before

Don’t you mean:

• deliberate stoking of an asset bubble by central banks after 9/11 to avoid recession;
• unconstrained speculation in asset bubbles during the long boom;
• poor lending practices in the 2000s;
• carry trade leverage in the 2000s;
• low interest rates/ZIRP;
• rentierism by landlords;
• artificial propping up of the bubble after 2010 for political reasons, via government backed schemes and artificially low interest rates.

All just for starters.

It’s nearly all financial and really nothing to do with gentrification or market value always rising or transport links.

Sadly the bubble has been propped up too long to avoid the greedy British public facing the consequences of two decades of malinvestment and a grossly unbalanced economy. The upcoming (smaller) generations now literally can’t generate the income required to sustain the market at current prices; and Brexit means even less immigration to prop up the economy.

I don’t know where you think the money will come from to keep it all going like a perpetual motion machine, but the economy right now doesn’t look like our workforce is going to have lots of extra income to spend on houses for a while.

It may end with greater rights for tenants. That's about as much as we can hope for. It's certainly not going to end with property becoming affordable again for owner occupiers. Those days are gone.

We just bought for 350Kish. Asking price was £275K. Was the 3rd house we went for and we weren't prepared to lose another one. BUT the house we sold went up by 83% in value in the 8 years we lived there. So deposit was all equity.