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

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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??

@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.

Hi Kirsty Because of course it’s all down to hard work and absolutely nothing to do with having parents that can let you live rent free or ‘help you out’ or anything like that. And everyone else doesn’t work as hard. Got it thanks for the advice.

If FTB were aged 20-25 I’d agree. But they’re more like 35 and either have kids or are desperate to start. I was pregnant when we bought our first house so we needed at least two bedrooms and a garden in an area close to schools
This is the worse mistake you g people make, having kids before buying, and then too often continue to have 2 or 3. If both work ft, the cost of childcare makes it impossible to save. If one stays home, the income isn't enough.

As for needing a two bed with a garden? Why? A young child would be happy to just have a share of a bedroom or living room. That's what my parents did until I was 8. We didn't have a garden until I was 11. I never missed it. Gardens are more for parents to send their kids out safely so they can have a break than something the children actually need.

We did have help back in 2001 but could have bought something smaller without help. The prices were not so crazy and out of kilter and we both had professional jobs so decent salaries.

With the current house value based on the traditional calculations of maximum loan of 4 x one salary plus the other salary we could buy approximately half our house on current salaries.

In the row of 30 or so terraces where I live there are only 3 that are still owner occupied. Me, NDN and one guy up the road. The rest have all been snapped up over the years by the BTL crew and rented out. When I bought 22 years ago (25 year 100% mortgage, paid less than a third of what it is worth now) they were all owner occupied. The same happened where my sister used to live. I dont know about the more expensive housing but in terms of "affordable" homes, FTB dont seem to be able to get a toe in as they are up against cash buyers with no chain who are adding to their portfolios.

I think the problem with being a rental nation is that the law has changed to give renters no long term protection. When my grandparents generation were all renting they had rights to long tenancies, rent increase protection etc. Now there is no reason to assume you will be in the same house in one year, never mind ten years.

I used to work for 2 conveyancing solicitors - one was expensive London area, mostly high earners, inheritance clients.

Second was equally expensive London area where we had baby boomers buying buy to let properties to help pensions and/or helping their children with house deposits. We also had clients buying first or second properties and buying together - so FTB x 2 buying together then that's their second springboard property.

Deposits have changed since then and so has stamp duty. Mortgage rates etc have also gone up/down - I think most had 100% mortgages.

When I bought I was very lucky - through a family inheritance I had a good chunk of money for a small house/cottage. I also saved a lot and had a good deposit and bought cheaply in an area which has gone up significantly in value since then. I also rented out 2 of my 3 bedrooms - don't now. I didn't have a huge mortgage and at 50 I still do have one but it's small and will aim to pay off within next 5 years.

Plus I'm also guaranteed a third of the family home as inheritance plus maybe extra 25K from stepdad (he's said) so will have approx 350/400K extra.

DB and SIL have a London flat which has increased in value but this was bought for SIL and her DB in parents names (as guarantors) in 2000s - it's now split between SIL/DB and her DB and his DW. They're now wondering what mortgage they will get but should have a hefty 200K profit - at a guess.

Slightly on the other side - we also used to have clients who'd buy up lots of cheaper houses/flats etc mostly in London but in other cities like Manchester etc - as property portfolios - great for them but no good for FTBs. I mean I say that wasn't great by my nana's father (maternal side) bought houses in NW London in 1920s and made profits from them so I'm being a bit hypocritical there.

People don't really talk about the impact of the increase in buy to let mortgages and people buying second homes.

There's not been any legislation to curb it - perhaps because a lot of MPs are also private landlords?

Most people can only buy when they inherit. It's like we're going back to a society of lords and serfs who never own property.

No idea. In my area, houses go so fast you really need to be a cash buyer as the mortgage process is just too slow. With a basic 2 bed ex-council house in a historically dodgy area costing £200,000+ I have no idea how anybody manages unless they come into money somehow.

Sometimes I wonder if people say they own their homes but actually rent and don't admit it?

To be honest, I don't recognise these housing horror stories from mumsnet.
I am foreign, well integrated into the diaspora. People who don't speak English and do manual jobs for a very low wage are buying quite nice properties after a few years here. I helped so many of them with understanding the process / witnessing papers / re-reading emails from agents and brokers that it is quite a solid statistic at this point. My old cleaner bought a house in London just before the pandemic, with her husband who's a construction worker. All from earned income, not an inheritance windfall.

We didn’t have any help to buy. Bought an apartment as a couple in a London commuter town, no kids, two young professional salaries right at the height of the financial crisis. Sold that a couple years later and bought a small two up/down terraced house even further out that needed a ton of work, lived in that and did it up over a couple years and moved again and only now in a 3 bed terrace with a garden. Now more senior professionals but still living below means and saving the biggest deposit we can for a detached house (which will still be a long term renovation most likely, but we’re ok with that)

This is the worse mistake you g people make, having kids before buying, and then too often continue to have 2 or 3. If both work ft, the cost of childcare makes it impossible to save. If one stays home, the income isn't enough.

But less & less young people are having dc & if they do are having fewer. Not many people have 3 dc these days!

Plus having dc still makes it hard to move up the ladder even if on it so what can they do.

Just wait until the next property market crash then everyone will be in negative equity like the early 90s
Your sincerely,
Boomer x

@torquewench

Id love to know jow it all works too. I know someone who's a self employed unskilled (as in no qualifications needed) tradesman, his accounts state he makes about 13k pa, his wife works 2 days a week in admin, they have a 90% mortgage on a 300k house (semi) which they've spent about 150k on extending/ remodelling (massive ground floor build involving lots of structural alterations, w marble floors, granite worktops, bifolds, new bathrooms x3, loft extension). Hes told me all of its remortgaged. Plus a new ££££ car, gardener every week, cleaner x2 a week. How do they do all that on so little earnings? Their parents live in social housing so no inheritance🤔

@torquewench Is hecd3claring his whole income? I'd guess he earns more than you know

On Location, Location, Location there are often couples expecting babies who seem to do faffing about jobs that need a home office that have budgets of £500k plus.

Oh god why do people persist in this Intergenerational drivel.

Early Boomers with war generation built the NHS and actively tried to address housing shortages with huge public housing programmes. This led to large national debt and economic problems but the intentions were good.

Late Boomers got hit by inflation which is a scourge. They also had a fuel crisis. Life in the 70’s was no picnic. Their voting and political preferences will always tend towards parties who hold back inflation. ironically inflation wiped out a lot of their debt allowing them to help Gen X on the property ladder.

Generation X got hit by mass unemployment and very little by way of benefits. They vote for parties that promise jobs. They don’t trust or like the idea of benefits or reliance on the state.

Millennials live in a time of intense consumption, far more than any generation. Goods and services are ubiquitous, cheap and disposable. They are encouraged waste to sustain an economy and as cheap compensation for the fact that real assets are out of reach.

CGT can be gotten round, as can IHT.

Easier for those who have money to access the help.

Look at the NI increases? this hits the poor the hardest, for the wealthy, its money down the sofa.

I don't disagree.

They are unlikely to go after the billionaires though. I still think we will definitely see changes to CGT

Yes to the 2 salaries thing.

When we bought our first house we had a combined income of £42k and no kids. We saved a £17k deposit and had a £160k mortgage. We bought a crap house, in a crap area. Did it up whilst living in it and then sold it for £250k 3 years later (a mix of it being an "up and coming area" and the improvements we did) which allowed us to buy a better house in a better area because we had a new deposit of £90k plus savings over that 3 years (not much because we had a baby!)

The better house was also a do-er upper and the better area has gone up more in value than the old area, plus we've done it up. Our wages have also gone up. Bought for £390k, now worth about £550k 3years later.

Yeah declaring a 13k income is one thing, actually having a 13k income would make all of that impossible so he is on the fiddle somewhere!

Many people manage without handouts or living at home rent-free, just by living modestly and saving hard. We did it with no handouts in the last 10 years.

DP and I lived in a studio flat, walking distance to work, for 4 years from 2007, for £500 per month rent, while earning salaries of 19k and 23k and working any overtime that was available. Any holidays were a weekend away. We always tried to feed ourselves for under £7 a day, combined. No cars (which was awkward at times but we managed).

We saved 20k in that time, and then bought a flat for 180k, 10 years ago.

We then progressed in our careers to earn 30-35k or so each, and continued to save as much as we could. Within 5 years we'd saved another 40k, and our flat had increased in value by 15k.

We sold it and bought an (extremely) doer upper house for 300k, a few weeks after DC was born. We've refurbished, then extended it, in the last 5 years, again through savings (plus adding another 80k to the mortgage).

It was all just saving. We got no inheritance or deposit gifts from anyone. Actually, for our first flat, DP's parents paid our £700 (from memory) solicitor fees and my parents bought us a bed and sofa. We could have bought these ourselves, but instead put the extra £1.5k into our deposit (didn't make any difference to the LTV or interest rate).

So it can be done. Our lifestyle wasn't very instagrammable though!

BOMAD, for the most part.

Part of the issue is also that young people seem to want a 3-bed detached as a starter home. A few decades ago, you would buy a flat, then a small home then a bigger home which would mean you would have a deposit each time to get up the ladder rather than start on the top rung.

Mortgages can be spread out over a longer period now rather than the previous 25 years as people will have more employment years due to later retirement.

@Georgeskitchen

Just wait until the next property market crash then everyone will be in negative equity like the early 90s Your sincerely, Boomer x

That will not help the average buyer, as lenders will not lend, or have very strict criteria. Then all the 'bargains' thar you think will be available will be bought by investors with cash, and turned into rental stock. Thus quickly recovering the market. I have a friend thst was waiting for a crash, so she could buy a cheap house. She's been waiting and renting for 12 years... and has just watched prices rise, whilst paying someone's mortgage...

Part of the issue is also that young people seem to want a 3-bed detached as a starter home. A few decades ago, you would buy a flat, then a small home then a bigger home which would mean you would have a deposit each time to get up the ladder rather than start on the top rung.

How many times!!!

The age of a FTB is now 30.

And the ladder doesn't really exist any more.

@OmgIThinkILikeYou

*The issue now is that H2B has been used by the government to artificially inflate and prop up the housing/ new build market and people are buying houses they wouldnt be able to get the full mortgage for. Nice until the cost of basic living soars and suddenly those people have to find the money to pay it back. We are talking 100s of £ per month once the repayments kick in*

Then surely you just sell up when approaching 5 years and use the equity as a deposit on a house you can afford? When we got to near the 5 year mark, we had a meeting with mortgage advisor, we could have got a new mortgage to cover the original loan but we wanted to move to a bigger house so decided to go down h2b route again. When we come up to the end, we will probably sell this house then move to an older property. No massive monthly fees but will likely have a nice deposit based on the equity from this house.

I know a couple of people who used help to buy for new build flats, overpriced completely and now cannot sell without a massive loss

@forinborin

To be honest, I don't recognise these housing horror stories from mumsnet. I am foreign, well integrated into the diaspora. People who don't speak English and do manual jobs for a very low wage are buying quite nice properties after a few years here. I helped so many of them with understanding the process / witnessing papers / re-reading emails from agents and brokers that it is quite a solid statistic at this point. My old cleaner bought a house in London just before the pandemic, with her husband who's a construction worker. All from earned income, not an inheritance windfall.

So cash in hand workers.

@forinborin

To be honest, I don't recognise these housing horror stories from mumsnet. I am foreign, well integrated into the diaspora. People who don't speak English and do manual jobs for a very low wage are buying quite nice properties after a few years here. I helped so many of them with understanding the process / witnessing papers / re-reading emails from agents and brokers that it is quite a solid statistic at this point. My old cleaner bought a house in London just before the pandemic, with her husband who's a construction worker. All from earned income, not an inheritance windfall.

That's ok then

The bare fact of the matter is that wages have not kept up with increase in property prices and in large parts of the country first time buyers, unless they have significant help have no chance whatsoever in both saving up a deposit and being able to afford and pass affordability checks (which are now MUCH stricter than they were 10 years ago) to get a mortgage.

And no amount of saving a fiver a week on Starbucks is going to changes that.