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??

I think Healthcare and Social care are being used interchangeably here and at cross purposes.
Healthcare is free
Social care -if you have less than £23500 is paid for by LA.
Otherwise self funded.
A tiny amount with very complex health needs get CHC funding.
The vast majority do not go into care homes.

You’re all missing the point on this. It doesn’t have to be the majority needing social care: these effects happen at the margins (as housing values do too). All you need is a slightly bigger number of a larger demographic needing care and the whole system is overwhelmed.

On social care - no, there are actually a lot of older adults needing social care and care homes: there’s been a huge increase in dementia for one thing as that population live longer. LAs are crumbling under funding needs for care. The funding agreements will not last long and politically, this will need to be revisited very soon. Once the now under-40s become the voting bloc (this shifts within the next 5–10 years), in the upcoming very stretched financial landscape, how much do you think they will be amenable to boomers getting free care from taxation as well as keeping v expensive homes they can’t afford? In any case it won’t work, financially.

Healthcare - we are already seeing free healthcare being eroded. The upcoming NHS burden is huge. Either there will need to be a political agreement for much higher taxation by 2035 to afford it; or there will need to be some contributory costs being paid by the individual. Which option do you think will be the one the U.K. public goes for? Basic rate taxation at over 30 percent (which is what it would take), or contributory costs?

Those posting how “most people don’t need care” really don’t understand the aggregate effects of the total taxation and financial systems. At the same time the welfare bill (almost all spent on the state pension and coming out of general taxation) will rise as well. The aggregate effects will mean there are multiple pinch points on tax revenue and not much scope to bring in more. This will be the uncomfortable reality of her next couple of decades - prices for almost everything will increase, costs to service the expectations we have of pensions, healthcare etc will increase, there will be limited scope for raising more taxation revenue. And things will need to give.

The expectation that a whole generation can have a) a state pension b) free healthcare c) largely free social care d) a massive house price windfall that they get to keep and not liquidate — not all of these will be able to be met. That’s the simple truth.

Especially when the generations who are expected to pay for them via taxation, themselves face increased costs and the prospect of not having many or all of these expectations met themselves.

@nightwakingmoon

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've been thinking 'This isn't sustainable' since the 1980s. I just can;t fathom how prices keep on rising.

To OP - I think mortgages can be longer now. When I first bought the average mortgage was about 20-25 years. I think these days they are stretched out over 30-40 sometimes.

And yes, if you have a house that inflated in price, you sell and buy at the inflated rates but it was never real money iyswim.

Say you first bought for 100k but sold for 400k. The next house you buy might be 500k, but the increase doesn't feel like £400k more, it feels like £100k more, because the risen value of the first house has been offset into the next one.

So cash in hand workers.
No, self employed, with all taxes duly declared and paid. How would they get a mortgage otherwise.

There has been a bit of a H2B crisis locally for the same reason. Loads of brand new houses being thrown up, all over priced, all snapped up with H2B and are now in negative/no equity. So the "just sell it and move somewhere cheaper" idea doesnt actually when you still owe ££££ to the bank after selling......

WonderingFree

Nobody is going to let Kirstie live that down are they? It was a very, very stupid comment though.

Despite it being clear buying conditions were much more favourable pre-2008 (good point about older gen Xers doing very well too pp). Arguing between generations diverts away from how the government have failed repeatedly to deal with this issue when there was clearly a need to build more houses and stop BTL or holiday let buying. It doesn't matter what different generations say. It is our government that have let us down. Half of these so called 'boomers' who talk this snowflake nonsense on these sites are probably working with the intention to divert people away from the real problem here, which is the housing market being allowed to only benefit a few wealthy people.

I'm glad my parents had the opportunity to buy their homes. I just wish it was the same for all generations. The average worker being able to buy their own home was seen as progress years ago and it's a shame things have gone backwards.

Friend who is an EA has said there is a huge problem with over inflated prices on shared ownership properties when the buyer wants to sell. They have no chance of selling when identical properties in the area are 25% cheaper. I would never advise anybody to go for shared ownership now, although it worked well 15 years ago, the price inflation has got ridiculous now.

I didn’t have any help, just worked a full time 9-5 Job topped up with waitressing 3-4 nights / weekends. Still managed to have a life even though was saving.

@forinborin

So cash in hand workers. No, self employed, with all taxes duly declared and paid. How would they get a mortgage otherwise.

Ahuh sure they are.

not like construction work is poorly paid anyway.

Most people I know bought their homes with help from inheritance or a wedge from their parents (some released equity- essentially early inheritance). I put my hand up and say that's what we did! Currently our mortgage will be paid off at 60, however if we move to a bigger house, that'll probably change to 65 due to house prices.

We can afford a deposit via saving, and have saved enough over a few years. We can't however get a big enough mortgage for a 2 bed house, and it doesnt matter how little avocado toast we have

The problem is people don't recognise how much things have changed. People even in their mid thirties who struggled and bought 10 years ago struggle to see how much has changed and assume if they could do it others can

In 2011 for example a band 5 nurse earning 21,176 and a minimum wage partner earning about 12k roughly had the buying power of 148.95 thousand.

They could buy the small 2 bed house pictured its gone from 144 to 285. It's a small terrace house in the bad part of town, no parking on street and is a very much ftb house. No garden

Ten years later you would need a household income of 63k for that same house. The couple would now earn 25,665 and 16k and only have a buying power of 187k. Even if they somehow managed to get a mortgage for same small perfect first time buyer house theyd need to save an extra 14,000
If the couple in 2011 saved 20% of their wage they'd have over the deposit in 2.5 years. The couple in 2021 need to save 20% for 3.5 years.

That's including the fact that the minimum wage and nhs wage increase is probably more than other sectors might have see

these threads are always full of "well I did it", and I can't help it's a deliberate push from certain people to encourage the public to think that people who can't are lazy and watch Netflix and go abroad rather than having to fix the housing issue. People who worked hard for their home get insulted because they think people are saying they didn't have to save, so reinforce the same save hard message.

@catwomando

We've lived for so long hearing about austerity bullshit from this government that we've been brainwashed into thinking we live in a country with no money. We don't. The UK is a rich country with plenty of money sloshing around. At the top. Where it firmly stays and gets bigger.

If you are at the top, finding cash for deposits, fees etc is easily come by. There are a large number of high earners too, who can get stupidly large mortgages to buy these expensive places.

And for those lucky bastards (like me) who are older and started ages ago, it's just incremental spend , so more easily achieved. That said it's getting harder - when we went from flat to house 18 years ago, price difference was c £100k, it's now £400k difference (london, obvs) .

house shortages and prices will stay as they are until the government chooses to stop letting foreign investors to buy what they want and then leave empty , and to put much stronger rent controls and housing quality legislation and enforcement in place. It can be done but they just don't give a shit.

The attitude seems to be 'I'm alright Jack', and that housing is not a basic human right. It is a basic human need and right, and in such a rich county frankly it's a disgrace that we have such poor, expensive housing. We can do better but we keep electing politicians who just don't care about us.

You are sport on, @catwomando .

I also think it's absurd that successive governments have failed to invest in social housing, but are happy to pay (albeit indirectly) the mortgages of BTL landlords via universal credit/housing benefit.

The cost of renting in the UK is one of the reasons people can't save up deposits, and the insecurity of renting is one of the reasons why so many are desperate to buy.

I think if we had affordable rents and secure tenancies, demand for properties to buy might ease a bit.

Higher interest rates in the past are a red herring when it comes to comparing affordability over time. It is much more expensive (like a third more over the life of the mortgage) to own my house now on a 2.99% interest rate than at the 90s price on a 15% interest rate because it’s a percentage of a number which is over 4x bigger!

@weansu

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.

And that's the problem. Buying a shitty 2 bed terrace or small flat as quickly as you possibly can and then going up the ladder is works better than trying to save for a deposit for a 3 bed house. You'll get further quicker. So the average age of a FTB will go down. I've seen it amongst my friends - those that buy early do better in terms of what house they have by 30.

Those that didn't buy want that end house, the 'forever home'. They turned their noses up at our cheap FTB properties, then have kids in their lovely rentals. It's much harder to save with kids, much harder to live in a do-er upper with kids and to move areas.

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.
This is directly opposite to my experience. A couple on £20K each is able to afford a £200K-£250K starter property without any significant pain. Yes, they have to live for four or five years in a houseshare before that in order to put together a deposit, and have quite a frugal life generally.
And no amount of saving a fiver a week on Starbucks is going to changes that.
A fiver in Starbucks a week is £250 / year, and £1.25K over five years even not accounting for any interest.

@GeneLovesJezebel

I see a lot of houses being flipped by builders these days, whereas years ago a newly married couple bought a doer-upper, worked hard on it then sold it for a profit to go towards a forever home.

@GeneLovesJezebel Part of the problem with this is that even a fixer upper takes a long time to save for. It's all very well doing this in your early 20s but most couples I know bought a house then had to get straight on to having babies because they were 30+ and time was not on their side.

@VelvetChairGirl
And the purpose of me lying about it is....?
I know it as neither of them speaks English well so I helped them to understand some details about real estate process here. And I think you're stereotyping here.

Seriously, the lenders must see you coming. Do you know how compound interest works? The longer the term you borrow over, the more the lender makes from you.

Yes but does it matter in terms of this poster's expenditure?

I took out a 32 year mortgage to buy my house. Due to pay off at 65.

My mortgage repayments are £450 pcm. To rent the same house would be £1100 pcm. Yes the banks win by charging plenty of interest but it's still the better course of action financially for me to own my house with a long term mortgage than to rent, surely?

In our experience, everyone who we know who has purchased a home was already a home owner OR they lived at home with parents rent free, and put all their money into saving for a deposit and also had a top up from parents.

We had children young so we and have been stuck renting since our early 20s and we couldn’t stay with parents to save.
Our parents would love to help but they aren’t in the financial position to do so.
All our money goes on ridiculous rental prices and bills so there’s nothing left to put into a savings pot.

The stamp duty was axed for awhile by the Tories because they were worried about the industry due to covid. This caused house prices to come up. I'm sure they will go back down soon. There was a race for people buy 4 bed detached homes in my area. There seems to be a lot of people around my area who are spending money on extensions etc.

Biggest 2 factors by far...
Mortgage multiples used to be 3x main earner plus 1 x 2nd earner, now can get 5 x both earners. Hence same couple can borrow more than double
And low interest rates

My boomer parents had tough childhoods and then struggled financially for years. Dad did a low paid manual job plus weekend casual work to make ends meet. Mum did bar work in the evenings and gradually added other jobs as we got older. They are now retired and financially comfortable thanks to mum going to college in her early 30's and getting a decent career going after us kids started secondary school. They got on the housing ladder thanks to the RTB scheme but I remember the worry and the pawning of jewellery to pay bills. They went through the 15% mortgage period too. They have not had it easy by any stretch of the imagination. I'm glad they live in comfort now - they deserve it.

I on the other hand am Gen X and it's been very easy to climb the property ladder even though I wasn't born into wealth and haven't had any financial help from parents. I think perhaps it's my generation who are guilty of not understanding how difficult it is for young people these days. I know not all Gen X have have had an easy ride but most that I know and have grown up with have.

I've no idea how my DC are going to manage it. They will inherit obviously but I'm only 52 so not planning on going any time soon and my parents are only in their 70's and very fit and heathy thankfully. I'm sure nursing home fees will come into play at some point and then anything left will be split between me and my siblings so not much help to my DC even if I pass it straight to them.

@Tilltheend99 a house on my very nice road was unoccupied due to a horrible divorce fight. It was empty for 8 years, the husband had removed the entire bathroom and kitchen. It went to auction and sold for 180k to developers for cash, it sold for almost 300k last spring. Just as an actual example regarding your post on developers.

Our deposit came from my parents when they sold their business and we have saved up so our ds will have a deposit when he buys a place. Our first house cost £90,000 it would now be worth around £300,000 or more (Devon coastal village)

I would like house prices to be slashed across the board and would be happy for our current house to be worth what it was 20 years ago. The rise in house prices has been ridiculous.

I bought a gleesons new build a few years ago. They were set at a fixed price range and they were built in a considered not so nice area of a town. Years later the property value has increased and the area is no becoming more desirable. Just luck I suppose.

Even as a quick crude example if both were earning 30k, their borrowing power has gone from 120k to 300k...