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??

We’ll that’s the problem isn’t it - for anyone over 50 there isn’t a housing crisis, just a growing mountain of passive wealth accumulation. And that’s why nothing will happen, even though economic mechanisms are there.

Anyone who bought a house before 2008 actually. There are plenty of people over 50 who don’t own houses. And plenty aged less than 50 who bought before the crash.

I completely agree that both the private rental system and the social housing situation are completely horrendous and need reform @ManicPixie . Also agree that a system that allows buy to lets and the like which are allowing some people to get (very) asset rich at the expense of others is pretty immoral too.

Inheritance does come into it, my parents inherited £100k and bought a bigger house , one day (hopefully not soon) I stand to inherit £300k based on todays value and assuming care costs are horrific. I already own a house so I could in theory buy a bigger one or give to my (now) young adult kids.

@Yeahthat Agreed. I think it's important to remember that a political choice was made in 2008 not to allow house prices to fall too much (banks encouraged not to repossess in the way they did in 1992, so fewer forced sales and the correction wasn't as big as it could have been), political decision to commit to QE and keep interest rates low, which led to investors piling in to property as one of the only sectors that has decent yields, and a political decision to cut social housing provision. So you have to expect that at some point there will be a political retribution from those now shut out of the system. Good article on this in the LRB from John Lanchester a few years ago: www.lrb.co.uk/the-paper/v40/n13/john-lanchester/after-the-fall

You may be able to afford a house if you can live with your parents for ten years while having no fun, and doubled up with a partner doing the same, but you really shouldn't bloody have to.

@Blossomtoes

We’ll that’s the problem isn’t it - for anyone over 50 there isn’t a housing crisis, just a growing mountain of passive wealth accumulation. And that’s why nothing will happen, even though economic mechanisms are there.

Anyone who bought a house before 2008 actually. There are plenty of people over 50 who don’t own houses. And plenty aged less than 50 who bought before the crash.

Fine, if you want to nitpick, replace ‘anyone over 50’ with ‘anyone who bought before the crash’. Point still stands - enough people from certain cohorts gain from it that nothing will change on the supply side. For many it’s working exactly as it should.

I had to start again at 38. Ex husband left the country and refused to pay the mortgage on the house we jointly owned.

I sold it for a £13k profit as he'd ripped the bathrooms and kitchen out and not replaced either.
We lost so much money because of this.

I couldn't afford to live there as it was 30 miles away from my family who helped me with child care whilst I worked full time. The petrol costs were unaffordable for me.

When it sold he took the £13k profit as he wouldn't sell without me agreeing. I would have lost my half and more by going to court and still been liable for the full mortgage.

I was living in council housing at the time so I bought that when I got the right to buy/right to acquire.

There isn't a shortage in my area. This was the only way I could back on the ladder.

I know what you mean OP. In our case it's inheritance as DH has no surviving relatives and we've piled everything he was passed on into a nice family home. But I often wonder how on Earth others manage

@OpheliaThrupps

So what people are saying then, is that people shouldn’t eat to afford a house??

I think what they're saying is that is more people lived more frugally then more people would have more money for a deposit. They are not saying that if Diesel and Zoozoo give up avocados a loft apartment in Dalston will be theirs.

But that fundamentally ignores the fact that house prices are rising faster than wages.

In such a situation no matter how long or hard you save for you will NEVER have enough for a deposit and to meet lending criteria, because it's a target which is constantly accelerating away.

@Windystate

I agree. You would have to he drinking an extreme amount of Starbucks if the mere act of reducing it were able to compensate for housing market inflation.

@nancybotwinbloom

I had to start again at 38. Ex husband left the country and refused to pay the mortgage on the house we jointly owned.

I sold it for a £13k profit as he'd ripped the bathrooms and kitchen out and not replaced either.
We lost so much money because of this.

I couldn't afford to live there as it was 30 miles away from my family who helped me with child care whilst I worked full time. The petrol costs were unaffordable for me.

When it sold he took the £13k profit as he wouldn't sell without me agreeing. I would have lost my half and more by going to court and still been liable for the full mortgage.

I was living in council housing at the time so I bought that when I got the right to buy/right to acquire.

There isn't a shortage in my area. This was the only way I could back on the ladder.

I've got mixed feelings about right to buy as a scheme, but I definitely 100000% don't blame ANYONE who was offered it and accepted. I bought a house largely with inheritance; I didn't spend my 20s in my parents' cellar and never socialising or having any fun.

You have to work with the system as it is and if right to buy benefited you, you didn't do anything wrong in taking advantage of it, any more than I contributed to the housing market issue by using money I didn't earn as my deposit.

I was so lucky to buy my first property in 2007. Just in time. I had to make significant sacrifices to do it and my first flat was a huge compromise (a small flat in a very grotty tower block). I see me being on the property ladder as a mixture of luck, determination and willingness to be compromise and be frugal.

However, I am under no illusion whatsoever that in 2022 if I was starting over, in the same level job I was in in 2007 and same circumstances that there is no chance at all that any combination of luck & sacrifices would be sufficient for me to buy a property in the area of the country that I did on one income.

No one who bought pre-2008 is in a position to comment on young adults not succeeding in getting on the property ladder in 2022. I definitely don't think that if they give up their takeaway coffee and manicures that it would make the difference. It's just not true.

It's completely possible for a young person or a couple to save for a deposit, even without help from parents. However it is a slog and means making sacrifices, whether that is holding back on holidays, cars, socialising etc. owning a house isn't the be all and end all for everyone, but it feels like the grown up thing to do and a safe investment, even in these troubled times.

@Couchpotato3

It's completely possible for a young person or a couple to save for a deposit, even without help from parents. However it is a slog and means making sacrifices, whether that is holding back on holidays, cars, socialising etc. owning a house isn't the be all and end all for everyone, but it feels like the grown up thing to do and a safe investment, even in these troubled times.

For many, no, it's not.

If house prices rise significantly faster than wages then no matter how long people save for they will never have enough for a deposit - even if they do manage to save say 20k over 5 years, at the end of those five years they will need a deposit of 30k for the exact same property.

I also think that most people do not realise how much harder it is to get a mortgage compared to 10 years ago. The lenders have significantly tightened up their criteria for lending which is why so many people are stuck on expensive mortgages but are unable to remortgage onto cheaper rates.

[quote Yeahthat]@Mollysocks

Yup; it's lazy and stupid. Do the maths and it's objectively far more difficult for young people nowadays to buy homes, including when you work out the potential savings from not buying the mythical avocado toast, or reducing Starbucks coffees.[/quote]
The mention of avocados - poncy food for people who think they are better than the rest of us, bloody snowflakes etc etc - plays really well with the ‘four Yorkshiremen’ slant of some of the posts, though.

“Avocados only cost 70p you say? Well, I didn’t spend 70p on an avocado. I worked two twelve hour shifts every day. I didn’t take the bus to work, I WALKED so that I didn’t have to spend money at the gym. When I got back to my parents’ garage, where I was living rent free to save up, I didn’t put the light on, to save putting 50p in the meter. I ate roots and berries I scavenged on the way home. Now tell me that you couldn’t afford a house if you did the same as me!”

One of the interesting elements of the post-COVID return to work is the absence of the over 55 employee.

As many of us may know from personal experience that the UK workplace is not that fond of the over 55s. They often have found them selves slowly managed out of the UK workforce on a variety of legally sound reasons but not that ethically good.

What this has meant is a socially acceptable ‘early retirement’ & from that an adjustment of income & savings. This is a time when people take their occupational pensions & the opportunity for a 25% lump sum, & also many downsize. Both of these financial events release lumps sums. Return on savings & annuities are not attractive, so the cash lump sums may become available to get their children on to the property ladder or for a while there was an efficiency in being a BTL landlord. This throws some kindling into the hot market.

@DrSbaitso

You may be able to afford a house if you can live with your parents for ten years while having no fun, and doubled up with a partner doing the same, but you really shouldn't bloody have to.

It's always been like that, though. My parents married in the 60s and started their married life living with Dad's parents in their front room to save money for a deposit and spent a few years there without much "fun" as it's what you had to do even in the 1960's, so it's nothing new at all. Although it was, of course, "easier" in the intervening period mostly due to high inflation causing high wage rises (70s/80s).

It really hasn’t always been like that. It certainly wasn’t like that for my generation, who bought in the 1990s and early 2000s. Loads of people bought as single twenty and thirty somethings, and I didn’t have to live at home to save up.

@DrSbaitso

I agree. I also had mixed feelings about how I bought our home.

When I weighed it up I thought about the state it was handed to me in.

No floors in any room. Just bare floorboards. Rat infested garden we couldn't use. Every wall needed replastering. It was like a hovel to be honest. Kitchen was dog chewed on all the bottom doors. Every single interior door had a punch mark in or a kick through.

I got a £75 voucher to re paint. No other assistance because I work full time.

I paid for it to become what it is now over the last few years and I've paid more in the renovations it needed than the 9k discount I received.

It's took hard graft, saving up when I could and hours of weekend and evening to get my home nice. It's a three bed terrace. It's in a so so area.

We are in the northwest and the housing situation is not what it is in say london. They are literally throwing up council housing all over where I am.

However I know how lucky I am to live where I do and to have had the opportunity to have the chance to buy from the council.

I didn't buy this house to turn a profit or rent out I bought it for the security and because I was lucky enough to be offered the chance to.

Ultimately when I die, it's for my Dd so she never gets in the positron I found myself in with her dad.

UniversalAunt's theory about the over-55s being managed out of employment has substance, especially with using the lump sum for investment. Annuities and cash savings rates are dreadful, so yes, lots of people bought a BTL as property was the only investment they understood and could see yielding 7-10% return. I think that advantage is evaporating fast.

Certainly when we retire which means selling a business, we shall give DC a hefty chunk of the proceeds towards a property. The industry they want to join is mostly freelance and, though decently paid, there will be patches when there's no work happening.

Hello @WindyState

Am I being dim? I'm not really getting your logic here. As far as I can see people can certainly save a deposit, no matter what inflation is doing.

If house prices rise significantly faster than wages then no matter how long people save for they will never have enough for a deposit - even if they do manage to save say 20k over 5 years, at the end of those five years they will need a deposit of 30k for the exact same property.

So they buy what they can with a deposit of £20k.

Not sure but it’s mental. I live in Salford - a decent part (but not Worsley prices) but let’s be honest, Salford is Salford. Three years ago we bought our three bed house for £185k - it’s now ‘worth’ £300k and the identical house next door to ours sold for £350k this week.

It’s absolutely mental.

@OpheliaThrupps

Hello *@WindyState*

Am I being dim? I'm not really getting your logic here. As far as I can see people can certainly save a deposit, no matter what inflation is doing.

If house prices rise significantly faster than wages then no matter how long people save for they will never have enough for a deposit - even if they do manage to save say 20k over 5 years, at the end of those five years they will need a deposit of 30k for the exact same property.

So they buy what they can with a deposit of £20k.

Fundamentally if the price of property available goes up faster than wage inflation then there isn't going to be a property they can afford with that 20k deposit. The price of everything from the top of the tree to shitty little flats will have gone up faster than they can save.

So the choice is our FTB need to save a higher percentage of their wages - which for many people isn't possible - or they need some sort of extra help from parents/inheritence etc.

@DrSbaitso

You may be able to afford a house if you can live with your parents for ten years while having no fun, and doubled up with a partner doing the same, but you really shouldn't bloody have to.

You mean save money by making persinal sacrifices? I recall my parents and grandparents saying that is what they done, us too to afford to buy a house. Home ownership is not an entitlement, it takes commitment.

But everyone over 50 isn't fine. There's a view on here that it's all ok being over 50. Many people over 50 don't own a house. Many are in lower value houses with no pension, or no job. Many aren't going to inherit anything from parents, so can't pass onto their children. Many are supporting their parents, financially or otherwise (all boomers aren't ok either).

There's a tendency to see owning houses as the be all and end all, but the over 50s aren't all ok.