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.
What an ignorant pile of ageist shite.

I will say if I hadn’t have had help off my parents in the form of 10k - we’d never have been able to buy because we were naive, silly and had children young. We couldn’t save a deposit and pay for childcare. Yes, eventually we would have done it, but not in time for the house price increase which means we actually wouldn’t be able to buy our own house now - and we have an combined income of over 80k so we’re not in poverty, or even struggling. Houses at the price we bought our house (in our area) for now, are two bed terraced needed a lot of work. We bought a 3 bed detached in almost perfect condition save for a mirrored ceiling in the master bedroom

@Itsnotdeep

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.

Exactly - and even if it was true - it's fucking insulting.

There's an implication that there the have been regular referendums with the question "do you want to steal all the money of the young people?" in which everyone over 50 voted yes 100% of the time.
Many of us didn't vote for this - and we didn't buy cheap council houses even if we had the had the chance etc etc - yet every single thread on here has a least one cunt writing us all off as greedy bastards.

@Billandben444

My stepson and his wife have just bought a 2-bedroom flat for £85k on the Wirral. His salary is £23k and her part-time one is £10k. They both work in Liverpool and it's an easy commute for them. They saved up for the deposit while in rented accommodation (I think it took them 3 years) and have managed it without asking the family for financial help. It is still possible in certain parts of the UK.

Knowing the Wirral, a 2 bed flat that isn’t like living in beruit would be £250,000. Good luck to them theyll need it, i hope they dont have nice cars parked outside

@WindyState

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.

But this is demonstrably wrong - property has outstripped wage inflation for as long as I can remember!

no matter how long people save for they will never have enough for a deposit

People have managed to save deposits over all that period of roaring property inflation.

"But this is demonstrably wrong - property has outstripped wage inflation for as long as I can remember! "

No, it hasn't. The gap has increased massively in recent years.

In the early 90s an average salary for a 21 y/o was around 11k, with average house prices being around 50k -> So 4x annual salary.

In 2022 those figures have changed to around 20k and 255k. See the problem?

I had money from an inheritance to get me onto the property ladder - people seem to react to that angrily but frankly I'd rather my father had been alive for another 20 years even if it meant no house...

Other friends around my age have also mostly used money from inheritance for their deposits. And people are climbing up the property ladder - my first flat was £155k, had a short lease and hadn't been modernised for years, but was in an "up and coming" area. It was just pure luck though as I know I wouldn't be able to get anything for that price now.

@Plumface actually the number of private landlords in the UK has stayed pretty much constant over recent years. In fact, there is a shortage of rental property which is white rents in general are going up.

This is largely thanks to the government doing their very best to make it hard to be a private landlord, with all the recent legislative and tax changes. Many landlords are in fact selling up (thus reducing the amount of housing stock available to rent)

At the same time, lenders are now making 90% mortgages available to 1st time buyers again, which has stimsted demand at the bottom
end which then permeates to the chain, plus the stamp duty holiday massively inflated demand and inflated prices at the same time.

The estate agents I'm speaking to are saying that there is a real shortage of property coming onto the market for sale, for various reasons. This is therefore reducing the amount of stock available for people to buy, which again pushes up the prices.

As to who is able to afford those prices, that's a whole other matter, I certainly couldn't!

@WindyState

"But this is demonstrably wrong - property has outstripped wage inflation for as long as I can remember! "

No, it hasn't. The gap has increased massively in recent years.

In the early 90s an average salary for a 21 y/o was around 11k, with average house prices being around 50k -> So 4x annual salary.

In 2022 those figures have changed to around 20k and 255k. See the problem?

Hello @WindyState

Here's the graph. Property prices have grown at a greater rate than wages for most of recent history. People have nevertheless saved deposits and bought property. But you seem to be saying that at the moment because property prices are growing faster than wages it's somehow arithmetically impossible to save a deposit.

In fact looking back you said:
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.

Which history (and other reasoning) suggests is wrong!

I recently bought a large flat for £1 million. I'm divorced and 57. 80 percent of the price was equity built up on house moves. The majority was made on one house in a very desirable area of London which I'd done up over the years - it was a wreck when I bought it and it was tough going for the first couple of years finding the money to do it up (it never was in tip top condition). I had £800k equity from that house built up over 20 years (after paying off my XH's remaining stake and an additional interest only mortgage). My move was a downsize but to a higher spec period home that has everything done.

Since I wanted to stay in the area to be close to friends I had to pay a lot and still have a 10 year mortgage to pay off. I may inherit some money when my elderly father dies that might pay off up to half of that and I'm going to try to accelerate payments myself. I've never had any family help, saved my own deposits etc. I've worked hard over the years and it was a juggle when my DC were little but I built a good career and my earning potential. I have good pensions too.

@OpheliaThrupps

You've literally proved my point for me. The issue is the gap between average salaries and average house prices. See how much bigger it is now compared to 20/30/40 years ago? See how faster house prices have increased over wages since around 2000?

Combine that with lenders who are now massively more cautious and you've got way, way more people who are completely priced out compared to the 70s/80s/90s/2000s.

Ah, Ok, thanks @WindyState, I think your point may have subtly changed

@DrSbaitso

If you go to buy another house that is £150k then you now have £80k deposit to put down (more than 50%, giving you better interest rates and terms) - you will of course have stamp duty, legal costs, removals etc - but there comes a point where the increase value in your home covers this.

But you're buying a house that's worth the same as the house you're living in now.

I realise you might be moving to change areas and you might get different bang for your buck between cities. But generally, if people move to "climb the ladder", they're moving to a more expensive/valuable property than the one they're living in is worth now. So yes, they get the deposit but they also get a stonking new mortgage on top of it.

Not necessarily - the more deposit you have the better the interest rate.

If you have a 90% mortgage vs a 75% mortgage - your rate will be better. Of course, an individual may go and get a stonking new mortgage putting them back to a 90% rate but I'd say most don't. Point is with increase value in your home you have more options.

@OpheliaThrupps

Ah, Ok, thanks *@WindyState*, I think your point may have subtly changed

Well, no, it hasn't.

The basic fact is that as house prices go up the amount of money you need for a deposit goes up, it's not as simple as saving x per month for x years and you are all sorted, you effectively need to start saving more than you actually think you will need, and if you are on the limit of what you can save the only way to compensate for that is if your wage goes up a corresponding amount to house prices.

Hello @WindyState,

We're going round in circles, but how do you explain how people have been saving deposits and buying houses all through this time of alarming house-price inflation. You earlier said it was impossible.

(Incidentally, the graph doesn't prove your second (different) point either! Use the graph to turn the clock back to 2003. Or 1985. Look at the alarming gap that has opened up between wages and house prices. It very obviously can't possibly go on like that ...)

Lots of people get help from their parents.

And yes, living at home rent free (or for very low keep) is help!
Some of us couldn’t live at home to save up.

And, no, I don’t eat avocado either!

*Not necessarily - the more deposit you have the better the interest rate.

If you have a 90% mortgage vs a 75% mortgage - your rate will be better. Of course, an individual may go and get a stonking new mortgage putting them back to a 90% rate but I'd say most don't. Point is with increase value in your home you have more options.*

I don't understand.
The person in the original house that has gone up to £150k would just remortgage onto a new rate at 75% LTV or whatever it may be. If you change lender, it gets valued. You don't need to move.

I think more houses are bought by two working people, whereas a generation or more ago it was one.
Also it's who is buying: my husband (a well paid city lawyer) and I ought our family home from two teachers. I sold it to bankers. We couldn't have afforded to buy it at what we sold it for, and the teachers couldn't have afforded to buy it for what they sold it to us for.
I now live in a small, comfortable (now, as it was not built with indoor plumbing) terraced house that cost just under £1m (sw London), it was probably originally built for lower middle class workers.
My friends and I all bought as soon as we had jobs in the 80s. Some had a deposit from parents, some bought with friends. 20 years later not one of the same age group could afford to buy the equivalent until much later in their careers, but they still bought.

I think a lot of buyers save up for the deposit and work their way up in their careers until in their 30s/40s, then buy the large house.

It’s not unusual amongst my social circle, we all had our first babies when living in small rental flats and bought houses when we were earning enough to afford the mortgages.

@Bringsexyback
Knowing the Wirral, a 2 bed flat that isn’t like living in beruit would be £250,000. Good luck to them theyll need it, i hope they dont have nice cars parked outside
It's in Birkenhead where they both grew up and though not posh it's certainly not like Beirut! What a strange thing to say.

@OpheliaThrupps

Hello *@WindyState*,

We're going round in circles, but how do you explain how people have been saving deposits and buying houses all through this time of alarming house-price inflation. You earlier said it was impossible.

(Incidentally, the graph doesn't prove your second (different) point either! Use the graph to turn the clock back to 2003. Or 1985. Look at the alarming gap that has opened up between wages and house prices. It very obviously can't possibly go on like that ...)

Yes, we are going around in circles. For a start, I didn't say it was impossible for everyone.

If you have help you can manage. If you have a high enough salary you can manage. However, it is completely undeniable that young people have a much, much harder time of it now than they did 20 years ago and the massive discrepency between house price growth and wage growth (which is far wider now than it has ever been) is the key factor in all of this.

Home ownership has halved for the under 25s compared to 20 years ago. There is a reason for this and it's not because young people can't be arsed to save money.

[quote Billandben444]@Bringsexyback
Knowing the Wirral, a 2 bed flat that isn’t like living in beruit would be £250,000. Good luck to them theyll need it, i hope they dont have nice cars parked outside
It's in Birkenhead where they both grew up and though not posh it's certainly not like Beirut! What a strange thing to say.[/quote]
Are used to live in Cleveland Street in Birkenhead I hope to goodness they’ve got a stab proof vest, Full of heroin attic‘s and just zombies walking around look Like that Robbie was soon as look at your last Halloween and bonfire night kids from Liskeard were driving over the bonnet of cars around the park people were getting the windows put end there’s a bloody good reason why that two bedroom flat was only 85 grand

We moved in with ILs to have a hope of being able to gather up a deposit, but in saying that I'm in NI where house prices are much lower than England, but still significantly higher than 5 or 10 years ago. Saving literally every penny, bar housekeeping, food, phone bills. A lot of people I speak to are in the exact same boat, or are getting gifts from parents to help out.

My FTB is a 3 bed semi just me and my partner and I don’t for one second think that’s it is larger than “needed”.

It’s a small 3 bed and we have a kitchen, open plan lounge diner, WC and then the three bedrooms upstairs: one we sleep in and the other two we use as home offices for WFH/guest room.

Which bit of our house don’t we need?

@OpheliaThrupps

Hello *@WindyState*,

We're going round in circles, but how do you explain how people have been saving deposits and buying houses all through this time of alarming house-price inflation. You earlier said it was impossible.

(Incidentally, the graph doesn't prove your second (different) point either! Use the graph to turn the clock back to 2003. Or 1985. Look at the alarming gap that has opened up between wages and house prices. It very obviously can't possibly go on like that ...)

I obviously can't speak for everyone but for my DH he lost his mum when he was in his early 20s. His DF gifted him and his sister £30,000 from his mum's pension for a deposit. Traditionally I'd expect a father in his position to put that towards his own pension and then pass any inheritance to the next generation when the time comes. Instead DH was able to buy a 2 bed flat for 100k and 5 or 6 years later it was worth 180k. We then used the equity to buy a 3 bed house for 235k. It's been just over 5 years and it's about to go on the market for 290k.