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??

Last year, DH inherited a very large sum when his Mum passed away. So, we're going to use some of it to give both our DDs very substantial house deposits when they leave university.

@TwoCoffeesPlease

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?

If you'd said "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; ONE is used as a home office and one a guest bedroom" then the guest bedroom would be a nice to have.

However, of you both need an office space, then it's needed...

Calm down

Like some PPs I lived in horrendous but cheap househsares so I could save more money, if I travelled home it was on the megabus so cheap but very bloody long and unsavoury. I ate like a student even though I had a (modest) full time wage coming in, didn't drink so night's out were cheap, cycled everywhere rather than take public transport; all stuff that isn't possible for everyone but I did everything I could to string a deposit together. I met DH and we ended up buying together, he was military so although he had to pay for accommodation and food it was cheaper than privately renting I suppose- but he avoided acting like a payday millionaire. Neither of us had any help from parents, we bought only a few years ago and made a lot of compromises on location and the house itself but are happy. Securing a mortgage was always important to me as we lived in rented accommodation growing up and I hated moving several times at the whim of the landlord.

This is the thing. Previously a 1 bed flat was fine for a couple, with one of the two people working from home in some sort of dedicated desk area/dining table. 2 though? It's got to be big enough for either 2 desks in the living room (lack of privacy) or have room for a desk in the bedroom.

@Bringsexyback
Well, they've had their sporty Fiesta parked outside for a year and it's still got all its wheels and neither of them has been stabbed as yet - you're just being rude now about someone else's lifestyle choice so I'll leave you to it.

My husband and I losing all 4 of out parents by the time we were 32.

I'd swap the house for some grandparents for our kids 😔

So so many factors.

• parental help/inheritance
• people buying later, when their salaries are at peak in 30s and 40s.
• inequality. Average wages reflect lots of people on very low incomes balancing out some people on much higher. The gap between low & higher earners has risen big time and the high earners are buying.
• disparity around the country. plenty of 3 beds in the Midlands for 200k.
• people moving from more expensive areas to cheaper ones
• two incomes, and two good ones at that not a man in a decent job and a woman doing a few hours as a dinner lady which was more the norm years ago

@OpheliaThrupps

But where's the money coming from? It would seem... Parents/grandparents neither directly by giving them money, or indirectly by letting them love with them for next to nothing.

This all artificially boosts spending power, surely?

Joe Bloggs just cannot afford to pay £650k for that 4 bed house.... but actually he, his wife and his parents can

.
If people weren't giving this money ...would house prices be this expensive? I'd say no. Because people just can't magic up an extra £50k so the houses wouldn't sell, so the prices wouldn't be so high...

IN the case of my profession (law) the salaries after you had done 4 years (or 5 years) studying and 2 years training are about double in real terms what I got in the same job decades ago. (after allowing for inflation) because of student loan costs, wages jsut going up sky high (for the very few of us able to get those jobs) and presumably also because rents and house prices are so much higher in London than in the past.

So a £40k house we bought in 1984 with 2 full time professional salaries may be about £400k today (outer London) but the wage of each in the couple might well be £100k each in my profession so it remains doable. That is not the case in all jobs of course. Also we were paying interest rates up to over 13% a year and my current mortgage rate is 1.44% - a vast vast vastly smaller percentage.

I have also helped all 5 children to buy a first place.

I am the problem. We plan our retirement. We like our house but it's bigger than we need now since the DC flew the nest. But we don't want to live in a poky retirement property with tiny rooms and no storage space which is what seems to be expected of us. You are old and now irrelevant so move out and let someone else live in your (very nice) house. But I'm not trying to release money to live... I sorted that out 20 years ago, because I thought long and hard about how to achieve my goals.

I have a clear picture of what we want and need to buy as our last home and it has b*gger all to do with what McCarthy & Stone think I ought to want, but it still leaves us frantically reading Right Move several times a week.

I should probably add, we're 65, not 85, and in good health. A retirement flat may be the best option one day, but that's probably 15 years away given our genes... we have three living parents, two in their 80s and one aged 92.

Retirement flats are where you go to die

@User0458832

Retirement flats are where you go to die

Yes. But a perfectly reasonable option if you’re 85. Like @XingMing, I suspect that’s where we’ll end up in our mid to late 80s - my genes indicate that I’ll probably go on well into my 90s.

We bought 15y ago with a 100% mortgage with Northern Rock and sold our flat 1y later and bought this house. Still with Northern Rock at that time and no deposit. The market literally crashed just after we moved into our house.

We have no plans to move. We do co own a 2nd property with land through inheritance mortgage free.

Without a 100% mortgage, there is no way we could have bought as easily.

[quote 00100001]@OpheliaThrupps

But where's the money coming from? It would seem... Parents/grandparents neither directly by giving them money, or indirectly by letting them love with them for next to nothing.

This all artificially boosts spending power, surely?

Joe Bloggs just cannot afford to pay £650k for that 4 bed house.... but actually he, his wife and his parents can

.
If people weren't giving this money ...would house prices be this expensive? I'd say no. Because people just can't magic up an extra £50k so the houses wouldn't sell, so the prices wouldn't be so high...[/quote]
You seem very set on blaming baby boomers here.
They give to their children and its inflating house prices, they dont give and they are selfish, money grabbers

House prices have been inflated by demand outstripping supply, the hold on stamp duty caused a rush to buy and the H2B scheme which has kept the demand for new homes going.

Inheritance here.

@StEval

Well, yes in away i do blame them,as it's clear lots of people are getting help from their parents etc. Essentially 3-4 people are involved in buying a house, instead of 1-2.

Pretend that nobody was able to live fire free or given large money gifts in order to help buy houses... This would mean that house prices wouldn't be as high, because nobody would buy them.

The OP is correct. If all parents in a position to inject cash from the bank of mum and dad took a stand and said no, we’re not going to feed insane house prices by giving our children big deposits to ‘get ahead of the game’, then less money would be chasing the same assets and prices would have to come down.

But that would require all parents to make the same sensible decision, wouldn’t it? And to take a long term view for the common good.

[quote 00100001]@StEval

Well, yes in away i do blame them,as it's clear lots of people are getting help from their parents etc. Essentially 3-4 people are involved in buying a house, instead of 1-2.

Pretend that nobody was able to live fire free or given large money gifts in order to help buy houses... This would mean that house prices wouldn't be as high, because nobody would buy them.[/quote]
Im afraid I think thats quite a simplistic POV.
I and many others I know have received zero help.
Not all BB are rich, many particularly women who have poor pensions.
Few FTB are buying 650K houses for a start.

You sound quite put out and petulant, I take it if you were offered 20K for a house deposit you would turn it down?
Yeah right !

You sound quite put out and petulant

The OP started a discussion which I, and I’m sure many others, enjoyed reading and taking part in. No need to be insulting because you don’t like her point of view.

@Iamthewombat

You sound quite put out and petulant

The OP started a discussion which I, and I’m sure many others, enjoyed reading and taking part in. No need to be insulting because you don’t like her point of view.

Shes blaming a whole group of people via generalisations rather than actually looking at the whole picture and the actions of the government. Its unpleasant and as usual these types would be biting your arm off if money was offered to them!

Few FTB are buying 650K houses for a start.

Yes. I may be repeating myself but the £500k houses here are going to people on their 2nd or 3rd move who have been paying mortgages for 10-15 years. I'm 37 and we've been homeowners for 14 years, paying down a repayment mortgage as opposed to interest-only. My parents lent us 6k as a deposit back in the day but that's not really having an impact right now on what we can afford.

If people don't take their equity and move then essentially the starter homes are all full. Which is what would happen if there was a price crash.

@BulletTrain

Few FTB are buying 650K houses for a start.

Yes. I may be repeating myself but the £500k houses here are going to people on their 2nd or 3rd move who have been paying mortgages for 10-15 years. I'm 37 and we've been homeowners for 14 years, paying down a repayment mortgage as opposed to interest-only. My parents lent us 6k as a deposit back in the day but that's not really having an impact right now on what we can afford.

If people don't take their equity and move then essentially the starter homes are all full. Which is what would happen if there was a price crash.

Precisely. Once the FTB move up to more expensive properties then its equity that forms their deposits. I remember in the 2008/9 crash there was a dearth of FTB homes, threads on here about it. There was nothing to buy as many in negative equity simply stayed put.

I agree with poster who said there are still parts of country where it is possible for a couple to get 3x salary and buy a house. My son bought in Hull a 2 bedroom terrace house for £75k only last year. He moved from Midlands as he could not afford a house there. He took a £750 net pay cut when he makes bed but he can afford his mortgage which is 25 years and he could not afford a house in Midlands even with a good deposit.

I agree places where houses are cheaper often wages is a lot less too. Also unless in a city maybe less employment.