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??

It's basically Downton Abbey write across 5%-10% of the country. With the bulk of the remaining 90% being renting serfs for life.

@Coffeetree

Sorry, quote fail. When people say "living at home" to save money, they mean grown men and women living for free or very cheaply with their parents?

I mean, that's great if the parents can afford it and allow it, but don't act like that is an option available to everyone!

The interesting thing is lots of these posters who are letting their kids live rent free/dirt cheap are also saying their kids had no help???

We did HTB in 2013. Remortgaged to pay it off in 2018. It cost us £8k more on the loan amount than we borrowed, but we'd been overpaying on the mortgage and the value went up, which took us under 60% loan to value, so the payments went down. You could make it work really well. Now though? Not so much. I'm not sure that properties will have massively increased by 2027.

@cushioncovers

Because the baby boomer generation are beginning to die? In the next 10-15 years there will be the greatest transfer of wealth in history. Up to £5.5 trillion in the UK alone will transfer from those born between 1945 - 1965 down to younger generations. 2035 is predicted to be the peak year.

That's an interesting point Swiss, ** I have also wondered if sadly covid deaths have brought about a lot of early inheritance to people as well.

Covid deaths will be trivial in the big scheme of things. The number of deaths (for all reasons) was only slightly higher than average over the past couple of years. A lot of those who died of Covid will have died of something else soon afterwards anyway as they were very old or had serious health conditions.

I'm certainly not minimising the impact of Covid on the family/friends of those who died from it, as each death is a tragedy, but in a purely "numbers" point of view, a few tens of thousands of extra deaths in a country with a population of 60 million won't be having any significant impact.

Indeed.

The prices are completely out of sync with the average salary.

So it is either people who benefit from help from wealthy parents/grand parents, those who already bought a house when prices were lower and are trading for a new one. People who work in finance and other highly paid jobs. Then you have the buy to let landlords.

I appreciate that prices are different through the UK but a first time buyer with a normal job has no chance whatsoever to buy a house in many parts of the country. No matter how many lattes or avocados on toast they spend their money on or not...

@Darbs76

I live in the south east. For a 3 bed semi you’re looking at upwards of 450k. That’s a lot of money to be a FTB. My kids will get a leg up the housing ladder through grandparents inheritance. They bought their house in North London for 30k ish and it’s now worth over £1 million. They have 3 sons and only one doesn’t own a property so far and the other 2 will use that money to help their children buy in London. Their dad has also been working overseas and has saved for their Uni. Very lucky, sadly my parents weren’t in a position to do that; and I think it was different times back then. My parents wouldn’t have even considered giving their inheritance to us instead of having the money for themselves and rightly so really. But I grew up in a very cheap area and you can still buy a house there for 150k

But why would FTB generally be needing a 3 bed semi? Surely the majority of FTB are young single adults or couples?

Maybe that's some of the problem? People expecting houses larger than "needed"?

@Thatsplentyjack

Either people are being given the money by someone, or a lot of people are dealing on the side. I just don't understand how people are managing it now. Also, if a house has been valued at a price, why would anyone pay tens of thousands more than that price. Its madness.

"A house being valued at a price" is nonsense though. Houses are literally worth what someone will pay for them. That's how the housing market works.

Estate agents do nothing more than estimate/suggest a price (not a value), taking into account similar recent sales in the area.

So if an estate agent prices at £250k, and then offers are made above that, with the highest being £275k, then the house is 'worth' £275k.

Similarly, if an estate agent prices at £250k, and then the highest offer made is £220k, then the house is 'worth' £220k.

In some areas, notably London, but also Manchester and the Midlands, money is coming in from abroad to invest in property. Tower Hamlets council noted that they had a large number of properties which had never been lived in- not rented, just left as new and foreign owned (mostly Chinese). It would be relatively straight forward to give councils powers to tax properties which have been empty for a long time period, but we do not currently do this. We also do not limit ownership to UK residents.

@00100001

The interesting thing is lots of these posters who are letting their kids live rent free/dirt cheap are also saying their kids had no help???

It's an arguable point. Most youngsters pay at least something towards the marginal (extra) costs their parents bear because they live at home, i.e. towards food, laundry, power, etc. So, for many, the contribution made will in fact cover the extra costs of living at home, i.e. parents no worse off because they'd have all the fixed costs to pay whether kids live at home or not, such as mortgage/rent, rates, insurance, etc. Yes, the children are "saving" money by not renting somewhere else, but there's not really any transfer of wealth/money from parent to child if the child is making a contribution towards their costs.

There's also an opportunity cost to the child of living at home, particularly if they're in a less prosperous area, as they could well be earning less money than they could be earning if they moved to a city with higher wages. Or even taking a job within walking/cycling distance of home to save commuting costs may make taking a low paid job viable (it's what my OH did - saved a fortune in not having to buy and run a car by taking a pretty low paid crap job a stone's thrown from home which more than compensated for the loss of income).

Lots of different ways to look at things really. Not all black and white.

@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??

Do you have to use the 'boomers' insult?

At least nowadays the woman's full wage is considered whereas previously, even if the woman earned twi e her husband's wage only half was considered. Also, iif you were a single woman it was next to impossible to get a mortgage.

@JudgeRindersMinder

Yeah, but they had help being able to stay at home to save the 70k deposit

Only on mn is helping your kids seen as a bad thing. Meanwhile in the rest of the world it’s just what parents do

It's fine to help your kids.

But the parents are saying things like "my kid lived with us for 5 years rent free and saved £59k with no help"

Lots of people have huge amounts of equity just because they were able to buy at the right time. Equity is much harder to build these days & the climbing up the ladder concept doesn't really exist.

I had help, I don't know anyone who didn't.

ThisIsEngland

In wasn't an insult...it's a term of a generation born post war....

And yes some of that help was living at home to save. That is help! Not everyone has the space or location or money to support that.

But why would FTB generally be needing a 3 bed semi?

The cost of moving is huge, and most FTBs are older these days. If you are a couple, buying for the first time age 30, you are probably planning kids in the next 5 years. Why would you buy somewhere that would force you to move and pay stamp duty again?

You are thinking that FTBs will be single people age 20-25, but that simply isnt the case these days.

I live in the south east. For a 3 bed semi you’re looking at upwards of 450k. That’s a lot of money to be a FTB.
Same and it made me laugh upthread when a pp mentioned someone winning £500k so they could skip a few rungs on the housing ladder – once was, half a million on the lottery would have got you a mansion with change for decoration, furnishing, pension pot and an ISA. What it gets you in the SE is laughable – so many cramped, crap, damp and draughty houses for ridiculous sums.

But why would FTB generally be needing a 3 bed semi? Surely the majority of FTB are young single adults or couples?

Probably because they are much older than the past. And moving is prohibitive for many with stamp duty so most people move far less frequently.

*But why would FTB generally be needing a 3 bed semi? Surely the majority of FTB are young single adults or couples?

Maybe that's some of the problem? People expecting houses larger than "needed"?*

For a lot of them it's to start a family. The alternative is to sell in a couple of years when their one bed flat is too small for a growing baby and then incur SDLT, moving fees, selling and purchasing costs, not to mention the stress. There are also a lot of couples working from home who need somewhere to work.

It does make me laugh when it's said that young people just need to move to an area with cheaper houses.

What do you reckon would happen if all FTB followed this advice?

I know lots of people who only could move from a flat to a house during the pandemic because of the stamp duty cut

It does make me laugh when it's said that young people just need to move to an area with cheaper houses.

Tbf they are doing this hence the growth in UK prices, more FTBs left London to buy last yr than ever before. It just pushes prices up.

Where I live, one guy has bought three flats. Nobody lives in them and they aren't even rentals or holiday lets. Makes me very cross. It's investing for lazy people. This guy is going to be fucked if there is a crash as he's bought them recently when their value is over inflated. I won't shed a tear for him.

I think it's parental help and basically banks lending to people who already have a good sized property portfolio. Weirdly enough, properties are seen as an asset when they are a liability until you pay them off, so those in lots of mortgage debt seem to get more thrown at them. I know someone who has bought a house with the intention of doing it up and making money on it and they've just been told they won't as they spent too much buying the house. It was a shit hole too.

There was an article about Lloyd's bank buying up a lot of property too.

It's a shit state of affairs really. With utilities, leisure and food going up it feels some very rich people are fighting over the scraps of people's wages. Either rent isn't going to get paid, or utility companies won't, or people won't spend in shops and leisure. People will always choose to eat. It's not looking good because something has got to give and landlords and companies are not going to get paid what they are owed.

But why would FTB generally be needing a 3 bed semi? Surely the majority of FTB are young single adults or couples?
I was a FTB of a flat when I was 35. Then I sold up and bought with DP, his first buy, and he was 40 and we had a baby by then. We’d be so much better off now if we’d met just a couple of years earlier and bought the house together and skipped the single girl flat – stamp duty, costs, etc. Most people I know now buy a house as the first purchase because they’re all buying in their mid to late 30s and either have kids, are pregnant, or are going to TTC as soon as they get the keys.

Because the baby boomer generation are beginning to die? In the next 10-15 years there will be the greatest transfer of wealth in history. Up to £5.5 trillion in the UK alone will transfer from those born between 1945 - 1965 down to younger generations. 2035 is predicted to be the peak year.

I think there will be a wealth tax, they can't push more on income & our nhs & social care costs will increase dramatically due to an ageing population