To think it just gets harder for first time buyers?

[chatterbug22]

We rent a new build 2 bed and are lucky to do so cheaply, we have landed on our feet with it really as properties on this government scheme are cheap and we have two very decent sized rooms with a nice big secure garden.

The goal is to buy in the next 18 months, and we are lucky enough to be able to save quite well. We have good jobs, both on the average salary for people in the UK and we’re not yet even mid 20s. We are up north. The help to buy scheme in our area is capped at £228,100. A year ago you would get a 3 bed semi for that. 6 months ago you’d probably get a 2 bed for it. I have just browsed today out of curiosity and there is absolutely NOTHING that falls under the scheme, apart from a 2 bed terraced smaller than our current house in a not very nice area?!

How is anyone supposed to do this? Demand seems crazy at the moment. Are we best to compete with it all or just stay out until it crashes (which I’m guessing it inevitably will).
I don’t want to needlessly be paying rent that we will never see again but nor do I want us in a situation where we are priced out of our depth.

Boggles my brain!

You sound quite well placed to be honest.

Took me until my mid-30s and a couple of dead great aunts to buy!

Yeah this idea that you buy a starter home is really outdated. Most people I know didn’t buy til 30s or40s and had kids already. Moving is ££££. It’s also not always the case that people always bought worse than they could rent. My parents first house was a large 3 bed with a big garden when they were about 24. In your situation OP, since you’re young, I would probably try for an older house that needs lots of work, and definitely not a shared ownership. It is shit though. Basically it benefits the banks, and people who already have expensive houses, but it’s awful for everyone else.

Yes.
We have a 20% deposit, but are buggered by how much we can borrow cause of our income. (despite saving that 20% desposit while renting a similar £ per month as to what our mortgage would be).

We'd been looking for about 18 months, but had to pause on various points due to life being squiffy.

now looking again and what's in our budget seem to be barely anything.

Also - as you take longer to save we need more space due to WFH, and growing family), which means we migth need more deposit, or more income - but by then prices will have gone up again.
It just feels like a hopeless vicious circule.

It is very hard. We bought with a 5% deposit and a 35 year mortgage in 2008, just before the crash. Thing is, we did it in spite of knowing house prices were "high" and there was likely to be a crash. There was, of course, but that house is now selling to my friend's daughter for £200k when we both bought it and sold it for £123k. I don't really know how long I'd advise someone to wait out the market.

@GrumpyPanda interesting perspective. My other half actually lived abroad for some time growing up and said buying is extremely uncommon there, most rent. Weird how it varies so vastly. This is reassuring though so thank you

@Favourodds thank you. I think we are it’s just so hard not to look at others and compare, but I need to learn not to otherwise I will never be happy

@TammyOne exactly. I find moving stressful (know everyone else does too) but I want to minimise the amount of times I do it. We are by no means rushing to have children but it’s a possibility in the next few years as with a lot of people at our age and stage, I don’t want to constantly be moving about and the idea of settling somewhere with space is nice!! Also don’t want to uproot the poor cat!!

One thing though - the "we can afford x rent so we can afford x mortgage payments" argument is only valid with mortgages at current rates. Lenders will look at whether you could afford those payments if rates went from 2% to 5% to 7%. Which they might.

obviously it depends on your budget but stamp duty makes it's very expensive & the next place we buy we would like to stay at least 10 years.

@DashboardConfessional I understand, and there’s the added worry of if the boiler packs in you’re responsible to pay for it. I don’t know, I wish there was a blanket solution! Making decisions is the hardest part of adulting!

It's all the things you don't really plan for that cost. For example, oven broke. Fine. Order new £400 oven. Oven trips the electrics. Electrician comes out, realises the wiring is an 80s bodge job. New fuse box required, plus electrician's time. And so on!

@DashboardConfessional yep!!

Why is it outdated? I’m only 35 and it’s exactly what I did. Bought a one bedroom flat in a relatively run down area at 24; a two bedroom flat in a somewhat nicer area at 29; and a two bedroom house with a garden in an area I’ll happily stay for the foreseeable at 34. All in London, and taking a step up as my salary increased.

We can’t hark back to one very short and specific period between about 1970-1985 where particular cultural and socioeconomic conditions meant that housing was relatively affordable and use that as the baseline by which we measure things. Before then, the majority of people were lifelong renters. Since then, our population has changed, our demographics have changed, our way of living has changed, our expectations have changed. And I doubt most people would really want to reset all of that surrounding context back to 1975, even if it meant they could afford a bigger house.

Are you meaning the Right to Buy ISA? As you can transfer to a Lifetime ISA and then can buy up to £450K. Apologies if it's something else.

The bottoms line is house prices are rising too much.
I know of houses in 2000 you could buy a 3 bed semi in suburbs for £70k.
The same houses now are now £650k…

@ComtesseDeSpair because it is outdated. I'm sure you are aware that most FTBs are older today which is one of the main reasons. And that we have had a long period of low interest rates & low inflation. Plus the change in starter prices vs earnings.

This. My first house, bought in 1991, was a two bed terrace. It is tough for FTBs but expecting your first home to be a three bed in a nice area has never been realistic.

This is what the OP is referring to. Maximum full price of a new build on which the government will provide a 20% equity loan.

It's terrible, yes. BUT you're looking to buy a 3 bed as your first home. That might not be realistic. In 2010 we moved from renting a spacious 3-bed townhouse to buying our first place - a 1.5 bed flat that needed work.
We lived in it for 4 years and bought a 2-bed terraced house, then 3 years later a 4-bed detached.
Your first home doesn't have to be a 'family' home straight away - you might have to build up to that.

Thanks Dashboard, makes sense now. I'm in Scotland and I think they have stopped doing them here.

It’s been like that for a while. Typically people have to do usually something dramatic to get on the property ladder. For us to do it then we moved to a cheaper area and bought somewhere that needed a fair amount of work. As well as the saving money and cutting back etc

My first house was a 2 bed terraced house. It needed loads of work and was damp too but we loved it. I had our firstborn there. We moved up to a 3 bed terraced in next street. Then 6 or 7 years later a 3 bed semi. Then 4 bed detached. Now in 6 bed detached. You work your way up the ladder one rung at a time and when you get a chunk of equity you can move up. That is how it works. Very few jump straight up on to second or third rung of ladder straight away without family help.

You go for what you can afford then work up the ladder. Most first time buyers, even 20 years ago, don't start off with a three bed house.

Don’t you think it is odd that a couple each earning average wage, in a relatively cheap part of the U.K. (the OP is up north, I assume not Alderley Edge or Harrogate) can’t afford a three bedroomed house? I do.

It’s a sign that houses are overvalued.

I see that the posts urging the OP to live in a hovel and never have any fun, ever, so as to save more have begun. Great.

It is tough for FTBs but expecting your first home to be a three bed in a nice area has never been realistic.

Er, it has. I was able to buy a five year old three bedroomed house in 1998. I was earning average wage, and it was in a decent area, commutable to Manchester. It is much more difficult for FTBs now. I wouldn’t be ruling out a correction, by the way. Recession on the horizon, inflation plus higher interest rates.

We bought our first flat when we were 25 and 27. A small, one bedroom flat on the 6th floor with no lift.

The reactions of people around us were interesting:

1. Silly buying your main home in city so young. Rent in the city and buy a holiday home
2. How can you afford it? We can't (said by a couple earning the same as us but renting a flat over twice as big as the flat we bought and refusing to consider buying anything smaller)
3. Great decision, wish I'd done it so young. Instead I'm looking to buy my first flat now aged 35 with 2 DC and it's so hard affording anything big enough

We stayed there 4 years then bought a bigger 2 bedroom flat (moving with a newborn was not fun but worth it).

Stayed there another 4.5 years then moved to a nice big 3 bedroom flat which we would happily stay in until we retire.

No way could have bought the 3rd flat any earlier. We needed our various promotions and the equity from the previous flats (only the 1st flat made any extra money).

I agree that moving isn't fun but its all about compromise. Even if you get "stuck" a few years in your "starter" home, you're still increasing equity every month.

All very well to increase equity but what’s the point if the next step on the ladder is increasing equity at the same percentage rate - so therefore gets even further out of reach? Plus the increasing stamp duty on top.

A benefit to my kids when we shuffle off this mortal coil but not a fat lot of good for us.