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!

I wonder if all the people saying they sacrificed and got smaller houses could afford that house now on the equivilant of that jobs wages today.

I couldn't

@Theghosts I bought in 2019 and my flat has gone up by 50k. I can afford it today. To be fair, I did buy in London when it was thought we would crash out with no deal so the market was easier...I do think waiting for 1-2 years may not be a bad thing. But re smaller properties, I don't think there is any way to buy property in london without buying a smaller property. Unless you have a million pounds. Even if you move out to zone 5, you are often looking in excess of 500k minimum (unless the house is very small and often smaller than a flat in terms of floor area, and the third bedroom is a glorified cupboard) and that is above the stamp duty discount threshold for FTB.

Maybe the rest of the country is becoming like London and everyone has to adapt?

I’m 27. We worked our way up the ladder so definitely exists!

we started in a shitty flat. It was 2 bed - we did our research for saleability. It had 2 windows total and we got it at a decent price by monitoring the market. It was fine to live in. An area we didn’t want. But we made sure we could get to our jobs (made my commute almost 2 hours!) and save whilst paying the mortgage.

we made a couple of grand on this and using our continued savings plus equity bought a house for £500k. 2 years on this house is worth over £600k and was agreed by Santander when we remortgaged recently.

the ladder is there. You choose which path. It takes tenacity. I knew we couldn’t have kids if this was our way of getting there. We knew we’d have to be cheap with furniture and careful with money as it was the bottom rung.

it’s possible. You won’t have the dream home immediately and don’t get fooled by social media of peoples big first house posts.

You have a good house
Can have 2 kids
Increase your salary over time
Once they at school then buy
You only in your 20s

and the house earned more than we could save in those three years.

this is a really important point. I had this discussion recently with my DH. If people can get any type of house then financially it’s so worth it assuming the market increases which it probably will.

on a £250k house, the mortgage repayments are £1000 at 4%. Over 5 years they will have paid £60k in repayments (£20k capital and £40k interest)

i bet that £250k house will be worth more than £310k in 5 years time. This equates to about 5% increase in value per year.

so effectively their interest payment is actually a capital payment as it is being converted into equity and it’s not wasted money.

but the salary needed to afford this house would be £100k between a couple. Wages need to increase drastically to keep up.

Took longer than I expected for FTBs and their £6.99 Netflix subscription to be mentioned.

Negative equity isn't the end of the world unless you have to move. I would look for a 2 bed with a good size second bedroom and in a decent school catchment, then you shouldn't need to move until any kids are age 8ish. Inflation ramping up arguably helps FTBs especially if you can fix your mortgage. Rampant inflation in the 70s caused huge pain but also helped mortgages to depreciate quickly in relative terms, making them more affordable if you could get through a few tough years in the beginning. PPs are right that the housing ladder isn't there like it used to be, but that is partly because inflation's been so low. And that's changing.

That £225k that OP mentioned isn't that different to what we paid in 2004, for a really dodgy terrace house. Make a future proof choice even if it's a 2 bed, fix your mortgage, make it your own and concentrate on paying it off rather than worrying about how much it's worth.

Negative equity isn't the end of the world unless you have to move. I would look for a 2 bed with a good size second bedroom and in a decent school catchment, then you shouldn't need to move until any kids are age 8ish. Inflation ramping up arguably helps FTBs especially if you can fix your mortgage. Rampant inflation in the 70s caused huge pain but also helped mortgages to depreciate quickly in relative terms, making them more affordable if you could get through a few tough years in the beginning. PPs are right that the housing ladder isn't there like it used to be, but that is partly because inflation's been so low. And that's changing.

That £225k that OP mentioned isn't that different to what we paid in 2004, for a really dodgy terrace house. Make a future proof choice even if it's a 2 bed, fix your mortgage, make it your own and concentrate on paying it off rather than worrying about how much it's worth.

Negative equity isn't the end of the world unless you have to move. I would look for a 2 bed with a good size second bedroom and in a decent school catchment, then you shouldn't need to move until any kids are age 8ish. Inflation ramping up arguably helps FTBs especially if you can fix your mortgage. Rampant inflation in the 70s caused huge pain but also helped mortgages to depreciate quickly in relative terms, making them more affordable if you could get through a few tough years in the beginning. PPs are right that the housing ladder isn't there like it used to be, but that is partly because inflation's been so low. And that's changing.

That £225k that OP mentioned isn't that different to what we paid in 2004, for a really dodgy terrace house. Make a future proof choice even if it's a 2 bed, fix your mortgage, make it your own and concentrate on paying it off rather than worrying about how much it's worth.

Negative equity isn't the end of the world unless you have to move. I would look for a 2 bed with a good size second bedroom and in a decent school catchment, then you shouldn't need to move until any kids are age 8ish. Inflation ramping up arguably helps FTBs especially if you can fix your mortgage. Rampant inflation in the 70s caused huge pain but also helped mortgages to depreciate quickly in relative terms, making them more affordable if you could get through a few tough years in the beginning. PPs are right that the housing ladder isn't there like it used to be, but that is partly because inflation's been so low. And that's changing.

That £225k that OP mentioned isn't that different to what we paid in 2004, for a really dodgy terrace house. Make a future proof choice even if it's a 2 bed, fix your mortgage, make it your own and concentrate on paying it off rather than worrying about how much it's worth.

eek, sorry I don't know what happened there 😮

Make a future proof choice even if it's a 2 bed, fix your mortgage, make it your own and concentrate on paying it off rather than worrying about how much it's worth.

This is good advice really. We are in what would be, to many people, a "middle rung" house. 3 bedrooms, terrace, small garden - but we still like living here. We've made the decision to fix the mortgage for 10 years, stay put and concentrate on paying it off.

@Autienotnaughtie exactly this. The house next door sold last year, it’s exactly the same as mine, so in 22 years the value of my property has risen 400%. We didn’t go usual first time buyer tiny place but now with salary increases there is no way as a FTB we would be able to afford our house. We know what people starting out in the same careers earn as it’s higher education and has a clear structure. We just worked out that on current comparable junior salaries and with the same % deposit we had back then we would be 100k short.

Its extremely tough out there.

What has the OP’s age got to do with anything?

She and her partner both earn average wage (for the U.K., not the north of England), don’t have the cost of children (yet) and can’t afford an average three bed in the relatively inexpensive north of England, in which they could reasonably start a family.

Why is that expectation unrealistic? Sounds pretty normal to me.

And then have a mortgage into your 60s rather than being mortgage free by 50? No thanks.

I'm pretty shocked at a ftb wanting a 3 bed house! I started out with a 2 bed flat and took in a lodger to help with costs. My now husband bought a one bed flat. We were both living in flatshares to save up before we bought. We had those flats for a few years and then combined our households and moved in together. At that point we could manage a small 3 bed in an "up and coming" area. We are both lawyers and were on above average salaries. I think your expectations are unrealistic.

I'm pretty shocked at a ftb wanting a 3 bed house! I started out with a 2 bed flat and took in a lodger to help with costs. My now husband bought a one bed flat. We were both living in flatshares to save up before we bought. We had those flats for a few years and then combined our households and moved in together. At that point we could manage a small 3 bed in an "up and coming" area. We are both lawyers and were on above average salaries. I think your expectations are unrealistic.

And then have a mortgage into your 60s rather than being mortgage free by 50? No thanks.

Buy in early 30s
20 year mortgage or 25 years
Ends before retirement
What s the big deal?

Shocked? Really?

How dare the OP have ideas above her station!

She’s not asking for a three bed house in Clapham. She and her partner want an ordinary three bed in the north. What’s shocking about that? She’s allowed to be annoyed that she can’t afford this very standard aspiration.

Why do that when you have the money to do it younger?

You also don't know what will happen in your early 30s. Maybe your job pays significantly less in real terms compared to your 20s. But if you have a mortgage based on prices 10 years ago, you are likely to be able to afford it due to making mortgage payments for 10 years which would reduce the LTV.

Totally agree that the housing ladder doesn't work for lots of people now.

If FTBs are in their late 30s onwards, as so many are now, then they have often reached towards the top of their potential earnings so won't have big salary rises to help take them to the next level. Stamp duty- in the past the stamp duty boundaries would have meant that people would have avoided stamp duty on many first and second homes, but these days even a starter home will have thousands of pounds to pay in stamp duty. And until recently, the low inflation rates meant that the real value of your mortgage wasn't falling, so increasing your mortgage for a bigger property is less affordable than it was in the past.

I don't think that a housing crash would be good for anyone (might benefit a few FTBs but would totally screw up the economy), but we could certainly do with a very long period where house prices only rise at or below inflation, or even completely stagnate to allow wages to catch up a bit.

I also can't get my knickers in a twist about long mortgages meaning that people are due to pay into retirement. If the alternative is renting forever then surely it's better to have a mortgage that you might be able to overpay at points so it might be mostly gone by the time you retire?

What part of the ‘North’ are you in? Trafford in greater Manchester, or affluent Cheshire very different from a remote part of Lancashire.

are the 3 bed houses in the north quite small then?

Is it smaller than this ; a standard 3 bed house in my area: www.rightmove.co.uk/properties/118819379#/?channel=RES_BUY

my MIL has a very similar house in a nearby area and it was her second property/forever home. She knew a young couple- accountant and lawyer plus they had help from family. Their first property was an art deco 2 bed flat (similar to our flat we bought in 2019) followed by a 2 up 2 down in Hampstead Garden Suburb (which is the same value today as this 3 bed house). Then they divorced, but the husband remarried and now has a larger house in a cheaper area of north london.

@perenniallymessy I am hoping for prices for flats in London to drop so that I can upgrade to a bigger flat and pay less stamp duty. Sadly no joy yet:( I would even sell my flat at cost or lower as it would still be cheaper for me. That was how a lot of older londoners I know upgraded. The younger londoners are still buying flats and moving up the ladder but most have inheritance.

I am in my 20s so am also looking to increase salary but it would be good to not pay so much stamp duty.