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!

To an extent I do agree as income vs house price ration is always getting worse and the market is particularly mad at the moment.

However I felt EXACTLY the same as the OP as a FTB 15 years ago.

My fiancé and I moved 30 miles west to get a property we could afford. Previous to that I lived like a student renting a small room in shared houses for years, and planned my career moves and finances very carefully (quit a career I loved because it was never going to pay the bills).

To boost our deposit my DH and I postponed getting married, and I moved into his shared house for 18 months - we had the tiniest space and lived on top of each other. We worked our backsides off doing overtime to boost our income and cut down on everything - kept our credit profiles clean.

We were anxious about our first mortgage, terrified of being pinched by rising interest rates.

we were hyper conscious that if we’d been able to buy ten years earlier we’d have made a killing from property price increases and been extremely well off. That feeling of having missed out still kinda haunts me (as I knew some people from uni with rich parents who did buy property right out of uni, and did make a fortune).

i think it’s often very tough when you start out, and huge sacrifices are needed and very low expectations; and if you are only able to “start” in your 30s because you’re just getting yourself established in your 20s, that’s pretty normal for recent generations.

In other words: lower your expectations, make sacrifices, and don’t assume you are telling anyone under the age of 45 anything new.

But surely you can see that a drop of more than 5-10% would be a disaster for the economy overall?

We have plenty of equity so could easily weather a big price drop and still be able to remortgage etc, but plenty of people would end up unable to sell and unable to remortgage to lower rates when their fixes end due to insufficient equity. Additionally, people will avoid downsizing, so those bigger houses people can now afford to move into won't be coming on the market.

A long term price stabilisation does much less harm overall to existing homeowners whilst also benefitting first time buyers/upsizers (maybe not immediately but in a few years at least).

@perenniallymessy London has been 'stabilizing' from 2015 to 2021, but it hasn't really helped lots of people tbh. I did buy within that time frame but know more people who can't afford to. House price crashes are cyclical anyway and we do have the ingredients for it- high inflation, high pressure on household budgets, increasing interest rates.

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

yes, every single one of them. Tiny. They haven’t even heard of stairs in County Durham, didn’t you know?

That, in case unclear, was a demonstration of “ask a stupid question…”

@Iamthewombat the poster who asked that question was being sarcastic because another had compared the OP's wants to a 3 bed house elsewhere

@Iamthewombat well of course i didn't mean all 3 bed houses. But I wondered if there was a specific housing style in parts of the north from a certain era- compact, was meant to be relatively affordable for workers and their families in earlier times, and so it would be inconceivable that it is not attainable for a young couple. Like my friend in wolverhampton once sent me a link to show him what he meant by ex council terrace with no garden (and this was apparently standard in a lot of northern towns) . Cos I said I have yet to see a terrace in my area of london without a garden, and terrace houses in London can be absolutely massive. In truth, the terrace that he sent me a link to was very small, smaller than my flat even.

It is outdated. I'm glad we bought a house in 2019, but we are stuck here now except for a miracle. Prices have gone up massively in the local area, some of them to insane prices and the house/area isn't worth it, but people are buying them still. That's their problem though, I imagine some are regretting it now with everything increasing, but that was their choice to make.

Prices might come down in a year or so and we can maybe buy something bigger then, but we shall see.

Surely everyone downgrades to buy?

We went from renting a swishy central london flat to a shabby old conversion flat out in the suburbs. It paid off though, we just overpaid as much as we could and then in time could move on to a house but we did move further out again to go from a flat to a house.

The answer is yes, there are particular types of Edwardian 3-beds that are very common in Yorkshire and the Humber (assuming this is OP's region from the HTB price cap - it's where I grew up) This is an example of a "3 bed" where I'm from. It's priced as it is because it's on a main road. 68 square metres!

www.rightmove.co.uk/properties/115852712#/?channel=RES_BUY

This is where my best friend grew up, 3 kids and one income. This is what you bought when you had £49k in 1996 instead of £120k for a 4 bed detached.

The whole market is insane at the moment.

We are looking to move. Called about a property that went up last week. Called the day it went on the market and they already had 26 viewings booked and weren’t allowing anymore. So you can’t even get to see places!! We are bidding on a different one and there are 12 bidders at full guide price, so they are doing best and final offers for the 12 people so it’s going to go for way over asking.

Insane.

Weirdly, where I am, nothing is moving. Houses are sitting there unsold for months.

@DashboardConfessional thanks for sharing. interestingly my flat was £65k in 1995 (so not miles off), now a very similar flat in the same development is listed for £450k! Yes I would place this house in firmly FTB territory.

were in the same shite boat.
saved my deposit up. Myself. No help. Private letting. Boom. Chaos
ive registered interest on a new build out of desperation, only for then to tell me the price it is now, will go up. !?
and noe my ridiculous private let is evicting me so i have no idea how that's going to affect my mortgage application over the next few months( fingers crossed. Are we the only ones praying for a crash?)

I'd say in my particular area of West Yorkshire the increase is about 4x since the mid-90s, whereas where I live now in the SW it's about 6x increase. There were basically no flats, because if you had £40k for a 2 bed terrace you got a garden.

When I bought my first house all my friends were buying small, old properties that needed a lot of work. But it didn't take long for these to run out. We did find another doer-upper for our next house but it wasn't easy to find. It's harder to add value when all the major work has already been done. Whilst I had to make sacrifices, I know how lucky I was.

I have to admit I've never seen the reasoning in buying something cheap and then working up the ladder, every time you move house it costs money in moving costs and solicitor fees, not to mention uprooting and building net networks all over again. I get it if it's the only option but personally I'd rather wait and keep saving until I could get something I actually wanted to be in for the long term. We didn't buy until we were 31 but waited until we could afford a decent sized semi that in theory we'd never have to leave.

Sensible, but the issue with that is house prices tend to rise faster than salaries, and faster than most people can save. So the risk is entirely pricing yourself out of the market.

@SexyPortugese well in today's market,nothing will feel cheap! I suppose a bird in the hand is better than no bird at all. We bought at 27 and 29 after 3 years of living with family. If we had moved into rental instead, we would probably be paying £1600 to rent a similar flat instead of £1020 mortgage + £1000 overpayments. Less ability to save due to rising bills.

Also in 9 years time, you have no idea of lending conditions, your job situation and how that relates to your ability to get a mortgage. Of course, don't get something you hate and ideally get an extra bedroom. Also if you aim to buy at 31, chances are you might want to have a baby around the same time which could play havoc with your ability to get a mortgage due to childcare costs. At 25, you might say that wouldn't happen and you will wait until you have that semi to have a child... but in reality, lots of people have kids before they buy and this does affect their affordability. at least if you bought something before you had a kid, you can build equity through paying your mortgage even during the early years and also not worry about being the landlord terminating your lease.

Thing is, our house has gone up £115k in 8 years. We can't save that. I don't even currently earn that in 8 years on a PT salary! We don't want to move but if we did, we could in theory go back up to Yorkshire and be mortgage free. Our last remortgage was under 50% loan to value.

Yes, ours has gone up £105k in 4 years. Way more than we’d have been able to save. So I’m glad we bought when we did, rather than waiting for the next stage up.

Awful advice.

I would buy now OP because when you have kids your affordability is squashed.

I suggest buying the oldest shittest biggest house you can without the gov deposit scheme. You are young, you can do it up bit by bit or just ‘botch it up’ (amazing what a bit of paint and some stylish staging can do) and that’s how you make the most profit/ equity / deposit for moving to the next home.

New builds have a specific market because they are small dimensions, cramped streets and tiny gardens. They are only really for FTB who think the deposit scheme is great or for people who need the convenience of a turn key house (families / elderly). That’s why there resale value and growth is a lot less than older homes.

Goodluck ☺️

We started with a 2 bed flat, no way could have afforded to go straight to a nice house in a nice area..we then sold it after 5 years and bought a house that needs work, but is in an area we love. You have to start at the bottom rung I'm afraid

That’s why there resale value and growth is a lot less than older homes

i wonder if the energy situation will change that.