To just be so upset about house prices

[spuddy56]

We started looking in December after scrimping and saving for years and its got more and more out of reach with every passing week since then. We've had two sales fall through due to downvaluations, so not only did we need the huge deposit we had saved up for years, we needed 10k on top of that which is impossible for us. We are paying rent and have no family help. We viewed a tiny house that we love and has been on the market since beginning of April with no offers but the seller won't budge on the price. Based on one year of sold prices in the area its about 40k too much, even taking into account the 10% rises over the last 12 months. Theres just no way a mortgage company would lend that much. Been to view another one and it's tiny, has had no offers and is worth a lot less but agents don't think they will go lower. We've had to adjust our expectations down and down despite being what we thought were healthy earners. How are first time buyers managing to buy right now without help?! I'm so so upset at not having somewhere to settle and call a permanent home.

Are you widening your search to areas you hadn't previously considered?

Yes but with the cost of fuel we can't be too far from jobs....

Have you looked at Help to Buy?

It's really hard. You sound like you are highly proceedable and can move quickly. Make sure that the estate agents you are working with know that you have everything in place and could swoop in to fix a broken chain (if it was the right property of course....)

It's the same old answers... consider other areas, consider other types of properties, consider do-er uppers if you're not already, consider renting somewhere minute whilst you save up more cash, take a second job, work out how to increase your pay, take on a lodger.

It's tough, but it's really not impossible. There are probably just a lot of compromises and decisions that you'd rather not make. If home ownership is your number one goal at the moment, they won't feel too bad.

Sorry this is difficult for you though.

I feel so sorry for young people today, with house prices being so ludicrously high and rent also being very costly.

Back in the 1970s, it was possible to rent a "dump" (eg a grotty bedsit, with shared bathroom) for very little, so that you had money to save each month. DH rented such a place for a year before we were married. I vaguely recall it was about £12 a week rent, plus 50p in the meter if you wanted the heating on (DH used to sit in bed in the evenings, wearing 2 jumpers and a coat, as he refused to spend even 50p on using the gas fire! 🤣).

I'm aghast at the rental costs nowadays. Over £1k a month for a small flat - and bedsits seem no longer to exist, at least not in my area anyway. How do people save if they're paying out that much in rent every month?

Could you look at flats instead of tiny houses? That's what we did for our first buy - a flat can be more spacious and I imagine there is more competition for houses vs flats.

Can you rent somewhere smaller?

We already rent a dump 🤣 it literally leaks wind and rain.
If only we had room for a lodger. I already have self employed work on the side.
It's the down valuation that are making this really difficult for us as they require so much extra cash up front.

I know what you are doing through.

Luckily dh got the nod to work from home full time (pre covid), so two and a half years ago, we up sticks and moved 2 and a half hours away (dh has to do in every few months and that’s doable), to a place we could afford. We were in London previously and had been chucking away almost 2k a month to rent tiny, damp houses.

It’s not ideal, we don’t really love it here but we had a budget of 170k for a 3 bed house so didn’t have much choice.

I really feel for you, because even prices here have since gone up so much that we couldn’t even have afforded to buy here now if we were looking now, and this is a shithole!

We aren’t young either, early 40s, so it was then or never.

I agree it’s horribly frustrating and just feels so so unfair when on paper you’re doing everything right.

I won’t bother telling you options as I’m sure you know them, but I will join you in moaning about the situation!

I sometimes idly look at ‘sold prices’ in 2016/17 and it makes me want to cry. If I was just a couple of years older and made the exact same choices my lifestyle would be massively better.

This is the thing, 12 months ago this would have been possible (but we didn't have the income or deposit then). If we were just 12 months older we could have managed. But I'm really not sure it is possible now. 😪

What kind of places are you looking at? Our first bought home was a flat and we used help to buy, would I have liked a bigger house and garden, especially during the pandemic with a toddler? Sure! But we built up equity there and last year we were able to buy our house. Can you take a smaller step just to get on the ladder?

I am so sorry you are in this situation - it must be soul-destroying when you are working your tripe out and still can't afford a decent home. I am sending you lots of good luck wishes.

If you stopped eating avocados and drinking lattes you'd have £500k saved by August. Bloody millennial snowflakes.

@Mushroo exactly! Oh what I would give to be 5 years older than I am.

It may not feel like it, but your prospective lenders are doing you a favour.

They have declined to lend you too much money to buy an overvalued house. They aren’t daft. The mortgage is secured on the house, so when prices correct - and it’s when, not if - they want to be certain of recouping a reasonable proportion of the money they have lent you. If they can’t, they’ll come after you for the difference if the house is repossessed. That’s worst case. Best case is you end up frittering all your wealth servicing a massive mortgage to buy an asset that’s worth less than you borrowed.

Let’s say that they loan you £350k to buy a tiny house, because that is what the sellers are asking. Interest rates go up, buyers can’t afford to service big mortgages so aren’t entering the market, prices necessarily reduce. It’s the smaller houses that are hit first. You’d be in negative equity and unable to move because you can’t sell at a high enough price.

Take your current circumstances as a warning from the universe. Have you seen inflation rates? Increased interest rates is the cure for inflation but it’s painful for borrowers. The only thing keeping the housing market going at the moment is huge mortgages over 30, 35 and 40 year terms. I wouldn’t want to be one of those borrowers.

I feel your pain, I started looking a year before we could afford to buy and there was loads of options in towns close to work, we'd been priced out of a whole town by the time a year passed. We ended up being further from the city than we'd have liked but managed to have a bit of luck finally when an older couple were desperate to move and we weren't in a chain

If houses keep getting downvalued, the sellers will have to get the message sooner or later that they drop their prices or they don't sell, because it's not just that people won't be able to pay the higher deposit, it's that people won't be willing to pay £40k above the valuation of the house. Why would you?

Thats what we are trying to do but we can't because of the downvaluations.

I completely agree with everything you say and this is what worries us. The size of house we are looking at isn't somewhere we could really potentially have a family so we would have to be able to sell on but I think there's a fair chance we could end up in negative equity if we reduce our deposit and add the cash. We can't afford to buy a house we could stay in longer term.

@Mushroo i bought a very classic ‘starter home’ in 2016 and the house has gone up about 50 grand (a 45% increase!) since then without me doing anything. If anything it looks worse than it did 6 years ago. It’s ridiculous. I’m not bragging just wanted to affirm that you are so right that it’s just luck and opportunity rather than ‘hard work and compromise’.

@eatingapie absolutely!! The problem isn’t just starter homes either - the gap between starter homes and family houses is getting bigger as well!

I would definitely look at new builds if you can.
I know it might not be exactly what you want but it may get you on the ladder.
We bought our new build just under 2 years ago and I've just remortgaged and it's jumped up in value by around 30k.

Can you not to part buy /rent or help to buy
My son is in the opposite position
big deposit 50k possibly a further 20-30 k if he needs it but he’s not a a high wage and buying on his own so can’t get a big mortgage

Hes buying a 2 bed / 2bathroom huge flat in a really nice gated complex with 10 acres of private parkland

it’s 250k but if he buys 50 percent with his deposit of 50k he will only need a mortgage of around 75k and the other percentage is rent so in total it will cost him around £650 £700 a month mortgage & rent