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.

I looked online yesterday night. I was surprised to see that every single family house in our area is now selling through unofficial viewings so never gets onto Rightmove. The only exception are some naff developer newbuilds that are unattractive and overpriced.

I would add that we have had a massive influx of HK buyers which may explain it.

Thanks @Ballcactus . I can't believe how many people can't understand that we have compromised on everything we can but house prices, a mental market and downvaluations are making it impossible.

Thanks @Beaucoup this is sort of what I think too but I'm terrified of being priced even further out. It's so hard to know what to do.

Interests rates seem to be rising now. I think people will be finding these big mortgages unsustainable soon and lenders are right not to lend over valuations.
Negative equity played a part in the recession in the 90s iirc.

Once people can't buy at the bottom of the market then prices start to fall again.

Where are you looking and what's your budget? Really sorry to hear of your predicament. The Uk is batshit crazy with its property Ponzi scheme. I'm 61 and own my own house and it was much easier back in the 80s there's no denying that. I would welcome a crash and young folk voting out these conservative bastards that will try and keep the market going come what may and sod the consequences for the younger generation.

Yes this happens every few years usually followed by an almighty crash in the economy.

Big companies are laying off staff already it's a sign of bad time's ahead.

I was looking at reasonably priced houses rural areas in last year they've increased massively this year.
The shortage of housing against the demand is also pushing the prices up.

Hold off for now.

It's a terrible time to buy. Sit tight and wait for a while.

@spuddy56
Would you consider shared ownership?

I very nearly bought a shared ownership flat last year, I wish I had now, as I hate where I have moved to. Best wishes

In the nicest possible way, you don’t get how it works, do you?

Lenders work on multiples and affordability. That used to work well until the late 1990s when those lenders, increasingly under pressure to deliver returns to shareholders, started relaxing lending criteria. Higher multiples, applying multiples to two salaries rather than one, lending more than the value of the house (Northern Rock’s notorious ‘together’ mortgage, which helped to ruin the bank), self-certification, lending to people who couldn’t necessarily pay the mortgage.

We all (I hope) know where that ended up: the credit crunch, bank bailouts using our money and quantitative easing, I.e. the creation of more money. Which is now being lent for housing.

The lenders, ever keen to keep lending, charging interest and delivering shareholder returns (and those shareholders are anyone with a DC pension, or anyone who holds tracker funds) hit on a way to lend even more of the money that was being created, at greater profit: longer mortgage terms. That helped them to get around the ‘stress testing’ requirement, because if someone is borrowing for 35 years instead of 25, an increase in monthly payments looks more manageable. Of course, that borrower will pay back a shedload more over the term, but the lenders are happy with that.

Result: more and more money, in the form of inflated mortgage loans, chasing assets. Houses, in this case.The average person now has a lot of borrowed money to spend on a house, by any objective standard and certainly compared to average salaries.

That’s why house prices have risen by a record amount.

What happens if average salaries go up? Oh yes. The amount lent to the average buyer goes up because it is based on, amongst other things, a multiple of the borrowers’ salaries. So prices of average houses go up. That’s why the OP will be no better off unless she is the only one getting a massive pay rise.

High house prices are terrible for everyone. They suck money out of the economy. That’s why there are so few decent shops left, leaving us with a choice of crappy cheap stuff or super expensive stuff. It leads to poorly thought out relationships: I’ve lost count of the people who have moved in with a partner too quickly because they wanted to buy a house and can only do so with two salaries, and by taking on a huge mortgage, which they regretted. It reinforces inequality, because housing wealth is recycled down to younger members of families who already have it.

Don't write off shared ownership it's how I bought my first little flat on my own. I stayed five years made a good profit and with now DH then bought a 3 bed house with a huge garden and a lot of work to do! That house has increased in value by over 100k in the six years we've had it and we have done a fair bit of work on it but it still needs a new kitchen

You need to look in a cheaper area then. We bought a very cheap house, because it was all we could afford, and have improved it over time.

We are not first time buyers but having the same issues in that we can't afford to sell our 3 bed house if we are to move to 3 bed with 1 more reception room and a garden. The leap is too much without selling it close to asking price. We live in an expensive area, very close to the station for London commute, you don't get gardens at our asking price and 3 bed, 2 mins form the station as that is what we are looking for and it is minimum 600 but usually closer to 700. We had a first time buyer look at our house which I feel is a bit of a time waster as they can't afford it. The agent assured us they can but low and behold an offer of 60,000 under the AP! We have decided to give up looking at the momen and have pulled it off the market.

This is good advice. Have a look at what is going on in the US right now. Interest rates have gone up quite a bit and house prices are falling a lot in overvalued areas. Chances are it could happen here with the rate of inflation at 9% and going up and interest rate rises. We do have good employment rates, but if people are spending more on necessities than some sectors might struggle.

I agree it is shit though. I'm 40 and renting and have basically just given up. I'm hoping to save uo what we can and emigrate somewhere cheap in old age if that is possible.

Sit tight - I'm in London and I've noticed the market softening slightly. I'm not saying that there is going to be a crash but, in a few months, it may be more of a buyers' market.

OP I don't know where you are but you probably need to move north. Where I am there is a choice of property under £100K.

You might not want to do that - but if home ownership is your number one goal, that may be what you have to do to achieve it.

I know that home ownership is difficult, and that the market is a nightmare, and skewed in favour of those with family money.

But there are truly very few people who can buy a modest property in what they see to be a reasonable area on the first step of the ladder. That's why it's called a ladder - you can move up it to some extent by trading up on property type, condition and location. There are a lot of people who have to do this two, three or four times to get the sort of property that they would like / need.

Wow, where are you? We are looking to move further north next year if still no luck and if we can get new jobs (need to do another year or so in current jobs so we don't look like people who can't stay in one place). Fingers crossed.

YANBU - I'm turning 60 next month, only managed to buy a place 5 years ago because of inheritance from DM (who didn't work much for it). My career and earnings capacity were greatly reduced by being, and continue to be, the LP of a disabled dc, now young adult child.

I think my siblings might have spent theirs on teeth, hairdressers and sportscars.

I bought in the cheapest neighbourhood of the town I live in - having already been priced/forced out of the countryside. I still have a Mortgage to pay

The house next door is a rarely used second home, it's a cheap terraced house, but the owners seem oblivious to the community chasm they're helping to create. As soon as any of these cheap, yet finite, houses come for sale now, they're bought very quickly by those with the Cash.

I just despair at thinking where else the local people are supposed to move to when even the cheapest houses are bought by those with a bit of spare cash and not much aforethought.

New builds are so much more expensive compared to non new builds, they're bad value for money

Not the property ladder fallacy again. There is no ladder unless you expect to earn significantly more in the future than you do now.

I’ve used this example before. You buy your first house for £200k, borrowing £180k. After five years on a 25 year mortgage you might have paid off £10k of the capital; interest on a repayment mortgage is front loaded. On a longer mortgage term, you’ll have repaid less capital.

Your house has gone up in value during those five years by 20%, to £240k. Your equity is £70k: current value less the £170k you still owe on the mortgage.

The house you want to buy next cost £400k when you bought your £200k house. It, too, has gone up by 20% and now costs £480k. To buy it, you will need to borrow £410k. £480k less your £70k equity from house number one. And you’ll need to find the stamp duty, which you can’t borrow.

Who is going to lend you twice as much as your original mortgage, five years on? Will your salary have doubled in five years? Unlikely. So your ‘trading up’ will involve borrowing a shedload more, on a longer mortgage whose term restarts when you move to the new house. You can forget going part time, as well: there’s a big mortgage of £410k to be serviced. Forget retiring before state pension age: to borrow £410k you’ll need a long mortgage term, which will necessitate working well into your sixties. Your massive mortgage will vacuum up your disposable income at the expense of pension contributions that might buy you a more comfortable retirement. And you’re very exposed to interest rate increases.

Property ladder? Sounds more like a property snake to me.

You have only offered on 2 houses OP. That is only the start! You will find that sellers vary wildly, not all are holding out for inflated prices. View everything, make offers wherever you can. They are not legally binding in England!

Until you make the offer you simply don't know and it's not worth getting emotionally invested until much further into the process.

You will find something that is right for you, the stars will align! You've come this far. Keep going.

I walked down this street recently and thought the houses looked nice, wondered how much they cost. The % increases between each sale are insane! www.rightmove.co.uk/house-prices/ox2/beech-croft-road.html

I'd rather more suggest that the Property Ladder is mostly accessed by a 'preferred private access' around the 4th Floor or it's now a Property Trapeze with no Safety Net.

Only a daring few might make it, but even the best might fall.

Hardly the makings of a stable society is it?

Have you looked at a shared ownership set up?

I own 50% of a new build two bed house in a nice area. I've been here 6 years and have easily made £30000 in that time (if I choose to sell.)

There's no way I could have afforded a place outright so this has been a good compromise for me.

Have you looked at a shared ownership set up?

I own 50% of a new build two bed house in a nice area. I've been here 6 years and have easily made £30000 in that time (if I choose to sell.)

There's no way I could have afforded a place outright so this has been a good compromise for me.