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 really feel for you OP, it’s a crap time to be a FTB.

My DC and their partner have actually moved away from where they were living in Scotland because they couldn’t get on the property ladder even with the cheapest one bedroom flat because of the offers over system - which seems to now be being replicated down south but without the guarantee of knowing the home’s value before bidding.

Say you have £20k saved for a deposit and can borrow £180k, simply lowering your budget to £180 won’t bridge the shortfall if people are bidding 10% over to secure a property. By lowering the total deposit required by 10%, that only leaves you with £2k to bid over on which is a drop in the ocean compared to what some places are going for!

Add to that the huge demand from both FTB and investors for properties at the bottom of the market, it’s a nightmare for those with good salaries but little in up front cash.

Even if a FTB in this scenario were to negotiate a mortgage with a 5% deposit on a £150k place (for example), there’s still no guarantee they would win out on a popular property with £13k cash behind them.

I can see why OP and others like my own DC are so despondent - you could have a good salary and a healthy deposit yet still be shut out the market with such huge amounts of money being thrown around in even remotely popular areas.

Pretty much everyone has to compromise, and this has pretty much always been the case.

For me the compromises included moving 300 miles from my family, putting off having children until I was well-established in my career, and spending a decade doing sixty hour weeks.

Eventually this paid off, and in my thirties we were able to buy our first place.

You have mentioned that you want a permanent home but also that the properties you are looking at won’t be suitable once you have a family. Therefore if you buy now you won’t be having a permanent home anyway. I know people have been saying this for years but at the moment I think prices are at their peak. They are probably not likely to increase further in the next couple of years due to the cost of living increase, inflation and interest rate rises. They may even decrease.
i think it is probably best to carry on renting for a few years, cut your outgoings as much as possible and save save save. Good luck!

Haha we are compromising and the longer we spend changing our lives to compromise the more they get out of reach. Had house prices risen by 20% in the previous 2 years before you bought?! Alongside an energy crisis and rising inflation?!

Thanks @JS87 when I say permanent I just mean the stability of not being able to be chucked out by a landlord with two months notice. Of course not permanent/forever.

@SlightlyGeordieJohn you said £100,000 initially. And Newcastle is somewhat
different from from many of the left behind post industrial towns in the NW and Midlands. £150,000 is pushing it for a decent family home close to good schools etc I want to relocate back over the Pennines to one of those lovely affordable places but can't find much for under £250,000 if anything at all. Love the brag about the million pound property you own though 😂 but funnily enough not in the north. And how come folk like you never stay in those amazing areas ?

@Odessafile they are also missing the point that years ago when they bought it was more possible to make compromises and buy. The market is very different now to what it was 2 years ago. And 2 years ago it was terrible compared to 5 and 10 years ago, with little salary change in that time! They are not comparing similar time periods.

Your reading comprehension seems to have slipped; I do have a home in Newcastle.

I moved South because I wanted to study in Oxford, and spent a lot of years away as I work in banking.

You are coming across as a bit chippy here.

How keen you are to accuse other posters of being bigots.

I have always lived in the north of England, thanks for asking, and I certainly don’t believe that the entire north of England is dodgy. Nor does anybody else on this thread. I’m wondering why you are attempting to support your own arguments by pretending that anybody does think that.

Perhaps read the thread more carefully. A PP (who passionately believes in the ‘property ladder’ despite, er, maths) advised the OP to find cheap areas around northern towns and buy one house a year, for five years, starting with a house costing less than £100k. She later qualified this to say that she meant five separate houses and that the OP shouldn’t move once a year after all because of stamp duty but anyway, she was advocating buying cheap - in a less desirable area - in order to benefit from price growth. Because prices are always going to increase and the OP can’t lose, right?

The problem with that strategy, as recent history has shown, is that property in much less desirable areas doesn’t hold its value when prices correct and/or the supply of buyers dries up. Of course not. Those houses were cheap in an overheated market for a reason. If people are buying in those areas in an overheated market, just to buy something, anything, to get on the mythical ladder, then in a cooler market you won’t see the same behaviour. The desperation isn’t there. In a buyer’s market, which we last had in 2008-2010, buyers want houses in better areas and anyone who bought somewhere less pleasant won’t be able to charge an inflated price when they want to sell. That’s what has always happened and what will continue to happen.

Interesting that you should mention Newcastle. In the mid nineties there were a number of stories about people buying in the rougher areas of the city in the late 1980s price boom - and yes, every town and city has rough areas - and having to sell for derisory prices just to move because nobody wanted to live there when prices moderated. These buyers weren’t property investors or landlords. They were nurses and other people in average jobs. Don’t wish the same face on the OP and people like her.

FATE, not face!

You do know not everyone can just uproot and move with a snap of their fingers to a new job right? Or have the ability to put off having kids for many years? Or do 60 hour weeks because their work doesn't allow it?

Imagine you don't actually own a house right now. You are renting at £800 a month, your salary is 25k, no way of increasing it. The house prices near by you are £250,000. How do you expect to buy in such circumstances? Can't move, can't increase wage. You know a lot on making compromises, what's the compromise in that?

Haha my DM was the same " but this house is only £90k? Theres loads in your budget"
me " yes mum but the bank will only give me the report value. I then need to find £30k to go OVER the report"
repeat ad nauseum

What’s stopping you moving, or earning more?

And why is it a problem that someone unable to earn the average wage can’t afford to buy a house? It seems a perfectly reasonable state of affairs.

I know people have been saying this for years but at the moment I think prices are at their peak.

Agreed. That’s why mortgage companies are being sticklers about valuations- at one point these were almost just a rubber stamp. I don’t think we’ll have a huge crash but a correction- maybe 10%. Just need sellers to catch up with the world we’re now in.

I think your posts are a bit confusing as you say you want a house and are about £40k short?

Surely you are able to buy a flat then? A 2 bed house in my area is about £100k more than a 2 bed flat with garden, but I do live in pricey SE.

Before buying our first property, XH and I both worked two jobs each in order to build up deposit. Can you increase earnings that way?

@Lindjam we were 40k short due to the most recent downvaluation. So it required 40k extra cash on top of our 40k deposit we have spent years saving. So disheartening. Seller would only budge by 5k!

@Lindjam oh and we both already do work on the side. One year ago this would have made it possible for us to buy a house. Now it doesn't.

OK, I understand you can't buy a house as prices have gone up, but if you are serious about home ownership, why don't you look at flats, which would be considerably cheaper?

@Lindjam I've said further up the thread that we are. The cheap ones have very short leases or very high service charges. We did miss out on one that would have been great due to being outbid. I say house but I'm using the word interchangebly. Let's call it somewhere to live a landlord won't kick me out of.

House prices are particularly high compared to average wages at the moment. But that has been the case for a long time, especially in the south east.

If you can't afford what you want where you want then something has to change.

Areas or size.

Eg you say a two bed place, but could you get a one bed place? Parking always increases the price so is that absolutely essential.

Have you looked at Masionettes OP? They usually offer a garden, you'll have your own entrance and it will feel more like a house.

We have been looking for a while now and I kick myself that we didn't move last year when there was no stamp duty. House prices have rocketed even more. We are prepared to buy a house that needs to be fully renovated but cash buyers are snapping them up.

I have noticed, however, where sellers have been greedy, some houses are reducing and staying on the market and this is south east commuter belt. I think that's definitely showing some signs of a change and those houses would have previously been snapped up.

I

You also don't say how old you are or how long you've been saving.

The average age of a ftb in the UK is 34. So that's at least a decade of working and saving.

I don't have any advice for you OP, I just wanted to send a massive virutal <<<hug>>> and say: Hang in there! It is so tough at the moment.

I am 33 and I bought a little cottage on my own last year, and it was done on pure luck that the seller was willing to budge a little after a downvaluation, and I had just enough extra cash to meet her at a compromise.

Before I got the cottage I has so many disappointments, near misses, and just plain greedy sellers (usually former landlords!) that wouldn't budget despite their house being a sh*t hole! haha!

Sometimes I think that is all it comes down to: right place, right time.
Something will come up for you and your partner, but I so sympathise with you during this awful waiting period. <3
Best of luck to you xx

This sounds like the "offers over" system in Scotland, which is a nightmare.

The house/flat is valued at a certain price, say £250k. But is offered to market at "offers over £240k." Properties are routinely sold at about 10% over the valuation price, but you can only get a mortgage against the valuation price.

In this example, the valuation is £250k, so you need to take £25k out of your deposit to pay the amount "over" this. That drastically reduces the loan to value ratio on your mortgage, so the amount you can borrow is also hugely reduced. So somewhere that looked financially viable on paper is suddenly way out of reach - both in terms of monthly repayments, but also at the level of being able to get a bank to lend to you anyway.

It's extremely frustrating, because it hugely advantages people who are able to obtain very large deposits. You are effectively bribing the owner to accept your offer over someone else's, without the regulatory oversight provided by a bank's willingness to lend against the asset value.

Yeah both processes we've had to find extra cash due to gap between valuations and the winning bid in Scotland