To wonder how the next generation will buy a house

[macaronitoni]

Surely there needs to be a massive overhaul of the system. A new build home with two bedrooms on a new development nearby is £315k. Not London. Midlands. Who’s going to be buying that? Too small for a family with more than one DC but way out of budget for most first time buyers.

Without significant family help, how will today’s children and young people manage to buy a house? Something has to change!

Even 30 years ago down here in Surrey, although we all bought young, we all started in tiny one bedroom flats, shared between two, and worked up. No-one went into a two bed for starters. We're on our fourth house, in the same area, just moved up every 2 then 5 then 8 years. Been in our final house 20 years.

That doesn't really work when FTBs are older, flats are expensive & moving costs are so high. Plus it will be alot harder to build equity in the next 5-10 yrs.

If I was a FTB now, I'd skip the flat stage (unless I was happy to stay in one) & go straight for the house.

Absolutely

I've been paying rent for ten years but can't get a mortgage which would be less per month then rent, it's bloody ludicrous, something seriously needs to change.

You are a few years younger than me, @Namechangedatheist , but my experience was similar.

I left home at 19 and rented till I was 27. I bought my first house on 100% mortgage, and everything in it was secondhand. It was 16 years after leaving home that I finally bought myself a new bed and sofas.

Thankfully, I had a few years worth of equity when the crash came, so when its value fell from £87k to £49k, I wasn't in negative equity, but there'd been times when I was doing 3 jobs and renting out the spare bedroom to in order to pay the mortgage.

But a 10% deposit on that first house would have been half a year's salary. A 10% deposit on that house now would be around £40k, there aren't many people on £80k a year now.

I think it's really grim, and renting may well be the norm for most people for a good while to come. Which is why we need rent controls, secure tenancies and lots more social housing.

If you mother needs care her house will need to be used to pay for it. I think it’s only when she has a maximum of £23,000 left that the state will pay for her care.

We rented a 1.5 bed, first floor flat in Brixton for 15 years. Rent was half our income. We saved like demons but the deposit was never enough to buy.
The flat was sold for £800k and we were told to leave.
The idea that anyone on a mid range salary can afford to save £160k to buy a 1 bed flat is mind boggling. Despite the fact the mortgage payments wouldn't have been much more than our rent.
It's deposits that are the problem.
Yes we could have bought a crummy flat in Croydon but the commute would have been atrocious, and yes our lifestyle would have been significantly lower. Lower to the extent that we weren't willing to do it. We both worked 12 hours a day and we wanted to be near our friends and the things that enhanced our lifestyle. We were in our late twenties and early thirties and we weren't willing to give up those small pleasures for the 'joy' of buying a place somewhere that meant we were limited with the things that would enhance our lives.
We weren't massive spenders. We had a double futon in the lounge, a £15 ikea coffee table, a tiny tv that only showed the picture half the time and a donated bed for half of our time there.
Banks need to stop with the deposits and focus on ability to service only.
I'm furious that our rent was equal to mortgage repayments on the flat we lived I. but the fact we didn't have parents to offer a down payment contribution meant we missed out on buying until our late 40's.

And of the friends we had who owned properties all of them were only able to do it because they had a dead parent.
Not exactly fun for them
We were also paying off university debts well into our 30s too despite having tuition paid for as we didn't have rich parents. That took up years of potential savings. This generation have it even worse from that aspect.

I bought with help from parents in the form of cash gift & cheap rent living at home. Same for every single person I know.

DH and I plan to downsize our house once the kids have flown the next and use the leftover funds to gift each of the DC a house deposit. A house deposit early on can change the course of someone’s adult life as it gives both stable shelter (which means they are more resilient to financial shocks) and a chance to own a large, reliably appreciating asset.

Inheritance from grandparents is how we got on the ladder ourselves, and the same is true for almost all of our friends who have bought. I don’t see how anyone but the highest earners will get on the ladder without family help unless prices change.

How lucky your parents have spare cash and a spare space in their home! Neither my parents nor DHs did.
We both ended up with crippling student debt and debt from trying to live on the miniature wages we got from the need to get any, ANY, job to live.
Once you are in that cycle it takes years to get out and start saving.
Your situation is not the norm.

They’ll save and parents will save. My 2 year old has a couple of thousand in savings, we save every month for her so she’ll have a decent amount by the time she wants to buy a house. We’ll also be encouraging her to get a part time job as a teenager and to save her money. This is what we did, didn’t spend on expensive cars, holidays or new clothes, bought young and are now in a 4 bed in the southeast in our early thirties. We had no family help, our DC will have it easier than we did.

I just realized that even with a combined £110k salary and 100k equity in our flat (bought in 2019), we are still poorer in net worth terms than our friend who is a gardener, 35, owns his house in London mortgage free (has never paid rent, stamp duty or mortgage in his life) and doesn't earn enough to pay income tax. His parents weren't even particularly rich, they just downsized massively and gave him £280k to buy his house. People will either inherit, buy flats/small houses if they are on decent incomes (combined 100k and above), buy with parents/siblings or rent. There isn't an alternative.

Absolutely. I was born a few years after the boomers but I've already helped my children get on the property ladder and when I'm gone the house will be sold and the money split between the grandchildren. It should give them around 100k each. There won't be any care fees to pay when I'm older so it won't be swallowed up

This is what Israelis do, they save on behalf of their children. They have a similar home ownership rate to us even though the deposit required for any home is 30-40% (and the house prices are higher than London in many places). Their wages are also lower.

I'm a mortgage broker and I see many yong people who are very successful in their jobs by the time they are in their mid to late 20th.

If you are professional young couple, who saved 10% deposit (£31,500). Then buying this property for £315,000 really isn't a problem. All you need is to have salary of about £28,000 each. Or £52,000 for a single person.

Young generation has to learn to work for things they want to achieve and not to expect to get it easy.

As the parent of a 26 year old who is still living at home I don't know. He has a reasonable deposit (his savings plus a Help2Buy account we have funded) but as he doesn't have a partner he wouldn't get a big enough mortgage to buy and I don't see how he'd afford council tax, energy bills plus running a car (necessity around here due to poor public transport) on top of mortgage repayments.

There is an article in the times that 1/2 bed flats are coming back into fashion with FTB. In the past when interest rates were low,.people could have stretched to afford a house. Now there is no stretching due to higher interest rates. The houses within a decent commute are at least as expensive as the flats in z3 London or even more plus commute costs on top plus increased cost of living. In the past when inflation was low, a lot of FTB with our budget (£400k) could have stretched dto £450k-500k and just sucked up the £400 per month commute cost each(cutting back on other things). However when energy bills and basic costs have increased so much, jumping to the house stage means big compromises in your standard of living (or the bank wouldn't even lend you the money and you would be stuck renting).

They might have to look at different areas. I just put £200k max into Rightmove for my local area (nice area, commutable to Manchester) and ten pages came up. The lower value ones, in a bit less desirable areas, were well under £100k, some at £60k… My first property was a tiny studio flat and I really did live on baked beans on toast for a couple of years.

I once saw a twitter post that summed this up perfectly;

Buying a house is like, "we banks have no way of knowing you'll pay back this mortgage of £700 per month"
"I've been paying my landlord £1200 per month"
"Why can't you save a deposit of £25000 to reassure us that you can afford £700 per month?"
"Because I'm paying my landlord £1200 per month"

@benten54 absolutely I'm lucky, I completely recognise that. And it is the norm for many which as I said makes it difficult for those who don't have help.

There is a theory that once the boomers start to downsize/die there will be a glut of supply making prices fall. But then I've also read that the class 3 bed will hold its value due to demand from families upsizing & older people downsizing.

I also am not sure how much inheritance will be left for future generations. Obviously we have a ageing population & a NHS & social care not able to cope with the demand. That housing wealth will end up getting tapped into as the gov can't really target income much more.

There are predictably a few posts saying it is 'doable' because their son/daughter/friend's acquaintance's DC did it- but what they don't acknowledge is there's always a particular set of circumstances involved.

Whether that's inheritance, the ability to have lived with their parents in adulthood (rent free or otherwise), or because they were lucky enough to happen across a decently enough paid job somewhere where housing costs considerable lower than the national average.

I'm a Civil Servant and am lucky enough to have flexibility between working at the office and at home. But I still need to be commutable to my office, which is in the centre of a very expensive tourist city with a housing shortage. Those saying people need to be 'more realistic' about the areas they're searching in- sometimes there just isn't an affordable option anywhere near work. It's a catch-22.

Even if I managed to persuade my landlord to let me live in this property rent-free for two years (which would obviously never happen!) I still wouldn't have a big enough deposit for a 2 bed here. And nor would my stagnant Civil Service wage come anything close to what I'd need for them to lend me a mortgage on the rest.

The gap between wages and house prices rent is just out of control and things look bleak for the majority from younger generations.
It's a bit ignorant to claim there's no problem and it's all fine, because you know a younger person who had luck on their side.

@journeyofinsanity Thank you for pointing out that it will be good news when my generation die out. Makes me feel really welcome in this world and welcome in the volunteering I do. Shall I just end it all now to make life easier?

@socialmedia23 I'm sure flats are coming back into fashion due to financial constraints as they definitely fell out of radios during covid. In my part of London flat prices haven't moved much since Brexit. Personally I don't think the costs of commuting from z4 are that different to z3 & also I think service charges etc don't make a flat much cheaper.

Nonetheless if I wanted to end up in a house I would still skip the flat stage. You can disagree but I assume you have a flat & like it!