To think there’s no good option for first time buyers

[ton29]

Prepared to be told it’s always been like this but I’m not quite sure it has.

On our combined income as it is now (both earn the average UK salary) in 2018 we would have been able to buy a 3 bed semi, possibly 3 bed detached in a really lovely area. We couldn’t buy then as we were still students.

Fast forward to this year and prices have rocketed so much so the same houses are 60-80k more making them unaffordable.

Buying a flat isn’t always the answer if you’re going to outgrow it immediately because if you move fairly quickly after buying, there’s the risk of negative equity and costs associated like legal fees and stamp duty on the new property.

Buying a house in need of renovation isn’t suitable for everyone. It’s ok if you have family help or are quite creatively minded, but if you work very busy 9-5s it’s soon going to get expensive and untenable to rip up flooring and knock through walls.

Moving 30-40 miles away to a cheaper area makes life inconvenient for commuting to work and seeing family.

I’m not sure why you can no longer buy the average sized house when you are on average sized salaries. Buying wouldn’t be an issue either if it was more secure to rent, but as everyone knows renting in this country is huge instability.

Great post @Bonding

I would add to that that there are (quite rightly) many more women in the workforce than in the 70s, which has also driven up house prices.

When affordability of a mortgage was based on a single salary, this naturally put a ceiling on house prices, but as more and more families became dual income that meant buyers could pay a bit more for the house they really wanted. Then before you know it we are trapped in a situation where you have to have 2 full time incomes to afford an average house.

Why are you trying to buy a 3 bed house? We had to coz we have 3 kids now but why would you start with that? Do you have kids?

These huge price increases simply aren’t going to happen any more. If someone buys a house for 400k this year it’s not going to be 450k two years later. And even if it is, all the other house prices have gone up too; meanwhile wages are stagnating/falling in real terms. Climbing the ladder ‘like in the old days’ simply isn’t an option any more. Those days are gone.

We bought our first property 20yrs so when we were early 20s, we both worked full time so similar situation to you. We had to buy a small 2 bed flat in need of modernisation to be in the area we wanted. 5yrs later we bought a terraced 3 bed house, 5 yrs after that we bought the 4 bed semi. That's normal for most first time buyers, it was never the norm to be able to get a 3 bed semi in a good area as a first time buyer, apologies, I know it IS tough now, but your expectations seem very unreasonable.

Can I also add that we have had to sacrifice other things, obv. We have lots of friends who bought a small first home, then had children and lots of holidays and found they would rather just stay in that small home and spend their money in other ways. There’s nothing wrong with that too! We are house proud people who had a goal of having a big house and cut our cloth. We have found dc now and we wanted to be in our final home before they were a certain age - it’s been harrrrrd work!!! It’s just making the right choice for you.

I also forgot to mention the sheer cost of trades and labourers now. Not just the raw materials have shot up in price but the hourly and daily rates of plumbers, plasterers, electricians, roofers, joiners… and where do you get the money to flip a house if you have spent every penny on the house itself?

@ton29 has the problem spot on.

It is shit.
But the older generation here will tell you how hard they had it +massive eyeroll+ they just cant fess up to having ruined it for their children.

Asking prices are very high at the moment but actual sold prices are starting to come down in many areas. Depending on where you want to buy you might be best holding off for a year or so, watching your area in the meantime.

You know what I think it (partly) is? My gen (1980s) grew up, in my area anyway, in either pleasant detached homes (approx 90k) or solid Victorian terraces with big gardens (50k). We only saw what we were born into and see the mid range homes as normal.

It goes the other way too. My mum and dad assumed we'd move into a detached from our current townhouse because thay's what you did in your 30s, if you were 30 in 1990! But we're not going anywhere.

I know as fact I was born in a crappy 2 bed bungalow in Bradford which was my parents' First Time Buy but I don't remember it. They dormered it and quadrupled their £10k investment.

The prices have slowed down a lot. When we bought in 2016 the small 3 beds we were looking at went up from 200- 210k when we started looking to 230-240k when we were ready to buy 4 months later. It was depressing having to adjust our criteria for Rightmove alerts so frequently. We jumped on it and then it slowed down. Our house is now worth 280k. For what it's worth, it wouldn't have been possible if my DH didn't have a flat that was also increasing at the same speed.

My brother and his GF bought a tiny two bed house in the best area in 2016. You could barely swing a cat in the living room or kitchen but it was literally the cheapest house in the best area.

In 2019 they were able to remortgage and took £20k equity out to build a two floor extension (no way are two floor extensions £20k now!).

So it’s now a three bed house, albeit still a small one.

They would like to move to a more spacious three bed, or even a four bed, not far, still in the same area because they’ve had kids who are now at the local school. But to get that, the houses are an extra £70k more than the value of their house. They’re both public sector earning at the top of their bands and promotion isn’t a possibility. They’re trapped. They can’t move.

Yeah I think you're right. I guess also a lot of the "starter home" stock has been snapped up and improved rather than left so it's now too expensive

@tealsofas i know what you’re saying but we are just two very ordinary people who have made it work. A mix of doing things slowly, prioritising carefully, buying in up and coming areas, doing lots of things ourselves, saving and shopping around. If you want to move in and get tradesmen round to immediately transform then expect to pay a fortune.

Lots of people have said to us recently that they would love a house like our new one… but I honestly don’t think they would. They would love it if you gave it to them right now but they haven’t prioritised that dream above other spending dreams and that’s what it takes for those of us on average / above average but not mega salaries.

Have you been using your LISA allowances to maximise savings into deposit?

That's probably the main benefit I can see for FTB now, that wasn't around when I bought

I was 21 and bought a 3 bed end townhouse in an ok area with then DP for £41k; interest rates were about 7% and it was worth about 3 x our joint salary - this was 1993

Let's not forget stamp duty is a real barrier to "climing the ladder" these days too.

Most of these posts are not relevant to 2023. There is no longer the concept of moving up the ladder. Flats are very poor investments and no longer allow one to build up equity as they don’t increase in price relative to houses which means upsizing from them is very very hard unless you have accumulated big cash savings. Flats are at a lower price today than 2016 so definitely shouldn’t be an option for you.
FTBs are also much older now than in the past decade so it’s very easy to quickly outgrow a small house. If you buy a first home at 32, have 2 DC within the next 3 years, then a 2 bed will be outgrown within 3 years. With house prices as they are, you need to buy a property you’re happy to stay in for minimum 5 but preferably longer so you don’t go into negative equity, chance to build up equity etc, so a 2 bed won’t work in this case for a FTB.
People need to get real and stop offering advice which was appropriate in 2018 and not today

It's always been difficult to get a first property. Prices are higher now, so it's even more challenging - but it always involves compromise and sacrifice - eg small size, far from work/family etc. For our first property we sacrificed space, it was a studio flat. Took us years to save for the deposit and years to be able to move on to a flat with a bedroom.

OP, I broadly agree with you- things are really really difficult as a first time buyer now.

I think what some people on this thread aren't acknowledging is that a lot of first time buyers are a lot older now. So yes, it makes sense that your first buy is a 2 bed flat, or a small terrace etc BUT if you are in your 30s, then as OP says, this may not be a suitable house for very long.

Because most people can't/aren't buying in their early 20s, they need a larger house to get started with, and it does become a bit of a vicious cycle- because the type of house that meets your needs is always more than you can afford.

I don't have the answer- I've moved towns and jobs in part to be able to afford to buy. I think compromise has to come in somewhere- but it's definitely not right that we've ended up in this situation.

I guess it depends where you live.
I'm estimating both of you on 30k.
3xjoint salary is 180K. Add in a 20k deposit, and you'd be looking at a 4 bed semi or 3 bed detached where we've just sold. But the other side to that is we sold for almost exactly what we bought it for 15 years earlier....

Solidarity OP. I think other posters are being slightly unfair in telling you you’re expectations are too high.
Me and DH have tried to do everything right (without parental help) and are none the better.
We did buy the small starter flat that we could afford at the time in 2016. We finally sold it last year (to try and upsize) after being on the market for 8 months, and just broke even with no additionally equity gains. The same flat this year has dropped an additional 70k, so I’m relieved we managed to sell when we did!
Friends that bought the 3 bed house at the same time (with parental help) have seen their investment increase 40% in the same time.
We’ve been looking for a family home since selling as I’m expecting, and have been looking at doer uppers and ready to go homes, but even doer uppers are priced to account for value when finished which doesn’t take into account the cost of renovating these days.
We can’t move area as we rely on our London salary’s and have parents and siblings close by which we will need when baby is here.
My advice is that a starter flat isn’t the first rung on the ladder that it used to be. I know another couple in exactly the same situation trying to sell their flat this year and are struggling to even get what they paid. I wish we’d had the money for a small house in the first place!

The housing market is nuts coupled with the CoL crisis, that's undeniable. However 3-bed semi has never been a trad first time buyer property. If you're looking back in time to make your point, it's pretty much always been the case that FTBs get on the ladder with smaller properties and only get to that level of family home by the 3rd purchase e.g. flat then terrace then semi.

Again, it's harder than ever now, but equally you are looking to jump to a family home from a standing start and that's not the same as FTBs having no options.

@Fretfulmum I didn’t see your post when I posted, but you’ve said it much better than me!
DH are mid/late 30’s and the advice from PP to buy a starter flat really grinds my gears as we tried to and are no better off and still don’t have a family home. We’re currently in a 1 bed rental expected a baby getting increasing depressed by the housing market. There is very little stock coming up and a lot of competition despite high interest rates

Completely agree with you - and your comment before. So tricky. Also a smaller property might lose value and then you’re trapped.

Priced are increasing massively in the very undesirable area I live in. It's not necessarily a case of buying somewhere cheaply even in those areas now. I bought a 3 bed ex council terraced house as it was all I could afford on a single parent, but reasonably high (for the area) salary. 1 year later and properties around me recently have sold for 15k more than I have bought my house and some are now asking for 30-40k more.

That's an insane increase.

Similar round here. It is crazy