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.

I wish all the people who are discussing their first buys mentioned how old they were when they bought them. The average age for a FTB in the UK is now 34. This definitely wasn''t the case 5, 10 and 20 years ago. People are buying at an increasingly older age, so of course that comes with the need for different sized "starter" properties. I've been happy renting a room in a terraced house or living in a studio and one bed flats, but at 37 I've outgrown these spaces, just as those who were able to buy these kind of properties did at similar ages. Governments really need to get serious about what housing stock needs to be built like they did in the 1930s and 1950s, but also build the social housing that is needed that could free up properties on the private rental market for first time buyers.

You keep talking about 2018 as some golden age of house buying - maybe it's just annoying me because it makes me feel old but I promise you no one felt those five years ago that it was cheap and easy for a FTB. We bought our first house in 2015 and it was similarly depressing but pointless to think of what we could have bought if we'd been buying 5 years earlier. I also remember lying awake with anxiety the night before we exchanged because I'd read an article saying that 2016 would see a huge crash in housing prices so buying now was foolish. Any year you buy you find that there were better years to buy and that there's someone who will tell you it's a terrible year to buy.

I remember buying in 2017/2018 as being quite stressful as the market had stagnated post referendum and nobody knew what Brexit was going to do to the market, very little came up onto our local market until the Covid boom.

It's not a competition, but house prices have increased a huge amount in the last few years. Average house price has gone up by like £80k since 2018. Wages aren't close to keeping up.
It's never been easy, but it's harder than ever at the moment.

We did what you don’t want to do. A one bedroom flat in the arse end of nowhere. Part exchanged for a 2 bedroom new build flat (brilliant flat) in a counter town, now a three bedroom townhouse…we moved up but didn’t start at the top.

Unfortunately this is very true. Whatever you buy now just make sure that it is cheaper than renting and that you are building equity. Don’t assume that your property will increase in value. A lot of doer uppers ( obv not all ) assume they made money by doing something up when in fact they just rose on the rising tide.
In your situation I’d try to buy a small but desirable flat in a good location.
Good luck!

My daughter has just bought her first place in London and yes, it's a starter home with one bedroom. It's a flat and it cost 450k because that is London prices. She's 31 not 21.
People living in cheap areas should count themselves very lucky and not think they are entitled to have 3 bed semis as their first home. Fine if they can afford it, but if they can't they will just have to buy what they can afford and affording a 2 bed flat or house would still be a luxury for most young people.

It's what people have done forever. My first home was also a 1 bed flat with no garden, I was 25, my partner was 29.

That's why a lot of families opt for new builds, slightly out of town. They are easier to secure, usually a deposit of £500 is enough and banks seem to look more favourable on new builds when securing a loan. Yes some are not the best, but it seems an easier solution for a lot of people.

Whatever you buy now just make sure that it is cheaper than renting and that you are building equity.

This is less likely to happen now interest rates are over 5%, my mortgage used to be comfortably under the going rental rate, but when it goes up when I refix it very likely won't be, unless you have a lot of equity already. Not that it matters, so long as I am paying back capital I will be building equity which is all that matters to me, not what I'd be paying in rent.

This

We did 1 bed flat thrn 2 bed terraced house then finally 3 bed detached house as family home. We would not havr been able to afford any of the future homes without equity and mortgage payments from previous one.

And i was still a student in 2018 so not too different in age i would guess

The problem people aren’t navigating, or I guess can’t, is that when interest rates go up, you should be decreasing the length of the term, not increasing it.

Yes that’s very true. I should have written “ideally” rather than “make sure”.
Paying down the equity is the important thing.
Also keeping a close eye on total interest to be paid is something that I feel most people don’t do.

@ThankmelaterOkay people are extending mortgage terms to try to make their repayments more affordable month by month, not because they think it's a smart long term move, nobody wants to pay their mortgage off over a longer period of time.

Of course.

But like everything, if collectively FTBs decided, “right guys, no one take a mortgage over 25 year term”, the market would correct itself sharpish.

That's the responsibility of the banks and government though surely. Individuals buying homes can't be expected to control the market. It's not like people have enormous mortgages over huge terms for fun.

But like everything, if collectively FTBs decided, “right guys, no one take a mortgage over 25 year term”, the market would correct itself sharpish.

Well that just simply isn't realistic is it? I've always preferred to have a longer term mortgage and overpay, gives me more control. I'm not doing anything "collectively" I'm doing what's right for my situation.

"I totally understand why a 30 something couple would be looking to buy more than a 1 bed 'starter home' in a crap area

OP I totally get it!"

See this is exactly the issue, this generation don't want to start at the bottom. These property's and areas are bellow you? Why may I ask, are the people in these areas below you?

I bought my first, 1 bed terraced house in a deprived area 22 years ago, because I needed a home and needed to get on the property ladder.

I also had a good job but it was a start, If people like you and the OP feel these properties are below you quite honestly you deserve all you get.

Regardless of the interest rate?

Or did you do this when rates were 1%?

Were you 30-35 then?

1 bed terrace round me is ~£250k. Could you afford that now on what a 22 year old in your job is making these days?

@ThankmelaterOkay the interest rate is irrelevant if you're planning to overpay anyway, it has the same end result but with the bonus of wiggle room should personal circumstances change mid term.

So do you overpay each month, or at the end of the year?

31 actually.

Go on tell me the rough area not for an outing and let us all see then, so we can all check right move.

Yes, but that's like saying if I had been at the age and stage to buy out current house when it was built 14 years ago I would have got it for about £300k less. But I wasn't. So it's a moot point. House prices have risen. So have wages (although not to the same extent). Interest rates are rising, but as I said, they are lower how than they were when we bought out first (small, in need of imporvement) starter house in 2008. Right before the market crashed as well OP, so we bought it at the peak and essentially lost about a third of its value in the next year.

It's challenging now. absolutely. But this whole "all these posts aren't relevant as noone knows what it's like" is a very insular way to view your circumstances. Current home buyers don't have a monopoly on challenges.