To be so sad about my slide in living standards?

[ColdNow]

I grew up in a not so nice area, but my parents had a big house with a huge garden that they bought on two fairly modest salaries when they were younger than I am now. My mum took years out of work when I was born and although things like holidays and eating out weren't a regular occurrence, my parents admit they were never really stressed about money despite having several children and easily paid off their mortgage.

Fast forward to now, where I did my very best to do the 'right' things. I got a good degree, decent and stable job, married and bought a property before TTC. I'm now pregnant and feeling so sad about our financial situation. We purposely went for a modest property with a tiny garden to give ourselves a buffer, but now with the huge increase in our mortgage repayments and other expenses we're struggling to keep afloat. I would love to work part time when I go back but it's now looking very unlikely that we'll be able to make it work without being extremely stretched. I'm always worried about money and already buy all my clothes second hand, shop at budget supermarkets etc. The main cost is housing though, because we live in an expensive city, but this is the city I grew up in and where all my family and friends are, and moving away would be a very difficult choice to make and remove us from all our support networks.

I just feel so sad that within a generation the things my parents were able to offer me (space, time) I'm not able to offer my child, despite me earning far more comparatively than they did. I'm also the youngest in my family and the older siblings are much better off than me, again just because of time - they got onto the property market much earlier before prices sky-rocketed and now although I don't earn a lot less than them, I'm only just scraping by. I notice this at work too, I have colleagues at the same level of seniority and pay to me but a decade or more older, and the houses and lifestyle they sustain far exceed mine.

I don't know what the purpose of this thread is except to just say that it makes me sad that this is the situation I'm in, and people younger than me (I'm in my early 30s) are even worse off.

The majority of the people you see out and about are not very rich IMO, they are (or were) using debt to appear more "wealthy" than they actually are IMO, of course there are areas and people with lots of disposable income but the nuts and bolts of the property price bubble is debt, cheap debt, that builds chains and allows people at the top to extract "equity" (London equity has been feeding into many mini-bubbles around the UK for 20+ years)

You've done the right thing, not overstretched yourselves with a mortgage and so you'll be OK. There are a great many people who won't.
Two of my DC have their own families and found it tough but things got better when their DC were older. Your PT work means that you have more time with your DC which those working FT won't have, enjoy the time.
I couldn't afford to pay for decent childcare before my DC were at school so didn't work, but am glad of it now as I had those early years with them.

Why not DYOR?

https://www.propertylog.net/

This is so true, there are very many people who max out on their overdrafts every month. A lot of those driving big cars have leased them so appear to be doing well but may be struggling to pay for them every month. They paid way over the odds for what @CrashyTime calls "basic property" in very expensive areas which won't suit them for long. On paper they own a lot but in reality the banks, mortgage companies and finance houses own most of it.

Property investors with multiple mortgages are more screwed than anyone, if we get the much debated recession they will be absolutely rinsed as the voids mount up.

I am talking about the sorts of people who can use this years bonus to pay cash for a new rental investment in central london and still buy an aston martin with the change if they feel like it. And the people much richer than that.

Some quick calcs - if the richest 10 people in the UK have 10% of their net wealth in cash then they can go out and pay cash for around 70,000 £300k houses if they want, of 280,000 £300k houses if they borrow 75%.

Then you have rich chinese and american buyers.

Maybe their impact on the market is relatively small... but I can safely say that there's a lot of money that could buy houses at current prices if it wanted to.

As I understand it, as large proportion of those paying cash where we live are older people who are downsizing and freeing up larger properties. I'm one of those and like most others I am retired so have the cash to buy a place but not the income to pay a mortgage now.
Like the OP we never overstretched ourselves on our mortgage but still struggled quite a lot from time to time, but house ownership has enabled us to live without paying rent now that we are retired. We're certainly not rich though we are comfortable.

It would be interesting to know your source for that? Don't get me wrong, I am sure there are plenty of investors in trouble or at risk, but there are many others who stopped buying years ago, or who went all-in 20 years ago and have sold half off, so now they're debt free with a 10 flat portfolio which is half what they used to own. And they're enjoying rising rents to offset the increasing costs (unless they are fixed and their costs are not rising - they're just telling the tenants that to make the rent rise a less bitter pill to swallow).

I don't know what the stats are in terms of how many landlords are screwed, how many are a struggling a bit, and how many are doing fine.

I think it’s outrageous OP & don’t understand why the youth tolerate it tbh. Housing costs are ridiculous & 15% interest rates of a low figure is often the same as 5% of a high figure. People talk about salaries but ignore how much wage stagnation there has been.
I think the youth should only emigrate or revolt!

Yes. Your generation is screwed. Get campaigning, pester your MP etc to sort out the housing crisis.

It is a tiny amount of people in terms of the population, and obviously they are not propping the market up at the moment? Why would they when they can still get a return from stocks, money market funds and bond funds? Why on earth would a rich person want to buy some idiots "portfolio" of run down BTLs in Blackpool because they can`t pay the debt any more? Smart money buys assets at the bottom, not at the start of the bubble pop. The UK housing market is built on ordinary people borrowing too much, the rich are much more widely diversified IMO.

https://www.msn.com/en-gb/money/other/average-house-asking-price-down-13000-since-october-rightmove-says/ar-AA1liq08

You are comparing where you are now to where other people are when they are older, no reason to suppose you won't catch up.

Young people can’t catch up, that’s the point…

Seriously. I don’t know where u live but statistically I’m in one of the top 10 poorest areas in the country and x3 of my salary would struggle to buy me an ex council house for a family (not that there’s anything wrong with them) in a particularly undesirable area and it would probably need +++ £ to make it liveable! I’m a professional with a degree although public sector for reference to my salary

Just general observations and talking to people.
https://www.msn.com/en-gb/news/newslondon/four-hackney-schools-to-close-due-to-significant-decline-in-number-of-school-aged-children/ar-AA1lokHJ?ocid=BingHPC

I'm not sure this is that recent. I'm a bit older than you, OP, and bought my first house in 2000. Ex-council, smallish garden, nothing fancy. Then had kids - we were very careful for years, shopping in charity shops etc, to gradually pay down the mortgage, which then allowed us to size up. So yes, although mortgages were practically being given away in the 2000s, this was way below what my parents had at the same stage in their lives (1 earner, much larger semi with big garden, etc) As a PP said, this has been happening over time due to the demand for housing

No, YANBU. It's fcking sht. Technically our standards of living are probably counted as higher, generally, but like you say, noone has any time anymore. A decent standard of living needs two good salaries. A good sized home eats into so much of your cash. Add in holidays, eating out etc and you need to earn really well. Do you think it might be because we expect more? It's expected that you go on holiday, eat out etc. Perhaps if we screwed the expectations it might be better? I hear ya though.

In the late 80s at 15% you'd be paying around £700 per month on a £60k mortgage, and even on a "good" salary of £20k that was a struggle. Now paying £1200 on a £200k mortgage at 5% with an equivalent "good" salary of £50k seems far more achievable. The world can't work around people wanting to live in expensive areas.

In the late 80s at 15% you'd be paying around £700 per month on a £60k mortgage, and even on a "good" salary of £20k that was a struggle. Now paying £1200 on a £200k mortgage at 5% with an equivalent "good" salary of £50k seems far more achievable

That comparison doesn’t make sense? My parents house was 50k in the 80s & those houses cost 1.6m today.

Areas with 200k houses & 50k salaries can’t be too common & a 20k salary in 1980 is approx 80k today…

I don’t know this obviously! though as stated on this thread it’s a relatively small percentage who do go into a care home and those that do don’t tend to spend a million pounds as they don’t live that long. I am hoping I will be in the larger percentage. Anyway that is not the point I was trying to make, the point I was making is the huge inherited wealth that a lot will gain compared to other generations before and the inequality that causes in society.

Anyway that is not the point I was trying to make, the point I was making is the huge inherited wealth that a lot will gain compared to other generations before and the inequality that causes in society.

You are correct but the inequality already exists, many people in London have family money to help.

Also I think the funding model will change eg care in the home may include value of house etc and the NHS won’t exist much longer in its current form.

Can you link to the type of house/area, I would have thought it was more like 500k now, and falling due to mortgage debt getting more pricey.

@CrashyTime do you want me to link?

My parents house was in Hackney, not popular or gentrified in the 80s!

Basically the same for me but 80s and 90s.
A lot of people on this thread seem to have had extremely privileged childhoods - and that's great, it's genuinely nice to hear about how great their early years felt or indeed were.
And while housing is a particular challenge now, unlike any time since the end of WW2, hard-working families have always struggled and faced absolutely shit choices (or had no real choice at all). That's the often forgotten thing about social mobility; you can go down as well as up. It's actually strange - when we think about it - for anyone to assume that we'll have a better standard of living than our parents.

It has nothing to do with the demand for housing, house sales and mortgage applications are at multi-decade lows yet all those people no longer applying or buying still live somewhere! It is all about too much cheap debt being handed out for too long, and the public being really thick when it comes to house prices.