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.

Yes. If he bought that house when he was on the equivalent of your salary he either inherited money, won the lottery or married money.

I live in a "cheaper area" terraced houses go for around 200k but thats over 7x the average local salary.

Doable if there are two of you.

Trouble is, rents in this cheaper area are between 800 and 1200 pm, so how does this couple save for a min 20k deposit?

Now prices are stagnating, the properties coming to market have fallen off a cliff, almost all appear to be ex rental (empty/no onward chain) often needing a lot of work, reducing supply, driving up rents.

Most of us assumed that life would gradually get better and better because that's all we've known. We also — every generation since the 60s — expected to have it all. It can't go on. The world changes. The balance of power is shifting away from the west to the east. The idea that we're on a steady upward trajectory is a fantasy. We've been incredibly lucky here in the UK. Ask the people of Syria and Ukraine how they feel, or former industrial and southern communities in the USA, abandoned in poverty. Meanwhile India and China and large areas of Africa are catching up and surpassing us. It's what happens, always has.

You can stop competing to have a bigger, nicer house, a bigger newer car, more and more nice things and work out what really matters to you. If you really, really want a large garden, move to a part of the UK where you can afford one. If you really, really want a larger house where you currently live then tough this patch of high mortgage rates out for a couple of years, adopt a frugal, creative lifestyle, go back to work FT, save and move.

One question. If the houses your parents bought for £70k in the 80s are all worth £600+ now, where do you think a large chunk of that £600k is going to go when your parents die? This is money that is likely to cascade down to you.

My sympathy is for all those of every generation who come from families who have always rented and who rent themselves, and who don't get to choose a nice place to live, or the size of their garden, or their neighbours, and don't get a chunky inheritance at the end of the cycle.

I query those figures to be honest. I bought my first house - a two bed Victorian terrace in a very nice Berkshire commuter town - in 1991 for £69k. Zoopla tells me that the current value of that house is in the range of £325 to £375k. That means that it’s gone up to around five times the value. Coincidentally Zoopla also tells me that our current house, bought in 2000 also has a value of around five times what we paid for it. It seems very odd that the Kent market has outperformed the Berkshire and Cambridgeshire markets so spectacularly.

A fivefold increase is obscene enough. I can’t see a 13 fold increase being possible.

@Blossomtoes I'd love to know the identity of the nice Berkshire commuter town where a decent two-bed Victorian terrace is under £400k. Genuinely interested: I want to retire to a decent town with things going on that is also within an hour's commute of London. I'd be very grateful for a heads-up.

Wokingham.

That may be a fairly extreme example (precise location and your dad buying in a house price crash), but that's the basic truth.

You could buy a house in Zone 3 in London for under £50k in 1995/97 (I know because my old next door neighbour did it), and even in the early 2000s you could buy a genuine family home (3 beds, big kitchen, big living room) in Zone 3 for under £250k. Wages have simply not gone up as fast as house prices.

What would be very interesting to compare on a year by year basis is this... what percentage of working age homeowners could afford their current home on their current salaries? My dad always worked for himself and got on the property ladder very young (long story!) I think he would have been able to buy his house on his salary at any point in the 70s or 80s (he considered trading up to a much more expensive property in the 80s and ended up deciding not to take the risk.) I am sure he could have also bought that house in the 1990s and early 00s, but were he still working today he'd have absolutely no chance whatsoever.

We couldn't buy family home today, we sold it in 2006 when we downsized. It sold for £4.39m in 2016. It cost £100k in 1981 when we bought it.

Totally understand and share many of your sadnesses. I also notice that slightly older colleagues live in much nicer houses and areas - they would have bought pre or during 2008-10 financial crash and me in 2014. Those few years made such a huge difference.

You’re probably just having a moan and are hopefully happy with your situation. However, if you find you’re really not then I do think it’s worth considering big changes to get the life you want for your family. You don’t say where you are but I bet you’re in the southeast. If you moved north you could afford a much bigger property and land. If you’re in a town, you could get a much bigger house in the countryside. If you moved to the right place then you could reduce payments enough to work part time. Maybe think about what you want and work out if there’s a way to get it?

I literally could have written this myself point for point, but I'm not pregnant anymore and we have two kids. We have a 2.5 year old and a 6 month old who were both planned (albeit I'm 37 and didn't expect no.2 to come along so soon after as 1st took far longer).

Despite the nursery changes I'm having to delay my return to work to September (second is May birthday) because my first will be nearly 3.5 by the time he gets the 30 hours as he was born a week after the cut off. We'd planned to move this year and I was hoping to go to 3 days before they start school so I can enjoy their little years with them, but can't because of the 'mini budget' soon after I found out I was pregnant. I need to work FT to borrow enough for a bigger house so this is the only time I'll get to spend with them without working FT.

Even with 30 and 15 hours, and tax free childcare nursery will cost us 22k of our post tax income. On paper we probably look well off, but in reality we have no holidays, everything is second hand, we're tripping over ourselves and can't even afford to give our kids the space for a dining table which is the one thing that really gets me. We always ate at the dinner table as kids. I look at my youngest and could cry sometimes. At least I'm getting to spend my mat leave with first, but second will never have that time.

we sold it in 2006 when we downsized. It sold for £4.39m in 2016. It cost £100k in 1981 when we bought it.

wowsers that’s crazy, what part of London

Me too. The only people I know with big weddings (that they didn't pay for by their own admission) are the same that got deposits gifted by parents.
Partner and I just went to city Chambers and ordered pizza with his parents after. Was lovely and what we wanted but yes finances were a factor. Still saving for a deposit too.

£100k was serious money in 1981! Four years later, with a £4k deposit and earning £8.5k (so able to look at properties in the £36k region, I couldn't afford a halfway decent one-bed flat in Crouch End, Muswell Hill, Highgate, Golders Green, Finchley or anywhere else predominantly middle class and ended up in Finsbury Park.

Your family must have been wealthy to buy a house in a nice part of north London in 1981. And I assume you've benefitted greatly from the appreciation in value.

1981 was also the time of a really bad recession, with interest rates at 16% and everything looking really grim in London. So your family probably got a very nice property at a bargain basement price from someone forced to sell.

It was an amazing time to pick up a bargain, that’s for sure.

£100k in inflation terms is ‘only’ £368,399.48 compared to 1981

https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator

Totally get this! It’s so frustrating and feels so unfair! I definitely feel that that generation (when I was in my childhood) were much happier! Everything now feels so tough, we both work to survive, don’t get benefits or owt and too have a mortgage! Sometimes I do think we’ll there’s people on benefits in social housing much worse off than us but it still feels disheartening working to survive!

Interestingly (well to me!) The FTSE was at 665.50 in 1981. Houses are not the only asset class to have gone through the roof in that time. Imagine what 100k in the stock markets would look like now.

Yes, you need to factor in ordinary inflation. Eg my salary in 1983 was £6250. Today that is £20k allowing for inflation. People in the same job (law) in London today get £40k + (double what I got) after allowing for inflation. That is not the case for all jobs. I had done an annual list of income, expenses, salaries etc since the 1980s which can be quite interesting to look back on.

The other factor on house prices is some areas have gone right down and no one wants to live there now and others older people bought in the past were utterly dreadful areas that then did well. I was watching a film about Norman Wisdom (born 1915) recently on youtube including his childhood . He was brought up in utter slums in the same area where one of my children bought a first flat a century later. That is a big gap, but even places 40 years ago could have been dreadful,old people now bought then and tolerated it and then the area went up and up. Same the other way round - some areas get worse and worse, drug dealers move in, people flee who can afford it.

However no one is saying that house prices have not risen a lot more than wages in areas even here in outer London over the last 30 or 40 years. It is a complicatd comparison as when we were paying at one point 17% interest rates and people might pay only 5% today the comparisons are hard to make.

The 95% mortgage is the saviour for many as each of the 2 full time workers in a couple then "just" need £2.5% to be saved up each.

Yanbu
I lived through the 80s and 90s and don’t remember it being like this. Life is a fucking uphill struggle right now. I too busted my arse getting a degree and I work so hard, but struggle to pay the bills.
It is exhausting.

Yes, you need to factor in ordinary inflation. Eg my salary in 1983 was £6250. Today that is £20k allowing for inflation. People in the same job (law) in London today get £40k + (double what I got) after allowing for inflation. That is not the case for all jobs. I had done an annual list of income, expenses, salaries etc since the 1980s which can be quite interesting to look back on

Probably very few, certainly not public sector, hence the thread!

A nurse (SRN back then) was on a min of £4,450 in 1981, 42 years later and the min band 5 (held for 2 years) is £28400, slightly ahead of inflation but a worse pension, car park charges and of course student loan & based on CPI which EXCLUDES housing costs, wonder why the Government likes that measure?

Best description i heard recently about cost of living now was "i work fulltime, just to be poor"

I’m sorry this is your situation. It’s beyond wrong that it’s got to this. I always wanted two kids but I think we will stick at one, I just don’t know how we’d afford a second maternity leave and second set of childcare costs.

I haven’t read the whole thread, I’m retired and things are unimaginably different from my childhood.
In the 50’s most people rented, my parents bought their house but my father’s father helped them. As a child foreign holidays were a pipe dream, let alone owning more than one car. Televisions were often rented, I remember tiny screen, black and white tv.
We didn’t buy a house until the late 90’s, it was a massive struggle, I worked 3 jobs, often a 15 hour day, 7 days a week.
DH had lost his job, our house and I was sole wage earner with 2 teenagers.
In retrospect I don’t know how I managed.
Nowadays it seems so materialistic, a want it noe, want the latest gadgets’ society. I’m actually very thankful that our DCs didn’t have the social pressures to keep up with their peers that many seem to have now. We saved, slowly and painfully, for what we wanted. I didn’t have a new piece of furniture, other than our bed, until I’d been married for 25 years; we simply couldn’t afford it.
Holidays just didn’t happen beyond the odd day at the seaside a couple of times a year - now there’s an expectation of foreign holidays at least once a year.
We have a modest 3 bed semi, live relatively comfortably.

When I started nursing in early 70’s you had to ask matron for permission to marry and working as a married woman was definitely frowned upon!

Neither can I, and the 100k in `81 becoming worth 4.5 million in 2006 sounds unlikely as well TBH.

https://www.propertyinvestmentproject.co.uk/property-statistics/nationwide-average-house-price/