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.

I understand. My family can't understand why my husband and I are strict with money and don't have a big house/ splash the cash on what they regard as important ( expensive meals out, clothes, beauty treatments etc). They think that we're loaded as our household income is double what my parents was in the 90's/ 00's. They don't really understand that their house cost x2 their annual income, mine has cost me x 6 and we have students loans etc. They still call me stingy....

That was still four times the average house price in 1981, but yes if it made 4.5 million in 2006 someone in 1981 was desperate to raise cash by selling a good house.

Pop the property bubble and a lot of the COL problems disappear! So simple and obvious really?

No, we weren't wealthy (and we weren't in north London)and we were moving on from our first house which we'd had for five years. We were very young when we bought it and struggled to find something at a price we could afford and then struggled to pay the mortgage. We didn't have a holiday for 15 years and only ate out on our anniversary.

I appreciate that house prices were lower but we still had to spend a very hefty proportion of our income on the mortgage. The thing that helped us was that we did a lot of diy and had improved our house a lot (including adding a storey) and also house prices rose obviously.
As you say we have benefitted greatly from the appreciation in value, but as I said in an earlier post, have now downsized and all the appreciation has been passed on to our children to put them on the housing ladder. I don't believe that people should live in properties bigger than they need and it is up to families to help their children if they can rather than wallow in the money that their property has brought them.

We actually swapped houses (with a payment for the difference in value) with someone who was downsizing and wanted to live in our street.

Give over, 4.5m in 2006 is more than DIY.
I live in St Albans and £4.5m gets you a serious house in 2023 in these parts!

South west, won't name it but part of borough of Richmond. Yes it is absolutely crazy. People pay £1.4m for an extended 3/4 bed terrace now, our first £20k house is worth that. Personally I think it is insane to pay that sort of money.

What makes me laugh is that people imagine that it is skill in the housing market that enables them to make this sort of money. It's actually just luck. The same money invested in a different part of the country, or even a different part of London, would not have appreciated that much.

We didn't sell for that, we sold it and someone else spent a fortune on it then sold it a few years later. We did get a good price though.

Here we go again!

The economy is tied to house prices, for better or for worse, we are primarily a consumer led economy, negative equity means people wont spend, social mobility goes out the window and your recession turns into a depression.

What we need is to slow down the property market e.g below inflation price rises, driven by greater supply, both in rental (council housing) and open market, trouble is, the private sector wont build in this market, they want run away price rises = max profits, so unless the state intervenes, wont happen.

Population growth isn't helping either.

The thing that helped us was that we did a lot of diy and had improved our house a lot (including adding a storey) and also house prices rose obviously.

Dig out a basement at evenings and weekends, did you? Take the roof off yourselves and build up?

My point was more the church mouse angle with great returns due to DIY.

You might not have been wealthy, but that was a big house, or if not ‘north’ London, more like central. Maybe a naice Victorian villa in Shepherd’s Bush, but not a normal semi in a standard setting.

It is not really luck, just the effects of cheap lending, it will reverse pretty quickly if rates stay high or go higher.

Ah. Thanks.

Well, that’s just luck for the owner then, surely?

Apologies, I saw you answered this. Yes the lucky London bubble!

"Population growth isn't helping either."

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

Cheaper housing allows people more of their wages to spend in the consumer economy.

I see, nice move.

Well, yes of course but a housing crash is usually caused by or leads a recession, in which people lose their jobs, they don't have extra to spend, the converse.

But what would lead to additional consumer spending in the local economy would be more council housing = cheaper rents.

In this case it will be caused by cheap lending going away, that will also affect companies that never had a sustainable business model without cheap debt, We Work and other similar nonsense, so yes there will be job losses but they will never do a mass building programme, that would cause a massive slide in property values, they will try to manage the debt bubble bursting without adding to supply IMO.

13 fold increase very possible and common. It’ll be once rundown areas but with decent Victorian housing stock that have become very gentrified over the past ten, twenty years - mostly east London, Walthamstow, Hackney, Leyton. My old house was worth £60k in 1980 (we knew from prev owner who bought it off the council then and lived there decades), it was a Victorian house in a gentrifying area, and it sold for £800k earlier this year.

Berkshire towns won’t have increased 13 fold as they were already nice before!

Also what’s partly led to the ridiculous house prices of today is a decade of super low interest rates (set in direct response to the 2008 crash) which meant mortgage repayments were so low that people offered more and more to secure the house they wanted, because repayments would be so cheap anyway compared to rent. Offering an extra £20k to get the house you want for only like £15 a month extra.. why not??

The system of estate agency in this country has a lot to answer for, with blind bidding and being at the mercy of agents to up up up your offer and drive sold prices higher and higher, meaning the next people buying on the same street have to up their offers too.. etc etc. other countries like Scotland and Spain do estate agency a lot differently and more transparency!

I completely relate. This is so true for me too. I’m fed up.

@Zone2NorthLondon yep - this is the answer but not popular amongst all those people (usually 60+) who have a nice large house in the surburbs built on greenbelt originally, who can't stand the idea of the next generation benefitting from the same opportunity / perceived subsequent infrastructure issues. If we can get back up to close to 400k p.a. housing supply for a number of years from the circa 200k we have now (as we had in 1960s) and limit immigration (which accounted directly for 60% of population growth 2001 to 2020 - obviously gone up recently) we might stand a chance of giving next generation a comparable living standard to our parents. Can't see that happening though so not sure what answer is - problem should solve itself though as no one can afford to have kids so eventually will see population drop. We're already seeing in our area (Berkshire commuter town) a pronounced decrease in primary school numbers.