The ridiculous, ridiculous price of property

[Snakesandpropertyladders]

This is really just a rant/moan/ whinge about how ridiculous house prices have got.
We are looking for a standard 3 bedroom house where the 3rd bedroom is actually a box room that would only just about fit a single bed. So nothing fancy. We have a pretty good budget but it is just not going to be nearly enough as house prices have risen so much recently.
We viewed 2 houses today. Both had pretty small rooms and needed quite a bit of work. The first was priced at 450k. It needed a new kitchen and complete redecoration. The second house was priced at 425k. This one was identical to the first but needed new kitchen, bathroom, complete redecoration throughout. It was a major project, though not being sold as one. If we bought the house we wouldn't be able to afford to do the work for years and years if at all. How on earth can these sorts of prices be justified!?
For that sort of money we'd expect a house that we can move into and that's it. It's a pretty high budget yet all that is coming onto the market are dilapidated houses or houses in dodgy unsafe areas. Even houses in not particularly savoury areas are edging closer to 500k.
We have even looked at moving further out from where we are, but the cost of commuting then becomes prohibitive. Both of our jobs only exist in London so we have to be within commutable distance. A 30 minute commute from Essex will cost us around £800 a month in train fares!
I'm despairing of us ever being able to leave our flat and buy a house of our own. Rents are pretty crazy too at the moment so even that isn't a great option.

David that's hardly a structural solution though, is it? If more people followed your route of buying to let and owning several properties, how would it help the vast majority of average families who can't afford to buy because the prices and deposits are too high?

There is a generational aspect to this.

For some years now I have been unable to afford the house I live in. Or to put it another way, it has earned more than me. (There I was going out to work all day grafting for my pay when all the house had to do is sit around and develop a minor damp problem...)

So stonking good investment for me. Goody.

BUT

Where are my children going to live?

Although this thread was started to discuss the price of property which everyone assumed meant the cost of BUYING somewhere, the cost of RENTING is aprt of the cost of housing. Rents in London are far too high also; this then drives up the buy to let market as the landlord investors pay prices based on the "yield" on the property which is a combination of rent, and it is true, anticipated capital gain.

My children can live in any of the many places in the UK that don't have a ridiculous housing market.

If they can work there.

merrymouse, I'm pretty certain that house price to average income ratios have increased everywhere, not only London & the SE - maybe not by as much, but housing has still become much less affordable.

Also if you look at places like the East midlands where I grew up, now people will commute from there to London, which they never would have done in the past, so house prices have started to reflect London wages.

What about Bexleyheath or the surrounding area? It is possible to get a nice, chunky family sized home for under 300k.

Agree NLondon dad that rents have gone up as well - it's an interlinked problem.

I know it's unfashionable to say this, but I think unless there's a substantial social housing market (not necessarily owned by the state, but co-ops, housing associations etc) we aren't going to get away from this problem.

Regulation of the rental market doesn't seem to be a great option as it caused a lot of its own difficulties in the past.

I am thinking of places like the North East and parts of Wales - don't know enough about the East Midlands to comment.

It's true it's not as bad, merrymouse, but housing has still become much less affordable. The NE is the 'best' I believe, but even there av. house price: av. income ratio has gone from 2.5 in 1997 to 3.6 in 2010, and no doubt more now as prices have gone up & wages stayed still.

Cheaper housing: lower incomes is even worse, ratio of lower quartile house prices: lower quartile earnings has gone from 2.9 in the NE in 1990 to 4.6 in 2011 (in london same ratio is 9.0, from 3.9 in 1990)

(Figures from here )

Basically, if you're on a low income, you're stuffed - can't afford to buy, social housing only for those in desperate need, and market rentals expensive and insecure . . .

I think the problem is different though - the problem in the NE is low average wages (or no opportunity to earn a wage), not high house prices, the problem in the SE is high house prices, not low average wages.

It should be as normal for a company to have its headquarters in the NE as it is to have them in the SE.

We've found prices have gone up faster than we can save. And of course the higher the prices the less we can save as rent goes up in line with house prices.

"It should be as normal for a company to have its headquarters in the NE as it is to have them in the SE."
I definitely agree with that, merrymouse.

I guess it is a combination of different problems in different areas.

Where I am, second home ownership is a big factor in pushing prices up, low wages and seasonal work a problem, and lack of secure rental homes is a massive problem, lots of people end up with a winter let then pushed out into a caravan in summer time. Obviously they could move but if they've got work here, family for childcare etc then that's not a great solution.

West Wickham is a good location OP and if the Bakerloo Line extension comes off, will only go up in value.

I'd certainly look at that - local schools are very good too.

We've found prices have gone up faster than we can save

This is very true TheWoman because not only do low interest rates enable the BTL buyers to take on more and more properties, they mean you get virtually nothing for your savings. It's a depressing state of affairs and something has to give.

It is a big problem for people.If often has been in the past of course too. My grandfather in Newcastle in 1901 as a young man lived in a house with 26 other young men (sounds like Polish construction workers 5 a room in a 3 bed semi type thing today) and very few people ever owned a house then. you could only vote if you were male, over 35 and were a home owner. So that phase of the UK was not easy. Hardly anyone could buy. That does not mean it's find it's hard to buy today of course.

Then we had the 1930s London slum clearances and moving people out of Central London into all those new semis in the suburbs - some people earned enough to buy them but not everyone by any means. Then my parents found it very very hard to buy somewhere. They had to put off children for over a decade so they saved enough to buy. It was not then dead easy to buy - 1950s/60s. It as hard. Women could not even get loans as we were regarded as a lesser species effectively owned by men. Very tough times. Then there was the 1970s property crash which was disastrous for many and 60% inflation within 3 years - the advantage of the inflation of course was higher pay and your mortgage became in a sense less but house prices got very steep. At least we don't have inflation today of that kind of order.

When we bought 30 years ago no way could we afford Central London even on two professional salaries. We had to get a big mortgage and buy a tiny terraced place in zone 5 where they cost today £350k to £400k. Other people I worked with commuted in from places like Brighton, Herts, Kent and those were the better off partners in the firm. They were not paying peanuts for houses in Notting Hill. Also we paid interest rates of 8 - 12%. Most people could not afford that. The income multiple was 2.5 joint salaries.

Then later we bought two buy to lets which we sold at 50% less than we paid for them in the 90s crash - so again not a great deal.

However I do agree that at present we are in one of the regular cycles of the property market which makes it hard to buy. The Government's too tough new lending rules are partly to blame - market interference.

A lot of mumsnetters who own a place and have for a good while usually started like we did - run down place, hardly any carpets, second hand furniture, no luxuries and only over the decades has that paid off.

We bought our first house in 1985 for 14k and our present house in 1997 for 65k all affordable on average wages. It's now worth 250k hardly affordable on average wages (say family income 30-50k a year) Although interest rates were higher, wages hardly seem to have gone up.

I think that is a good point about interest rates. 14 years ago my 230k mortgage cost £1650 a month. Now my mortgage is 330k because I recently moved and it still £1650.

We're in a similar position to Want2bSupermum's friend, we have a DS and are in a 2 bed flat with no hope of getting a 3 bed unless we move out of central London. I would say though that we've chosen to stop at one and it's not such a reluctant decision - there are other advantages to having an only, as it means our lives are simpler and we can get back to focusing on our careers more quickly. It would have been nice to have a second, but not at the expense of having to leave our Islington flat and adopt a more suburban lifestyle in the outer suburbs. You just have to make your choices in life, and having fewer dc is one of the reasons we've been able to buy a decent quality place in a good location.

I think a lot of families in central London have the same thinking, I know many friends who only have one child, or couples who are remaining childless, so they don't have to take on the expense of buying a 'family home' (although we consider our small flat very much our family home!). As our child-related expenses are quite low since DS is at school now, and we have low commuting costs due to living within walking distance of work, we've not had to make the sacrifices others mention - buying a run down place, no carpets, no luxuries. Our flat was a newish build and was in excellent condition when we moved in, no work needed at all. It did cost a fair bit (slightly higher than OP's budget) but not such a stretch for a professional salary that we've had to forgo all luxuries.

I had carpets on my first home. Each room had a different shade of burgandy floral and the walls were pale blue florals. It was like a crazy chintzy West Ham supporter's house.

It's the whole London/rest of the Uk that's out of kilter.
London is in danger of imploding.
I have just bought a 5 bedroomed semi, massive rooms, dining room, conservatory, gardens front and rear for £198K.

I am a 14 minute train ride into the heart of the capital city.

It is indeed ridiculous.

You can get a decent 3 bed house with a garage and a garden for 125k where I live.

www.rightmove.co.uk/property-for-sale/property-32429226.html

I suppose I could have furthered my career significantly if I'd moved to London, but at what cost?

combust which capital city? Surely you don't mean London?!

No I mean Edinburgh, the Capital City of Scotland.

Oh sorry. Please forgive me bloody ignorant forriner-

I think that the only reason that houses are selling at such ridiculous prices is that young peoples' aspirations have had to change, which is such a shame and very sad.

When I bought a house with my DH 20 years ago we had low salaries and bought in an ordinary suburban area in the SE. We had a choice of many lovely flats and houses, and bought a 2 bed period terrace for £80,000. That house would now be worth £330,000 so would now only be bought by professional high earners, as a family home.

The cheapest flats in our area are £180,00 and are either above shops or in very grotty areas, and these flats are being bought by young professional first time buyers who have had to save for many years or have maybe inherited some money or been given a deposit by parents.