Will it just become impossible to afford a home?

[Corin870]

Currently the average UK household income is £29,900 and the average house price is £256,000. Out of interest, I looked on the Halifax mortgage calculator to see how much can be borrowed on the average household income and it said £134,255. This means that you would need a deposit of £121,745. Considering the average rent in is £868 a month, will people just become unable to save for a deposit? Will it eventually become impossible to own a home?

I’m interested as to if there is a solution to this? Or does there actually need to be a solution, I.e would we be better moving away from the mindset that home ownership is fundamental?

@mullmara

It’s worth pointing out that home ownership in the UK peaked at a high of 69% in 2001, and is now at 64% - for comparison, it was 65% in 1990. It hasn’t changed as staggeringly over the past 30 years as many people seem to think.

Is that just % of homes owned eg doesn't differentiate if someone owns 5 homes. It would be interesting to see by age because our population is ageing so more old people means more homeowners.

The percentages are based on households owning their home, not just homes in ownership - the major difference in the private rented sector nowadays, is that a larger number of small-time landlords with five or fewer properties in their portfolio dominate the sector, whereas previously it contained a smaller number of private landlords with large portfolios.

Home ownership among younger age brackets has definitely fallen, but even then I don’t think you can even make a direct comparison. For example, university used to be for maybe 5% of the population, whereas now it’s closer to 50% - so naturally, a lower percentage of young people are going to be in a position to become home owners in their twenties nowadays, when they’ve just graduated and are beginning a career, than in previous decades when a 25-year-old could have been in work for almost a decade already saving a deposit and increasing their earning potential.

Depends where you live, many places are significantly cheaper and high prices in London skew the average

@imnottoofussed

I'm NW and houses near me are definitely not next to nothing.

Same here!

I think its more that very few will be able to afford an “average” home as a first home.

Several of my friends used to moan about not being able to get on the property ladder. Reality was they wanted to go straight to a 3 bed, garden surburban average home straight away.

While they waited to be able to buy the prices went up and up.

I bought a flat as a first purchase. 5 years later a chink of the mortgage paid off, reasonable profit = good deposit for a two bed terrace. By 30 I was able to upgrade to that 3 bed with garden, while my friends were still moaning about not being able to do the same.

I will be encouraging mine to make some sort of purchase as soon as they can. Anything small and affordable as a starter.

@Reallyreallyborednow yep!

I am constantly astounded by the disdain shown by MNers for anything he with a shared wall (terrace / semi : flat) , with no off street parking, no garage, horror of any shared drive, neighbours access, etc etc.

Havjng been brought up in a place where shared paths, drives, flying freeholds etc are the norm, and now London, it all seems so fussy.

@imnottoofussed
Yes, I’m also in NW - in an area most would not consider even slightly posh, and our small terraced houses rarely sell for under £140k unless they need a complete redoing.

It is common sense that for a first purchase you would not normally expect to purchase an average home. You would start at the lower end of the market with a smaller and cheaper than average property.
It is also common sense that if you wait until you have 3 children to purchase your first home, you will either struggle to afford the deposit for a home of adequate size or you will struggle to fit your family into an entry level home.
I am so tired of people complaining they can't afford to buy. If you want to buy then your life choices will involve sacrifice in order to afford it.

And dont even get me started on people who complain that a specific area is too expensive. Its as dull as going to a porsche garage and moaning you can't afford a large enough car.

One thing is clear & that is there is no shortage of buyers, even at the arguably crazy/inflated prices of right now.

So that begs the question, are houses actually unaffordable?

Yes in purely numbers terms they cost more as a proportion of 'the average salary' than 40 years ago.
But that average may well be skewed downwards due to the nature of work now, with more people working p/t, the average household now has more people in work, interest rates are lower, mortgage terms are longer, it's never been easier to change careers/relocate/retrain...

*One thing is clear & that is there is no shortage of buyers, even at the arguably crazy/inflated prices of right now.

So that begs the question, are houses actually unaffordable?*

This in a nutshell. Houses are what people are willing and able to pay for them. If thats the price, its because the market (the people) decided thats the price.

And as a millenium on house no 2 in an average priced area in the UK; on an average salary. Its not unaffordable IMO.

I do think less people these days are prepared to accept a grotty flat in a less nice area, even though it would be a foot on the ladder and they could hopefully move up the ladder in a few years. Certainly when watching Kirstie and Phil I’m always astounded at the number of young couples (first time buyers in their 20s) who are looking for a 3 bed “dream home” and are not very keen on compromising. They seem to miss out the “first rung” of the ladder completely, which is fine but didn’t happen nearly so much when I bought my first flat in the late80s

@pointyshoes

I do think less people these days are prepared to accept a grotty flat in a less nice area, even though it would be a foot on the ladder and they could hopefully move up the ladder in a few years. Certainly when watching Kirstie and Phil I’m always astounded at the number of young couples (first time buyers in their 20s) who are looking for a 3 bed “dream home” and are not very keen on compromising. They seem to miss out the “first rung” of the ladder completely, which is fine but didn’t happen nearly so much when I bought my first flat in the late80s

Because the 'ladder' paradigm is an outdated, inapplicable nonsense now in a lot of places and there's a real chance of getting stuck in the grotty flat for a long time if not for good.

Because the 'ladder' paradigm is an outdated, inapplicable nonsense now in a lot of places and there's a real chance of getting stuck in the grotty flat for a long time if not for good.

I agree, many people are on the ladder but stuck hence why the stamp duty cut caused a mini boom. Before that in my part of London prices had stagnated for 5 yrs.

If I was young & buying again now I would personally skip the flat stage in favour of a small house perhaps a bit further out.

@Aroundtheworldin80moves

We could have bought a 4bed new build for £240k. It really does vary across the country.

One thing I have noticed though... a 'family house' when I was young was a 3bed, one bathroom, with the third bedroom being a single or even a box.
Now everyone seems to want a 4bed with ensuite master and a downstairs toilet.

Yes you are right here! Both me and my DH grew up in 3 bed semis where the 3rd bedroom was a box room and there was 1 bathroom and that was completely normal.

I think the increase in new builds with more bedrooms, utility rooms, built in garages and multiple bathrooms have sold us all a different lifestyle that has become the norm.

(I'm one of the people that lives in a 4 bed new build but it's certainly not my dream home! I long for a victorian/edwardian semi with properly proportioned rooms)

@mullmara

If I was young & buying again now I would personally skip the flat stage in favour of a small house perhaps a bit further out.

With so many flats, too, cladding is an issue, service charges that have no controls, built shoddily, anti-social noise tolerated, AirB&B/subletting/using as hotels even, leaseholds making them harder to sell, this just isn't the 90s anymore. Who'd have thought it?

Not to mention, crime has changed. That grotty flat in a dodgy area, would you want your kid stuck in one of those?

And you'd still pay through the nose for it!

Those figures make no sense. How can the average household income be £29k, that's roundabout the average salary for 1 person. You only need 10% for a deposit and you wouldn't necessarily be buying an average priced house, you'd buy something cheap if you don't earn a lot or are a FTB.

Most people I know who wanted to buy and made it a priority have done so, although they've had to compromise on some things and make sacrifices. Other than in London and the Home Counties, there are lots of affordable properties if you're on an average wage (you might struggle if you're on minimum wage but that's always been the case). It might not be your dream house jn your ideal location, but there will be something you can buy.

However, a lot of people have a ridiculous snobbery towards anything that isn't at least a 3 bed semi with a garden. When we had DD we lived in a flat and people kept asking us if we were doing to move to a "family home", even though it was a large flat with 3 bedrooms. On MN and IRL people are always talking about needing more space, even though they already have enough bedrooms to accommodate their family.
Why can a flat not be a family home? How much space does one family need?

Rishi Silent But Deadly Sunak has definitely made a bad situation worse hasn't he. Losing the taxpayer billions in the process.

What this country desperately needs is more social housing. Stamp duty could've been used towards the cost of funding it. Had Silent But Deadly not decided to further inflate the unsustainable housing bubble.

Why can a flat not be a family home? How much space does one family need?

Depends on the family. They have different needs. One of ours has special needs. A flat would be a nightmare. And honestly, with the amount of anti-social behaviour I've witnessed increasingly, buying a flat doesn't make sense for a lot of people. At least if you rent you can leave if there's a problem tenant or someone AirB&Bing the place.

Me and do are on 25k each and we managed to buy just before lockdown due to us both being made redundant from the same company and getting a deposit together from that. It would have been impossible otherwise. We were lucky that we live in the midlands so house prices arent ridiculous. We're both millennials

We couldn’t afford to buy a house so we now live on a boat. A lot of younger boaters experienced the same thing

There was a thread recently about being able to manage a deposit. I was wondering similar stuff to op.

My first flat (tiny, 1 bed) was small but not grotty and not in an especially grotty area.

Why the assumption that flats are ‘grotty’?

And you don’t generally chose your first flat as a single as the place to bring kids up in.

My second home was a 2 bed terrace, with a small yard, where my first child was born.