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?

@MarianneUnfaithful

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.

And more and more frequently, that first home is the one you might well become stuck in.

Some flats are bigger than houses!

The one my eldest DD was born into had three bedrooms, two bathrooms, a living room/diner, a laundry room (in the basement) and our own cellar. Big balcony. Communal garden. It was meant for a family.

People acting like it's so much cheaper in the North need to remember a few things.

It's not a homogeneous area. There are cheaper bits and not so bit cheap bits.

The cheaper bits can be less expensive for a reason.

Wages are often considerably lower in the North.

So yes you may be able to get a house for less than average but how does that compare to moat local wages? And what is the area like in terms of schools and amenities?

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

Did you both have new jobs when you applied for your mortgage?

@osbertthesyrianhamster Yes, with special needs I get it might not be suitable, but for most families it can work.
I've lived in several EU countries, most people on the continent (in the cities at least) live in flats, individual houses are a luxury and for the well-off. On a small island like the Uk it's crazy for everyone to expect to live in a one-family house with a garden and for it to be cheap. There isn't enough land for that to happen.

The average price in my northern town is £159,226 and the median salary last year was £28K. You would get a 3 bed semi for that price, and there is plenty of terraced houses in nice areas for much less. The countrywide averages are driven up by the crazy house price bubble in London. Prices locally haven't changed much in the last 10 years so a house is just somewhere to live rather than an investment.

@mullmara

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

Did you both have new jobs when you applied for your mortgage?

We did. I was about a week in and DP hadn't even started. Was due to start within about 6 weeks. We just sent the contract. but with it being before lockdown I aren't sure we'd have managed now

[quote ChunkyKitKat123]@osbertthesyrianhamster Yes, with special needs I get it might not be suitable, but for most families it can work.
I've lived in several EU countries, most people on the continent (in the cities at least) live in flats, individual houses are a luxury and for the well-off. On a small island like the Uk it's crazy for everyone to expect to live in a one-family house with a garden and for it to be cheap. There isn't enough land for that to happen.
[/quote]
Yes, well, many EU countries also have far better building standards, far better rental regulations, much more stringent and enforced laws and rules on anti-social behaviour, lifts as standard in many flat buildings, no ridiculous out of control service charges or leasehold deeds. And none of that is going to change in the UK because there's not enough push for any real change in those areas.

We did. I was about a week in and DP hadn't even started. Was due to start within about 6 weeks. We just sent the contract. but with it being before lockdown I aren't sure we'd have managed now

That's brave, I'd be worried in case I hated it or didn't fit but good for you.

As others say op, it depends where you are.

Where I live (east Mids city) it's perfectly possible to buy a nice flat or terraced home for about £120k. With a deposit of £20k (say) a single person in their 20s could afford this. Dd is 20 and some of her contemporaries (not those at uni!) are home owners.

Dd is 20 and some of her contemporaries (not those at uni!) are home owners.

How do they pay rent & save on i assume normal salaries?

@Yaykyay

People acting like it's so much cheaper in the North need to remember a few things.

It's not a homogeneous area. There are cheaper bits and not so bit cheap bits.

The cheaper bits can be less expensive for a reason.

Wages are often considerably lower in the North.

So yes you may be able to get a house for less than average but how does that compare to moat local wages? And what is the area like in terms of schools and amenities?

Some of the north is way more expensive than some of the south. Compare Harrogate with Jaywick (Essex). Or, Silent But Deadly's Richmond, North Yorks constituency with a deprived Kent Medway town.

Also there's the simple fact that if loads and loads of people move from a more expensive area to a cheaper one (whether north or south), house prices will go up and the cheaper area won't be cheaper anymore.

@mullmara

Dd is 20 and some of her contemporaries (not those at uni!) are home owners.

How do they pay rent & save on i assume normal salaries?

They live at home and maybe pay minimal keep to their parents I imagine. Well possible to save in that scenario if you are committed. Two years+ of working at say £20k could see you save £300-500 pm so £10k ish You'd have to really want to do it tho. That would be 10% on a £100k house or flat.

Ah ok I wasn't assuming they were living at home & paying little.

Well most 18-19 yos I know live at home. I'm not talking about lots of people, but some.

How do they pay rent & save on i assume normal salaries?

I got max student loans, worked all the hours in uni hols, went to a cheap uni town, and managed to save enough for a deposit on a flat and moved in within weeks of starting my first full time job.

My stepdc graduated in 2019, had worked in a fairly good job all the way through- a chain so could work at home and while away at uni. Max student loans, separate, fairly decent contributions off mum and dad. Came out with a reasonable wedge in the bank, but chose to buy a car, despite suggestions to use it for a deposit on a small flat or house.

Well most 18-19 yos I know live at home. I'm not talking about lots of people, but some

I thought you were talking about people in their 20s. 20k at 18 is a pretty good wage in an area where houses cost 120k.

My student loan was 3k & rent was 2.8k so I had to work all yr round to support myself at uni.
I did save after but was also hugely helped by parents, needed much more than 20k deposit though.

It's not just deposits- also the multiplier..

We have a 20% deposit, but due to our incomes we need another 10k deposit or so to be able to afford the house size we need.

Frustratingly, monthly payents wise we pay more in rent than we would for a mortgage.

We need minimum a 2 bed house for us n DC, with space for parents to come and stay as they live far away and not feasible to ask them to get hotels all the time.

I wish rent counted as part of affordabiltiy -so if you've paid with no issues (and saved a chunk each month for deposit) for years that forms the baseline for what mortgage you can get - based on payments.

hoping to by before end of the year but it's frustrating that it seems to be continually 'just' out of reach.

I’m 26 and I bought my house in the south east almost two years ago. I did this by putting up with a 3 hour round trip commute to work in London. I bought a 2 bedroom house with only a downstairs bathroom so it was slightly less than the average price in the OP despite the location.

It has always been hard to get on property ladder. Started in a rented flat 1 years later in 2 bed cottages could not sell. Moved to eatate in country. After 7 yrs to detached propery in country. Rate of interest 16.5
Paid it off 16 yrs later . Mortgage free now for 15 yrs.
It was a struggle with rates so high. We are no retiring and thank god we made the move

@onanadventure yep the multiples is why we needed such a big deposit.

What's often ignored is that lots of people do have a deposit. Their problem is a low income, which makes getting a mortgage difficult. It's apparently a growing issue. I can't find it now but there was a report on the reasons why FTB aren't buying. The number of people in the have deposit but can't get a mortgage situation has increased over the years.

@Tealightsandd

What's often ignored is that lots of people do have a deposit. Their problem is a low income, which makes getting a mortgage difficult. It's apparently a growing issue. I can't find it now but there was a report on the reasons why FTB aren't buying. The number of people in the have deposit but can't get a mortgage situation has increased over the years.

Exactly this. Nationwide are currently doing 5.5x income which changes it MASSIVELY- if you earn over a certain amount (I think £31k for a single or £50k for dual income)

I wish that was standard.

Yes it's much harder, lending rules changed after 08 iirc.