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

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.

well I said Dd is 20 so ... If you work straight from school then you could be on £20k. Wages no less in the east Mids than anywhere outside south east tbh. A mate's lad sells cars and earns more than that. It's all about priorities.

I have been able to help our dc to purchase property.
One saved 50% of cost moving from 7 yrs in canada.
Land donated by pil and fil a builder..had enough over to buy to let property to fund mortgage Other one purchased old farm house to renovate will cost 800 pm when finished. Hard workers but getting there.

@Nannyamc

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

But two big differences.

1. High rates = higher rates on savings (for a deposit)

1. Maximum multiples of salary for mortgage lending have increased...which has significantly inflated house prices). It's now particularly out of reach for many single income individuals or families.

Also, it wasn't as urgent in the past. There was more social housing available as an alternative. In fact it was actually a preference for many, being the most secure form of housing you can get (together with owned outright mortgage).

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)

But even then there are caveats, I think with Nationwide you need to lock in for a 5 yr minimum plus 5.5 x is pretty crazy particularly on a lower salary.

If you think someone on 30k takes home 2k allowing for pension deduction. 5.5x their salary is probably a mortgage around £800 which doesn't leave much for living expenses.

Although I appreciate some will be paying more in rent.

@clary you said this 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. I just assumed her contemporaries were in their 20s not 18.

It's all about priorities.

I disagree, I think a lot is based on whether your parents can & want to help whether that's giving you money, free lodging. I don't know anyone who got on the ladder without help regardless of how hard they worked.

@JaninaDuszejko

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.

You still need a deposit though. 10% is a fairly common amount as a min post covid economy. So £15k for average Northern House, wherever that is.

How long do you think it takes people on average salaries and renting to save that deposit?

One reason people want to skip the first rung of the ladder is the cost of moving. Estate agents, legal fees and stamp duty are essential but lost money. I think it was about £10k for us to move.

I actually think Stamp Duty shouldn't be as hefty as it is. I think their are exemptions for FTB so why have that exemption on a tiny flat when your better to get it on a family house?

Yes stamp duty is pretty prohibitive. We would have moved again already but it's not worth it so we are skipping a stage & putting up with a lack of space & will move again in maybe 5 yrs.

@Nannyamc

I have been able to help our dc to purchase property. One saved 50% of cost moving from 7 yrs in canada. Land donated by pil and fil a builder..had enough over to buy to let property to fund mortgage Other one purchased old farm house to renovate will cost 800 pm when finished. Hard workers but getting there.

Are you suggesting your children's privlidged situation of donated land and your financial support makes them hard workers in terms of owning a home?! 😂 Amazing

We had no equity from parents
I was self employed and ac applied on my earnings not my husbands secured jgovernment job. It was far more secure than mine we would never qualify for social housing as we had no children at the time. We sacrificed did lots of overtime and paid babysitter. Mid 60s now and ready to.retire. Dc.on.the.right rd

@Yaykyay fair point. I work very hard so does DH but I can't say that's what got us on the ladder because we couldn't have done it alone.

You sound like an over privlidged tory when you say it's all about priorities @clary

Utter crap.

I'm embarrassed at how out of touch you are.

Stamp duty is a necessary tax. It would have kept the house prices in check at least better than what's happened. Silent But Deadly's holiday has pushed house prices to the highest rise since 2004. That definitely doesn't help FTB (or many would be upsizers).

Stamp duty is tax revenue that could and should be used to fund social housing for those who would never be able to afford to buy. They need stable homes too.

My immigrant inlaws had no help either & paid about 40k for their London house in a not so desirable area in the 80s. They sell for 1.8m now. It's just not comparable & yes I know interest rates were very high for a bit.

I think far better to reduce or scrap stamp duty & look at heavier levies on 2nd homes, foreign ownership, etc. Stop all the props & the suppressed interest rates which has lead to the escalation that needs stamp duty to dampen it.

My children are far from privileged one spent 7 yrs in canada on shifts. Missed his young dcs 10 out of 14 days. My other son worked in mines 21/7 in Oz . They never expected land on returning i and dh were brought up in council houses and no help at all. I am very proud and pleased that my sons have achieved all this with very little help.frpm us.

If you’re in the south then yeah it’s pretty much impossible. There’s certainly areas in the north that you could get something descent for £150k but the big bucks jobs aren’t are readily available.

@Yaykyay

You sound like an over privlidged tory when you say it's all about priorities *@clary*

Utter crap.

I'm embarrassed at how out of touch you are.

Nice. It wouldn't be a priority for me, or for any of my DC. I'm just saying it's a priority for some 20yos I know.

I prefer my DC to have some fun with their money rather than saddling themselves with a mortgage at 20. I bought a house two years after I started working and sold it for less money about six years later, so I know home owning is not a passport to wealth.

I'm certainly not an over privileged Tory, I'm an under paid lefty tbh. Why am I out of touch?

I agree that buying a house in London must be out if reach of many; but that doesn't mean that no one can buy a house anywhere. If it's important to you then it is possible, where I live at least.

Under any circumstances this is not the case. They returned from.canada after 7 yrs 2 children in tow. Mam.offered site and dad offered.to build took every dollar.they saved plus morgtage. Really wanted dgs near.my son is an electrical contractor security advisers and General dogsbody when needed labor costs minimal due to help nothing was handled on a plate

You sound like an over privlidged tory when you say it's all about priorities

I dunno. I think there is a lot of truth in this and I say that as a millenial who only bought my first home 5 years ago.

I wrote out a long post explaining why I believe this is true but its just too long.

To cut it short - I used to be a drug addict. You would be amazed at the amount of money you can dedicate to something if you lower your spending in other areas to 'bare minimum to survive'.

Quality of life? Well thats called delayed gratification.

Yes theres those who will have to prioritise for longer - Singles, those with children etc. But for couples without children and no extenuating circumstances (ie. having to stay in an expensive area to be a carer to a family member) you can easily become a home owner if you prioritise and have a bit of perseverance.

Lots of people do not want to prioritise home ownership. Many prefer to prioritise their careers by moving to London. This is also an important part of life to many, and thats fine too.

Where will it all end 👀

KAYKAY
We live in rural ROI where land acquisition is totally different Mam donated land and as dad is a builder he built house. My son is an electrician and was able to call on other trades men who he did work for. It took 10 months to build house. They had saved 50% of cost. They got nothing for nothing and spent 10 months achieving thier dream. I have my dgc close to me now. Mid 30s they have settled back and are very happy.

You still need a deposit though. 10% is a fairly common amount as a min post covid economy. So £15k for average Northern House, wherever that is.

How long do you think it takes people on average salaries and renting to save that deposit?

But a FTB doesn't need to buy a family home, they could buy a 2 bed terrace for under £100K. And if you are renting a room in a shared house then your rent will be tiny, rent for a 3 bed is about £600pcm.