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?

@JaninaDuszejko

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.

We were FTB with 2 kids. Of course some FTB need a bloody family home.

I would rather rent a house than own in a flat. I can’t think of anything worse than a flat with DC.

@mullmara

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.

It was a risk. But looking back it was the right move as we wouldn't have afforded our house with the house prices how they are now

That £29,990 average household figure is POST tax deductions btw, not to be confused with individual's median salary which is usually gross.

Not forgetting the high inflation that was about at the time, that irodes the debt itself. While 16% would have tough back then now it would be impossible. Lots would be handing the keys back to the bank.

@JaninaDuszejko

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.

Rent doesn't cost that where I live! Nor do many 2 bed terraces.

Just shows when trying to justify how our housing system is not broken assumptions and generalisations don't work very well. (not sure why people are so adamant in doing this despite evidence to the contrary)

@ComtesseDeSpair

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.

As previous poster said, averages skew the figures by looking at all types and size of home sold, without acknowledging that it’s never been realistic in much of the UK for a single first time buyer to buy a family size home: most people start off in a small flat and then move up the ladder.

If we want prices to fall, though, we need to increase supply. Address developer land banking, and ultimately stop being NIMBY, because housing has to go somewhere and it can’t always be “somewhere else.”

Overall home ownership percentages will obviously change very slowly over the whole population because the range of ages over which people own houses is so large (about 50 years) - significant changes in ownership among younger cohorts will be masked by continuing high levels of home ownership among older cohorts. It will take another 10-15 years for this percentage to change dramatically, I reckon.

An ONS report earlier this year showed that only 50% of people aged 35-44 had a mortgate in 2017, compared with 68% in 1997. That's a MASSIVE decrease in home ownership among younger people.

@JaninaDuszejko

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.

The average age of FTBs is now over 30, so many of them will need family homes - they'll be buying once they have already had children, not as a single people or couples who are starting out on their careers. And the ONS has published affordability ratios for FTBs by region that show just how unaffordable houses are for them - in many areas, they can expect to spend over 10 times their salaries buying their first house. That's not a massive family home: the affordability ratio is the calculated by dividing lower quartile house prices by median gross annual workplace-based earnings for full-time workers aged 22 to 29 years (i.e. it takes into account typical salaries for 20-somethings and the cost of the cheapish houses that they'd be looking to buy).

Also, a room in a shared house is £400-600 where I am, and rent for a 3 bed is £800-1100! And a 2-bed terrrace is £220-250k .

Moving up the ladder has become unaffordable our house 3 bed semi 1000square foot approx worth 170k 4 bed detached 1400 square foot people asking for 450k !!

It’s not always the deposit that’s the problem though is it? I could gift some of my inheritance my dad left me and give my son a £50000 deposit but on his solo salary he can only borrow £120000 and nothing under 200000 in our county. It’s a vicious circle, hard to save on the high monthly rent.
He has accepted renting as his only option at present.

@Raxer26A

Not forgetting the high inflation that was about at the time, that irodes the debt itself. While 16% would have tough back then now it would be impossible. Lots would be handing the keys back to the bank.

At the time, quite a lot of keys got handed back to the bank. People just couldn't afford the hikes in mortgage payments. And then the housing market crashed and people who were able to pay their mortgages were stuck in negative equity.

These days, so much depends on where you live. Two junior nurses in Glasgow can buy a small house quite happily. I wouldn't fancy their chances in most of the south-east.

Locally, SW, a terraced house in our village with two decent sized bedrooms and a box room now costs about/at least £350,000. As salaries are not high here because there are mainly minimum wage or public sector jobs, these houses are being sold outside the local pool.

I happen to think it is good that school leavers and young graduates leave the nest, and go to follow the dollar. This is an area where everyone learns to row and sail as children, so my DS's best childhood friend has just completed an apprenticeship and will soon follow two siblings to sea as super yacht crew. They will be paid very well, as long as they are young and pretty and competent, which they are, tax-free. And they will come home after three or four years with money in the bank for a deposit on their house. Having seen the world at someone else's expense. Nice family, lovely children, with manners, without attitude.

However, super-yacht jobs are all about servicing the wishes of the super-rich employers so if your instinct is that providing service is beneath you, then you might want to jog on by.

@ElliePascoe Well, yes of course if you're trying to buy your first home when you already have kids and all their associates costs and you're on an average salary, it's going to be very difficult, in fact impossible for many, to save a deposit and afford a mortgage on a "family home" (i.e. 3 bed with garden).
That's why people either have to get on the ladder well before having kids, or accept that their family home will be a 2 bed flat/terrace if they're lucky. Or, keep renting.

If I were being controversial, and I know some will find it very irritating, the time to plan for a family is before you have one. So your DC come to a place planned for them. Until you're ready, you keep using contraception. We have the ability to plan and schedule babies nowadays. There's no excuse for an unplanned, unwanted child to derail a woman's life chances. IMVHO. (Except rape, possibly).

Houses are only worth what -people- developers can afford to buy and charge renters to pay the mortgage and turn a profit.

@XingMing I've been pregnant 3 times, none planned. 1 yes I can hold my hands up for, the other 2 were contraceptive failures one being with a flipping IUD in place, shit happens. I would not have aborted a baby because I didn't own a house yet.

You're not being controversial perse but you're being overly simplistic. Many people aren't in a position to buy, for lots of reasons, until they're in their 30s, average age to buy is around 30 I believe around the same age the average woman has a child, women are on a clock for babies- I would not have gambled with my health and fertility leaving children until firmly on the ladder, personally. For some people it just isn't possible to get on the ladder before having babies.

Our compromise, as there is usually a compromise, to enable us to have the children we didn't exactly plan for, and at a healthy age, was moving to a cheaper area.

Not my experience frankly. I aborted pregnancies (multiple) until I was ready to breed, and yes I was absolutely on the pill and taking precautions all through. I was not willing to have a child as a single parent, ever.

The average age of FTBs is now over 30

The average age of first time parents is over 30 as well.

And the ONS has published affordability ratios for FTBs by region that show just how unaffordable houses are for them - in many areas, they can expect to spend over 10 times their salaries buying their first house

Or... in three areas (London, the SE and the East) couples spend more than 5x their joint salary to buy a house. But in the north it's 2.5 - 3x joint salary. It is hardly news that houses are expensive in the south.

I aborted two pregnancies, for full disclosure. I don't regret either. And then miscarried my last, so I have one child. And that is fine... for me. I didn't even consider breeding until I was well over 40 and I accept that I am never going to hold my first grandchild until I am about 75. If I live that long.

Not my experience frankly. I aborted pregnancies (multiple) until I was ready to breed, and yes I was absolutely on the pill and taking precautions all through. I was not willing to have a child as a single parent, ever.

And that is your deeply personal choice, you can't dictate to others to live like you do. I'm not sure what the single parent element has to do with it, that hasn't ever been my quandary, I got pregnant young, we had the baby as our relationship was strong and that was all I needed to make that decision, therefore the house had to come later as we couldn't buy in the throws of childcare. We moved to a cheaper area so we could afford a family home whilst we needed one.

I am not suggesting that anyone else would make the same choices. But when I made those choices, they have proved to have been good choices. I cannot say that I miss the children that might have been born. I am not a born mother. I adore my one child.

And being just the one child, unless DC does something really daft and dies from doing it, DC will not have to worry about a home to live in. If that happens, it's been thought through too. Wills and planning!