Climbing the property ladder - how do people afford it?

[Rorysmum7]

Our house is valued at more than we bought it for 4 years ago but I’m sure the houses in this area have all gone up too.

my question is, unless we had substantial income increases since 4 years ago, how do people afford to move UP the property ladder?

We can still only afford the same amount of mortgage as we took out 4 years ago, yes the house has increased in value now but surely thats only helpful when the next house you buy isn’t the same price or cheaper. If all houses in the area increase too, i can’t see a way to do it unless you just save up the difference or use pay-rises for a bigger mortgage?

Honestly, the best way to move up the property ladder is to increase the value of each property you buy. You don’t need to even do any major structural works but it always surprises me that we have friends and family tell us how lucky we are to have the houses we do but we are the ones buying the wrecks and doing them up while they buy the new builds or the fully done houses. It’s hard work but it’s the fastest way to increase equity.

It's different for everyone. And where you are in the country makes a big difference.

If you're in London or anywhere else with high house prices, stamp duty means people try very hard to minimise the number of steps. And getting renovations done in London is expensive too.

Friends in cheaper areas of the country have bought and sold more frequently

We’ve been in our house nearly 20 years so have got equity from rising prices and decreasing mortgage balance. Salaries for us both are higher but we aren’t massively jumping up the ladder as doesn’t make sense at our stage but we are moving for more bedrooms and bathrooms than we have now

It's in the numbers. Trading something for another thing more costly means you have to put more in, so income has to grow. This is helped immensely if prices fall. Then you will need much less income growth to afford the trade up.

It's so simple that only the extremely blind or stupid celebrate rising house prices. Everyone needs a home and gambling or investment is always more effective outside of residential property. The increasingly frequent "ban second homes" crowd are also selfish or possibly blind or stupid not to get that their situation would not exist if it had not already happened at much larger scale in urban areas where there are always far more of the community displaced than will ever exist in rural areas. When population exceeds the carrying capacity of any situation, that situation has to adapt and building up is the main solution. The UK problem is low standards in both design and execution of new homes. We're way below current world-wide standards, and it's really obvious if people look when they travel abroad.

yes ever increasing prices benefit very few but a lot celebrate it.

For us it has been mostly renovating houses that has enabled us to move up. Both DH and I are very hands on in terms of DIY.

Our friends who benefited from similar house price rises and pay increases have not moved up as much as we have because they don't buy houses with a view to adding value the way we do.

I think we're done now though. We have enough equity to buy a decent detached house in a less desirable school area outright now.

Location and choosing in an up and coming area can also have a huge impact. My last two houses were bought in areas that were being redeveloped - so not only did I benefit from the typical house prices going up, the demand and prices in the area went crazy.

Buy something you can afford (but that importantly you like enough to live in for a good 5 years, moving is expensive!) in an area with planned development to transport or a higher end supermarket etc on the cards. Or a cheaper area that's right next to a much more expensive one.

We didn't really consider these benefits much more than being a bonus for ourselves at the time but it is worthwhile to consider.

I find the whole renovation thing quite hard. We just looked at a flat on for 575 it needs a full refurb i.e. 100k - new kitchen, bathroom, boiler, windows, sorting out the ceiling, skimming and redecorating walls, new floor. A flat that is in a good condition is on at 675. Beyond spending all the time doing stuff and maybe having things in the fashion you'd like - it just isnt worth it at the moment. Same with houses - saw a house on for 780k in need of a refurb - a house all done up is 900k. Realistically, while I cant quite afford 900k, 780k is also too much by the time we would need to redo it all - i.e. at least 100-150k.

Was it very different before?