Home Ownership

[Arthritic Toe]

We are just in the process of buying our first place, A two bedroom flat and its been a struggle. We werent really ready to purchase yet but if we dont bite the bullet now we are going to be stuck at home forever. We were going to carry on saving but we would just be playing catch up all the time. We thought it just best to try and get on the ladder now.

I know this comes as a total shock to most people, but house prices can go down as well as up. For some reason, many people are completely blind to this fact and have managed to erase from their memories the 89-94 crash and the one that preceded it in the early 70's (this one was masked by mega-inflation).
All the organisations with a vested interest in the housing market, together with all the property / location tv programs pumped out by the BBC will have you believe that the market will continue unabated, encouraging you to get on the ladder, quick! before it is too late. This is quite clearly impossible - how can anything rise to the point at which no-one can afford to buy it?. Just look at an inflation adjusted graph of house prices since the 1960's. It shows a boom and bust cycle which fluctuates around the long-term average, which is around 3 times average salary.

Right now, we are at the peak of the biggest ever boom cycle - a boom fueled by cheap credit and BTL investors. Guess whats coming next.

Don't get swept along with the current madness - as a first time buyer you will lose out bigtime. Don't believe the hype spouted by the estate agents and mortgage lenders. Do your own research into the history of the market. Don't join this generation of people who seem to have had their brain removed and will take on a massive amount of debt just because everyone else it doing it.

 

[Barrel of Fun]

That's another change since pre-Thatcher days.

The "property ladder" that everyone wants to "climb". It's all about people becoming speculators, isn't it?

As I said in my earlier post, I still live in the same three bedroomed house I bought in the seventies. It was bought as a family house. Three children have been raised in it. They've now moved out. They can't afford to buy anything, but, even if they could, the best they might hope for wouldn't be a family-sized property.

I would rather have a nice property that perhaps I could keep in the long term, rather than wasting money on rent. There are plenty of other investment opportunities that I would like to toy with. I get sick of wasting money renting, and filling the coffers of landlords

 

[Lammy]

That's another change since pre-Thatcher days.

The "property ladder" that everyone wants to "climb". It's all about people becoming speculators, isn't it?

As I said in my earlier post, I still live in the same three bedroomed house I bought in the seventies. It was bought as a family house. Three children have been raised in it. They've now moved out. They can't afford to buy anything, but, even if they could, the best they might hope for wouldn't be a family-sized property.

The property ladder is not about speculation. No one EVEN IN THE 70s could afford to buy a 5 bed house on a teacher's salary. Therefore you would buy a 3 bed house. Now even if the property stayed the same price for 10 years you would still be able to move up the ladder as you would be paying off your home. Thus enabling you to have a large down payment on your next house. You would also be hoping that your wages have gone up too.

If the house prices rocket then this has little bearing on climbing the ladder as the house you wish to buy next will be rocketing too!

 

[dwayne]

I got 'on the ladder' six months ago and at 25 can speak with a little bit of experience.

My girlfriend and I are both quite lucky and earn good money. We took on £147,500 for a two-bedroomed Victorian terrace in Eastbourne town centre and while the repayments are a bit sickening (as I am sure they have been for everybody when they've been starting out), they're quite easily manageable and leave me with enough spare to enjoy life.

However, as I say, we are quite lucky. We're also fortunate that her family are well off and mine, while not rich, do own their own place, the value of it having gone up 800 per cent in the last 20 years. The safety net of parents, despite the fact we would never want to use them, should not be underestimated.

I can't imagine how couples with jobs that don't pay more than £25k per year each can get on the ladder. The only thing I can think of is inheritance. And that applies to me to some degree in that when our parents die we will no doubt use what inheritance we get to pay off our mortgage.

Three points though:

1. I can't imagine my house rising in value by 800 per cent. Also, my father, who earns a fair bit less then the 'national average' could, in theory, pay his starting mortgage off in two years if he wanted to going on today's wages against the mortgage of yesteryear. I doubt youngsters from this generation will ever be in the position to do that.

2. Where do things go from here? If we were to have kids and want to move on then we would need to a) find a buyer for our place, and b) find a bigger place when we may not make a big profit on out place and our salaries may not increase sufficiently.

3. What will happen if there is a crash and those who were unable to afford mortgages because they have run up endless debts (I'm not talking student loans here btw) will then be able to pick up a place. Will it lead to considerable disquiet from those who have worked their arses off to buy a place and are then in negative equity?

My advice to anyone buying would be to find somewhere you really like and are prepared to stay in should the worst happen.

In real terms, I very much doubt your parents place has risen in real value by 800%...seems a bit crude the way you have stated this.

 

[Lammy]

I know this comes as a total shock to most people, but house prices can go down as well as up. For some reason, many people are completely blind to this fact and have managed to erase from their memories the 89-94 crash and the one that preceded it in the early 70's (this one was masked by mega-inflation).
All the organisations with a vested interest in the housing market, together with all the property / location tv programs pumped out by the BBC will have you believe that the market will continue unabated, encouraging you to get on the ladder, quick! before it is too late. This is quite clearly impossible - how can anything rise to the point at which no-one can afford to buy it?. Just look at an inflation adjusted graph of house prices since the 1960's. It shows a boom and bust cycle which fluctuates around the long-term average, which is around 3 times average salary.

Right now, we are at the peak of the biggest ever boom cycle - a boom fueled by cheap credit and BTL investors. Guess whats coming next.

Don't get swept along with the current madness - as a first time buyer you will lose out bigtime. Don't believe the hype spouted by the estate agents and mortgage lenders. Do your own research into the history of the market. Don't join this generation of people who seem to have had their brain removed and will take on a massive amount of debt just because everyone else it doing it.

First of all house price crashes are RARE. They also only have an impact if you wish to move or try and borrow more money.

Try taking into account the amount of money you are paying to a Landlord whilst you wait and see. You would need to have a crash buy this amount before you really started losing money anyway.

 

[Uncle Spielberg]

" You want detail?

OK. The house I still live in cost £10,500 in 1975. It's semi-detached. The house next door that is the mirror image sold for £295,000 in 2004.

Both houses have had extensions added (in the mid 1980's, at a cost of about £20,000), but they both still have the 3 bedrooms they had in the seventies.

My point is that I could afford this place in 1975. In similar circumstances today, I couldn't.

So how are people like me managing? "

Lord, there not.

1.The average age of a first time buyer 10 years ago was 25, now it is 34.
2. The average joint income is £ 40000 for ftb's, 3.5 x ( max income multiple ) = £ 140000.
3. People stay at home with mum and dad into their 30's now.
4. Those who can afford it rent now and not buy
5. The Brighton & Hove housing market has 40% , yes 40% of new purchasers coming dowm from London
6. Most ftb's who have no savings get the deposit from their parents who often take the equity out of their properties

 

[Uncle Spielberg]

7. Property landlords in this area have built up huge portfolios of properties ( I had 1 landlord with over 100 properties )
8. House price inflation has gone up much more since Blair has been in charge than when Thatcher was in charge

 

[Barnet Seagull]

What makes everyone think they have a divine right to own a property?

 

[Goring Gull]

Totally agree. So would I.

Because the system makes it easy. One less affordable house off the market.

LET'S BUILD MORE!!!

It is dead easy, Banks, building societys are bending over backwards to lend you money once your property has a bit of equity.

Oh yes mr Gull we'll happily lend you 100k for another property will lend it against your equity and your partners new income - bingo another property off the market.

 

[dwayne]

I know this comes as a total shock to most people, but house prices can go down as well as up. For some reason, many people are completely blind to this fact and have managed to erase from their memories the 89-94 crash and the one that preceded it in the early 70's (this one was masked by mega-inflation).
All the organisations with a vested interest in the housing market, together with all the property / location tv programs pumped out by the BBC will have you believe that the market will continue unabated, encouraging you to get on the ladder, quick! before it is too late. This is quite clearly impossible - how can anything rise to the point at which no-one can afford to buy it?. Just look at an inflation adjusted graph of house prices since the 1960's. It shows a boom and bust cycle which fluctuates around the long-term average, which is around 3 times average salary.

Right now, we are at the peak of the biggest ever boom cycle - a boom fueled by cheap credit and BTL investors. Guess whats coming next.

Don't get swept along with the current madness - as a first time buyer you will lose out bigtime. Don't believe the hype spouted by the estate agents and mortgage lenders. Do your own research into the history of the market. Don't join this generation of people who seem to have had their brain removed and will take on a massive amount of debt just because everyone else it doing it.

 

[Uncle Spielberg]

9. home owners in their 40's and 50's are taking equity from their homes and buying 2nd, 3rd properties etc and building up buy to let porfolios as an alternative to pensions for their retirements.

 

[Barrel of Fun]

What makes everyone think they have a divine right to own a property?

No divine right.

Affordable housing is designed to arrest the ever increasing gap between the rich and the poor.

 

[Dick Knights Mumm]

What makes everyone think they have a divine right to own a property?

It is not a divine right to own - but we all need somewhere to live. And one of the options is being removed for a lot of people.

 

[Deleted User X18H]

Absoulutley right.. it will all come tumbling down soon Cockneys are now realizing Brighton is not such a good screw

 

[Uncle Spielberg]

I think we are barking up the wrong tree on this one blaming Thatcher, Blame her for ending the coal mines, blame her for booting the unions into touch if you want but to blame her for unaffordable housing 15 years after she left office is

Don;t forget many people were in negative equity in this part of the country for about 8 years after Thatcher left, a huge crash occured in 1990 and it was 1998 before houses got back to the same value and indeed some dropped 50% in value between 1990-1996.

House prices have nearly trebled since Labour came into power in 1997.

 

[Leekbrookgull]

We moved into this property in 2002,for £84k,3 bed,garage,large garden,cul-de-sac,off a private road,right on the edge of town.Had it valued in July05,£175,000. Hardly sent a penny on it.Thats the upside,on the downside,just how do your kids get to buy?

 

[Uncle Spielberg]

Take some equity out of your huge profit by remortgaging or getting a further advance and give it to your kids as a deposit for their property. Simple really.

 

[Skint Gull]

In real terms, I very much doubt your parents place has risen in real value by 800%...seems a bit crude the way you have stated this.

He's not saying in real terms. For example if it were worth £20,000 about 20 years ago it is probably worth £160,000 now. That not 'real terms' but you can understand the point - That house will not be worth £1,280,000 (800% increase) in another 20 years!

 

[Goring Gull]

There does seem to be that danger, but various schemes are being introduced, such as part onwnership. You can buy half the house and rent the other part of the house.

Most, if not all, of the affordable housing will be "governed" by local authorities and they will target the select group of customers.

You have to be on a low income to purchase these houses and hence there will never be a real chance to use it as an investment.

It's the Low income threshold that concerns me it'll probably be les stahn 13k which is pretty low but there will still be a big chunk of people above that but lower tan able to afford a property. The problem is a nightmare to be honest.

 

[Uncle Spielberg]

Ther are some new mortgage schemes that based the lending on affordability. You do need a 15% deposit but they can lend more than traditional mortgages, a lot more. If you are single with no kids and not many monthly bills they are much more generous.

" You should not take out a mortgage that is out of your financial budget "

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