Young people can't afford to buy homes

IndigoLake · Post by **IndigoLake** » Mon Oct 08, 2018 8:07 am

I think I remember a debate on here a few months back about the cost of housing and whether young people today are just lazy or are genuinely really struggling to get on the property ladder.

Article on the BBC today: https://www.bbc.com/news/business-45776289" onclick="window.open(this.href);return false;

Around 40% of young adults cannot afford to buy one of the cheapest homes in their area even with a 10% deposit, according to a new research.

The Institute of Fiscal Studies said house prices in England have risen by 173% over two decades.

But average pay for 25-34 year-olds has grown by just 19% over the same period.

So it was easier for the previous generation then.

Sproggy · Post by **Sproggy** » Mon Oct 08, 2018 8:15 am

No worries - remainers have promised that house prices are going to fall 20% when we leave the EU.

https://www.theguardian.com/politics/20 ... ces-brexit" onclick="window.open(this.href);return false;

beddie · Post by **beddie** » Mon Oct 08, 2018 8:22 am

I think young people are genuinely struggling to get on the property ladder. Very difficult on a small wage to put together the deposit. Parents a relied upon more than ever to help where they can. Do we really need the volume of homes that are being built, who can afford them? Are these purchasers coming out of rented,if so won't we have a glut of empty rentals? I really feel sorry for the young of today in this situation.

AndrewJB · Post by **AndrewJB** » Mon Oct 08, 2018 8:22 am

Build more houses and perhaps introduce housing reform. We have right to buy with council housing, so why not with the private rental market too?

taio · Post by **taio** » Mon Oct 08, 2018 8:29 am

It is tough for young people. I would suggest any young person thinking of buying their first home in the next few years should look at a lifetime ISA. It's a great product because Government adds 25% to what the individual saves for their deposit.

J50 · Post by **J50** » Mon Oct 08, 2018 8:30 am

Students can buy their own home using one of the Buy for Uni mortgages.

Easier to buy a Buy to Let property than one for yourself to live in perhaps? Maybe that's the way to go... use the income from that to rent your own home. Got to think differently.

IndigoLake · Post by **IndigoLake** » Mon Oct 08, 2018 8:34 am

beddie wrote:I think young people are genuinely struggling to get on the property ladder. Very difficult on a small wage to put together the deposit. Parents a relied upon more than ever to help where they can. Do we really need the volume of homes that are being built, who can afford them? Are these purchasers coming out of rented,if so won't we have a glut of empty rentals? I really feel sorry for the young of today in this situation.

I'm in the 'young adult' bracket (though I don't always feel like it!). I'm also a homeowner but not in the UK. There's no way I could have got on the property ladder yet if it hadn't been for splitting the cost of the deposit/various fees with my wife. Even on a relatively modest wage, it's still difficult to save up the money required for a deposit, particularly if renting in an expensive area (which is not always avoidable if that's where family/work is based). So while it's tough for young people to get on the property ladder, I imagine it's nigh impossible for those who are single and unable to split the cost with a partner. I can only see the problem becoming worse in the future, to be honest.

CaptJohn · Post by **CaptJohn** » Mon Oct 08, 2018 8:37 am

AndrewJB wrote:Build more houses and perhaps introduce housing reform. We have right to buy with council housing, so why not with the private rental market too?

Certainly a radical proposal, along the same lines as the land grab enacted under Robert Mugabe in Zimbabwe.

Spijed · Post by **Spijed** » Mon Oct 08, 2018 8:43 am

The part buy, part rent seem to be a good idea.

Corky · Post by **Corky** » Mon Oct 08, 2018 8:49 am

CaptJohn wrote:Certainly a radical proposal, along the same lines as the land grab enacted under Robert Mugabe in Zimbabwe.

I think the above is an argument for another day.

I also think that we need reforms. Surely it is wrong for a foreign investor to buy a new property in London off plan then leave it empty just so they can see their investment rise in value.

And all this whilst we have a housing crisis. We should be building more affordable homes.

bfccrazy · Post by **bfccrazy** » Mon Oct 08, 2018 8:52 am

Corky wrote:I think the above is an argument for another day.

I also think that we need reforms. Surely it is wrong for a foreign investor to buy a new property in London off plan then leave it empty just so they can see their investment rise in value.

And all this whilst we have a housing crisis. We should be building more affordable homes.

This is also the same reason we won’t have reform - too many politicians have their own portfolios that don’t want them ruined by helping out those at the bottom.

quoonbeatz · Post by **quoonbeatz** » Mon Oct 08, 2018 9:02 am

very funny article from vice last week about homes under the hammer, which also highlights one of the major problems with the housing market - a lot of the stock is bought and spun by a small number of people.

https://www.vice.com/en_uk/article/59a5 ... television" onclick="window.open(this.href);return false;

Quickenthetempo · Post by **Quickenthetempo** » Mon Oct 08, 2018 9:04 am

Affordable new homes is a buzz saying for politicians. It means crap homes built cheaply.

Anything built these days should be better than what we had previously and people work there way up the ladder. A terraced house will become vacant when the buyer of the new build moves out.

Stop asking for crap houses to be built.

Stayingup · Post by **Stayingup** » Mon Oct 08, 2018 10:25 am

It's funny my son and his wife have just bought a house in a very fashionable area. Because they have strived to improve their standard of living.

If it's London forget it but up here there are plenty of affordable homes.

One other thing the young that can't afford a home will have every modern electronic device going as well as a car -each probably if a couple.

fatboy47 · Post by **fatboy47** » Mon Oct 08, 2018 10:27 am

It's because they are a shiftless bunch of wasters.

Imploding Turtle · Post by **Imploding Turtle** » Mon Oct 08, 2018 10:30 am

taio wrote:It is tough for young people. I would suggest any young person thinking of buying their first home in the next few years should look at a lifetime ISA. It's a great product because Government adds 25% to what the individual saves for their deposit.

Isn't that a help-to-buy ISA?

houseboy · Post by **houseboy** » Mon Oct 08, 2018 10:38 am

AndrewJB wrote:Build more houses and perhaps introduce housing reform. We have right to buy with council housing, so why not with the private rental market too?

Unfortunately the right to buy council houses, a child of the Thatcher era, is majorly to blame for the housing shortage at the lower end because decent social housing is now at a premium. Council houses should never have been sold off, it just meant that those who were lucky enough to be in one got to buy it dirt cheap and remove it forever from the social housing sector.

As for the private rental sector things are never going to get better while there are MPs like Jake Berry (Rossendale). His voting, according to Hansard, shows he has consistantly voted against any reforms to give more rights to tennants, including voting against any restrictions on the fees that can be charged to tennants by letting agencies. In other words he has voted every time in favour of the landlord and the letting agency. Jake Berry is a landlord with properties declared in his registry of interests, again in Hansard.

How are things ever going to change while the pigs are allowed to feed themselves?

ElectroClaret · Post by **ElectroClaret** » Mon Oct 08, 2018 10:40 am

Stayingup wrote:
If it's London forget it but up here there are plenty of affordable homes.

This.

Don't know if it's the case with this study, but it seems most of these studies are conducted
in London/Home Counties/the South East of England generally.

But far more affordable up here.

Jakubclaret · Post by **Jakubclaret** » Mon Oct 08, 2018 10:42 am

Stayingup wrote:It's funny my son and his wife have just bought a house in a very fashionable area. Because they have strived to improve their standard of living.

If it's London forget it but up here there are plenty of affordable homes.

One other thing the young that can't afford a home will have every modern electronic device going as well as a car -each probably if a couple.

Agree, it's a case of prioritising things, you have to abandon the expensive iPhone contracts & the flash cars on the never never, if you are serious about a house becoming yours, I think it's also helpful with 2 people contributing together in the same pot.

taio · Post by **taio** » Mon Oct 08, 2018 10:53 am

Imploding Turtle wrote:Isn't that a help-to-buy ISA?

No Help to Buy is different and less favourable in my view.

Any young person or more likely parent of a young adult should look into lifetime ISAs. A great way of saving for a first house, for example a 20 year old could save for say 7 years and have savings of up to £35k (not including interest), including £7k from the government to put down a healthy deposit. If at the time of buying a house they have a partner who has done exactly the same both accounts can be used together for the same house with up to £70k deposit.

Government needs to do much more to ensure housing is more affordable but people need to take person responsibility for their futures too. This would be one way of doing that.

IndigoLake · Post by **IndigoLake** » Mon Oct 08, 2018 11:04 am

Stayingup wrote:It's funny my son and his wife have just bought a house in a very fashionable area. Because they have strived to improve their standard of living.

If it's London forget it but up here there are plenty of affordable homes.

One other thing the young that can't afford a home will have every modern electronic device going as well as a car -each probably if a couple.

It can be done! However, I think you're tarring a lot of people with the same brush there. Yes, some young people have cars but plenty don't (I don't). And the cost of a phone or a games console is hardly comparable to a house is it? I agree that there are always ways to save money but it's certainly an uphill struggle when you see the cost of living rising, the prices of homes increasing and wages barely moving in comparison. It's normal that some people find it difficult to get started.

BigChaCha · Post by **BigChaCha** » Mon Oct 08, 2018 11:04 am

They will just have to stay at home with their parents longer. Most of my Asian friends stay at home until they are at least 30, when they are financially stable enough to purchase a home.

My 2 children should be okay. We have been putting away savings for them since they were a week old and it's solely for the purpose of going towards a house for them!

They should have at least 20k each saved up from us plus their own savings (My son has saved nearly 2k by himself and he's only 12 years old!) and maybe some of our savings if needed.

Lancasterclaret · Post by **Lancasterclaret** » Mon Oct 08, 2018 11:11 am

Another one here who started saving for my kids houses pretty much the day they were born.

I think you have give them as much help as poss to get on the housing ladder, though I fully appreciate that if you are an older bloke who likes cars and i-phone contracts it might not be that easy.

IndigoLake · Post by **IndigoLake** » Mon Oct 08, 2018 11:15 am

BigChaCha wrote:They will just have to stay at home with their parents longer. Most of my Asian friends stay at home until they are at least 30, when they are financially stable enough to purchase a home.

My 2 children should be okay. We have been putting away savings for them since they were a week old and it's solely for the purpose of going towards a house for them!

They should have at least 20k each saved up from us plus their own savings (My son has saved nearly 2k by himself and he's only 12 years old!) and maybe some of our savings if needed.

That's a good point. My wife lived with her parents until the age of 30 - a very common thing here in Spain. It's a shame that this has to be the solution for many though (a shame for the kid and the parents!).

Jakubclaret · Post by **Jakubclaret** » Mon Oct 08, 2018 11:18 am

IndigoLake wrote:It can be done! However, I think you're tarring a lot of people with the same brush there. Yes, some young people have cars but plenty don't (I don't). And the cost of a phone or a games console is hardly comparable to a house is it? I agree that there are always ways to save money but it's certainly an uphill struggle when you see the cost of living rising, the prices of homes increasing and wages barely moving in comparison. It's normal that some people find it difficult to get started.

It's not comparable, but every penny counts no matter what way you look at it & sacrifices have to be made if you are serious about owning your own house. It all adds up.

Rick_Muller · Post by **Rick_Muller** » Mon Oct 08, 2018 11:23 am

One of the problems faced are the current mortgage deals available. For example, if you have enough of a "deposit" to get a 75% LTV mortgage (where I live that's about $75k for a 3 bed semi valued at £300k) you can get rates as low as 1.64% on the high street. As soon as you enter the >75% LTV market the difference is that the rates go up to 3.24% - in real terms, on houses I have been looking at, that is a difference of about £500/month on the mortgage.

The government have "assisted" buyers of new properties by offering Help to buy schemes whereby the buyer will need 5% and they government loan the additional 20% to make the lower LTV rate mortgages available, but the reality is that the builders have artificially inflated the prices for profit to take their cut of the government scheme and leave the buyers having to find tens of thousands of pounds in 5 years to pay off the loan or find an additional £150/month or so to pay the interest on the loan.

It all smacks of a rip off deal whereby the government is funding loans for profit to building firms as opposed to actually trying to help the population be able to afford their own house.

If I were a cynic (and I am to an extent) I would be looking into how many politicians own shares in building firms... I would personally like to see the help to buy scheme assist first time buyers on used properties too (though there would have to be certain additional checks in place for this in relation to the suitability of the property - i.e. a certain EPC score for example).

The reference to Shared Ownership above (buy and rent) whilst it has a place to assist some people, this really isn't the answer as again the buyers wont fall into the cheaper LTV rate mortgages and get trapped in a property they will struggle to move on from.

Indecisive · Post by **Indecisive** » Mon Oct 08, 2018 11:41 am

quoonbeatz wrote:very funny article from vice last week about homes under the hammer, which also highlights one of the major problems with the housing market - a lot of the stock is bought and spun by a small number of people.

https://www.vice.com/en_uk/article/59a5 ... television" onclick="window.open(this.href);return false;

Hahaha. Brilliant.

Who’s going to put there hands up to being a private landlord after that? And which type are they?

dsr · Post by **dsr** » Mon Oct 08, 2018 11:54 am

I've never quite understood how a landlord selling to his tenant will increase the housing supply.

AndrewJB · Post by **AndrewJB** » Mon Oct 08, 2018 11:55 am

CaptJohn wrote:Certainly a radical proposal, along the same lines as the land grab enacted under Robert Mugabe in Zimbabwe.

People being allowed to buy the house they've lived in for a long time is a 'land grab'?

Lancasterclaret · Post by **Lancasterclaret** » Mon Oct 08, 2018 11:56 am

it does sound like the idea is that the landlord sells at below market value as well.

Subsidised purchases with Govt money (some sort of long term, very low interest loan perhaps?) might be the way forward

But what if Landlords don't want to sell?

basil6345789 · Post by **basil6345789** » Mon Oct 08, 2018 12:01 pm

It's tough on young people, once they've bought their latest iphone/contract, paid £15 for a bottle of water on their Ibiza holiday, financed nights out in Manny, bought a twin exhaust VW Golf and paid for their concerts every month all on credit, there's no way of saving up a deposit, let alone paying off the student loan and debt run up on the Aussie Gap Year.

ŽižkovClaret · Post by **ŽižkovClaret** » Mon Oct 08, 2018 12:14 pm

Tell you what i'll never tire of, those articles in the broadsheets, where Tamara outlines how she was able to "own her own home by 30", including how she inherited 30k from some relative or other.

Aye, cheers Tamara chuck

Lancasterclaret · Post by **Lancasterclaret** » Mon Oct 08, 2018 12:22 pm

"I cut down on going out, cancelled my sky subscription and gym membership and then Granny died and I suddenly had enough to buy a small castle in the kent countryside. if I can do it, you can too"

SammyBoy · Post by **SammyBoy** » Mon Oct 08, 2018 12:30 pm

basil6345789 wrote:It's tough on young people, once they've bought their latest iphone/contract, paid £15 for a bottle of water on their Ibiza holiday, financed nights out in Manny, bought a twin exhaust VW Golf and paid for their concerts every month all on credit, there's no way of saving up a deposit, let alone paying off the student loan and debt run up on the Aussie Gap Year.

Is the housing situation in this country broken? No, it's the children who are wrong!

Stayingup · Post by **Stayingup** » Mon Oct 08, 2018 12:31 pm

IndigoLake wrote:It can be done! However, I think you're tarring a lot of people with the same brush there. Yes, some young people have cars but plenty don't (I don't). And the cost of a phone or a games console is hardly comparable to a house is it? I agree that there are always ways to save money but it's certainly an uphill struggle when you see the cost of living rising, the prices of homes increasing and wages barely moving in comparison. It's normal that some people find it difficult to get started.

Oh I do see your point. But when we bought out first house we stopped holidays etc and really cut back on what you might call luxuries in those days, which were not comparabe to what is available today. My point being do these young people forgo as much as we did to buy our fisrt house. I dont think they do.

Caballo · Post by **Caballo** » Mon Oct 08, 2018 12:31 pm

Rick_Muller wrote:One of the problems faced are the current mortgage deals available. For example, if you have enough of a "deposit" to get a 75% LTV mortgage (where I live that's about $75k for a 3 bed semi valued at £300k) you can get rates as low as 1.64% on the high street. As soon as you enter the >75% LTV market the difference is that the rates go up to 3.24% - in real terms, on houses I have been looking at, that is a difference of about £500/month on the mortgage.
.

The difference between the 2 interest rates you've listed should be about £185, assuming the term is the same on the both of course.

AndrewJB · Post by **AndrewJB** » Mon Oct 08, 2018 12:41 pm

Lancasterclaret wrote:it does sound like the idea is that the landlord sells at below market value as well.

Subsidised purchases with Govt money (some sort of long term, very low interest loan perhaps?) might be the way forward

But what if Landlords don't want to sell?

I think it would be possible to build in protections for the elderly lady who rents out her upper floors to bolster her pension, or the family who rent out their house while they work overseas, or even the people who buy another house for rental income. My general thrust is that Thatcher's dream (which as a home owner myself I see as laudable) of a majority of the population owning their own home is a desirable outcome, then one company or person owning tens, or hundreds, or thousands of homes should not have their property rights stand in the way of this. If right to buy is fine for council houses, but now a lot of ex council houses are now rented out privately; then extending the right to buy to these (and other) properties will go some way to bringing Thatcher's dream back on track.

https://www.bbc.co.uk/news/uk-england-london-25710150" onclick="window.open(this.href);return false;

AndrewJB · Post by **AndrewJB** » Mon Oct 08, 2018 12:44 pm

Stayingup wrote:Oh I do see your point. But when we bought out first house we stopped holidays etc and really cut back on what you might call luxuries in those days, which were not comparabe to what is available today. My point being do these young people forgo as much as we did to buy our fisrt house. I dont think they do.

How much did your first house cost as a multiple of your income at the time?

Lancasterclaret · Post by **Lancasterclaret** » Mon Oct 08, 2018 12:54 pm

Income £19000

First house £35000

That was in 1998 I think.

Its a massive outlay for people now, no doubt about it.

Damo · Post by **Damo** » Mon Oct 08, 2018 1:03 pm

"The Institute of Fiscal Studies said house prices in England have risen by 173% over two decades.

But average pay for 25-34 year-olds has grown by just 19% over the same period."

Aye, it's all down to laziness of the young

Rick_Muller · Post by **Rick_Muller** » Mon Oct 08, 2018 2:24 pm

Caballo wrote:The difference between the 2 interest rates you've listed should be about £185, assuming the term is the same on the both of course.

just checked my spreadsheet and the difference for a £300k property is £473/month - what you may not include in your calculation is the additional 20% of help to buy equity loan that the buyer also has to pay back. How did you get to £185?

beddie · Post by **beddie** » Mon Oct 08, 2018 2:41 pm

In our small village over the last few years a number of properties (several are bungalows) have been placed with agents for Buy to Let, on checking, all of them are as a result of bereavement, the dependants favouring an income rather than a sale. Perhaps that adds to the national shorage of houses for sale.

Caballo · Post by **Caballo** » Mon Oct 08, 2018 3:11 pm

Rick_Muller wrote:just checked my spreadsheet and the difference for a £300k property is £473/month - what you may not include in your calculation is the additional 20% of help to buy equity loan that the buyer also has to pay back. How did you get to £185?

Rick
Just looked at a 225k mortgage at the rates you mentioned. I assumed the deposit was 'real' as opposed to additional assistance.

Jakubclaret · Post by **Jakubclaret** » Mon Oct 08, 2018 3:14 pm

Damo wrote:"The Institute of Fiscal Studies said house prices in England have risen by 173% over two decades.

But average pay for 25-34 year-olds has grown by just 19% over the same period."

Aye, it's all down to laziness of the young

I don't think the young are lazy not all anyhow, I think it's more down to not saving well & spending the money on daft things. Doesn't apply to all.

SammyBoy · Post by **SammyBoy** » Mon Oct 08, 2018 3:17 pm

Jakubclaret wrote:I don't think the young are lazy not all anyhow, I think it's more down to not saving well & spending the money on daft things. Doesn't apply to all.

And also presumably house price growth outstripping wage growth during the last 20 years by a ratio of around 9-1?

Jakubclaret · Post by **Jakubclaret** » Mon Oct 08, 2018 3:21 pm

SammyBoy wrote:And also presumably house price growth outstripping wage growth during the last 20 years by a ratio of around 9-1?

Of course that's a factor but can be minimised, even more reason not to be spendthrifty.

conyoviejo · Post by **conyoviejo** » Mon Oct 08, 2018 3:40 pm

Tents are the way forward. They are so cheap nowadays and you can put them up wherever you want..

Rick_Muller · Post by **Rick_Muller** » Mon Oct 08, 2018 3:52 pm

Caballo wrote:Rick
Just looked at a 225k mortgage at the rates you mentioned. I assumed the deposit was 'real' as opposed to additional assistance.

that makes sense as to the disparity.

Like I said above, Help to Buy is a nice idea but I do fear it is being used as a reason to artificially inflate new house prices further for profit. In the past month or two the new house sales have stalled - we have had builders offering to pay our deposit to sign up for one and be in before Christmas. For other reasons that isn't possible for us at the moment, but it sure as hell was tempting to try and make it work!

Rick_Muller · Post by **Rick_Muller** » Mon Oct 08, 2018 3:57 pm

For those criticising the young, I can understand their apathy about buying their own house and instead spending on what some would call frivolous spending on material goods. When I first bought a house my wage was £20k and my house cost £45k (in 1996). Now I am trying to buy again as a 46 year old (with no equity I'll add - ex-wife scenario), my wage has doubled, but the houses are nearly 10 times the cost - I am finding it overwhelming so I dread to think what a youngster with a whole life of mortgage debt to look forward to thinks. I do believe some mortgage providers are considering 50 year mortgages for young people...! Our "slave boxes" as some people call them are getting expensive...

Quickenthetempo · Post by **Quickenthetempo** » Mon Oct 08, 2018 4:12 pm

Is it worth buying a house though?

Rent would be slightly higher than Mortgage payments with Building insurance but you don't have to pay for maintenance or Building repairs.

On a 100k house you would pay 200k with interest payments over the 25 year period (average).
25 years upkeep on a house would probably need one roof replacement and two times windows and doors. 3 times every room in the house being done up with 4 bathroom and kitchen replacements.
Let's say another 100k grand for arguments sake. 300k for a 150k property at the end of the mortgage?

Is it worth it? Is it better to rent better properties and have more money in your pocket?