House prices - FTB - gaaaaah!

[TriggerFish]

I guess this is part a rant, and part a thread for suggestion from others.

 

TL:DR - house prices are ridiculous, but I'm sure most people know this already.

 

Anyway, my situation/grievance. I can't afford to buy a house. I've just turned 25 (within the last week), I have no debt apart from my student loan, I own everything out right, I pay off my credit cards in full each month (mostly used for their cashback/protection). I bought my car while I was uni in 2012, and it costs nothing to run (242k miles, driven consistently hard, and still soldiers on - couldn't ask for more!). 

 

My monthly outgoings consist of £35 for phone, Neflix and Spotify, around £200ish (max.) on fuel, about £40 a month on food at work, £50 on a garage/storage for the E30/wheels/parts and £200 in rent to my parents. Insurance for both cars is under £600p/a, so ~£50pm. I don't spend lavishly, as you can see. I have a decent salary (I think, personally, for my age) - £34.5k, rising to £36.6k next year - meaning I can get a mortgage of about £150k. I have about £15k in savings, going up by £1.4k a month, depending on socialising etc. 

 

I work in Oxford, which is well out of reach financially - prices there are just mad (and it's overrated as a city anyway - even the 'castle' is just a mound of dirt...), but live in Aylesbury. I'd like to stay close to home for friends and family, which puts me on the east side of Oxford. Places nearby in my price range are MK (horrid commute), Wycombe (it's Wycombe...), Bicester, and Aylesbury itself. With my budget of ~£160k, I could just about get a not very nice 1 bed flat. A nice 2 bed flat is about £200k - but they were around £180k when I started looking in December (that's £20k asking price increase in 2-3 months for like-for-like flats on the same development!). I'd much rather have two beds as a) I can rent out a room to a friend the benefit/extra income from rent vs. monthly cost on a mortgage isn't that great c) if I'm priced out of the market in the future, at least I have a second room for a child, or whatever and not be stuck in a one bedroom that's not fit for purpose.

 

The rate of house price increase (based on observation and Zoopla statistics) outranks the rate at which I can save. I can't afford one now, it looks unlikely I'll be able to afford one in the future (unless we leave the EU, and house prices plummet - but that's speculation on an outcome I don't want, and don't want to cover here). I could afford a nice place on shared-ownership, but some of the pitfalls there really put me off. (Like the fact most houses here sell within a week, yet this SO one has been around since November...). And you're at the whims of a third party, which I really dislike.

 

I know that none of this will come as a surprise to most of you ("young person can't afford a house" is hardly headline of the year), and I'm not after sympathy (although it's welcome! ), but I'd be interested in what others in a similar situation have done. How have we got to a situation where someone on an 'above average' salary isn't about to afford one of Davey C's 'affordable houses' with a ~33% shortfall? What were they smoking when they came up with these definitions? (Presumably it's before they chose to ban all highs, regardless of if they've been discovered or not...)

 

Anyway - rant over!

Joe

[Llanigraham]

Welcome to the real world, I'm afraid.

 

Got 3 children in exactly the same boat and even the Bank of M & D can't help.

 

Surprising thing is that if you were in much of Europe you wouldn't even be thinking of buying as it seems to be a very "British" thing to do. Over there rental is the norm.

['daiking']

You're right, TL:DR. But the world is your lobster.

Don't buy a house at 25, they're a ****ing liability. You want to be enjoying yourself.

Edited 22 February, 2016 by 'daiking'

[Dr Zoidberg]

Welcome to the real world, I'm afraid.

 

Got 3 children in exactly the same boat and even the Bank of M & D can't help.

 

Surprising thing is that if you were in much of Europe you wouldn't even be thinking of buying as it seems to be a very "British" thing to do. Over there rental is the norm.

But in Europe there's a greater difference between rent and mortgage payments.

Here, assuming you have a deposit, it's sometimes cheaper to buy.

[domhnall]

But in Europe there's a greater difference between rent and mortgage payments.

Here, assuming you have a deposit, it's sometimes cheaper to buy.

 

that's because there are rent controls - something to be introduced North of the border, but rejected South of it. Maybe time to widen the search. Could you relocate? https://www.taylorwimpey.co.uk/find-your-home/scotland/west-lothian/armadale/ferrier-way/the-andrew-terrace

Edited 22 February, 2016 by domhnall

[Sippo]

Get a decent mortgage broker. Mortgages are now valued on what you can afford.

[Llanigraham]

But in Europe there's a greater difference between rent and mortgage payments.

Here, assuming you have a deposit, it's sometimes cheaper to buy.

 

In some element, agreed, but there is also a huge cultural difference in that they don't see "property owning" as so important.

[TrevorB33]

That's why I moved to York from east London, could have barely got a 1 bed flat there

[VRS Mike]

What about moving west of Oxford i.e. Swindon, Faringdon, Highworth, £160k gets you a lot more! I live near Oxford so understand your hardship, luckily I bought my first house when I was 21 which was a few years ago.

 

Good luck

[Aspman]

Move to Scotland.

 

Outside the main cities of Edinburgh and Glasgow property is relatively cheap, however wages are lower.

 

Aberdeen used to have crazy prices but since the oil tanked it's all going a bit Pete Tong up there.

[MickA]

What about moving west of Oxford i.e. Swindon, Faringdon, Highworth, £160k gets you a lot more! I live near Oxford so understand your hardship, luckily I bought my first house when I was 21 which was a few years ago.

 

Good luck

 

My daughter lives in Swindon and rents, I live in South Derbyshire. There is a massive difference in rental prices between the two. She could rent a 3 bed detached near me, for the price she rents her 3 bed town type dewelling, and that's not in very good condition either.

 

Mines all done dusted and paid for 12 years ago, I would never move, too expensive, but then I feel no need to move. I feel for the younger generation trying to get on to the housing market.

[XLBaconDoubleCheese]

I feel your pain. 

 

Me and the Mrs have just started looking around MK, even our £180k or so doesnt get us far tbh, if we didnt have the in-laws to help we'd have no chance. I think we'll end up at auction tbh. 

 

My old man has just been told he need to get out his rented house on Watermead, his moved in years ago, the people that own it had to upsize so they kept the old one and rented it out. Now they have been declared bankrupt, he needs to buy it or leave. They want well over the odds, £250k for a tiny 2 bed so he's been looking elsewhere, he's struggling to find much at all. 

[domhnall]

Move to Scotland.

Outside the main cities of Edinburgh and Glasgow property is relatively cheap, however wages are lower.

Aberdeen used to have crazy prices but since the oil tanked it's all going a bit Pete Tong up there.

You say that but I just found out that a cala development in Livingston is charging £600k in Livingston for 4 bed house. Bonkers money

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[Paul007]

Mid terraced house in Burnley, Lancs. 12k. Move. 

 

http://www.rightmove.co.uk/property-for-sale/property-53064682.html

[cnc]

UK house prices in most areas seem well out of proportion to the average wage. When interest rates rise, which they will at some point, many people will find their houses repossessed, it will be a very sad situation if/when that happens. The younger generation obviously don't know what it was like in the early 1980's when mortgage rates went up to 18.5%. Hopefully that will not happen again, but it could, no one knows.

When I purchased my first house you generally went on borrowing 3 1/2 times your wage, that got you a 2 bed house, 3 bed semi if you were lucky. The house I have now would require me to borrow 8.5 times my salary, and I don't earn bad money, well above the average. A ridiculous situation.

When you look at what 150k or less can get you in most of mainland Europe it makes you wonder just what has gone wrong with the UK housing market, but ultimately it's all down to supply and demand. 

Way too many people are in the same situation as Triggerfish, I hope things get sorted out in the UK housing market without too many people getting hurt.

Triggerfish, good luck with your house hunting.

[lol-lol]

The housing market is completely screwed up due to a combination of lots of foreign money going in to some areas of the UK and a decade of ridiculous low interest rates perpetuated by the central bank.

 

With about a third of mortgages linked to the Base rate, so there are lots of mortgages in the 2-3% interest lending rate, there are millions paying less in mortgage payments than the equivalent rent for the same property but Lenders are worried about the housing market crashing like it did under the last Conservative government in the early nineties.

 

Until the Bank of England Base Rate gets back up to 2% and mortgages therefore between 4 and 5 % ie back to a norm, house prices will remain silly in most of the UK.  Why would somebody change their situation when they are paying £500 pm in mortgage, and the asset at least keeping pace with inflation, rather than rent for £1000 pm?

 

Until mortgages are moved upwards so that they are higher than rents the market will be in this sick state where the haves (those with properties, often more than 1) do very well financial out of the status quo and those not in the property elitist group are frozen out.  It is not in the nature of the Con party to disrupt this situation but like the financial issues of the later 80s and early nineties ie the exit from the Exchange Rate Mechanism (ERM) the BREXIT, or even the prospect of it, looks like it will cause enough financial disruption to causing a similar "adjustment" as they like to call it.  BOE/Cons will have to raise interest rates to defend the pound and the market will fall as it did in nineties under the Cons, cyclical and inevitable. 

Edited 24 February, 2016 by lol-lol

[KenONeill]

You say that but I just found out that a cala development in Livingston is charging £600k in Livingston for 4 bed house. Bonkers money

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YGBSM!!

[Glynn]

Bought my first house in swindon this time last year (@25yo) for £133k, two bed mid terraced double drive nice area.

Next door has an identical house to us condition and spec wise. Just had estate agents over to LET the house. Valued the property at £180k and rental at £750pcm. They bought their property 2 weeks after us at £135k. Not a bad profit over a year!

Swindon is rapidly getting expensive due to all the new builds springing up with stupid price tags!

Edited 24 February, 2016 by Glynn

[domhnall]

YGBSM!!

 

my mistake, it's a five bedroom but still their prices are way over what you would pay for any other home in the area (including some built by Cala)

 

https://www.cala.co.uk/homes-for-sale/east-of-scotland/murieston-gait/availability-and-prices

[DanGum]

I feel for you , I'm 25 now and bought my first house at 23 . Earn the same wage as yourself but where I live you can buy a 2 bed semi for around 150k in a decent area, whereas your neck of the woods its a 1 bed flat. Anywhere that side of this country is a joke to buy feel sorry for genuine people trying to buy.

If you have a trade then maybe look further afield ?

[PastyBoy]

We faced a similar scenario a few years back and had it not been for the fact me and the girlfriend (now wife) wer eliving togethe and both contributing I think i'd rent for the rest of my days.

Wouldn't have been a problem apart from half a dozen of my colleagues all got turfed out of the properties and forced to hurriedly move into whatever was available when the landlords decided to sell up.

 

We looked at buying in Cheltenham (where we were renting) but we could only afford a step backwards (1 bed rather than 2 no garden etc) so looked to new builds in a development in Gloucester (but still close to Cheltenham).

Me and the wife bought a new build on a Frist Time Buyer part equity government scheme and have a 3 and a half bed terrace we can expand a family into with having to worry.

 

Missing out the first couple of steps on the property ladder has treated us well and we have haven't got a bad word to say about the government scheme.

 

£200k puchase price

We put up the deposit, and the house builder matched it as did the government.

That money was "lent" to us free for 5 years

The plan being to save up as hard as possible for those 5 years, then pay off as much as possible in cash and add the rest to the mortgage.

Hasn't quite worked out like that so we've taken an extra coupel of years on the "loan" paying a nominal fee for the privilege (almost exactly an extra monthly mortgage payment)

That payment is also a lot less than the extra interest we'd pay on the bigger mortgage.

 

Yes we only fully own a certain percentage of the property (78% if memory serves me correctly) but equally we also only have a percentage of the mortgage.

Meaning we can get a better rate as the mortgage is against a lower percentage of the total house price than if we'd bought the whole thing.

We're also free to sell up when we want but obviously we only get a percentage of the money back.

 

I honestly don't know how long it would have taken us to get to where we are now without the help from the scheme

Edited 24 February, 2016 by PastyBoy

[rum4mo]

I'd think that "that is it" - best plan, if you are inclined, is to get a "life partner" as it really does take two to buy a house, just the same as I bought one back in 1976 - very little real change!

 

Edit:- I used to enjoy Oxford when my daughter was down there doing her DPhil, hotel prices nasty as you might expect, as will be buying there. She and her DPhil boyfriend are working in London, now that does get expensive - even to rent.

 

I know that it is easy to say, but a lot of my friends have kids that will not move to get a job, and end up with hating their work, both my daughters thought nothing about that and moved to where the work is for what they can/want to do - reality is cruel when it kicks in!

Edited 24 February, 2016 by rum4mo

[Ally_bassman]

Just about to buy our first property with my girlfriend (wer're both 26), it's amazing the difference in property prices between where we are and what you're looking at in OXF.

 

£150k will get you a semi-detached 2/3 bedroom house with a drive, decent garden in a good quiet area round where we are (Outskirts of Stockport)

 

Can you not look to buy with a partner / good friend? It's amazing what having even a small second income can do for the affordability checkcs and what lenders would be happy to lend.

Edited 24 February, 2016 by Ally_bassman

[PastyBoy]

Ally_bassman, on 24 Feb 2016 - 15:51, said:

Can you not look to buy with a partner / good friend? It's amazing what having even a small second income can do for the affordability checkcs and what lenders would be happy to lend.

 

yeah or this

 

a guy at work bought with his mate when they were both batchelors, one has now grown up and got a girlfriend moved out to live with her.

my colleague has thus bought him out and got a lodger (another mat) in to cover the part of the mortgage his mate was paying.

 

nothing helps with affordability like having someone else pay half the bills!!

[MickA]

As rum4mo did we got a mortgage to buy ours back in 1976. We struggled to get the mortgage, taking both mine and the wife's wage in to account. The purchase price of our house back then was £7,995 which was a new build. We had a garage and a kitchen extension built in 1990, that cost roughly the same as the purchase price. 40 years on and still here, guess it's worth around £150-£160k but we aren't going anywhere.