Average house price now 8.7 times average income
Discussion
Olivera said:
Great advice from both Benno and Nomme de Plum, nothing is more relevant to struggling FTBers than advice from wealthy PHers that own holiday homes and/or BTLs. 
My comments were based on my own lad, who went on an entirely different trajectory from both parents and can easily afford to buy - although he's under no pressure and in no hurry to do so.The only support we've really given him is free board and lodgings up till 19 which he's have had if doing A levels and since then he's chipped in to the household budget monthly.
bennno said:
100%. I went to University to train as one of the professions on that list.
At the same time you can become an engineer, a mechanic, technician, plumber, joiner etc etc via an apprenticeship.
I'm not knocking neither approach, simply i've pointed out when theres an overarching rhetoric that 25 year olds cant afford a mortgage that it all depends.
For sure if you are a recent graduate with large student debts, needing to live in a rental property in London, on a grad training scheme then it'd be near impossible at that point.
Within my company we employed some grads but also many school leavers with good UCAS points and then they did distance learning degrees and eventually the professional qualification exams. They earned during the whole time, were actually contributing to the business within a year, fees paid by us and came away with no debt. A few of them became the partner/directors that replaced us oldies. At the same time you can become an engineer, a mechanic, technician, plumber, joiner etc etc via an apprenticeship.
I'm not knocking neither approach, simply i've pointed out when theres an overarching rhetoric that 25 year olds cant afford a mortgage that it all depends.
For sure if you are a recent graduate with large student debts, needing to live in a rental property in London, on a grad training scheme then it'd be near impossible at that point.
Mr Penguin said:
You're right - I assumed that most parents will not charge their 16 or 17 year olds market rent for a two bed flat plus charge them for the equivalent heating and food. They could always get a flat share if this is a big problem and they will have less chance to save.
However, they make £26k over two years until they are 18 so only need to save 20% of that to get a mortgage at 18, when their former classmates are still doing A levels and have another 3-4 years to go before they even start saving. Other options are available with saving faster or for a bit longer but in any case, they are far ahead of the people who didn't earn anything for all that time.
But students are earning. Most (70%) have jobs in college and university.However, they make £26k over two years until they are 18 so only need to save 20% of that to get a mortgage at 18, when their former classmates are still doing A levels and have another 3-4 years to go before they even start saving. Other options are available with saving faster or for a bit longer but in any case, they are far ahead of the people who didn't earn anything for all that time.
You're making flawed assumptions at every step to suit your argument.
Nomme de Plum said:
There used to be plenty of opportunities if a person is willing to get the hands dirty and move regularly.
EFA.Stamp duty and greedy estate agents make the cost to move house almost prohibitive - £20k between them typically now on a £500k house, >£36k on a £750k house (not unusual in the SE)!
That plus the cost and grief of conveyancing and physically moving makes it unpalatable (and moreso for anyone with a family).
Olivera said:
Great advice from both Benno and Nomme de Plum, nothing is more relevant to struggling FTBers than advice from wealthy PHers that own holiday homes and/or BTLs.
Sometimes life doesn't go to plan. I was technically bankrupt in 1996 decided to work overseas for a few years to payback the debt and start again. Not great when one has a family who remained in the UK. So I was mid 40s when i started back on the property ladder. That's life. There will be people like my 30 something tradesperson mate or my slightly older Daughter who just graft to get where they want to be and those that will find a reason not to do something.
havoc said:
Nomme de Plum said:
There used to be plenty of opportunities if a person is willing to get the hands dirty and move regularly.
EFA.Stamp duty and greedy estate agents make the cost to move house almost prohibitive - £20k between them typically now on a £500k house, >£36k on a £750k house (not unusual in the SE)!
That plus the cost and grief of conveyancing and physically moving makes it unpalatable (and moreso for anyone with a family).
The bigger the house the more potential profit. Buy at £600K, works £150K sell for over £1M stamp duty and fees are new irrelevance. Last place I did was £550K spent £350K on it sold for £1.35M about 3 years later.
Nomme de Plum said:
That is an excuse not a reason. There has always been estate agents fees and stamp duty for many decades.
The bigger the house the more potential profit. Buy at £600K, works £150K sell for over £1M stamp duty and fees are new irrelevance. Last place I did was £550K spent £350K on it sold for £1.35M about 3 years later.
Agreed, we've moved principle residence 3 times in 6.5 years and netted about £635k after refurb costs. All properties were do-oo-er uppers sub £500k purchase price.The bigger the house the more potential profit. Buy at £600K, works £150K sell for over £1M stamp duty and fees are new irrelevance. Last place I did was £550K spent £350K on it sold for £1.35M about 3 years later.
bennno said:
Nomme de Plum said:
That is an excuse not a reason. There has always been estate agents fees and stamp duty for many decades.
The bigger the house the more potential profit. Buy at £600K, works £150K sell for over £1M stamp duty and fees are new irrelevance. Last place I did was £550K spent £350K on it sold for £1.35M about 3 years later.
Agreed, we've moved principle residence 3 times in 6.5 years and netted about £635k after refurb costs. All properties were do-oo-er uppers sub £500k purchase price.The bigger the house the more potential profit. Buy at £600K, works £150K sell for over £1M stamp duty and fees are new irrelevance. Last place I did was £550K spent £350K on it sold for £1.35M about 3 years later.
Evanivitch said:
But students are earning. Most (70%) have jobs in college and university.
You're making flawed assumptions at every step to suit your argument.
The BBC say they work 13.5 hours a week on average, probably minimum wage, so over 52 weeks that would be £6k a year.You're making flawed assumptions at every step to suit your argument.
https://www.bbc.co.uk/news/education-65964375
I think the apprentice would still bring in more money if living at home - even assuming they never get off the minimum wage
Apprentice: £13k a year for three years plus £18k for two years means a total of £75k by the age of 21
Student living at home: £14.6k a year for three years for loan plus part time work means a total of £44k at the age of 21
Student living away from home: £16k a year for three years means a total of £48k
Student living away from home but in London: £19.4k a year for three years means a total of £58k
If you earn more, you can save more. Other options like doing a part time degree while working full time are available which are a good compromise between the two extremes.
Earthdweller said:
The problem is house prices can’t just be taken in isolation.. everything is more expensive now and lots of it is unavoidable
Mobile phones are an essential nowadays and handsets can easily be £1k plus monthly subscriptions
TV’s used to have 3 channels and cost £4 a month from radio rentals, now it’s £2k TV’s and £100 per month sky
Cars were ford’s and Vauxhalls and bought dirt cheap out of the back of the local paper or auto trader, BMWs and Mercs were a rare sight
Council tax is insane amounts
Parking used to be free or cost next to nothing
Etc etc etc
It’s very hard to live frugally now as everything costs and it’s seems businesses/government/councils are trying harder and harder to come up with ways of fleecing more and more money out of people
I don’t want the above to seem like a rant but just pointing out that it isn’t just house prices that have gone mad
I’m in my 50’s now but looking back to my 20’s life just seemed so much simpler and easier
I was living in east London, I could just jump in my car and drive anywhere I wanted, I could drive it up to Muswell Hill, even went to Selsey Bill, I drove along the A45, even had her up to fifty-eight, park most places for free after 6.30pm as an example, now it’s so I have the right permit, I have paid the congestion charge, ULEZ charge, have I avoided the thousands of cameras trying to fine me etc etc
Anyway as you were
Sorry, lot of rubbish there. The past was nowhere near as cheap/rosy as you paint it.Mobile phones are an essential nowadays and handsets can easily be £1k plus monthly subscriptions
TV’s used to have 3 channels and cost £4 a month from radio rentals, now it’s £2k TV’s and £100 per month sky
Cars were ford’s and Vauxhalls and bought dirt cheap out of the back of the local paper or auto trader, BMWs and Mercs were a rare sight
Council tax is insane amounts
Parking used to be free or cost next to nothing
Etc etc etc
It’s very hard to live frugally now as everything costs and it’s seems businesses/government/councils are trying harder and harder to come up with ways of fleecing more and more money out of people
I don’t want the above to seem like a rant but just pointing out that it isn’t just house prices that have gone mad
I’m in my 50’s now but looking back to my 20’s life just seemed so much simpler and easier
I was living in east London, I could just jump in my car and drive anywhere I wanted, I could drive it up to Muswell Hill, even went to Selsey Bill, I drove along the A45, even had her up to fifty-eight, park most places for free after 6.30pm as an example, now it’s so I have the right permit, I have paid the congestion charge, ULEZ charge, have I avoided the thousands of cameras trying to fine me etc etc
Anyway as you were
I've got a very good handset (Pixel 6a) for £350, and a £6/mth SIM which gives me 5Gb of data. Keep for 3 years and that's <£200/year cost.
(Sensible) TVs now are cheaper vs salary than they used to be, and far more capable. Freeview gives a ton more channels than we used to have, and is...FREE! Sky is only for idiots who HAVE to watch the Premier League / F1.
(We've got kids and 3 subscriptions and pay ~£300/year for more TV than we could ever watch.)
Up until c.3-4 years ago cars were no more expensive vs salary than they used to be, and packed with more safety, more power and far more equipment. The difference is everyone's been conned into going upmarket (German, typically) by the introduction of PCPs and Leases - "monthlies"/never-never. Cars have got more expensive and harder to fix, granted. But they've also got substantially more reliable (ignoring all the electronics, anyway). Buy a simple Japanese car and car ownership is cheaper and less hassle than it used to be.
Council tax has gone up at roughly inflationary levels, so the issue there is that wages haven't kept pace with inflation.
Parking - agreed. But with a load more people/more cars and no more space, that was inevitable. And that's hardly a major cost, outside of London / other big cities. I pay <£20/mth in car park charges, FFS!
bennno said:
Agreed, we've moved principle residence 3 times in 6.5 years and netted about £635k after refurb costs. All properties were do-oo-er uppers sub £500k purchase price.
Nice income. Other alternative is to buy them and live in them for a while. We bought one then renovated over several years. We will stay for a few years so we did pay more for some things than we would have done if it was purely an investment but we also added a lot to the value of the house by doing so, have a chunky amount of equity for when we move in 2-3 years, and kept the mortgage low enough that Mrs P could quit her job and go back to uni for the year and we can live off one salary.A lot of people asked why we were doing it rather than buying a house that is ready to move into, now complain about having rent or mortgage payments in the high hundreds if not over a thousand. In many cases paying the cost to people like you.
okgo said:
Nomme de Plum said:
No it isn't easy but it never was. Not for my Grandparents, parents, me or my 40 something Daughter and two 30 something Stepsons.
So how come my parents only had to find 16x the average wage to buy their forever home, and today it would be over 60x?Lots of other variances too.
How come some 20, 30 ,40 somethings just get on with it and work their way up the property ladder? Attitude maybe?
gamefreaks said:
House prices detached from reality some years ago. You have wonder where it leads from here without some sort of intervention.
For example.
When I was a 20 year old pimply faced youth, me and my then girlfriend were thinking about buying the house we were renting from the landlord. I was earning just under £20k per year.
This house was a dump. It was in a bad area of Leicester (Mowmacre hill, if you know the area, you know what a dump this place is). No garden, views of the flyover and feral kids roaming around. No central heating, no double glazing. It was cold and damp. It literally had ice on the inside of the windows during winter but we figured it was only 3x my meagre salary so we could slum it there for a few years until we could afford somewhere better.
It fell through in the end because the landlord wanted £80k and the bank valued it at £60k.
Fast forward 20 years...
I saw the same house on rightmove for...£240k. No major upgrades had been done apart from double glazing. The rooms were still the same as we painted them 20 years ago.
It's the same 3x the salary I earn now. How that happen?
I have no idea where this leads. Maybe I do know. We're already seeing where this leads from Asia and America. Multi-generation mortgages for the well off and trailer parks and tent cities for everyone else.
240k to live up there, not great is it...For example.
When I was a 20 year old pimply faced youth, me and my then girlfriend were thinking about buying the house we were renting from the landlord. I was earning just under £20k per year.
This house was a dump. It was in a bad area of Leicester (Mowmacre hill, if you know the area, you know what a dump this place is). No garden, views of the flyover and feral kids roaming around. No central heating, no double glazing. It was cold and damp. It literally had ice on the inside of the windows during winter but we figured it was only 3x my meagre salary so we could slum it there for a few years until we could afford somewhere better.
It fell through in the end because the landlord wanted £80k and the bank valued it at £60k.
Fast forward 20 years...
I saw the same house on rightmove for...£240k. No major upgrades had been done apart from double glazing. The rooms were still the same as we painted them 20 years ago.
It's the same 3x the salary I earn now. How that happen?
I have no idea where this leads. Maybe I do know. We're already seeing where this leads from Asia and America. Multi-generation mortgages for the well off and trailer parks and tent cities for everyone else.
Mr Penguin said:
Nice income. Other alternative is to buy them and live in them for a while. We bought one then renovated over several years. We will stay for a few years so we did pay more for some things than we would have done if it was purely an investment but we also added a lot to the value of the house by doing so, have a chunky amount of equity for when we move in 2-3 years, and kept the mortgage low enough that Mrs P could quit her job and go back to uni for the year and we can live off one salary.
A lot of people asked why we were doing it rather than buying a house that is ready to move into, now complain about having rent or mortgage payments in the high hundreds if not over a thousand. In many cases paying the cost to people like you.
100%. Some just wouldn't know where to start or just don't want the upheaval or many don't have the free cash to buy a £500k property which isn't ready to move in to and needs 100-150k spending on it etc etc. Nicely refurbed bungalows sell very well for cash to retiring purchasers. A lot of people asked why we were doing it rather than buying a house that is ready to move into, now complain about having rent or mortgage payments in the high hundreds if not over a thousand. In many cases paying the cost to people like you.
Nomme de Plum said:
okgo said:
Nomme de Plum said:
No it isn't easy but it never was. Not for my Grandparents, parents, me or my 40 something Daughter and two 30 something Stepsons.
So how come my parents only had to find 16x the average wage to buy their forever home, and today it would be over 60x?Lots of other variances too.
How come some 20, 30 ,40 somethings just get on with it and work their way up the property ladder? Attitude maybe?
It still doesn't change the fact that a person earning the average salary now can afford less of a house than those earning the equivalent amount 20 years ago.
kingston12 said:
It is down to attitude in as much as it takes a much higher salary now to work their way up the property ladder so would require a better attitude to work to get to that level in the first place.
It still doesn't change the fact that a person earning the average salary now can afford less of a house than those earning the equivalent amount 20 years ago.
It is funny how this gets missed repeatedly. It still doesn't change the fact that a person earning the average salary now can afford less of a house than those earning the equivalent amount 20 years ago.
The old 16% interest rate thing as usual. It’s been debunked many times as being harder than it is today. But it doesn’t land with a certain crowd.
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