When was the "us and them" split made?

Reading a lot of threads which explain how hard it is for younger people to get on the housing ladder, how expensive houses are, spending habits, saving for deposits etc.

I was wondering when did the split occur? I am 40 and now own a £200k house (with a £465 mortgage) but have never earns more than £26k. First house was £53k, paid £28k of that off and sold for £110k. I might have been one of the last people to get a 100% mortgage as we bought as the house prices were rising dramatically.

Now I see people in mid twenties seemingly never going to be able to afford a house even on decent wages. Is that really true or is it mostly around London or because they won’t give up luxuries to save for a deposit (like people of my parents generation had to!).

First house was £53k

My first house was £250k bought ten years ago. It’s more or less worth that now. My mate bought in 2000 or so and doubled his money I think. House he then moved into around the same time as we bought ours is now worth around double what he paid afaik.

I’m 41 now and one bedroomed flats are now £120k round here, which is Cardiff.

loads of data here with which to construct whichever story makes one feel better about oneself.

http://www.economicshelp.org/blog/5568/housing/uk-house-price-affordability/

it was when house prices massively shot up after 2000.

london and south east, properties are expensive, but not definitely ‘too’ expensive – it is simply that properties now take two full time salaries to afford, and need to be in cheaper/crappier areas, and will be smaller than the previous generation. Take a pair of teacher’s salaries (as an example), £60k with a 4.5x multiplier will buy a £300k house with a 10% deposit. Even in most parts of the southeast, that’ll get you an ex-council house. Years ago the same people would have probably been able to get a much better place.

there was no ‘split’ – properties are just getting gradually more and more expensive as time goes on. I suspect lifestyle is more a misnomer than anything else – does an extra £10 a month over 2 years (for a posh iphone vs a generic android) really make much of a difference?

^ fascinating link Stoner.

(a failed property business means I am both a capitalist pig landlord, personally and solely responsible for the property issues we face apparently, and a mid-40’s family of 5 struggling in a three bed house I can just about afford)

Take a pair of teacher’s salaries (as an example), £60k

How many teachers earn £60k? How long does it take to get to that level?

At 43, I’m starting to worry if I/we will ever get on the housing ladder, if we do it will be part rent part buy, but how are we going to pay the rent in ~25 years when we retire?

What really gets my goat is I’ve paid ~£70k over the last ~10.5 years for the privilege of living in the same rented accommodation! 👿

I think our only hope, as grim a thought as it may be, is that inheritance comes to our long term rescue.

Neither Mrsgoat or I are capable of working full time hours, but thankfully my job pays relatively decent money for a 3-day week contract, plus Mrsgoat seems hopeful of getting a better position in her workplace with better pay. The question is, will she find doing more hours (days) too mentally exhausting? I’ve been there in my last job, got the t-shirt, it left with with absolutely nothing to give after work or on my days off.

molgrips – Member

How many teachers earn £60k? How long does it take to get to that level?

‘ave another go…

Take a pair of teacher’s salaries (as an example), £60k

So £30k each.

We’re all good at maths round ere

How many teachers earn £60k? How long does it take to get to that level?

Not many, but heaps earn £30k (which I think is what he was getting at).

My house might be worth a smidge more than we paid for it in 2004, but not a lot. For my age I’m in a decent position housing wise, but struggling financially at the mo, wife doesn’t work so household income is just over £30k for a family of 4. If my mortgage was similar to my peers then we’d be in the doodoo.

No tax credits for me, I earn too much apparently. Doesn’t matter than I can’t afford the train to work any more.

I think Molgrips needs one of those teachers.

I was lucky and bought my house when property prices were still sensible, I took a decison to do it at a young age and pleased I did.

fascinating link Stoner.

The issue isn’t affordability of mortgage payments, it’s the ease of saving a deposit – which is a function of deposit absolute value, rent levels and incomes. That stat isn’t on that page.

I think Molgrips needs one of those teachers.

Rightmove tells me there are 595 properties for sale under £90k near me, that’ll give you a £465/mo/25yr mortgage with a small deposit. Not London though.

That stat isn’t on that page.

Agreed.

It echoes much of my thought – that some of my peers are there through inherited deposits and reduced payments, not through the usual save/pay/pay/pay/pay again route…

loads of data here with which to construct whichever story makes one feel better about oneself.

Well having just reviewed all that data, I am now pretty convinced I am the messiah and you should all bow down at my feet…

Now I see people in mid twenties seemingly never going to be able to afford a house even on decent wages. Is that really true or is it mostly around London or because they won’t give up luxuries to save for a deposit (like people of my parents generation had to!).

My sister in law has significant savings for a mortgage, but is still at the bottom of the ladder. She wants a one-bed flat, but round where she is (Surrey) she’s looking at £200k+ for anything not with a significant issue, which is a joke.

How many teachers earn £60k? How long does it take to get to that level?

A pair = 2 x £30k

Edit: beaten to it.

if you’re 40+, you’re probably the right side of the pulled-up drawbridge.

if you’re 30-, you’re buggered, you’ll be renting till you die (unless you have helpful parents)

i’m trying to persuade my in-laws to let us (build and) live in a cabin in their garden… (i’m 38)

Its definitely a problem, and whilst the prices in the SE are certainly crazy they are somewhat offset by equally crazy wages.

Up here, depending on what field they get a job in, a fresh graduate may be looking at a wage of £18-20k is probably looking at £100-£120k to buy a house.
= looking for a minimum of a £5k deposit and a fairly risky £560pcm 95% mortgage.
More realistically a £15k deposit is needed to get a better deal and reduce the LTV.

Now here’s the key part.
Our imaginary £18-20k graduate has a take home of ~£1350pcm
If staying at home with parents and paying minimal rent, its pretty easy to put aside £500pcm and you’ve got your deposit in 3yrs, and still leave plenty left over for car, food, and a decent quality of life.
However if you are already renting a place at close enough £500pcm then you’ve got no chance of also saving at £500pcm, and you are looking at more like 5-10yrs to get a deposit together.

And the really harsh bit, is house prices are generally still appreciating, so unless you can save quite quickly, your deposit may be growing each month but you aren’t actually getting any closer to home ownership

Inheritance is somethign to consider.

Home ownership has been increasing since the 50s. So as more of my parents’ generation die and leave houses, that will enable even higher prices as deposit lump sums become available – to those whose parents could afford to buy. This could further drive inequality, couldn’t it?

All these people renting – they are paying money to private individuals, mostly, who own houses they don’t live in. So they are also creating bit fat piles of assets, that will make it really easy for their kids to buy houses or possibly not even work at all. All the while keeping those houses out of the hands of the poorer end of society.

I can’t see anything other than spiralling inequality in the long run.

I was wondering when did the split occur? I am 40 and now own a £200k house (with a £465 mortgage) but have never earns more than £26k. First house was £53k, paid £28k of that off and sold for £110k. I might have been one of the last people to get a 100% mortgage as we bought as the house prices were rising dramatically.

I’m a similar age but much worse position financially, despite earning more, because i didn’t buy a house before the rise!

I had a few redundancies, and ended up going back to uni to retrain. I still managed to save up a deposit, but in hindsight I’d have been far better off putting it all the property market even if i’d have rented out after the redundancies.

Lots of friends bought earlier, but they all had significant parental assistance.

I think the start of the increases occurred after the interest rates were dropped in 2001.

Also took me a while to find someone to buy a house with 😥

If staying at home with parents and paying minimal rent,

I’m 46 and I moved back in with my parents after Uni to save for a deposit. Meant I could save a lot more in a shorter time. I put down a £16k deposit on a £91k house 20 years ago. Now worth over £500k.

I’m 46 and I moved back in with my parents to save for a deposit.

Naff all work for a Physics graduate in rural Herefordshire. Point is that what works for some isn’t possible for everyone.

Yay for living in Oxfordshire where house prices are on average more than 6 times the amount the stated pair of teachers earns.

I bought my first place in 1996 (I think) for £42,500 (2 bed terrace) as a single bloke aged 27 years with zero help from my parents (they were in a pretty dire financial position themselves so they just helped with giving time to clean/decorate my new place) and the value remained static for several years then suddenly shot up. Houses on that street now sell for £230k and I’d struggle to get a mortgage at all if I was starting from scratch despite being a high rate tax payer. I think we’d struggle to get a mortgage even if I included my wife’s earnings.

I would hate to be in the position most young people find themselves in right now.

Yay for living in Oxfordshire where house prices are on average more than 6 times the amount the stated pair of teachers earns.

Yep, London, Cambridge and Oxford all top the unaffordability league based on average income. Although all three cities have plenty of people on large salaries who can afford to buy.

I can remember when it was possible to buy houses in Southampton for <£60k around 1995, now you might be lucky to find a flat for ~£130k and a house for <£150k.

Since 2006, the rent on our current place has grown from £510pcm to £635pcm, while the the original landlord and then the son that inherited it are doing far too little to maintain this flat’s dated 1960’s build. Still no shower; laughable double glazing that lets a gale through when the bitter easterly wind blows; far too few electric sockets for modern living; storage heaters that consume electricity outside Economy7 times etc.

But if we moved rental properties, we would have to downsize, similar space buildings in decent condition are >£700pcm. We couldn’t afford that rise and it would definitely prevent us from slowly building any deposit through HTB ISAs.

ahwiles – Member
if you’re 40+, you’re probably the right side of the pulled-up drawbridge.

if you’re 30-, you’re buggered, you’ll be renting till you die (unless you have helpful parents)

i’m trying to persuade my in-laws to let us (build and) live in a cabin in their garden… (i’m 38)

And in my case if you’re 33 you bought your first starter flat a year before the crash then lost £30K when you had to sell a few years later. Gave us rather a dry bumming when we came to get a mortgage to buy a family home. 😀

I’m early 30s, bought a house 4 years ago. One of the first of my friends, although quite a few have done it in the interim.

My friends are split into

never going to be able to afford a house even on decent wages. London plays a huge part here – some of them plan to move when work allows it.

won’t give up luxuries – no idea how to save.

first house in 1982, 30k (2 bed flat, coast, Hampshire, in a bleeding retirement zone with a nightclub ???), I actually had to visit the building soc manager with last 3 months salary slips, it wasn’t funny when the mega interest period came along 14/15% I think ………..

Yep, London, Cambridge and Oxford all top the unaffordability league based on average income. Although all three cities have plenty of people on large salaries who can afford to buy.

Those stats normally include brighton and are somewhat skewed – the adult populate in all of those (outside london) includes a huge number of both students and recent graduates, none of whom tend to earn much money, but most of whom are willing to pay significant amounts of rent for a single room, which pushes the floor of the prices up. I’m not saying that they aren’t expensive, but I’m not sure the average earnings is necessarily comparing like with like

Oxford’s actually so ####ed we’re struggling to get peasants to come in and do the manual jobs… like teaching and nursing as they simply can’t afford to be here.

It’s horrible isn’t it? I live in the southeast – and someone has to work there…

Yep, my partner and I are fine and sorted. But we have kids aged 20,17, 15 and 15.

Mine will have some dosh from relatoves who have popped their clogs at convenient times. Hers might do, eventually… but despite them all having good earning prospects – I am not sure how this is going to work out, and kids having to rely on inheritance sucks.

We are told there are not enough new houses being built, but also that there are lots of empty houses, but perhaps not in the right places, and there seems little central will to alter things to push industry and tech start-ups to base themselves in lower cost areas. But the Market really is not going to sort this out.

When interest rates go down, loan multiples go up, money supply and house prices and then indebtedness goes up. Round and round goes the bloody great wheel. 👿

if you’re 40+, you’re probably the right side of the pulled-up drawbridge.
if you’re 30-, you’re buggered, you’ll be renting till you die (unless you have helpful parents)

Agree with this, I’m 36 and amongst friends it depends on whether life circumstances (e.g. met partner) were right round about 2001

I remember when I was younger, a typical mortgage was 3.5x a single salary (conventional wisdom was that you shouldn’t borrow more than this). So your £30k salary nets you a £105k mortgage. I hope you like living in the less salubrious end of Burnley.

There was a recent article, (maybe Guardian long read?), that disputed the notion that it is the hardest it has ever been to buy a flat/house. When you look at the wider view such as cost of living, salaries, savings, interest rates, lifestyle etc.
It is difficult now but things were worse in the 70s and the late 80s when rampant interest rates, low wages and so on were commonplace.

People who bought pre early 2000s and now.

Boomers and the lucky / smart of generation X&Y on one side – the unlucky, daft X&Y and Millennials on the other.

It won’t last forever though, all markets self-correct in the end, the Banks are almost ready for a price correction, not sure all consumers are – but there always has to be a loser and the ‘haves’ have been on the winning side for very, very long time at everyone else’s expense.