Realistically house prices in this country have never fallen we have had the odd blip and a few regional long term declines but as a general statement house prices have always gone up. Yes you could wait and gamble on the 'crash' but every day you wait makes the home you want less affordable! I don't know how I'd get on the ladder today if I was starting over I certainly wouldn't be buying a house on my street or even in my postcode!
Best way to start off on property ladder
- Thread starter Glacius
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Caporegime
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that is the problem with this credit generation. they want to move into their lifetime house straight away. it's not seen as a property ladder but just my dream home now.
move into a 1 -2 bed flat. then a larger flat or terraced house. then a semi detached home or townhouse. then a detached home. that is moving up the ladder.
4 steps over say a 40 year period.
they want to go straight to step 3 or 4 and skip steps 1 and 2 completely.
i know someone selling their rather large expensive home in a very good area. they had some young hotshot put an offer in which was accepted. he gave them the run around for 6 months before saying the bank wouldn't give him a mortgage and had to pull out. during that time he was asking stupid questions like can i see the back garden and area around the house so I can see if I could build an extension (only him, his wife and 2 kids in a 6 bedroom home old with huge ceilings and over 3 floors with 4 bathrooms - we asked why he needed more space as that is the reason they are selling to downsize the house is far too big). Can you ask your neighbours if they would be willing to sell me their house too so I could combine the plots, etc. He couldn't even afford the house never mind all the additional crap he was going on about on top.
Associate
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If you can afford it though why not?
I bought my first house at 19, a 3 bed semi, then due to work sold it and got a 2 bed apartment, then sold that and I am in a 4 bed detached now.
We are currently looking to sell this, as we want a house with more land, we are both 28. I don't see the issue in buying the best house you possibly can, its only going to get easier to afford it over the years, unless something goes wrong with your job.
Caporegime
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if you can then that is fine. he was stating he doesn't know how he would get on the ladder today if he tried to and it wouldn't be in the same post code.
well it would be a smaller property in a different post code more likely.
that is the thing though, most cannot afford it and overstretch beyond their means rather than buy cheaper and sell and move on more frequently.
Soldato
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Why wouldn't you if you can afford it? Changing houses multiple times is almost as bad as renting, dead money going on legal fees, estate agents fees, mortgage broker fees and stamp duty.
I've been in my job 4 years and I've seen couples buy their first home then move once, twice or even three times. First purchase maybe £1,500 in fees if you're lucky? Then you sell and buy at a total cost of maybe £3-4k? And that's if you don't pay much stamp duty! Then do it again for maybe £5-6k? I'd much rather stretch myself to the maximum I can for my first home, which is exactly what i'll be doing in the near future (although not paying any legal or surveyor fees
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Caporegime
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Why wouldn't you if you can afford it? Changing houses multiple times is almost as bad as renting, dead money going on legal fees, estate agents fees, mortgage broker fees and stamp duty.
I've been in my job 4 years and I've seen couples buy their first home then move once, twice or even three times. First purchase maybe £1,500 in fees if you're lucky? Then you sell and buy at a total cost of maybe £3-4k? And that's if you don't pay much stamp duty! Then do it again for maybe £5-6k? I'd much rather stretch myself to the maximum I can for my first home, which is exactly what i'll be doing in the near future (although not paying any legal or surveyor fees
in the grand scheme of things i'm advocating a max of 4 buys over say a 40 year period (most would only move maybe 2-3 times). if your house hasn't increased in value of at least £10K over those 10 years of ownership in between buys I would be shocked. so will the other houses but you needed to start somewhere and overall you won't have really lost out on money as you needed somewhere to start off on the ladder anyway.
My first home is a large 3 bed detached.
I plan on maybe one more move in my lifetime. But I can comfortably afford to do so. It's the fact that others still have their expectations set at step 3 or 4 straight away rather than being more practical and going with step 1 or 2 on the ladder.
The fees aren't the biggest concern IMO. by buying a smaller house you would save elsewhere. heating, electricity, council tax, renovation, maintenance, repairs, etc. all your monthly bills would be less. allowing you to save more for your next move.
Soldato
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Basically saying wait 40 years to get the house you want, by which time you'll be 60-70 years old. So only about 10 years to enjoy it before you get thrown into a home, which is paid for by selling the dream house.
I dunno about not affording it, but stretching budget as far as it can go can be a good idea, eg if youve got good/defined career prospects ahead of you and would otherwise have to move in a couple years (to increase size/space/garden) . All dependant on individual circumstances really, and obviously you want somewhere you can afford in the long run!
Another advantage of buying bigger is if prices generally increase then you will have a larger equity share/increase. Obviously there is the converse risk if interest rates boom, and house prices decline.
Caporegime
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company pension plus state pension should see you through retirement
My house is hardly most peoples dream home, it was a three bed 1 bathroom mid terrace in a nice Sheffield suburb when we got it. We done some work so it is now four bed 2 bathrooms but it I still a mid terrace with no off street parking and a tiny back garden. I'm certainly not living the life of a king in my mansion we can't afford to move up the ladder as the next step ie a decent sized semi would mean adding the best part of 200K to our mortgage! Our hose has gone up in value by over 50% since we bought it doesn't help with the ladder as those further up have gone up a similar percentage which in cash terms just makes them less affordable.
Caporegime
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homes are getting to the point though that they are ridiculously expensive and people therefore have to increase their income or lower expectations.
can you imagine for instance buying a home for £66K and it now being valued at £780K 35 years later? If only you could go back in time and buy 10 of those homes and rent them out for 35 years. it's crazy but that is reality in the west end of glasgow.
so people could have afforded a very nice large home in a brilliant location all those years ago with a half decent job i imagine. no idea what wages were like back then. but now it is beyond the reach of 99% of people.
While I don't disagree with your statement overall in terms of the upward trend, during my lifetime I can think of at least two occasions where house prices have fallen and taken 5+ years to recover; once in the late 80s (it took until 1998 to reach the 1989 peak level) and then the blip that started in 2007 (didn't recover until 2014). If you adjust the inflation, the picture is even more pronounced particularly during the 90s when inflation was higher and thus real house prices were lower for the entire decade than they had been in 1989. In real times even today house prices are well short of 2007 levels.
These medium term fluctuations are OK for some people (I lost money on a house sold in December 2008) but the issues arise for those pushed into negative equity who then either struggle to get a good remortgage deal or otherwise suffer from the poor state of the economy that usually accompanies house price falls e.g. losing job and unable to pay mortgage so have to sell at a loss.
This is a common thing I observe, people often talk about "I can't afford to buy in my area, something needs to be done about it" but then you look at where they live and it is somewhere expensive like London, or expensive relative to their earnings. People seem to think they have a divine right to own a property round the corner from family/friends/work; they need go get with the program and accept that that isn't always feasible anymore unless they have high wealth/earnings. I earn a decent amount, top 5% in the UK but I don't expect to be able to live near the office because I know it is expensive.
Caporegime
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you could always buy whatever you can afford even if it's only a £100K flat.
pay it off. then go live in Portugal when your ready to retire and rent it out for extra income. Buy a wee place in Portugal, good weather, very cheap food and drink, 50p for a bottle of wine from local market. Enjoy life by immigrating to a much cheaper nation when you have an asset in the UK earning you £500+ a month. They are literally giving houses away over there because the country is broke.
or move to a cheaper place to live in the UK for a better quality of life.
pay it off. then go live in Portugal when your ready to retire and rent it out for extra income. Buy a wee place in Portugal, good weather, very cheap food and drink, 50p for a bottle of wine from local market. Enjoy life by immigrating to a much cheaper nation when you have an asset in the UK earning you £500+ a month. They are literally giving houses away over there because the country is broke.
or move to a cheaper place to live in the UK for a better quality of life.
Can't go wrong with houses. Sold my first house for a £80k profit. Second house made almost £150k profit, third house made £220k profit. Now downsized and ran with the profit. I do feel sorry for those who can't even get a deposit together for their first pad though in this financially oppressive climate.
Yeah, they are for young players. The wealth gap is widening. Luckily I bought when the world was more sane and reasonable. We're almost at the point whereby if you don't already own a property (and by that I mean paid off in full, or at least have minimal mortgage left to pay), you're almost screwed. Over the next few years, I can see interest rates being held down, wages being suppressed (with job losses thrown in to boot), and house prices continuing to rise year on year.
Soldato
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Interest rates are too low IMO, propping up an already high housing market, saving those who borrowed too much from their own stupidity and also of course protecting the banks from defaults.
In this selfish country, much like elsewhere I suppose, because there are many house owners people love the market rising not caring about the younger generations who unfairly struggle to buy. I don't get the infatuation personally, some people move every other year just to live somewhere else which is quite sad for them really as they hardly must have a very fulfilling life.
My advice to OP is to save hard as others have suggested. Maybe in a few years house prices will drop or at least stabilise. People say you can't go wrong with buying property but with investments that's usually the time to start worrying although people have been saying that for years and house prices have continued to rise but maybe Brexit will have an impact. The government should not be encouraging further purchases via special schemes imo as that's not good either and pushes up prices even further making the high prices wholly justified
In this selfish country, much like elsewhere I suppose, because there are many house owners people love the market rising not caring about the younger generations who unfairly struggle to buy. I don't get the infatuation personally, some people move every other year just to live somewhere else which is quite sad for them really as they hardly must have a very fulfilling life.
My advice to OP is to save hard as others have suggested. Maybe in a few years house prices will drop or at least stabilise. People say you can't go wrong with buying property but with investments that's usually the time to start worrying although people have been saying that for years and house prices have continued to rise but maybe Brexit will have an impact. The government should not be encouraging further purchases via special schemes imo as that's not good either and pushes up prices even further making the high prices wholly justified
I still really don't get why people like a rising property value so much it doesn't help with moving up the so called ladde! Example my house cost about 175k ten years ago today it would fetch about 280k do the value has gone up 105k i.e. About a 60% increase. The next step on the ladder was about 300k when we moved in but those houses have also seen a 60% increase so are now more like 480k so over the course of ten years the real money gap between the two has gone up from 125k to 200k so despite my mega profits from a booming market i still can't afford to step up without taking on a cripplingly big mortgage!
This reasoning being why I took out the largest mortgage I could afford, so I have spare rooms if I wanted kids /friends over etc., even if it's larger than required just now.
The amount of my friends and cousins who have 'played' the ladder over the last 10 years or so and are now in a nice sized family home, large garden and semi detached/ detached staggers me. The thing that staggers me even more is the amount who have made profits on 2 or 3 moves and are now in a 'dream' home, BUT on interest-only mortgages also amazes me. I certainly remember interest rates at 4+ %, yet these folk believe the house will have gone up enough in value to cover this eventuality. Being a parent myself, I simply couldn't risk everything like this, maybe I'm a worrier, it seems like everyone else does this as the norm, they are always asking when I'm moving or building a big extension??? Anyone else in their mid 30's also see this trend amongst their friends/relatives?