OT : House buying

Why is it seemingly considered a right here to be able to buy a house?

It seems a strange thing that people assume that they should have one.

Okay, I'm on the ladder and therefore in a different position, but isn't the
effect of pricing out first time buyers part of market forces?
Or is that the people who can't afford houses can't afford the rent as
that's gone up too?

 

dwb said:

Who cares? Let the poor pikeys live in caravans.

 

That happens around here(Leicester), I know a number of people still with
their parents,who would like to either rent a place, or buy one, and they
cannot afford either - the cheapest/shithole houses around here start at
80k (yes, there are some hovels available at 50k in shit estates, but who
would want to buy there?),with a typical 'starter' home at 100k.The
typical mans wage is between 13-18k, so you can see, even with dual
income, it is very difficult to afford a place, and the rentals seem to be
more expensive than paying a mortgage.
Alan

 

It is partly a cultural thing that property ownership is seen as "a good
thing" but also the result of the whole way in which property law and
property financing works in this country. Also there used to be an
effective tax subsidy on mortgages which skewed the housing market
towards ownership not renting.

It is odd compared to the rest of Europe where the rental market is
better developed and better regulated.

The simple truth is that the current spiral of house prices cannot
continue. The market is slowing working itself into a position where the
inability for first time buyers to enter the market *will* force a
correction to prices. The lack of demand from such buyers will force
prices to fall and this then ripples through the rest of the market
given the need for a chain to (usually) exist to allow people to move.

It will take a number of years for the supply of houses (in the correct
price brackets) to expand sufficiently to reset the market and therefore
it is more likely there will be a sharp correction to prices. Add in the
risk of interest rate rises, the high levels of personal debt becoming
unaffordable and a wobble in government finances damaging economic
growth and you will see a return to negative equity and price falls.
Dear old Gordon Brown has got away with an amazing run of economic
success but I feel it cannot last much longer.

 

Paul Corfield wrote in

the big problem comes in 20-30 years when the baby boomers liquidate their
buy to let property assets - with a declining birth rate now, so less
buyers in the market then, who is going to want to buy a 50 year old mock
tudor Barratt home?

 

Champ

 

[/QUOTE]

That will be in a hole in the ground by then - if it even makes 50
years.

See above.

 

Think about the bigger picture here; expensive house prices are based on the
foundation of cheaper house prices.

Let's say that you have a house that is worth £150,000 - a little too much
for most first time buyers - and you want to buy a £250,000 house.

In order to sell your house for £150,000 you have to find some second time
buyers who have a house worth £100,000 and they have to find some first time
buyers who can afford that.

If the market prices keep rising and price out first time buyers then,
ultimately, the whole lot comes tumbling down.

If you don't want a repeat of the negative equity woes of the 80s then you
either have to suppress house prices, raise the average wage or extend
mortgages over a longer period, to allow first time buyers to borrow more.


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Champ[/QUOTE]

*nice*
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Once all the married people have split up a bought a house each (that's
what's causing the housing shortage) who will be at the bottom of the
chain when you want to move? Original first time buyers won't be able to
sell a property...

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Why does that seem odd? - It's basic economics, someone, somewhere has
to have a mortgage on that property, so they're not likely to rent it
out for less than the mortgage payments, are they?

 

My daughter and her family wanted a place they could afford here in
Reading. It proved impossible to get anything they wanted. To rent was
astronomical, to buy meant a mortgage 5 times their earnings. They
went for half-and-half from a housing association, though the
resulting flat was really too small for them. Then they had to put up
with the management charges (e.g. 400 pounds to have 3 windows and a
door painted - erk) and restrictions on what they could and couldn't
do. In the end they up sticks and moved to Yorkshire, where they could
afford to buy a 3 bedroomed house.

Rent is much more than a mortgage for the same property, which has
always seemed a bit odd to me. To buy my property, I paid 89,000 seven
years ago. The mortgage of 60,000 was about 600 per month (and still
would be if I hadn't paid off a big chunk). To rent my property when I
bought, would have been about 900 per month. To rent it now - ooh -
about 1800 per month. So it's much cheaper to buy.

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At 80k you have a bargain. We just left the sunny south and a small
house in a shite area (aka Luton) is well over 100k - even in the crap
parts of the town, you have to top 150k to get anywhere reasonable to
live.

Rent was in excess of £700/month for a small 3 bed.

 

What would you define as a 'starter' home, then?

Even in Wales, the going rate for a 3-bed semi in a nice area is rapidly
approaching £150k.

 

Something like I have, is what I'd term a 'typical starter home' - 3 bed
ex-council semi,which was about the cheapest in the area when we bought
it.Current price about 100 - 110k in our area.
Terraced houses in the next road along are actually more expensive, with
less garden and smaller interior, and no off-road parking. New/recent
build semis that are described as 3 bedroom go for 120K+. Depends on what
you want, I'm quite happy living in what used to be a council house,
others wouldnt even look at them.
There are a number of very nice 1960's 3 bed semis in the area for 150k,
so this may be an area that is cheap compared to the national average, but
it is still beyond the reach of many first time buyers in the area.
Alan.

 

Stop right there.

3 beds is _not_ a "starter home"

A starter home is a 2-up 2-down, at most. Anything beyond that is a
premium. This isn't 1956.

 

Stop right there.
3 beds is _not_ a "starter home"
A starter home is a 2-up 2-down, at most. Anything beyond that is a
premium. This isn't 1956.[/QUOTE]

A starter home in my view is the cheapest(or nearly) that is available.The
2 bed terraced in our area actually sell for more than the ex-council 3
beds.Why this is I dont know, maybe snobbery?
When we bought this,it was within 4k of the cheapest house in the area, so
IMO, that classes it as a starter home.
Likewise, the recent, 2 bed,builds in the area, which are little more than
large egg boxes, similarly go for more than a large 3 bed ex-council.There
are no 'sink' estates in the area either, so its not a case of a rough
neighbourhood.
Alan.

 

(SteveH) wrote in

Duh...It depends what your deposit is, and what yield you're prepared to
live with. A lot of investors put up a sizeable amount of cash, thus
leaving a lower mortgage, and they can then afford to have a lower rent
which will still cover their mortgage. OTOH, a buyer, with a 10% deposit
might find that the mortgage is a hell of a lot more than the rent.

Anyway, in London at least, rent is much lower than a mortgage for the
average first time buyer.

 

As Ogden says further down, in my world, a starter home has 1 or 2 two
bedrooms - it definitely does not have three.

How much are 1-bed/2bed ?

 

And that's why I ask - in some cases, when the maths is done, it's cheaper
to rent.

Yet that never seems to be suggested by the media as a viable alternative -
it's always "the woes of the first time buyer"