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What does the future hold for first time buyers?
Former Member
Posts: 1,876,323 The Mix Honorary Guru
Now, I've not yet left university, in fact I've just started, but buying a house or some sort of property has been an ambition of mine for a long while, far more so then having children or a superly successful career.
It's not a case of having a huge house either. Ideally, I'd love a Victorian property with all its original features with a decent garden in a decent area, 3 bedrooms max. BUT, this is a plan for 10+ years time and isn't going to occur without a lot of work.
I just wondered how on earth any young person/couples can afford to buy their first home, in this ever increasing high priced property market, without forcing themselves into mountains of debt from 23 years old +.
Should I just give up hope now of ever owning my little victorian town house. Talk about forward planning (I'm 18!)
It's not a case of having a huge house either. Ideally, I'd love a Victorian property with all its original features with a decent garden in a decent area, 3 bedrooms max. BUT, this is a plan for 10+ years time and isn't going to occur without a lot of work.
I just wondered how on earth any young person/couples can afford to buy their first home, in this ever increasing high priced property market, without forcing themselves into mountains of debt from 23 years old +.
Should I just give up hope now of ever owning my little victorian town house. Talk about forward planning (I'm 18!)
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Comments
:yippe:
Or maybe it won't be quite that easy...
It's easier if you go for a career where you get an annual bonus - typically sales/commission-based jobs offer this, then you can use that bonus to go towards a deposit, so you can each year see a great annual reduction in the interest you're paying, or maybe start buying multiple places to let out.
I just bought a modest 3 bed house. In 5 years I want a nice Penthouse, 5 years after that a mansion. It's all about starting low and working your way up, not wanting your perfect dream property from day 1!
It is perfectly possible to buy now, but you have to be a bit less choosy about what and where you want to live.
We can afford to overpay on our mortgage, and we don't have great salaries, and we have student debt.
It's not that easy you know. Most grad salarys are 25k or less and a lot of 1st time buyers aren't graduates on that salary either. A lot of places won't give more than 5 x a salary and tbh it's pretty difficult to cover living expenses at 5 x 25k salary. so getting 150k together means saving at least 25k deposit - it's not going to take 2 years on a 25k salary to save that amount, and probably when taken out rent and everything you'll be lucky in 4 years.
Yes if people are buying with partners then it makes life a little easier, but most 1st time buyers aren't at a point in life where they're ready to buy with a partner even if they have one.
Anyway, what's the big deal with having to rent for 3, 4 even 5 years? Then at age 26-29 depending on when you started a graduate job you can own your own place. Only in Britain is there this obsession with everyone wanting to own their own place, go to Italy or Spain and the majority of people - and familes - are happy to just rent. The only reason I have a mortgage is because I wouldn't know what to do with my money without it, there's utterly no reason to own a property, or get stressed about mortgages when you can just rent somewhere nice in the interim.
But what do none graduates do, a lot who work for years to get to a 25k salary?
Make that 17k after student loan reductions to start with.
I'd like to see anyone living in a city paying £250 a month rent including bills. My fellas in a cheap flat and pays £300 excluding bills in Manchester. Cheapest I know in Southampton where I live is £350 excluding bills and thats people sharing. A lot of people start a new job and a new phase in their life and want independence. You're then looking at £500 - £600 a month excluding bills.
So you can probably knock another 4k off what they're left each year from your reckonings. I also think a few of your other figures are unrealistic, but I suppose if you're trying hard to save up it's possible. Leaving 4.5k a year meaning 5 years at a push to save up.
Personally I was ok and had 50k saved when I came out of uni, got a 100k mortgage and got on the housing market. I hated renting though, wanted a place that I can call my own, do what I want with, etc. not that I have to ask permision if i want to decorate a room, or worry if something gets damaged.
Anyway, fine, presume my numbers are all wrong. I just remember how easy it was to save if you're sensible, costs outside accommodation are relatively low. I made £85k in my 1st year graduating = £56k after tax, and saved over £40k of that - spent only £1-1.2k/month to live in Central London, and bought in my 2nd year, most my friends also bought in their 2nd year. Anyhow, even having to spend 5 years renting before buying your own place isn't that big a deal in the grand scheme of things, will help you appreciate owning your own place even more.
How long are we talking?? 10 years?!!
Me and my fella couldnt save as much quick enough for a deposit cos we was renting, so weve had to have 100% mortgage. But a lad who lives near us saved 5k for a deposit cos he lived at home with his dad, didnt pay alot of rent and went to pub fri/sat nite and spent nothing else.
Me and my fella are thinking about getting them tourer caravans, so we can go anywere and it should be alot less cheaper!
I just added up what we pay for rent and it comes to £5628 a year, not including bills.
My metrocard to get me to work costs me £660 a year, and that's at a cheap rate because I'm a student. That is not factoring in my commute to uni either, which is costing me £30 a week this term but could possibly go up next term.
I'm a student at the moment and I earn £5.52/hr part time. I don't know what I want to do after I graduate, so I think I'll stay at Morrisons full time until I can get a better job. Full time is 39 hours a week, so that would be £10333.44 per year minus tax. (Living on my own that would be OVER HALF my earnings in rent, jeez! Glad I'm not on my own)
What I want to do is have children, but I don't want to do so in a rented house. Having to save up so much to buy one (and to make sure the mortgage could be paid mostly on a single income) is really pushing back the time I can have children in, I'm going to be a LOT older than I had hoped to be when starting a family.
I hate that house prices are so high for that reason. And I hate how "affordable homes" really aren't, and I hate how 100% mortgage, and 5xsalary have become acceptable.
I only hope that we can save up enough of a deposit to be able to buy when the markey topples over like a tower made from building bricks.
Rent: 5k
Student loan repayments: 1k
Bills: 2k - when you include council tax
Food: 2k
Going out: 2k
Clothers+gadgets: 1k
travel expenses: 600
holidays: 600
Total: 14,200
Leaving a grad total of just short of 4k to be saved on a 25k salary. For someone living on their own which a lot of independent people want to do as a break away from student life.
a) From my experience, very very few grads live by themselves when starting out. Some may want to do it but realise its unaffordable. Actually when I say I wanted to live on my own everyone asks why, wouldn't you get bored being by yourself etc. Anyway may be more common to live by yourself for grads outside London.
b) An important point to note - graduate salaries massively, massively rise over the years. A report out today http://news.bbc.co.uk/1/hi/education/7079742.stm shows that the average graduate salary (median £23k) goes up by on average 37% in the first 3 years - someone on £25k now would be on £34k in 3yrs, this is a massive increase in disposable income & savings potential, meaning that if someone lived paying your above figures, moderately increasing their living costs annually, they should still be able to save up £25k in under 4yrs.
Quite a few people I know have bought houses, they are not on great salaries but they have got large mortgages and don't live in fantastic areas. Certainly in Wolverhampton there are houses on the market for less than
100k.
One guy I know has bought with a friend..not something I would really want to do but I guess even that is better than renting, maybe.
I've been renting my own place for the last 2 years, which has cost me around £10,000. Ouch. That would have made a nice deposit.
Do most graduates do "graduate" jobs though? Most people who go to work in career areas like the media, healthcare (excluding doctors and specialist) and charity sectors will not earn anywhere near £34k per annum in their life!
Every report I've ever seen has indicated population in the UK is booming due to migration, and Gordon Browns pledges for accomodation would have to be increased by several factors to meet demand.
However, it's going to get more expensive for investors too, smaller profit margins and so on - we're heading towards the need for economies of scale to satisfy the demand at a low average cost - a bit like how we used to have expensive unique goods, and now have homogenous cheaply produced chinese goods.
I'm not saying we'll have chinese houses
a) There were 16 new grads that started when I started in Sept. All but 4 of them live on their own. Interestingly we all started off chatting before anyone had got accommodation sorted and we all said we'd be looking for someone to live with. After those talks died down and people actually started looking most decided they'd prefer to live alone.
b) You keep avoiding my point that not all 1st time buyers are graduates. Yes grad salaries go up dramatically and yes it becomes easier to get on the housing market. But what about those graduates who don't get grad jobs or those people who aren't even graduates. From your own figures we can say there's probably at least 30% of graduates who don't get graduate jobs. These categories of people don't get rapid pay increases, so where are they meant to get extra money to save up - when a lot won't be on anywhere near the salary that we've been using as a base salary anyway.
We managed to get a mortgage in April this year. My boyfriend is older than me (31) and he lived with his parents for many years and saved for a £10,000 deposit on our £115,000 house. The reason it was so cheap is because it's ex-council, but it's in a nice area and I have no problems not living in a 'new build' (which we did when we rented). I honestly believe it depends where you live as to how quickly you can get on the property ladder. When my boyfriend lived in Basingstoke with his parents he couldn't even afford a one bedroomed apartment on his own. He's moved up north and co-owns a 3 bedroomed house. His sister has bought a 1 bedroomed apartment for £130,000 which is £15,000 more than our house cost.