From the worst rated comments to an article in The Daily Mail:
Face reality, I know it's a long time ago, but the principles remain, in the 60's we lived with our parents and after each doing three jobs for three years (main job + delivery work & cleaning factory canteens), in 1971 we had saved enough for the deposit and main furniture (total £750) (1) for our 1st house (new 2 bed semi, but 50 miles away) - you cannot expect to get a house until you are about 30'ish, you have to get some experience under your belt to earn the wages needed.
By 2020 the wage level is £20k they say - OK, thats £40k pa for 2, save £25k pa (2) plus get part time work in evenings and w/ends, holidays at home, you'll probably have £100k, or close in three years,(3) with pay increases and odd extra jobs, you're on the ladder and away, its the old story, if you want something you've got to plan & work for it. Polly ticians [sic] never were in the reality business! (4)
Jay, Swindon
1) OK, there are different ways of indexing up the value of £750 in 1971, but the value of consumption foregone is £8,670, according to Measuring Worth.
There's a huge difference between doing without £8,670's worth of goods and services to save up a deposit and doing without £60,000's worth, which is what the article says first time buyers will need as a deposit.
2) The post tax-income of somebody earning £20,000 a year is £16,132, so what Jay is saying is that a couple doing full-time jobs can live off £7,000 a year.
3) Or possibly four years.
4) Neither is Jay, Swindon, by the looks of it.
A grim document
14 hours ago
12 comments:
To be fair, the arithmetic may be well off, but the principle of waiting and saving for a deposit is correct.
The size of the deposit is a related but separate issue.
L, I couldn't agree more. It's perfectly reasonably to expect people to save up £20,000 or something as a deposit, if that were a 25% deposit.
But the goal has to be attainable. There is no earthly way an ordinary sort of young couple can save up £60,000 or £100,000 in less than ten or twenty years, and that's assuming they live like paupers and are happy to watch inflation erode their savings.
So most do the sensible thing and abandon the attempt.
So if house prices were bang on the long term price/earnings ratio instead of being horribly inflated, what would the relevant figures be for a deposit and the time to reasonably save up for it?
B, a 20% deposit on a long term average price ratio of 3.5 = 0.7 times one year's gross income.
So if your net income is 60% of gross and two people are saving up one-sixth of net income (or one-tenth of gross), it would take three or four years.
i.e. 2 people x 3.5 year x 0.1 x gross = 0.7 x gross.
That seems reasonable and do-able.
MW - Agreed, and what's more there seems to me to be a high probability that that 100K could easily be wiped out when property prices crash properly...
Thought you would be interested in seeing this chart of house prices compared to rents. Never thought about France of being particularly bubbly.
http://www.theatlantic.com/business/archive/2013/01/the-biggest-housing-bubble-in-the-world-is-in-canada/272499/
L, that's the thing, even I am starting to give up hope.
R, nice chart! Given that Japan is too expensive, where does that leave the rest?
L, that's the thing, even I am starting to give up hope.
R, nice chart! Given that Japan is too expensive, where does that leave the rest?
Mark, I think the housing market is set to turn Japanese - no sudden crash, just a long long drift downwards, which, in the long run, is better than a crash.
Bayard - why is that better than a crash? anyone who buys until the bottom of the market is going to lose. Is that such a good thing?
It's better than a crash because it gives time for it to sink into the public consciousness that property doesn't always go up in value. With a crash, the actual time prices spend falling is very short compared to the time they spend rising, so it's easier to remember only the good times. Yes, it's a good thing. Firstly, because very few people are losing any money: your house might be worth less than when you bought it, but your next house is correspondingly cheaper. Secondly, property isn't an investment; no wealth is created, so all gains in value are simply from the bubble process and thirdly, without bubble gains from land price inflation, houses can be seen for what they are, a depreciating asset like a car.
B, you make good points.
So I agree, long term slide is probably better than a crash, after which it will just bounce back.
G, he's got me convinced.
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