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Home buyers 'nervous about year ahead'
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Author:  Amnesia10 [ Mon Dec 17, 2012 4:13 am ]
Post subject:  Home buyers 'nervous about year ahead'
http://www.bbc.co.uk/news/business-20749231

Quote:
One in four prospective first-time buyers believe it will take them at least 10 years to have a deposit in place, a survey has suggested.

The report from the Building Societies Association (BSA) said that pessimism in the market remained.

This was despite a 34% rise in lending in the mutual sector, the BSA said.

The findings contrast with the view of the Council of Mortgage Lenders, who last week predicted a more "positive" year in the housing market.

The quarterly property tracker conducted by the BSA found one in five first-time buyers believed they would still be renting or living with family in 2022.

It said that before the financial crisis of 2008 hit, 88% of first-time buyers were able to raise a deposit in five years of less, but at the end of 2012 just 62% felt they would be able to save for a deposit in five years.

However, while it said raising a deposit was still the biggest barrier for all UK home buyers, the survey also pointed towards a small improvement in sentiment.

Around 59% of respondents said saving for a deposit was a barrier to buying a property in December, down from 62% in September and 64% in December 2011.

I think that they are still too optimistic. If you consider that wages are growing slowly and costs rising faster than wages they might find saving even harder and then interest rates are so low that will not help them much. So I suspect that the ability to save will shrink the longer the government follow austerity.
Author:  JJW009 [ Mon Dec 17, 2012 9:18 am ]
Post subject:  Re: Home buyers 'nervous about year ahead'
It took me 10 years to save the 30% deposit I needed, and that was 1998 - 2008.

In 1998 I was earning a little over £2 an hour. Now a similar job pays triple that, and my house has less than tripled in value.

Have things really changed so much in the long term?
Author:  jonbwfc [ Mon Dec 17, 2012 9:37 am ]
Post subject:  Re: Home buyers 'nervous about year ahead'
JJW009 wrote:
It took me 10 years to save the 30% deposit I needed, and that was 1998 - 2008.
In 1998 I was earning a little over £2 an hour. Now a similar job pays triple that, and my house has less than tripled in value.
Have things really changed so much in the long term?

Houses is some parts of the country probably have more than tripled in value since 1998. I bought mine in '95, it's currently worth over 2X what I paid (at least, that's what a similar property in the same street went for this year) and I don't live in a very 'up and coming' area. At all.

Also, if you count inflation over the 20 year-ish period, how much of the increased rate of pay has actually been eaten by that?

What we're really talking about is confidence I suspect. It's not how much better or worse off people empirically are, it's how much better or worse off they subjectively feel.
Author:  TheFrenchun [ Mon Dec 17, 2012 11:19 am ]
Post subject:  Re: Home buyers 'nervous about year ahead'
I'll just sit here while I work in London. Prices, even the less than appealing zone 3 area we live in, are unbelievable.
Author:  JJW009 [ Mon Dec 17, 2012 11:44 am ]
Post subject:  Re: Home buyers 'nervous about year ahead'
TheFrenchun wrote:
I'll just sit here while I work in London. Prices, even the less than appealing zone 3 area we live in, are unbelievable.

They always have been.

The only real change over the last 30 years is that the commuter belt has expanded, so some areas have seen disproportionate growth. Milton Keynes for example is now in North London for all practical purposes, being only 30 minutes by train from Euston. It takes longer than that to get to Cockfosters or other end-of-line tube stations.

If we go back much more than 30 years, then home ownership was far more rare than it is now. It was primarily a reserve of the rich. There was a brief period when borrowing was easy and young people could get mortgages, but that was an economic glitch that wasn't sustainable...

For most of history, young people lived with their parents until they could afford to rent a place of their own. Often times that wasn't until after they were married; having several generations under one roof was pretty normal then as it is now for most of the world.
Author:  Amnesia10 [ Mon Dec 17, 2012 4:27 pm ]
Post subject:  Re: Home buyers 'nervous about year ahead'
JJW009 wrote:
For most of history, young people lived with their parents until they could afford to rent a place of their own. Often times that wasn't until after they were married; having several generations under one roof was pretty normal then as it is now for most of the world.

For centuries the average house price was around 2.5 to 3 times average salary. Now it is substantially higher than that. So even if you could save the deposits, wages have not kept up with house price inflation. My father was able to save his 10% deposit within a year, I defy anyone to save at that rate now.
Author:  JJW009 [ Mon Dec 17, 2012 4:54 pm ]
Post subject:  Re: Home buyers 'nervous about year ahead'
Amnesia10 wrote:
For centuries the average house price was around 2.5 to 3 times average salary. Now it is substantially higher than that.

Do you have a source for that? I can't find one going back that far, but the last 30 years:

Image

Suggests the situation is actually better now than it was 5 years ago, with the long-run average being x4

I would have expected that with so many people at or below the poverty line, the multiplier 200 years ago to have been higher. Unfortunately my few seconds on Google didn't find any reliable figures going back before the wars.
Author:  Amnesia10 [ Mon Dec 17, 2012 5:51 pm ]
Post subject:  Home buyers 'nervous about year ahead'
Home buying really took off with the rise of the middle classes during Victoria's reign. It was given a boost post WW1 during the twenties. Averages now are still too high especially considering the stagnation of wages that started in 2003.


Sent from my iPad using Tapatalk.
Author:  Amnesia10 [ Mon Dec 17, 2012 6:01 pm ]
Post subject:  Home buyers 'nervous about year ahead'
Just looking at that graph it does look skewed by being only last 30 years. So the long term average looks higher than it was.


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Author:  ProfessorF [ Mon Dec 17, 2012 9:01 pm ]
Post subject:  Re: Home buyers 'nervous about year ahead'
My parents first place was in Croyden I think, 1966, and they paid about £3k. IIRC.
Author:  Amnesia10 [ Tue Dec 18, 2012 12:15 am ]
Post subject:  Re: Home buyers 'nervous about year ahead'
My parents first place was £4000 in 1972, and the deposit was £400.
Author:  hifidelity2 [ Tue Dec 18, 2012 11:06 am ]
Post subject:  Re: Home buyers 'nervous about year ahead'
Amnesia10 wrote:
My parents first place was £4000 in 1972, and the deposit was £400.

ProfessorF wrote:
My parents first place was in Croyden I think, 1966, and they paid about £3k. IIRC.


But what was their salary? My parents house was about the same in the early 60's but they say that it took all of their spare income and they were really stretched
Author:  Amnesia10 [ Tue Dec 18, 2012 1:37 pm ]
Post subject:  Re: Home buyers 'nervous about year ahead'
hifidelity2 wrote:
Amnesia10 wrote:
My parents first place was £4000 in 1972, and the deposit was £400.

ProfessorF wrote:
My parents first place was in Croyden I think, 1966, and they paid about £3k. IIRC.


But what was their salary? My parents house was about the same in the early 60's but they say that it took all of their spare income and they were really stretched

My dads salary was around £2800 so not even an income multiple of 2, and the deposit was saved within a year.
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