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Cost of houses, Is it too much


Craig855S
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I was thinking some time last week, and this topic about moving out has reminded me to put it out there in evoland...

 

"Is the cost of property too high?"

 

I'd love to get on the property ladder but for me,with my salary of 29k (Wife doesnt work, or claim to be seeking for a job, so my money is the only money we get..plus a few quid in child benefit) even with years of saving a decent deposit together a mortgage of a 3 bed down here will still cost sh!tloads (£185,000 is the cheapest house I've seen at the estate agents that meets our needs) so a Mortgage of £600 a month is on the cards.

 

£600 a month out of £1500-1600 wont leave a lot for other bills let alone the general crap you spend money on such as

Council tax

Home and contents insurance

gas and elec

Virgin

Mobile phones

Car running costs such as insurance etc

tesco shopping at 60+ a week

 

I honestly dont think I could do this and keep my head above water so im not even gonna try.

 

The banks have been giving mortgages to people who cant afford to repay 500 a month while keeping their other bills paid, hence why all the reposessions happened, and that is also what drove the cost of houses up.. People paying mega prices for houses driving the market up when actually not many people can afford it.

 

I think the costs of houses need to drop considerably, especially the difference between areas (You can get a 3 bed terraced house where i grew up for 105 grand,yet the same house in the area im in now will be......well, i've not seen any terraced house prices down here, theyre all semis, and theyre 185k for 3 bedders)

 

My parents paid 7 grand for the 3 bed house I grew up in when they took the mortgage out on it 30 years ago (its all paid off now) Its now "worth" over 14 times that amount. Does that also mean that my dad could earn a wage 14 times higher than he did 30 years ago? NO!

 

Thoughts people?

Edited by Craig855S
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i was on the property ladder for the tune of £66k for a 1 bed flat - soon after i moved in, the cost of living went up by 25-30% (council tax, ground rent, house insurance etc) and as a result, we simply couldnt afford the morgage anymore, and as a result, the house was reposessed.

 

a 2 bed terrace around here is around £130k, and a half decent semi is closer to £160k - and the deposits required are still horrendous so that puts to many people (including me) into buying again

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This is a complicated subject, and im sure everyone will have their own opinion on it, but to answer the question in your title, yes houses are overpriced, but everything is relative. Can a £200,000 house really be called 'expensive' if thats the going rate for similar types of property? As an example, when i bought my house, the guy doing the survey phoned me to say that the structure was all fine, but he commented that he thought the property was way too expensive for what it was. The problem was that other similar houses in the area were being priced at the same rate, so what else could i do?

 

At the end of the day, the amount of money that Joe Average is willing to pay for a property is what drives house prices, but as you pointed out, its partly the irresponsible lending from the banks that causes people to be willing to pay more for a house (especially with their trend of giving away 100% mortgages), however its not right to blame house prices solely on irresponsible bank lending, as there are many other factors that cause it. As i said its a very complicated subject.

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The cost of houses have dropped considerably. I paid £14,000 less for my house in May than the previous owner paid for it as a new build in 2003, before the crash it was valued at £300,000 so it dropped by 25%, not a small drop.
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Unfortunately it´s supply and demand. Houses will only sell if people are willing to pay the price.

 

I´m a bit older than most people here (I´m 44) and got on the property ladder when I was 19. The mortgage then was only 90 quid a month, before long I realised that I couldn´t pay my bills and the mortgage; so rented the house out and moved in with my girl friend (Now wife) We didn´t move back into that house for nearly 8 years but the bills were covered by the rent and the equity went up, we spent a fortune on renovation and sold it for a lot less than we had invested in it, next house was pretty much the same but we left that one with a reasonable deposit on the next house which had a mortgage of 700 quid a month about 9 years ago, that terrified me at the time but to be honest we got used to it pretty quickly and having the house we really wanted made up for cutting out a few other things, when we sold that and moved to Spain we had a fair chunk of equity and bought a Villa here with pool etc etc.. that I would never have dreamed of owning back when I bought the first house and even though the mortgage here is around 1650 quid a month the pleasure I get from this house is unreal, so to get to the point. If you can at all afford to get on to the property ladder and it means cutting out a few things then just do it, before you know it you will be seeing the benefits and thinking about the next place. :)

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Depends where you live.

 

The prices around here haven't dropped much at all, so if I want to buy a place then it would have to be with my girlfriend in a couple of years. The vast majority of my friends are still at home as it's virtually impossible to buy around here on a single income. And we've all got decent jobs too.

 

Problem is I'd never rent.

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Yes and No to this one.

 

Living in the North West, I personally think that the house prices here are very manageable.

 

That's coming from the perspective of someone who is in a solid relationship, earning a respectable 'joint' income with their partner.

 

I could look to get a nice 2 up, 2 down terrace for around £95k or a nice 3 bed semi for less than £110k.

 

The problem for me however isn't the price of a house, its the deposit for a mortgage.

 

I am not fortunate enough to have any significant savings.. nothing in the region of 10-15% anyway. Now the 100% mortgage that we looked at two years ago (and has subsequently vanished into the ether) was a viable option.

 

I imagine in a year or so we will be in a much better position, but for now, renting will suffice. I know that renting is a bit taboo for most people as its "dead" money. On the plus side, its definitely a great insight into the real world.. real bills, real living. And it helps that my apartment is huge, homely (2 bed, 2 bath, furnished, huge balcony and great view over across Manchester).

 

But, all of this is in the North West.. Living too far down south is NOT an option at all.

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I dont want to live down south...I hate this place. Only good thing about being here in oxfordshire is my Job...Thats about it tbh.

 

however the main things that makes me think this are

1. Cost of houses put off younger people with low incomes from getting out of mummy and daddys house due to houses being either VERY expensive and it'd be "too much scrimping" for them so they stay at home, or just TOO expensive so moving out is just not an option because they couldnt afford all the commitments of the house. If you only take home a grand a month how are you gonna pay a 500 quid mortgage,all the bills and the food without building debt up rapidly? and also, how can a person earning 1k a month afford to save for the deposit?

2.When people want independance but cant afford to do it the right way..they do it the wrong way by getting benefits to pay for it for them by popping sprogs out..

 

I think everyone should be able to afford a house for themselves. People on low incomes (Retail workers etc) shouldnt be forced to "Get a better job" in order to have something as basic as a flat

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I think its managable. I bought mine with my girlfriend 2 years ago now. i didn't have enough for a deposit so we opted for a 100% mortgage. I payed £98,500 for a 2 bed semi in a good area between us we pay 200 a week into the joint account and that covers all the bills apart from food shopping and car stuff. Edited by Ratspeed
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You earn more than me and I pay a mortgage at £600 and all the other bills above. I also run 2 cars, married with one kid and a wife still on career break so no income there.

 

I don't think house prices are so much the problem these days more so the considerable size of deposit you need to get a mortgage.

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Nobody said buying a house was ever going to be easy and I don't think it ever has been but you have to cut your cloth to suit, you leave out the stuff you can't afford, new tv/sofa/car etc. If your not willing to take the risk then you never will get there. A few years down the line when you have some equity behind you'll find it will be a lot easier and be glad you made a push forward.

 

An old friend of mine gave me the advice that when you get the opportunity to get your own place that you should go for it. He never did because he was afraid things may change and he might not afford it, he now lives on his pension and has to pay the council rent which makes things pretty tough :(

 

The vast majority of my friends are still at home as it's virtually impossible to buy around here on a single income. And we've all got decent jobs too.

 

Problem is I'd never rent.

 

You could do a house share with one or two friends and get on the ladder early :thumb:

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McRic I don't know how you do it..I really don't. In fact I can hardly believe that its possible to keep all bills paid while keeping food in your bellies and cars on the road on the change from the mortgage

 

With all due respect you must squander a hell of an amount of cash or have expensive interests? Neither of us smoke and we rarely drink. We do like the occasional meal out. Both our cars are paid for (58 Corsa cdti and 96 Golf Vr6 highline) we still have the running costs of both though.

 

That leaves Council tax, elec, gas, phone, tv licence, life insurance, buildings and contents insurance, broadband, sky, 2 x mobiles, kids classes (art and toddlers) food and you'll be able to relate to the addition of nappies, wipes etc on the grocery shopping!

 

It aint an easy task by any means. You earn about 3k a year more than me, if I had that things would be easier for sure.

 

If you calculated your absolute essential outgoings I bet you'd be amazed at whats left which you use as luxuries.

 

On an upnote the wife goes back to work the end of this year so things will be easier.

 

PS Little lad was born 08.01.08 and we've been on one wage since then, obviously had maternity pay initially but once she goes back we've been 2 years unpaid (through choice obviously)

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It all depends on how long you plan on living in the house you want to buy, if your only looking at staying there say for 5 years or so look at an intrest only mortgage, it's not ideal as you never pay off any of the equity, but it is a way on the property ladder and after a couple of years you could possibly use the increased value as the deposit for a re-mortgage.

Just as a comparison i got laid off nearly a year ago and had my mortgage reduced to a intrest only, full mortgage payments were £498 a month, interest only £203 a month, this has worked for me but may not suit everybody.

 

Bryan

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