First Time Buyers - Grow Up And Get Real.

[Yandros]

You have to remember folks that KOTC is a troll (and I wouldn't be suprised if it's BBB, but since one troll is the same as the next, the point is academic). There's no point trying to win the argument with the actual troll, but for the sake of any FTB guests to the site, it's worth making sure that this drivel opposed.

Circa 1991, a graduate could reasonably expect to start on about £14,000.

A small flat in a cheap area cost about £40,000.

Repayments on that on a near 100% mortgage would be about £340/month

In 2005, an above average starting salary is £20,000 in the SE

A small flat in a cheap area costs about £75,000

Repayments on that on a near 100% mortgage are £480/month

You will notice that the repayment/earnings ratios are almost identical. You'll also notice that the 3.5x rule still holds.

You might think I'm actually arguing on KOTCs side...except for one small detail. We all know what happened to prices after 1991 don't we?

So KOTCs argument, in a nutshell is "Housing is just as affordable as it was in 1991". Very courageous position there mate! Good luck

[str]

You have to remember folks that KOTC is a troll (and I wouldn't be suprised if it's BBB, but since one troll is the same as the next, the point is academic).  There's no point trying to win the argument with the actual troll, but for the sake of any FTB guests to the site, it's worth making sure that this drivel opposed.

Circa 1991, a graduate could reasonably expect to start on about £14,000.

A small flat in a cheap area cost about £40,000.

Repayments on that on a near 100% mortgage would be about £340/month

In 2005, an above average starting salary is £20,000 in the SE

A small flat in a cheap area costs about £75,000

Repayments on that on a near 100% mortgage are £480/month

You will notice that the repayment/earnings ratios are almost identical.  You'll also notice that the 3.5x rule still holds.

You might think I'm actually arguing on KOTCs side...except for one small detail. We all know what happened to prices after 1991 don't we? 

So KOTCs argument, in a nutshell is "Housing is just as affordable as it was in 1991".  Very courageous position there mate!  Good luck 

<{POST_SNAPBACK}>

You would be hard pushed to buy a one bedroom flat for 75K in my part of sussex.

So what happens when that person is 30. They earn say 35,000 which will allow them to borrow 122k which will buy them a 2 bed flat with no garden, just the right position to be in to start a family.

You can make figures add up to illustrate any point you want

[Justice]

So what happens when that person is 30. They earn say 35,000

Thing is few at the age of 30 earn that sort of money and that takes them to 55 before they have paid the debt off. does not sound fun to me for a 2 bed shoebox

[Guest muttley]

You might think I'm actually arguing on KOTCs side...except for one small detail. We all know what happened to prices after 1991 don't we? 

So KOTCs argument, in a nutshell is "Housing is just as affordable as it was in 1991".  Very courageous position there mate!  Good luck 

<{POST_SNAPBACK}>

I bought and sold in 1992,sold again in 2004 and moved into rented.The big difference between now and then is the number and quality of properties to rent!The BTLs have given the rest of us the big stick with which to beat them.

Gawd bless ya,Guv!!

[The Masked Tulip]

The smallest 2 bed terraces here 5 years ago were 45K, today they are 180K.!!!

These are first time buyers houses.! Wages have not changed.! Houses are simply far too high and unaffordable. This is why property has to fall.!

Snap here in Swansea... Well, almost. Two bed terraces were 45K 3 years ago and are currently 350 short of 200K. Wages have not gone up, no new employers have come into the area. Quite the opposite infact as call centres get off-shored to Bangalore.

[Yandros]

You would be hard pushed to buy a one bedroom flat for 75K in my part of sussex. 

So what happens when that person is 30.  They earn say 35,000 which will allow them to borrow 122k which will buy them a 2 bed flat with no garden, just the right position to be in to start a family.

You can make figures add up to illustrate any point you want

<{POST_SNAPBACK}>

I think you missed my point a little. The position today is indeed ridiculous and almost certainly unsustainable, just as it was in 1991. KOTCs argument that 4.5% interest and todays prices is no worse than 12% and 1991 prices is just saying "what's the problem, this bubble is no worse than the last one"

Oh and I'm not making the figures up, they're based on personal experience. The 75K flat I used in the example is in a dodgy part of the "Thames Gateway" area. The price was indeed £40K in 1991, and they're selling today for £75K. The morgage payment figures are right too, since they're straight from an old bank statement!

[leemo]

First time buyers: Grow up and get real

I will grow up, by probably a couple of years, before I get real... value for money.

Can afford to buy, but its much cheaper to rent. Simple eh?

[Nomadd]

Life is about choices,you choose to work in N.London, you choose to want to live there. If your salary does not reflect the added cost of living amidst some of the most expensive real estate in the world (as it always has been), then why stop there?

             

                  Why not get a job in Monaco,and complain about being priced out there? (300k for a studio)

      http://www.prestigeproperty.co.uk/property...egion//County//

                At least you'd have the sun to compensate.

OK, I'm being facetious, but my points are genuine.

KOTC.

<{POST_SNAPBACK}>

Sorry, dude, but please open your eyes and face reality:

1. I didn't 'choose' to live in London. It's the only place a Freelance IT Architect like myself can find regular, consistent work. If I had the chance to find regular work outside of London, I'd move in an instant. And I've done this work for 17 years on a freelance basis - 20 years in total - so please don't tell me I don't know the marketplace. And yes, I have considered retirement in Monaco, and it's still a strong option for me in the next 3-5 years. But - and it's a big but - that doesn't mean I can't feel for people who aren't in my position, does it? Unlike you...

2. My salary DOES more than reflect the cost of living here. But *I'm* not the issue. It's the other 99% of the population who don't earn anything like I do that can't afford to live here - or ANYWHERE else - in the UK. That's the problem. I mean, you do want a Doctor, Nurse, Fireman, Police Officer...1,000 other 'normally paid people' at sometime in your life, don't you? I know I need them. I raised this same issue in a previous thread you started, but you chose not to takle that issue. Care to have a go at it this time? BTW, I have two Police Officers renting the house next door to me, and it's crippling them.

3. Yes, you were "being facetious", but yes your "points are genuine" - but only 'up to a point'. And we passed that point in the UK housing market long, long ago. The lack of affordable housing is ruining this country for EVERYONE, not just those who can't afford to buy. Is that so difficult to realise? You need to get out and talk to some real people, like those doing the jobs I mentioned above. Get some feedback from them to see how "genuine" your points are.

Nomadd

[Michael]

North Yorks median income £22.5k ............median HP £200k............WTF is going on?

[CrashedOutAndBurned]

You have to remember folks that KOTC is a troll (and I wouldn't be suprised if it's BBB, but since one troll is the same as the next, the point is academic).  There's no point trying to win the argument with the actual troll, but for the sake of any FTB guests to the site, it's worth making sure that this drivel opposed.

Circa 1991, a graduate could reasonably expect to start on about £14,000.

A small flat in a cheap area cost about £40,000.

Repayments on that on a near 100% mortgage would be about £340/month

In 2005, an above average starting salary is £20,000 in the SE

A small flat in a cheap area costs about £75,000

Repayments on that on a near 100% mortgage are £480/month

You will notice that the repayment/earnings ratios are almost identical.  You'll also notice that the 3.5x rule still holds.

You might think I'm actually arguing on KOTCs side...except for one small detail. We all know what happened to prices after 1991 don't we? 

So KOTCs argument, in a nutshell is "Housing is just as affordable as it was in 1991".  Very courageous position there mate!  Good luck 

<{POST_SNAPBACK}>

Few will recognise that starting salary. Back in the real world, all people know is that they know of people on 12k that bought flats for 50k in 1999, and now those flats cost double the amount, or treble in a BTL 'hotspot' - so you could suddenly need a salary of 40k on traditional slary multiples.

According to he auhtors of a good book, the Mismanagement of talent, the average graduate starting salary is 12.5k, when you factor in underemployment. When you see a 20k+ figure quoted, it is from 'graduate employers' that offer the old-style milkround jobs. As fewer than 1 in 40 graduates get a milkround-type traineeship these days, it's virtually irrelevant. So it's far worse than you make out - just take a look in broadsheet jobs pages and pick out all the 15k and below jobs that call for graduates, sometimes even with experience!

People also forget about the corporate fads in the 90s for downsizing and deskilling, which slashed the numbers of middle-of-the-road solid salary jobs. Remember all that 90s talk of why there was no feel-good factor when the economy was racing ahead? Does anyone care if they are underemployed in a poorly paid job with few benefits? My present company has probably half the number of managers it did in the mid-90s - that's a heck of a lot of decent-money jobs to replace through economic growth.

Brutal rises in the cost of living could not have come at a worst time for people that are basically poorer than they use to be.

[Yandros]

My guess is BTL holiday homes are responsible for a fair amount of it in North Yorks, correct me if I'm wrong.

[Yandros]

Few will recognise that starting salary. Back in the real world, all people know is that they know of people on 12k that bought flats for 50k in 1999, and now those flats cost double the amount, or treble in a BTL 'hotspot' - so you could suddenly need a salary of 40k on traditional slary multiples.

According to he auhtors of a good book, the Mismanagement of talent, the average graduate starting salary is 12.5k, when you factor in underemployment. When you see a 20k+ figure quoted, it is from 'graduate employers' that offer the old-style milkround jobs. As fewer than 1 in 40 graduates get a milkround-type traineeship these days, it's virtually irrelevent. So it's far worse than you make out - just take a look in broadsheet jobs pages and pick out all the 15k  and below jobs that call for graduates, sometimes even with experience!

People also forget about the corporate fads in the 90s for downsizing and deskilling, which slashed the numbers of middle-of-the-road solid salary jobs. Remember all that 90s talk of why there was no feel-good factor when the economy was racing ahead? Does anyone care if they are underemployed in a poorly paid job with few benefits? My present company has probably half the number of managers it did in the mid-90s - that's a heck of a lot of decent-money jobs to replace through economic growth.

Brutal rises in the cost of living could not have come at a worst time for people that are basically poorer than they use to be.

<{POST_SNAPBACK}>

As I'm sure you're aware, you can always find a handy statistic to support your argument (or sell a book). Remember the figures I'm quoting are for the Southeast (my example was a flat in the Thames Gateway), excluding London. I'm not sure where that author concocted £12.5K from but it's simply not true here.

I'm speaking as a small scale graduate recruiter (I'm usually involved with CV selection and first round interviews in our company). Our starting salary is currently £15.5K. We generally know what the right level is, because when you drop behind the competition, candidates generally don't accept the position when offered, or we have an increased staff turnover rate. We're still a little on the low side to be honest. You're right though, £14K (1991) and £20K (2005) figures are either higher end graduate starting salaries, or alternatively the salary level they can usually except to be on after a year or two (when most people start considering buying a place).

[is_suicide_the_next_logical_step]

Few will recognise that starting salary. Back in the real world, all people know is that they know of people on 12k that bought flats for 50k in 1999, and now those flats cost double the amount, or treble in a BTL 'hotspot' - so you could suddenly need a salary of 40k on traditional slary multiples.

According to he auhtors of a good book, the Mismanagement of talent, the average graduate starting salary is 12.5k, when you factor in underemployment. When you see a 20k+ figure quoted, it is from 'graduate employers' that offer the old-style milkround jobs. As fewer than 1 in 40 graduates get a milkround-type traineeship these days, it's virtually irrelevant. So it's far worse than you make out - just take a look in broadsheet jobs pages and pick out all the 15k  and below jobs that call for graduates, sometimes even with experience!

People also forget about the corporate fads in the 90s for downsizing and deskilling, which slashed the numbers of middle-of-the-road solid salary jobs. Remember all that 90s talk of why there was no feel-good factor when the economy was racing ahead? Does anyone care if they are underemployed in a poorly paid job with few benefits? My present company has probably half the number of managers it did in the mid-90s - that's a heck of a lot of decent-money jobs to replace through economic growth.

Brutal rises in the cost of living could not have come at a worst time for people that are basically poorer than they use to be.

<{POST_SNAPBACK}>

my ex girlfriend always used to harp on about her 13k a year job with her masters in english lit....and how she couldnt understand it when she reads about graduates earning £20k+ as an average....what did you mean by "old style milk round jobs" btw?

[Yandros]

my ex girlfriend always used to harp on about her 13k a year job with her masters in english lit....and how she couldnt understand it when she reads about graduates earning £20k+ as an average....what did you mean by "old style milk round jobs" btw?

<{POST_SNAPBACK}>

Large corporations go around the universities to headhunt final year students. I don't think it happens as much now though. We've done something similar by having a stand at one of the London graduate careers fairs.

[Michael]

This 3.5 X rule was used by the building societies long before we got to IR’s of 15% and rates are going back up again. Look at the USA, rates up 250% in less than a year.

I know 3.5 is a hard figure for you to get your head around so lets make it simpler for you. We will work in tens (10).

Professional landlords traditionally value residential property at 10 X Rental income.

Does this help make it obvious to you or do you need one of these

<{POST_SNAPBACK}>

Pity they're now valuing property at 20 times rental income......T*ssers!

Thje words ''burnt'' and ''fingers'' spring to mind

[Michael]

Not only that - think about this.

If you are 35 or over your parents and grandparents were given a 25% rebate through MIRAS, on their Mortgage through tax rebate, to buy THEIR house!

This was all done off the back/taxes of the 'ordinary' working class man who could not afford to buy and had to live in council accommodation.

These same 'REBATED' parents are the B'stard BTL's who are stitching up their fellow countrymen and the next generation led on by the UK financial industry.

What do we say to those parents then?

<{POST_SNAPBACK}>

If you remember the basic rate of income tax was 33% ...............so MIRAS had the effect of knocking a third off the interst payments!

[DTMark]

Great idea KOTC, have everyone on average earnings move out, so the only people left are super-rich and non-working chavs who get housed for free.

Fantastic.

<{POST_SNAPBACK}>

This seems to be quite an accurate description of where London is going - hence the difficulty in recruiting public sector/key workers in London.

Another civil service strike ballot anyone...? Seem to remember hearing about that the other day...

I'm not suggesting that 'everyone on average earnings has moved out' but anecdotally everyone on this estate in Blackpool bar one is from the South East.

I do wonder if the affordability issue in the South East is just one of the factors that have caused house prices to come closer to levelling across the whole country now than ever before, as people move away. This isn't backed up by the figures that seem to suggest that within a short time everyone in Britain will live in the South East though.

For the record, myself and partner *could* (FTB) buy a nice 3 bed semi here on our wages (well above average for the local area), but we have no intention of doing so ony to see a third of the equity disappear in the next couple of years and be trapped in it for a decade.

Even if we don't move abroad, stay, and buy, there's no point in doing so now when even the most optimistic forecast for the market this year seems to be +2%. The maths are simple. There is no hurry to buy.

[VacantPossession]

Circa 1991, a graduate could reasonably expect to start on about £14,000.

A small flat in a cheap area cost about £40,000.

Repayments on that on a near 100% mortgage would be about £340/month

In 2005, an above average starting salary is £20,000 in the SE

A small flat in a cheap area costs about £75,000

Repayments on that on a near 100% mortgage are £480/month

You will notice that the repayment/earnings ratios are almost identical.  You'll also notice that the 3.5x rule still holds.

<{POST_SNAPBACK}>

I don't think those figures add up at all. First, a small flat in ANY area around the SE would be hard pushed to be less than 100k, and this is being optimistic.

Secondly, the crucial thing about the affordability is in fact not conventional earnings to repayment ratio, but DISPOSABLE income after the mortgage and other basic shelter expenses are paid. I would guess that you could easily double your proposed monthly payment of £480 when you include a more realistic flat price, insurance, maintenance, rates and community charge. That leaves precious little disposable income after tax is swiped from an annual salary of £20,000.

VacantPossession

[Yandros]

I don't think those figures add up at all. First, a small flat in ANY area around the SE would be hard pushed to be less than 100k, and this is being optimistic.

Secondly, the crucial thing about the affordability is in fact not conventional earnings to repayment ratio, but DISPOSABLE income after the mortgage and other basic shelter expenses are paid. I would guess that you could easily double your proposed monthly payment of £480 when you include a more realistic flat price, insurance, maintenance, rates and community charge. That leaves precious little disposable income after tax is swiped from an annual salary of £20,000.

VacantPossession

<{POST_SNAPBACK}>

*sigh* Yes they do add up.

Firstly, of course I'm not being optimistic. The flats I'm talking about are specific ones, in a particular development, on the market today, listed on Rightmove, and I know full well what the value used to be, BECAUSE I BOUGHT ONE 15 YEARS AGO!!! In fact, since the average prices paid are 92% of asking price, I could claim that the current price is £69K.

Secondly, you're quite right. Morgage, ground rent, maintenance, insurance, council tax, and utility bills would account for over 50% of your income. If you run a car too, that's not a whole lot left for food and luxuries.

Your point is?

[Jayne The Payne]

No,you miss my point. All I'm saying is if I was you ,that is what I would do,of course not everyone would do it, complacency and lassitude are traits that many people have. All I'm saying is that I would be proactive in my approach, and if that meant moving out of an area because I couldn't afford it, then so be it.

pretty simple solution.

KOTC.

<{POST_SNAPBACK}>

Find an idiot somewhere else KOTC, you are wasting your time here.

I think KOTC is a little uneasy... to say the least.

After all, why else would he hang around here? Go on KTOC, admit it!

DrBubb has hit the nail on the head. Why is this journo effectively telling to FTBs to buy any old crumbling leasehold in a crime hotspot when prices are stagnant and falling?

<{POST_SNAPBACK}>

Methink KOTC is fearing this:

- HPC has started - even his encouraging FTBs has not prevented the chains from continuously breaking down for months

- KOTC's property portfolio will go crashing in value

- KOTC's tenants will be asking for lower rent (so many desperate BTLs out there)

- FTBs will be waiting for the bottom before they consider buying

- KOTC is stuck with negative equity

- The market goes back up and FTBs who have been saving healthily for years now will leapfrog the first rung of the "ladder" and fight for the more decent "starter homes"

- Assuming KOTC's portfolio has not been put on the market by his lenders by then, his investment properties will take a long long time to achieve today's values.

And to think he was just going to ride in the sunset when it all started!

I bought and sold in 1992,sold again in 2004 and moved into rented.The big difference between now and then is the number and quality of properties to rent!The BTLs have given the rest of us the big stick with which to beat them.

<{POST_SNAPBACK}>

Quite right!

[simon99]

You have to wonder why someone who has supposedly done so well spends so much time gloating on an anonymous message board to people priced out of the market.

[Realistbear]

It is a safe place where there is less chance of rejection. The forum is a place where people who are feeling rejected by a system can join together as a community. Acceptance is a big issue in many people's lives and cyber support can help you make it through the day sometimes.

Why would a BTL/VI/EA spend time on the board? Insecurity probably. People who are facing tough times look for signs of re-assurance and sometimes become delusional and think they can alter market direction by sowing seeds of doubt here and there.

Why am I on here a lot recently? Bored as a parrot and trying to decide whether or not to move back to the UK! I am also a STR at the beginning stages of a HPC in Southern California where a drop of 60% is required to bring things back to normal affordability levels. We may be down by around 10% from June 2004.

[bearly holding up]

It is a safe place where there is less chance of rejection.  The forum is a place where people who are feeling rejected by a system can join together as a community.  Acceptance is a big issue in many people's lives and cyber support can help you make it through the day sometimes. 

<{POST_SNAPBACK}>

I agree with this point, but I think its more than just a feeling of rejection. Its alot to do with being able to relate to people that are like minded, even if they appear contarian to the majoritys way of thinking. Personelly it also makes me feel that I have to put a part of my life on hold while waiting for things to return to some kind of normality from this mad situation.

[CrashedOutAndBurned]

my ex girlfriend always used to harp on about her 13k a year job with her masters in english lit....and how she couldnt understand it when she reads about graduates earning £20k+ as an average....what did you mean by "old style milk round jobs" btw?

Cue all the engineer/IT guys on the forum popping up to say English lit is worth zilch as a degree

No, but I too started on 13k with a higher degree. My job was 'graduate' in that the emplyoer wanted someone with a degree, and it was hard to see how a non-graduate would have been equipped to do it. What's more, when that particular employer advertised, 100-400 people responded. The majority of these were probably perfectly qualified, so I imagine many fell through the net again and again and had to get by doing data-entry, retail work, working as office juniors.

A 'milkround' job is a little wider than Yandros' definition. Basically, it's the traineeships offered by the employers that advertise in things like the Hobsons Guide, Prospects and attend the big graduate fairs. According to the internal newsletter my company recently took on ten IT grads for network administration - over 2,000 applications!

The 12.5 figure I mentioned above came from a survey of ALL graduates, including those that failed to find graduate-level work. 40% of graduates are not in graduate level work three years after graduation.

The 20k+ figures come from surveys of blue-chip graduate employers.

[oracle]

average wage guides are about as accureat as a HBOS price gude anyway,don't pay them too much attention.

with salaries,there are a good number of people who earn a significant sum of money,a good chunk of people that aren't on the payroll at all!,and some that are stuck in the middle.

the mega-bucks guys are earning...well megabucks,and commanding salary INCREASES of about 4 times that of your common-or-garden shopfloor worker.

these guys are also included in average wage stats so it skews the figure to make it look like everybody is richer.

now have a look at total tax-take per capita....everything from income tax to petrol duty...this is static for the high earners,but increasing for the lower brackets.

Mr executive in his bentley still pays VED at rates comparable to mondeo man,except mr.exec gets his travel expensed by the company,whereas mondeo man pays full-whack....same with petrol.and then there's council tax etc.

the whole system is skewed against an employee!!!

thank god I am self-employed!!!!...when I was an employee(in the normal sense),I just accepted travel and living costs. Since I went freelance I can see how screwed over the average guy really is!!!!!!!!!!