Tuesday, Jun 06, 2006

Can you save 300 a month over 4 years for a deposit?

Firstrung: First time buyers will need to save 300 a month for 4 years to afford average deposit

Does the term saving even exist as a concept amongst most under the age of 35?

Posted by Converted Lurker @ 10:51 AM (693 views)
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25 Comments

1. George_monsoon said...

I'm 39 and Saving has not been an option for over a decade!!

Tuesday, June 6, 2006 12:02PM Report Comment
 

2. Sebastian said...

I don't think anyone under the age of 35 knows what a deposit is never mind saving. 100% mortgage all the way!

Tuesday, June 6, 2006 12:02PM Report Comment
 

3. talking rot said...

It is reasonable to think FTBs tend to be younger people. So, on top of rent, council tax, high fuel prices, pension savings, etc (oh, and living and eating) we expect FTBs to save for a home and then get tied into a horrendously expensive mortgage. It is no wonder many don't bother.

High house prices cause economic and social misery and, reduce the long term economic outlook for short term gain.

Tuesday, June 6, 2006 12:20PM Report Comment
 

4. denzil said...

TR. I read somewhere recently that the average age of a FTB has risen to 30+, think it was 31.

Recently I've been looking at investments I have and was considering my "emergency fund". I've had it for years and fortunately I've never drawn a penny of it. I was talking to some friends at work who are in the FTB age group mentioned above and they had just never heard of "emergency fund" but commented that there was no way they they could save that amount because their outgoings and potential mortgage would absorb most of their salary.

The point of my ramble is that "emergency fund" or "rainy day" money in this day and age is almost impossible to save and in many ways is little more than an historic concept but it got me thinking that how much rates would have to rise before people got into trouble because there is no fall-back plan apart from a credit-card of course.

Anyway I'm rambling, so I'll bu**er off and go and sit out in the sunshine and enjoy the lawn which my landlord cut for me yesterday.

Tuesday, June 6, 2006 12:41PM Report Comment
 

5. Japanese Uncle said...

Junkies have been and are the most profitable targets for "them" all the time, whether, it be opium,. tobacco, loan, let alone gamble. What is going on in UK at the moment is in essence no different from what was going on in China around Opium War. "Them" are the shameless, ruthless,bloodthirsty bankers and financiers. All you can do is to arm yourself with a little bit of brain and self-restraint.

Tuesday, June 6, 2006 12:49PM Report Comment
 

6. talking rot said...

denzil

I like your style.

Alas I am just outside the "average" age for FTBs so I wish my Landlord would cut the grass!

Tuesday, June 6, 2006 02:15PM Report Comment
 

7. Dadm said...

I've had trouble coming to terms with the market for a long time and still to this day do not understand why it has not collapsed on itself.

When I first bought a house, I had a mortgage at 3.5 times my salary and still found it very, very tough. Now I rent and based on 3.5 times my salary, I couldn't even buy any type of decent house.

Who wins in this......? Only the Banks.....and unless you cash in and move to a smaller house...noone else.....so the whole country loses out.........

Tuesday, June 6, 2006 03:06PM Report Comment
 

8. Sebastian said...

>> High house prices cause economic and social misery and, reduce the long term economic outlook for short term gain.

Try telling that to smug homeowners who are happy to sacrifice the futures of want to be homeowners just so they can all feel a bit happier that there home is now worth X amount more irrespective of the fact it makes no difference to their life.

The looks you get when you tell people that high house pices do no good for society are rather amusing, good spin from the news means that anyone speaking in such away is instantly seen as 'doommonger'. Surely in a sane world anyone that goes around buying 'homes' purely for investment would be seen as the vermin they are?

I heard it mentioned on the radio about how buying and reselling concert tickets at a higher price is now illigal? Someone sent a text message into the show asking why the same doesnt apply to houses?

Tuesday, June 6, 2006 04:03PM Report Comment
 

9. tyrellcorporation said...

...Splutter...choke! I can see hundreds of 'winners' right ouitside my office. White-flighters, Public sector immigrants - thousands of 'em (met-office moving to Exeter for God's sake!). and yummy mummies in Porsche Cayennes sipping Chardonay and pretending to be Victoria Beckham. Everu last one of them has won the lottery.

The whole country has not lost out by any means. Those who are now priced out of the housing market should just sit tight, forget about buying a house or emigrate to somewhere cheaper. That's what 4 of my mates have done in the last year. I seem to remember the phrase most widely used was '***k this ****hole I'm outa here'.

A bit harsh but I can see where the frustration is going...

Tuesday, June 6, 2006 04:24PM Report Comment
 

10. denzil said...

Dadm said:
>>Who wins in this......?

The chancellor too! Stamp duty revenue has at least doubled over the last five years and imagine the tax gained through inheritance. House Price Inflation is pointless to the home owner unless you stay where you are and withdraw equity etc......

Talking of downsizing there's a fair bit going on and I might add some really good bargains can be picked up from downsizers, e.g. A retired couple just down the road from me bought their house for 4K in early 60s. They put their house on the market for 395K early last year and it was fairly priced. It did not sell mainly because the market was very slow. Eventually a couple looked at it who could not really afford put in an offer of 295K which was accepted. I used to go to school with the son of the couple and the reason they accepted it was because they wanted out and they viewed the sale as making them 291K which was their retirement fund which they took with them to their cottage in Devon which they had bought in the 70s.

Tuesday, June 6, 2006 04:31PM Report Comment
 

11. Gav said...

Who wins? Not just the banks, the people doing BTL are also laughing. More people renting due to high house prices means it is easy to rent off your property. I know quite a few people who have gone down the BTL route and are laughing. Its not a bad way to go, getting others to top up your pension pot by buying you a house.

Me I'm looking for a house at the moment, but I seem to be one of the unheard of people these days; certainly of my age group. At 29 I'm one of those FTB's that thought about how I would buy a house a long time since when I was at college. Now Im in the position to pay cash should I so wish, saving is not dead its just not so popular these days. You cant have your cake and eat it springs to mind, too many people these days cant wait to rent a flat, get a fancy car and spend a fortune on going out. You can only spend it once, when and what on is up to you.

Tuesday, June 6, 2006 04:55PM Report Comment
 

12. Sloth said...

Greetings this is my first post on here I am 41, sold my house up 3 years ago and stashed the money away. I currently live in rented accommodation with my wife have zero debts and earn a reasonable salary. In addition I am very careful with money and carefully monitor all my expenses.

In recent months in my position I have noticed how the value of my income has subtly been shrinking. Nobody believed me at first. Meanwhile I have been observing how many of my friends who are on better incomes than me are now all starting to panic and pulling in the reigns as they realize how their monthly bills are rocketing.

I reckon the arse is going to drop out of this economy shortly as people begin waking up to this.the nation has been in some sort of collective amnesia. Personally I have options to move over seas and I am seriously considering those options because I believe that the financial situation is going to become serious.

Tuesday, June 6, 2006 05:02PM Report Comment
 

13. Phil said...

Sloth I recently sold my house in Sydney Australia to allow my children to be closer to there grandparents. It would seen that we are both in a similar position that is we can afford to rent by using the interest gained by the sale of our houses. As we are both in similar positions to be able to move abroad take my advice, if you are in any type of industry that can be affected by an economic down turn don't move. As from 1990-1993, I lost count of the amount of company's that I worked for that went down. In a strange place with no friends or family this can be a tough time.
Finally if the arse doesn't drop out of the economy what will the UK be like in 10-15 years time, probably the most expensive houses in the world and the lowest living standard in Europe, not forgetting the most profitable banks in Europe.

Tuesday, June 6, 2006 05:50PM Report Comment
 

14. Sloth said...

The inflation figures have been fiddled for ages. M4 sterling inflation has been 12%.

I call it "house prices rising", I see house affordability dropping, which is not a good sign!

Tuesday, June 6, 2006 05:55PM Report Comment
 

15. Waiting For The Crash said...

everybody i meet wants to leave the country!!!!!!! This is what labour have left behind. I am 29 and i have enough money saved to buy a house - but i will not buy at these stupid prices!!!!
I am going to rent with my girlfriend!!!

...and i would love to leave the country as well ---- it is ruined in 10 years. House prices are the tip of the iceburg. When this bubble bursts it will go with a bang.

Tuesday, June 6, 2006 06:23PM Report Comment
 

16. Worzel said...

I have written to my MP to bring up some of the points raised by people above e.g. high house prices not being good for society, especially in the long term, and mentioned some things the government could do help put things right.

I actually got a reply saying that I raised important issues and that she would write to the relevant minister and get back to me when she heard back. I will definately post the response if and when it ever arrives.

Tuesday, June 6, 2006 07:28PM Report Comment
 

17. talking rot said...

Dadm said:
>>Who wins in this......?

Sorry Chaps, in the game of high house prices, no one wins. My logic is:

1. House prices rise steeply and home owners "feel" wealthy.

2. Over time, more and more people take on larger and larger mortgages - Not just to buy their first home, but also to upgrade.

3. Larger mortgages means you have to pay more. Increases in salary have a tendancy to be eaten up with higher living costs. (My salary has risen with my career experience but I now have a family, car (fuel bills), larger food bills, clothing bills and costs of schools (and my children go to State schools but it still costs). The net effect is that there is LESS money to spend. For an economy that is dependent upon Consumer Spending, this is BAD news.

4. Factor in Crash Gordon's tax increases now ... and the massive [middle class] debt ...

5. Insufficient money is available to maintain Consumer Spending so the economy deteriorates and jobs are lost. Home owners loose the "wealthy" feeling they had in the days of high house prices.

So who wins here?

I believe the House Price Crash of the early 1990s and the lack of a "feel good factor" within the economy killed the the Major Government's reputation for economic competence - it just took a while to filter through to people. Perhaps this is why New Liebour is propping up UK the House Prices?

Tuesday, June 6, 2006 08:17PM Report Comment
 

18. Dadm said...

"I seem to remember the phrase most widely used was '***k this ****hole I'm outa here'."

Damn right.....

.....I'm going to f off to Jersey for two years.

Wednesday, June 7, 2006 09:06AM Report Comment
 

19. Sloth said...

Waintin for the crash said..everybody i meet wants to leave the country!!!!!!! This is what labour have left behind. I am 29 and i have enough money saved to buy a house - but i will not buy at these stupid prices!!!!

Sloth says.This is not just a legacy from labour.13 years ago when I moved back to England at the end of the last recssion.(it was Conservative back then) and everybody I met said never again to borrowed money. Here we are 13 years later and the debt is worse than it has ever been.

Wednesday, June 7, 2006 09:52AM Report Comment
 

20. Ohhyesitwill said...

What is the point of saving with interest rates so low anyway? And why save an amount less than how much prices are going up each month? Pointless. I am 34, I have 40,000 in savings and a pension. I have no credit card debt. I would say I am financially sound and I earn 2000 net each month. I have a mortgage and apparantly my house has doubled in value since 1999. So why don't I want to buy somewhere bigger? Because at the end of the day the prices being asked are simpley not worth it. It is just bricks and morter inflated by temporary & volitile economical conditions. I could lose almost everything if I buy now and it crashes. I firmly believe it will crash.

The real issue here is the banks & building societies. They stick the finger up at regulations, the FSA never prosecute, and even when they do the punishment is far less than the amount they made so the banks don't care. The government are happy that the banks are willing to give money out to anyone, it helps keep retail spending up. Want to go bankrupt? - go ahead, the banks take the hit - not the government. What!? You want to borrow some more? Ahh!, you need to go the sub-prime lending route sucker! Want a porche Mr & Mrs Chav? You deserve it, simply borrow against your recently bought council house. Open a copy of 'What car?' to see some of the vile adverts put in their by the Halifax - 'The key to your next car is your home' - Jesus, I mean how that be responsible lending? Brits owe more than 50% on all of Europes credit cards - doesn't that tell us something? This country is knackered. It's a debt society, you know I actually got laughed at the other day for having nothing on credit cards - like I wasn't normal?

When it blows up the responsible man/woman will pay for the cost to the banks. We will also get taxed more to cover the mssing retail tax revenue.

I apoligise humbly to everyone in this country for voting labour in in 1997. The tories may have been steeped in sleeze, but it was never this bad. "ooh what about black wednesday!". Didn't black wednesday bring about a much needed correction?

Wednesday, June 7, 2006 11:03AM Report Comment
 

21. Ticktock said...

Couldn't agree more with T.Rot on this, high house prices are not good news for the economy, or moreover are not good for citizens in general, for the reasons already given.

This is causing dangerous social divisions and huge generational/ class resentment. This, i believe, will get much worse before/if it gets better.

However, It has to be said that high house prices are not an 'accident' that just sprang up from nowhere. This monetary policy has been designed to stave off the effects of deflation (see japan as they were 'yanked' first).

Attempting to stave off the inevitable will only make the eventual collapse worse, but I just can't see that there is any political will to even begin sorting it out at present. Gordon Brown has allowed himself to be convinced (by American REIT experts) that the public judgement upon his success, rests almost entirely on the stability of house prices.

The acceptance of REIT proposals (that come into effect in January) is what has caused the 'mini boom' of late, not city bonnusses as the spin would have us believe.

It is worth noting that the Yield on a REIT rises as prices fall (like bonds) and than asking why 'yield hungry' big institutional investers a looking to buy into/ convert to REIT status in January 07?

Wednesday, June 7, 2006 11:24AM Report Comment
 

22. Jake The Muss said...

A few people have mentioned leaving the UK because of a possible HPC. I'm interested in where you would go and what you would do that would mitigate the effects on your standard of living in the event of a global recession (and the resulting HPC).

Wednesday, June 7, 2006 12:44PM Report Comment
 

23. Waiting For The Crash said...

What are REIT proposals?

Reading all thsese articles which make sense....how come the guy in the street does not believe it?! My brothers flat mate has just got a 120% mortage on a flat in London. He is on interest only payments and wants to rent it out....... has the world gone mad???????

WHY DID THEY LEND HIM THAT MUCH??? FLAT COST 275,000 he earns between 20-30K????? HE is having to bank on a lodger to pay the mortage and wants to rent his room out as well!!!!!

Wednesday, June 7, 2006 02:13PM Report Comment
 

24. Ticktock said...

WFTC,

Real Estate Investment Trusts are 'tax efficient' property funds. They pool the combined value of a property portfollio and distribute units, or shares to this amount. The rental income from the properties is the yield, which is distributed to 'shareholders' as a dividend. Capital growth comes from rises in the portfollios value.

When a property develoment Company (or Bank, or Pension Fund, or Supermarket) sell a property, they are liable for capital gains tax......unless they convert to REIT status (at the top of the market) which is tax 'efficient'. Having bought up the market, they effectively off-load the property risk to (usualy long term) investors at max. value, tax free.

Pension funds are the biggest buyers as they need the relative stability of yield, can invest for the long term, and can wait for a maket slump to recover.

Heavy and sustained lobbying from big business has forced Gordon to give the go ahead for January. (like - 'now we all own so much, and your economy is so dependant on property, if you say no, we'll all sell at once, the market will crash, and you'll never be P.M.)

Many believe that House prices will obviously rise, as all these funds will have to buy property (and these funds are absolutely huge). Others believe that the property has already been bought, and a legal conversion will be all that takes place in January.

At the moment, VIs holding huge portfollios in anticipation of either selling to a REIT fund or coverting to REIT fund status themselves (i.e. British Land, Land Securities, Hammerson etc.) would lose billions of the market 'corrected'. After the conversions, and after all the retail money has been scooped up, the spin may subside significantly.


Wednesday, June 7, 2006 02:51PM Report Comment
 

25. sirgoogle said...

Back to the Article. I do like this statistic of how long to save for a deposit. Perhaps it will also help people understand just how big the debt they take on is when they take on these huge mortgages.

Incidentially we have been saving for the 12 years we have been out of the country (since the last crash). We have made some bad investments too with the savings, but could still buy fairly comfortably in the UK (not necessarily in NL/BE where the prices are actually much higher). Its just that we do not want to buy in UK as it has taken this long to save for and we do not trust the market not to crash. It would be equivalent to taking the wheelbarrow of savings in to the back garden and burning it. Oh and by the way if we do get a mortgage (if we do have to return) we do not want any mortgage other than an old fashioned repayment mortgage - we are still also living with the endowment scam of the late 80s.

WFTC - 120% Interest only mortgage - only an idiot would take this on.

Thursday, June 8, 2006 04:37AM Report Comment
 

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