How will young people ever own homes?

fret_wimp

I was chatting with my old landlord a few days ago and 10 years ago when he purchased his house, houses were generally priced at 4-5 times the annual wage of a decently paid earner.

nowdays a house is 9+ times the annual earnings of a decently paid worker, (price based on wages before tax).

Also, most banks will only give you 80% mortgages meaning for a 400k house a young person has to have 80K saved up. now, im on moderately ok wages, but to save up 80K will take me the guts of 7-10 years, if i do well.

that puts me buying a house at age 33-34. i have no land, my family has no land or assets so obtaining funds in that way is out of the question.

so lets say i get my 320K mortgage in 7 years time. it will be most likely at 35 years. this leaves me working until 70 years of age most likely!!!!!

where is the sense in that, and how do young people with no land, inheritance of cash sums etc get houses now days, that they wont be paying for until they are on their last legs?

tHE vAGGABOND

Just get saving, there are no shortcuts [unless you invest a lot in the lotto!].

Maybe by the time you have a decent deposit prices will have come down, and banks will be insane again and lend you more than you can afford...

gaz wac

Dont forget, your parents have to die at some stage

jetski

So your single and on moderate earning as you expect to live in a 400k house! get with it.

Years ago interest rates where soemthing like 20% dont forget.

Deedsie

Are house prices not in free fall at the moment? Surely that will help younger people out. I hope so anyway.

what2do

Also part of the problem is that people want a house but don't want to make any sacrifices - no holidays, no new car and cut back on the socialising and you'd save a fair few quid!

fret_wimp

i make plenty of sacrifices. im busting my hump at the minute to get savings together.

where did i say i was single? myself and my partner are in this together, but its still out of the question.

where did i say i want new cars or anythin? between us, my partner and i have an old 1 litre runabout, and will have for the forseeable future.

with regards to a holiday, we spend about 500 quid per year on a package holiday. i believe working every day 8:30 - 6, we deserve some form of a holiday, even if its only a budget stduio apt in spain for 7 days.


one big problem here is that i wont settle for an appartment. i want a house with some sort of a back garden.
maby im just old school and my belif that everyone should be able to own a house, is old dead country thinking.

jetski

fret_wimp wrote: »

where did i say i was single? myself and my partner are in this together, but its still out of the question.

fret_wimp wrote: »

I was chatting with my old landlord

80% mortgages meaning for a 400k house a young person has to have 80K saved up. now, im on moderately ok wages, but to save up 80K will take me the guts of 7-10 years, if i do well.

that puts me buying a house at age 33-34. i have no land, my family has no land or assets

so lets say i get my 320K mortgage in 7 years time. this leaves me working until 70 years of age most likely!!!!!

Reading the above why would i assume it was anyone but only you wanting to buy.

im only 25 ive save a massive deposite and found a nice 3 bed semi in north dublin and i can afford it no problem.

tHE vAGGABOND

maby im just old school and my belif that everyone should be able to own a house, is old dead country thinking.

Ahhhh but Im guessing that you want your house to be from some area's and not others

DamoKen

fret_wimp wrote: »

to save up 80K will take me the guts of 7-10 years, if i do well.

that puts me buying a house at age 33-34. i have no land, my family has no land or assets so obtaining funds in that way is out of the question.

everyone I know, myself included saved and sacrificed quite a bit before we bought. All of us were over 30 at that stage. From your post you're what 23-25? With house prices falling as they are and the fact you're putting away cash you're in a really good position. Everything is in your favour to continue the way you are.
Up until 2 years ago the dilema facing those trying to buy was prices were rising faster than they could save, hence stupid mortgage deals on houses people couldn't afford.

You should be thinking positively about this, would you rather you had been one of those who got a 100% mortgage at the height of the stupidity?

Just carry on the way you're going, with prices falling and you saving you'll be in a very good position when it finally stabilises.

fret_wimp

tHE vAGGABOND wrote: »

Ahhhh but Im guessing that you want your house to be from some area's and not others

im trying not to rule anywhere out, but yes, as in previous resedencies i have been broken into, im trying to avoid certain areas with a bad rep, but mainly im trying to live moderately close to work.

id hate to have to drive more than 90 mins to work a day.

yes, i have a fair few requirements, this post is making me see them, and they considerably jack up the price of what i require because of the location.

Moonbeam

Well it depends affording a house won't be so much your issue as affording the ideal house,in the ideal location.
I bought my house a few years ago,had to make a lot of sacrifices to save up the money for it and also as I wanted to buy I had to compromise on a location and house that I could afford but also that was handy enough for work.
My next house will hopefully be more on my way to a dream house and big enough for my family and a future but I could never have started out in that house.

gurramok

jetski wrote: »

im only 25 ive save a massive deposite and found a nice 3 bed semi in north dublin and i can afford it no problem.

Considering you would of needed maybe 280k+ on your own, how?

Did you buy as a singleton and whats your salary like? (hope not too intrusive here )
Did you buy on the open market or under one of the affordable schemes?

Are you a FTB or were you in a chain?

If in a chain, did you buy years ago when the houses were cheaper so you upgraded now?

professore

jetski wrote: »

Reading the above why would i assume it was anyone but only you wanting to buy.

im only 25 ive save a massive deposite and found a nice 3 bed semi in north dublin and i can afford it no problem.

I take it you did this living at home with your parents? Also what bank lent you the money?

Assume 300k for the house. You would need to save 30 k for a 10% deposit, which is if you started at 20, 6K per annum after tax, or 115 per week, every week. If you live at home you could do that. Then you need a mortgage for 270000, which going on the old criteria should be 2 1/2 times your salary. So your salary should be 108000 per annum now, and your repayments are 1449.42 per month or about 365 per week until you're 55 over 30 years. You need 17K after tax to pay this mortgage ... but hey since you earn 108K a year at 25, no problem right?

chahop

Very simple, houses are over priced the rules are simple
1) If you can not save a 10% deposit you can not afford a house.
2) If you can not afford a 25 year morgage you can not afford a house.
3) If you can not afford a house, houses are over priced

These rules were forgotton by most people during the boom, but have been around one way or another in our and many other countries for a long time.

And 6* your salery is right, prices have a long way to fall.

professore

Is it just me or is it nonsensical to ask the question of the OP (no offence OP) when I can count hundreds of empty new houses within a 1 mile radius of where I live? Surely these are worth little or nothing now since there is no-one to buy them? Think 30 - 50 K for one of these houses. Just as the boom years there were queues at each development surely now the true value is something along these lines at the moment?

fret_wimp

professore wrote: »

Is it just me or is it nonsensical to ask the question of the OP (no offence OP) when I can count hundreds of empty new houses within a 1 mile radius of where I live? Surely these are worth little or nothing now since there is no-one to buy them? Think 30 - 50 K for one of these houses. Just as the boom years there were queues at each development surely now the true value is something along these lines at the moment?

true value is one thing,but the people who own these houses lying dormant are prob already in negative equity with these houses and would never cut the prices down by 70%

this is why the banks are in the state they are in. they have loaned all their money to developers who built the houses, but cant sell them at the rediclious prices. the developers dont want to go any more into negative equity so wont sell them for less than they paid to buy/build them, which was also overpriced at the time.

so money is all locked up in houses that wont fall in price as developers are against the wall to the banks, who lent them the money in the first place.

you can really see how most of this is the banks fault.

jetski

professore your a mile off.


I saved for 2 years and managed a good amount and im only on the normal industrail wage. i rented a room for that 2 years and am buying with my missus but shes still only a student

gurramok im a FTB and getting a loan from the EBS, they said seen as ive a good deposite and been with them since i was ten they would give me what i needed

Jumpy

jetski wrote: »

professore your a mile off.


I saved for 2 years and managed over 60k and im only on the normal industrail wage. i rented a room for that 2 years and am buying with my missus but shes still only a student

60k savings over two years on average industrial wage doesnt add up. Even if you were spending nothing at all.

jetski

well it must because i just checked my balance...

punchestown

2 years = 104 weeks (round down to 100 for say Christmas etc)
€60,000/100 = €600 a week

Average industrial wage = €35,000 p.a. over the above two year period = €70,000.

You are genuinely telling us that you have saved 85% of your wage for the past two years?

gurramok

What was purchase price of house?

EDIT: figures removed at user request by PM.

Now if your on 'average ind. wage' which is either 33k or 40k whoever you listen to, how on earth did you get a mortgage thats at least 9 times your wage?
(your missus has zero income as a student yeh?)

Something does not add up.

Jumpy

You are forgetting tax.

astrofool

I wouldn't expect anyone to post up here what they earn, what they pay, and the exact terms of their mortgage.

One can assume, that he probably had a smaller deposit before he started saving, also that his partner is contributing.

jetski

yea im closer to 40 after everything, i used to hand over the coins in my pocket when lodging money. over 35 years after interest relief and excluding insurance and life protection its a bit over a grand. see ive a stable job and she will too when qualified so i think thats what they are looking at......

Jumpy

jetski wrote: »

i used to hand over the coins in my pocket when lodging money. over. see ive a stable job and she will too when qualified so i think thats what they are looking at......

That is above average. Still, well done at saving what you did. You are a rarity amongst a lot of people.

jetski

i must say i enjoyed it...

gurramok

A salary on 40k after tax is well above the average industrial wage according to http://taxcalc.eu/

Saying 'im only on the normal industrail wage' is just wrong.

It would explain how you saved so much in the short timeframe and the size of the mortgage you obtained.
Still, well done on the saving. Just wished you got a shorter mortgage though or overpay the thing when needs be so you will not have it strapped around your neck till your 60.

jetski

believe me ive no intention of paying the minimum, its just handy for times when i want to chill out for a few months