I Don't Want More Debt Forced On Me

[Deleted member 174758]

It must be a real struggle for all those retirees on here who made their cash by sitting on a property worth a fortune for forty odd years they bought for sod all in the first place.

I'm what you probably think of as one of those retirees, so I'll fill you in a bit on what it was really like to buy a house in the 1970s if you were young. For starters houses couldn't be bought "for sod all" - I seem to recall that the household income had to be at least 1/3 of the mortgage value. Note that this wasn't combined income, just (most often) the man's income. My first house cost £10.5k in 1976 at a time when I was earning under £3k per annum, so the only way to fund it was to find about £2.5k as a deposit in order to afford the mortgage payments. That took me 4 years, overtime every week and at times a second job and I sold my beloved motorbike and a few other things besides. For the first year my furniture comprised a bean bag, a mattress and a very secondhand black and white TV. At the time I bought interest rates were about 8.5% but they went up to about 11% by mid-1979 - a hair raising amount which resulted in a number of people I worked with losing their homes because they couldn't afford to keep up the payments. You also have to bear in mind that income tax started a lot lower back then and was at a higher percentage - no 20% base rate - which I doubt you knew. Compare the taxation and interest rates to today's rates, if you will, then add in the fact that many items were bought cash (limited credit). I only kept myself afloat by taking in a lodger for a number of years. I will grant you that it wasn't as hard as it is for younger people today, but thst was a world in which credit cards could be hard to come by and getting credit to buy, say, a car, as a tradesman meant going cap in hand to see some snotty, suited bank manager and basically just grovel. So things there are immeasurably easier today

So properties didn't cost sod-all back then, and it has always been a struggle to get onto the property ladder. I'm not saying it was harder than now - but it wasn't easy and affordable houses were (and probably always will be) "fixer-uppers"

 

[diy_fun_uk]

Are you living in cloud cuckoo land? Take your 1980's average house prices and compare them to 2022 when you have houses at about £277K and wages at £32K? It's hardly comparable and a house costing £23K in 1980, I'll wager, sells for a helluva lot more than £250K now.

No, I'm not living in cloud cuckoo land, I'm simply going by the facts. And I notice when rattling off your figures, you conveniently left out the average salary in 1980.

My point, which is valid, stands. If someone was earning £6k in 1980 and bought a house for £23k i.e. almost 4 times their salary, they were hardly paying 'sod all' for it, were they? Or are you asserting buying something at £23k when earning £6k is 'sod all'?

Average UK house price start of 2022 was £274k, average salary just over £31k. So just under 9 times salary based on averages compared to 4 times from 1980.

I wasn't asserting that the gap hasn't widened, it very obviously has. However to argue people in the 80s (based on 80s economy) were paying 'sod all' for property is a flawed assertion. I think what you're doing is basing things on the 2022 economy

 

[diy_fun_uk]

These options just don't exist anymore. We have criticised kids for squandering their money on phones, clothes etc, but the fact is, they know they'll never afford to buy a home, so just enjoy their money on other things. Most kids today probably won' own a home until their parents, or grandparents, die.

I think it depends on the individual circumstance of the person in question and sometimes their determination. Now before anyone jumps down my throat, obviously there are some people that no matter what they do, can't afford to buy their own property. However some young people have done things like forgone nights out, holidays, new clothes etc for a few years to build up a deposit. Maybe even moving back with parents whilst building their savings for a deposit.

 

[Ihavenojob]

My point, which is valid, stands. If someone was earning £6k in 1980 and bought a house for £23k i.e. almost 4 times their salary, they were hardly paying 'sod all' for it, were they? Or are you asserting buying something at £23k when earning £6k is 'sod all'?

Not forgetting that mortgages in the 1980's/90's had interest rates of 8% or more, so payments for the house were higher. Those struggling with mortgages now will be sitting pretty when their house is eventually paid for.

 

[THFC]

When I bought my first house in 1980, the mortgage interest rate was 15%

 

[JP_]

I think it depends on the individual circumstance of the person in question and sometimes their determination. Now before anyone jumps down my throat, obviously there are some people that no matter what they do, can't afford to buy their own property. However some young people have done things like forgone nights out, holidays, new clothes etc for a few years to build up a deposit. Maybe even moving back with parents whilst building their savings for a deposit.

Yeah, but you still need to earn a lot more than average salary for your age. And even then, while help to buy may have helped get a mortgage for a property 5-6 times your salary, simple flats are now 10-12 times salary. It is getting impossible.

 

[Deleted member 174758]

It all depends on where you live in the UK. Terraced houses in my part of the world are £110k to £170k (depending on location, condition and size), a few miles away in Oldham, Rochdale and some parts of outer Manchester they are a little cheaper for comparable houses - so 4x earnings for a couple is still just about achievable. The new builds where I am in Rochdale today are £185 to £210k for 3-bed semis, depending on spec (or 6x to 7x average income?) and I'm told people are taking 30 year mortgages on them.

 

[Ihavenojob]

The new builds where I am in Rochdale today are £185 to £210k for 3-bed semis, depending on spec (or 6x to 7x average income?) and I'm told people are taking 30 year mortgages on them.

Maybe they don't want all of their income going on the mortgage as they want luxuries like holidays and a new car every few years. I, and possibly thousands of others decided paying off the mortgage as quickly as possible was the best thing to do, so we had to forego such luxuries.

 

[diy_fun_uk]

It all depends on where you live in the UK. Terraced houses in my part of the world are £110k to £170k (depending on locatiob, condition and size), a few miles away in Oldham, Rochdale and some parts of outer Manchester they are a little cheaper for comparable houses - so 4x earnings for a couple is still just about achievable. The new builds where I am in Rochdale today are £185 to £210k for 3-bed semis, depending on spec (or 6x to 7x average income?) and I'm told people are taking 30 year mortgages on them.

This is the thing, understandably of course, people base things on where they live. However in many parts of the country, people don't need to spend anywhere NEAR 8-10 x salary to bag themselves a nice property.

Slightly OT but it's the same with rents. I own a BTL that I started renting out in 2007 for something like £420 pcm. Now, 15 years later, it rents out for £450 pcm. Granted, if I was re-letting it now, I'd put it on at £475 pcm. Even then, hardly a dramatic rise over the last decade and a half.

However the stories of horrendous property prices and rents often relate to property hot spots.

 

[Deleted member 174758]

Maybe they don't want all of their income going on the mortgage as they want luxuries like holidays and a new car every few years. I, and possibly thousands of others decided paying off the mortgage as quickly as possible was the best thing to do, so we had to forego such luxuries.

When I bought for the first time the choice was holidays, beer and a motorbike for a few years - or a house. You generally can't have it all

 

[diy_fun_uk]

I'm what you probably think of as one of those retirees, so I'll fill you in a bit on what it was really like to buy a house in the 1970s if you were young. For starters houses couldn't be bought "for sod all" - I seem to recall that the household income had to be at least 1/3 of the mortgage value. Note that this wasn't combined income, just (most often) the man's income. My first house cost £10.5k in 1976 at a time when I was earning under £3k per annum, so the only way to fund it was to find about £2.5k as a deposit in order to afford the mortgage payments. That took me 4 years, overtime every week and at times a second job and I sold my beloved motorbike and a few other things besides. For the first year my furniture comprised a bean bag, a mattress and a very secondhand black and white TV. At the time I bought interest rates were about 8.5% but they went up to about 11% by mid-1979 - a hair raising amount which resulted in a number of people I worked with losing their homes because they couldn't afford to keep up the payments. You also have to bear in mind that income tax started a lot lower back then and was at a higher percentage - no 20% base rate - which I doubt you knew. Compare the taxation and interest rates to today's rates, if you will, then add in the fact that many items were bought cash (limited credit). I only kept myself afloat by taking in a lodger for a number of years. I will grant you that it wasn't as hard as it is for younger people today, but thst was a world in which credit cards could be hard to come by and getting credit to buy, say, a car, as a tradesman meant going cap in hand to see some snotty, suited bank manager and basically just grovel. So things there are immeasurably easier today

So properties didn't cost sod-all back then, and it has always been a struggle to get onto the property ladder. I'm not saying it was harder than now - but it wasn't easy and affordable houses were (and probably always will be) "fixer-uppers"

Higher mortgage rates etc aside, they've made a rather simple error in their calculations i.e. direct comparison of present day costs to those of 40 years ago. Let's apply that logic to everything ...

What, a Ford Cortina cost £573 in 1962??? But the OTR price of a Ford Focus today starts from £23k!!! Jeez, they were able to pick up new cars for SOD ALL in those days, they don't realise how lucky they were!!! You couldn't buy a banger today for that price!!!

 

[JP_]

or a house. You generally can't have it all

That is true. I went for house I've not been abroad since 2005, and my last week long holiday was 2017. Soon to go off for 3 nights glamping in Sussex though - yay!

 

[Keithmac]

Our 3 bed Terrace is probably worth £220,000 now.

We'd struggle if starting again from scratch to buy the same house.

I genuinely worry how my two kids will get on the property ladder, will need a lot of help from me and the wife. Just hope we can do it for them when the time comes.

 

[Mottie]

I'm what you probably think of as one of those retirees, so I'll fill you in a bit on what it was really like to buy a house in the 1970s if you were young. For starters houses couldn't be bought "for sod all" - I seem to recall that the household income had to be at least 1/3 of the mortgage value. Note that this wasn't combined income, just (most often) the man's income. My first house cost £10.5k in 1976 at a time when I was earning under £3k per annum, so the only way to fund it was to find about £2.5k as a deposit in order to afford the mortgage payments. That took me 4 years, overtime every week and at times a second job and I sold my beloved motorbike and a few other things besides. For the first year my furniture comprised a bean bag, a mattress and a very secondhand black and white TV. At the time I bought interest rates were about 8.5% but they went up to about 11% by mid-1979 - a hair raising amount which resulted in a number of people I worked with losing their homes because they couldn't afford to keep up the payments. You also have to bear in mind that income tax started a lot lower back then and was at a higher percentage - no 20% base rate - which I doubt you knew. Compare the taxation and interest rates to today's rates, if you will, then add in the fact that many items were bought cash (limited credit). I only kept myself afloat by taking in a lodger for a number of years. I will grant you that it wasn't as hard as it is for younger people today, but thst was a world in which credit cards could be hard to come by and getting credit to buy, say, a car, as a tradesman meant going cap in hand to see some snotty, suited bank manager and basically just grovel. So things there are immeasurably easier today

So properties didn't cost sod-all back then, and it has always been a struggle to get onto the property ladder. I'm not saying it was harder than now - but it wasn't easy and affordable houses were (and probably always will be) "fixer-uppers"

Not forgetting that in the 70’s as well as the 80’s, you could only get a mortgage from a building society. They only had so much to loan out each month and you had to be saving with them for a good few years just to get on the list for a mortgage.

My daughter and her boyfriend (now husband), paid just over £400k for a 2 bed flat in North London a few years ago. They are looking to stay local but want a house with a garden and they start from about £650k upwards. That sort of debt would worry the life out of me.

 

[Deleted member 174758]

Not forgetting that in the 70’s as well as the 80’s, you could only get a mortgage from a building society. They only had so much to loan out each month and you had to be saving with them for a good few years just to get on the list for a mortgage.

That's true. I went with a mutual (lender - banks rarely made loans on cheap housing in the 1970s as far as I recall) - and to get a mortgage I didn't just have to have the deposit, I also had to wait in a list to get a mortgage - because they only had so much income every month and so much available to lend. I think that added about 5 or 6 months to the wait.