I was asked last week if I’d provide a quote for an article in The Telegraph on first time buyers and the current property market, with particular reference to Kirstie Allsopp’s recent comments about young people & their reluctance to make lifestyle compromises in order to save deposits. The short article is below, and then invited comments from some industry experts:
When it comes to houses, the usual story is that young people today are entirely to be pitied. Lenders are stingy, prices are stratospheric and wages are low, goes the argument. The poor little urchins have to make sacrifices their parents never did. Kirstie Allsopp, the television presenter, disagrees. In a recent interview, she claimed that first-time buyers have always had to give up some luxuries.
“Young people are slightly losing the concept that you make sacrifices to get on the ladder,” she said. “They want to go to university, they want to travel, they want to eat out frequently and they want to buy their first flat.” Allsopp has previously said that when she acquired her first mortgage she was earning a wage of around £12,000, buying pizza and lipstick as treats just once a month.
“On my 21st birthday, interest rates were at 15 per cent. It has never been, and never will be, easy.”
Is this right? We asked other broadcasters and property experts how they got that difficult first foot on the ladder, and how young people today can make it easier for themselves.
It’s lazy to criticise Kirstie for her privileged background with a ‘what would she know’ sneer (as some people have) and I’d rather imagine that she’s spoken to hundreds of first time buyers first hand during the process of filming LLL and gets a pretty good feel for a good cross section of buyers. From my perspective as a landlord to Manchester based young professionals and as someone who built up a decent sized property portfolio from a bank balance of precisely zero pounds, I felt I was also well positioned to comment and this is what I said, paraphrased by the Telegraph to lose the boobie reference, far too Northern 😉 :
Many twenty somethings today seem to want Hollywood and handbags not pensions and property, dissuaded that hard work reaps rewards. Get your tits out rather than get your bricks out these days is proclaimed as the sad route to success. I didn’t have cash or family backing when I started with £1 and a 100% mortgage, but houses were much cheaper so it was possible to be canny, creative & work hard to climb up the ladder, for a place to call home or as a business choice like mine. Sacrificing the good life for the mortgaged life is still possible, but only in less ‘desirable’ areas, getting stuck in as well as ditching life’s luxuries for a more frugal existence – doesn’t sound much fun but neither is being homeless & without security later in life really. If you have the bank of mum & dad for that extra lenient loan, thank your lucky stars!
I see time and time again with my tenants that the ones who are more ‘sensible’ are the ones who get on, and have watched how quickly some realise that buying endless pairs of Louboutins when you’re not on Mrs Beckham’s salary is not exactly paving the path to financial security. The smart ones work hard at Uni instead of treating it as a three year drinking holiday (believe me, I live in the heart of student land, there are still students who are *that* stupid). House sharing in growing in popularity again and I can see this being the next HMO style bandwagon for landlords to jump on (though most of them will design the houses really badly, treating them like ten a penny student lets).
For the tenants who do live alone, the ones who do it successfully and end up buying their own place are the ones who aren’t breaking the bank at Net-a-Porter or Pizza Express but living a more careful existence. I’m not talking beans by candlelight here – although with the recent unbelievably disgusting rises in utility prices, I’m a big advocate for candles – smart cookies still go out & socialise, but there are ways of doing it without spending a fortune and you don’t need a different ASOS frock every weekend. In the past few years I’ve seen a number of them change their lifestyles, save their pennies, even move back with parents if necessary, to gather together the necessary deposit for a house or apartment in an affordable part of the city as a first step to security. It is possible, I don’t care what some of you say, it IS possible. I’m also going to set myself up for an accusation of sexism here and say it’s been by far and away the girls who’ve done this well. Boy tenants are the ones who’ve got into the most trouble financially in my experience.
My first flat in 96 was £54k with a 100% mortgage where the builders paid the 5% deposit, payable back if the poroperty was sold within 5yrs. We absolutely busted our balls to make it a home, sourcing a reclaimed floor (back in the day before this was Living Etc obligatory) , fully plastering and decorating, then selling it two years later for around £69k when the initial two year deal came to an end and we couldn’t afford the monthly rise in rate. We then bought a wreck of a house in a location where I hated living, far away from trendy bars and our friends, but it was £47k, leaving us enough to do it up and make another profit. Even though I was working full time started a business, evening and weekends were spend filthy and working hard, I got a horrendous full body rash from sanding lead painted floors and washed dishes in the bath for months before we had an actual kitchen. To me in my mid-twenties, with no family money to fall back on or safety net to fall into, this was a necessity to create the financial security I needed and craved. No-one else was going to buy or leave me a house and the thought of carrying on paying rent to a landlord forever after 5yrs of doing it as a student & graduate was not attractive at all!
It took determination, a lot of hard work and a genuine desire to have my own home and it’s those things that I fear many young people don’t have today. That feeling that life owes you everything simply because you are so fabulous, it’s almost portrayed as a right to have wealth, success and lots & lots of blingy stuff. Big mistake, as Julia Roberts once said, HUGE. You get what you work for in life unless you are one of the chosen few who is incredibly talented at something like singing, acting or today’s golden goose profession, football. For the rest of us, hard, smart work reaps rewards. I’m not saying there isn’t a huge problem in our society where the rich are creaming the top of the milk leaving thin watery remnants for the rest, but imo the economic crisis we’ve seen had been a direct result of the greedy want-it-all and want-it-now attitude which has grown since the 80’s and flourished in the years pre the ’08 crash. Nearly everyone bought into it and look at the results. Dire. But not insurmountable, which brings us back to sacrifices.
There are houses out there which are crying out for a little home lovin tlc and there are mortgages at affordable rates – couple those with the type of buyer with their head screwed on right and you’ve got the next generation of ladder climbers. I’ve loved nearly every minute of my clamber up and there’s so much advice out there now for brave new climbers with their eye on the mansion on top of the mountain. It’s clearly not a route for everyone at the moment, but for those just heading out with their property grappling irons, best of luck 🙂
Have you deliberately chosen to ignore these facts? :
– A much higher deposit is required now. 5% / 100% mortgages which you enjoyed don’t really exist.
– House prices are 20-30% overvalued compared to the historical average
– Youth unemployment is at a record high . We have been disproportionately affected by the recession
-Apprenticeships are not very common, compared to when you brought. So many young people go to university and take on debts.
-Buy to let landlords have gobbled up many homes, which also increase prices.
I agree with you about some young people buying lots of luxuries, but we are not all like that. I’m not.
I will be interested to see if you acknowledge these facts, as it is a bit frustrating being labelled as part of the ‘want it now generation’, when some of us are trying hard to save.
Hi Matthew,
No I haven’t chosen to ignore any facts, just given my opinion on a statement of whether many potential first time buyers find it a struggle to give up life’s luxuries in order to get on the property ladder and I do stand by my opinion. Certainly not all young people fall under this umbrella and you may well be one of the ‘not alls’. I fully appreciate what you say but still maintain that houses can still be bought affordably in many many parts of the country. I’d also say that interest rates & deals are historically low, when I bought in ’96 we’d just had a recession and jobs had also been very hard to come by which is why I set up my own business. I was lucky to be able to buy that apartment at that time with that deal and have always said so, and do recognise the difficulties many sensible young people who really want to get on now face.
Interestingly, even though I’m a landlord, I do agree with you that the proliferation of buy-to-let mortgages, ease with which they were given and the almost manufacture of profits for gain within the industry pre 2008 in no way helped the UK housing market, artificially hiking prices and unbalancing the playing field. It was uncomfortable watching it at the time and hindsight is a wonderful thing.
I wish you all the best with your new business,
Sian
Sorry I came across as a bit moody yesterday. It feels like I’m up against everyone/everything at the moment.
Don’t worry, I feel like that regularly 😉
Sorry forgot to add, despite the larger deposits required now. I’m still positive about the future, as it’s much easier to start a business now – which I am doing.
Such a good post – well done!
I agree, it’s far too easy to spend the money than save it. Out of hubby’s friends, the one who isn’t on the property ladder yet is the one who had everything handed to him as a kid. Another rented out his house to go travelling, and although earns a damn good salary can’t afford to move back to his house so is currently staying with his parents, awaiting a miracle. Have their lifestyles changed? Of course not. They sit there whining about how everything is “unfair” and how the world owes them. They’re both 33.
Having said all that, it IS incredibly hard to get on the property ladder in Cambridge as the houses are all bought as buy-to-let’s for students, leaving very few for regular Joes and leaves many out priced on the asking price even before they’ve enquirer about it.
Developers have recently made “affordable” housing in a new estate- 2 bed flat for £350k??
Totally agree with you about the crazy prices in many parts of the country. Still amazes me that we consider houses over £250k normally priced – that’s 1/4 of a MILLION pounds!
Love that post, and so true.
I agree with a lot of what you said, however there are some young people who try very hard at saving and still struggle but it does get tiresome when 30 somethings moan about getting on the property ladder when all they do is holiday 4 times a year, buy designer clothes, new flash cars, newest mobile phones, new laptops, eat out all the time and then wonder why they can’t save, they are the ones that get on my nerves, stop moaning and start saving and stop being so materialistic!! ((I got on the property ladder in 1991 without any help and I was 20). It can be done if people are more careful with their money.