Who can afford a house in 2022?
A very warm hello and happy 2022! It's been a while since I've written a post due to all of the very exciting things that are going on behind the scenes, more on this in another post!
When I do get a minute to myself, I tend to do a few scrolls through my Facebook feed (I know, tell me off, I was supposed to reduce screen time in 2022, tut-tut to me!) and I honestly can't believe the amount of media on the topic of purchasing a house, especially those that mention "quit the Starbucks and you'll be able to afford a home". As this ridiculous information circles our social accounts, house prices are increasing, energy rates are rising while general bills such as transportation costs or petrol are going through the roof. And so, today I wanted to discuss what the reality is and whether it is too much Starbucks over the year, or is this something completely out of our control?
The Situation
Currently, in the UK, around 40% of young adults cannot afford to buy one of the cheapest homes in their area, even with a 10% deposit. The Institute for Fiscal Studies said house prices in England have risen by 173% over two decades, but the average pay for 25-34 year-olds has grown by just 19% over the same period.
Let's just work that out
2000 - Average price of a property: £93,624
2000 - Average annual salary: 18,848
2022 - Average price of a property: £276,759 (+£183,135 more)
2022 - Average annual salary: £25,971 (+£7123 more)
Examples of £25k annual salary jobs in 2022
NHS workers on Band 4
Deputy management
Support officer
Care assistant
Teaching assistant
(the list could go on!)
With an additional 7k in the youth's back pockets, working respectable jobs, they are expected to pay an additional £183k more for the exact same house that was purchased two decades ago? Hardly seems fair.
Also, if 40% of young adults cannot get onto the property ladder, where are they going to go? To the rental market? Where the cost of the rent is the same, or if not more than the cost of a typical mortgage?
What's even more alarming is that some famous figures are choosing to spend their free time telling the same youth who are genuinely struggling to simply 'stop your Netflix and Starbucks' and you'll be able to get onto the property ladder. How infuriating must this be to hear if you are one of these souls who work 40+ hours a week in an educated job and are doing their best to save up but feel like they're getting nowhere?
I know I don't need to tell you smart cookies that it's not the expenditure stopping the youth from getting a mortgage, it's how eligible they are based on their salary against the mortgage they are after. Unless they get a pay rise or the housing market crashes, the mortgage is near impossible to achieve unless you have a large deposit from family members - another recently spoken topic on social media explaining how most individuals get a helping hand onto the ladder and don't tell people this out of feeling shame for taking the help. It's most certainly not shameful when it's the only way!
What really is the issue?
We hear it all the time - there isn’t enough housing, there’s not enough in certain areas, the new houses are too expensive. This video from Sky News explains looks depps into the housing crisis to unravel what is really going on.
Source - Sky News
I loved this video as it tackles the problems from all sides. We are usually fed the idea that there isn’t enough housing which has led to overcrowded housing but this message is also a good eye opener to explain that the current housing stock is pretty poor and almost unfit for habitation.
Could tiny houses be a solution?
Now, I'm very aware that tiny house living isn't for everyone. Yes, we've had some good laughs watching 6ft+ people attempting to stand in a 6ft bathroom! BUT, we do believe it is a solution for some. Even if 1% of that 40% opted for a tiny house, that's around 300,000 people with a property including financial freedom as they are more affordable than a regular home.
It's the very reason we are working on developing our homes to live as long as regular houses, to fill the void of missing one-bedroom homes. We are also working on financing that works similar to that of a mortgage along with methods of finding land owners who support the tiny house lifestyle.
Imagine paying off a home before retirement, one that can be moved should you want to move to a new location? A land owner should you want a permanent plot with opportunities to rent spaces to gain income from others?
‘Sounds great, how do I do this?’ Well, that’s coming up in the next post! We’ll run through the general savings of living tiny, the easiest ways to get started and potential income should you want to profit from your land! Until then, as always, if you have a question or would like to know about our models, feel free to contact me - leanne@thetinyhousingco
Have a fab week!