To disagree with my work colleagues in thinking that the cost of living is a potentially serious social problem?

[Livingtothefull]

I was having a discussion with a few work colleagues, they were all 50-60 somethings and own their own properties, only small mortgages left etc. We are based in one of the major cities in the UK.

I said that it was a big problem that a lot of people, despite working hard & having good jobs and/or professional qualifications, couldn't afford to buy property and much of their salary went on rented accommodation which left them very little disposable income….also many jobs were insecure which left them worrying about being able to afford rent or to save.

I have previously talked to a few (mostly younger) people who are in this position. One person who is a police officer in his 30s complained that he had been a police offer for 12 years, been promoted but still couldn't get on the housing ladder.

I suggested to these colleagues that there was something intrinsically wrong when a police officer - doing a difficult, sometimes dangerous and necessary role - couldn't afford to buy himself even a small flat.
They all quite vehemently disagreed with me; their response was, that rather than complain about the cost of living, people should just go wherever the work and job security is and where housing is more affordable, and if that means moving away to a cheaper area then so be it (one or two of them pointed out that they had had to do this when they were starting out).

I was really quite surprised at their response: is it just me who thinks this way? How are people with personal/family ties to where they live supposed to just up & move? What about essential workers like nurses/police officers who are needed everywhere, not just in affordable areas?

I do feel that the 50-60s are a luckier generation (I belong to it btw) & I was surprised at their response, some of them have DCs? I do feel things are tougher for the younger generation & it can be difficult to get ahead, I think I have quite a lot of anecdotal evidence from them (no massive student loans in my day either). I just felt that the colleagues I spoke to weren't aware of how much the world has changed - but would be interested to know what others thought about this.

Granny - I'm guessing you're not in the southeast if you can buy a decent house for 120k. You've highlighted the issue though - the type of doerupper you bought just isn't available anymore.

My house sold for 33k in 2000. To go from that to 110k in 2005 is crazy. It's possibly worth 115 now I think. The last one on the street sold for that.

Probably because all the houses being built on such [green field] developments are large 4 bed plus houses which are definitely not affordable.

I’ve heard that argument - and there are too many 4/5 bed deluxe houses in them but the little family I have still in the area and the few that I grew up with who managed to stay around are all on these new estates in the two and three beds - usually renting occasionally buying. So if they hadn’t been built I think housing issues there would be even worse.

I think even the Uk government admits lack of supply is part of the issue.

I also don’t think my parents or IL had it easy - I know my parents cousins and a sibling emigrated in 60 and early 70’s for work. I worry that it will continue to get worse and that my children will find it impossible to get decent roof over their heads. If renting had greater security longer leases or something we’d have done that happily for longer so I think that's another area the government should be looking at.

Actually I think the stamp duty prevents a lot of people moving. Personally I think stamp duty should be zero on anything up to £1 million and then a percentage such as 1-3% of the purchase price so people pay it and don't bother trying to avoid it. If foreign (as in not paying UK taxes on worldwide income) the stamp duty tax should be 20%.

Stamp duty on private homes possibly could be reduced but the stamp duty on second or subsequent homes definitely need to stay or even increase

The interest rates argument is a stupid one. 17% of £30,000 (what my parents bought their 4 bed semi for in 1983) is not the same as raising a deposit on a £300,000 property in the SE whilst paying over a grand a month in rent.

I'd put VAT on 2nd homes with very few exceptions. I own homes that I let and I run it as a business. My tenants will not be able to afford to buy. It's important that LLs run their business as a business and not some side gig that isn't properly managed.

We also need to build better - we can’t have acres of sprawling shitty rabbit hutch semis with tiny rooms - we need well planned , spacious, low rise developments like they have in Europe - with good gardens, storage areas etc. And we can’t keep expanding the population unless we build.

yoko I don’t think the interest rise thing is stupid - 17% on a 1980s wage was a huge amount. It doesn’t have any bearing on the fact that house prices in much of the south east are too high. Both were/are bad situations. It’s shit trying to raise a deposit on a low wage and it was shit paying 17% back then.

As for stamp duty - where I live you’re taxed on the profit even from your primary residence. :/

It is extremely difficult to buy your own home but when we bought a derelict house in 1981 we were the only ones in our family to buy their own house. People rented, normally from the local council.

Which is of course something that many more younger people now would like to do than are able to.

Our first mortgage was 15% interest and the top up loan was 18%. It restricted what we could buy. No-one could live with that now.

Absolutely nobody could live with it. Because the property prices are so very much higher. 15% interest rates on a 40k mortgage are bad enough, 15% mortgage rates on a 300k one are far worse. Even factoring in inflation.

Of course, very low interest rates and spiralling property prices are inextricably linked. They feed each other. People can borrow more because rates are lower, so they have to stay lower, otherwise nobody could borrow enough. Meanwhile, we'd be infinitely better off if prices were lower and rates higher, but that's not a political possibility. Whole thing is an absolute nightmare.

The amazing house price inflation mainly affects some parts of the country. Where I live you can buy the first house we bought for £70k.

It affects virtually all parts of the country. The thing to look at isn't the price of the house now, it's how much it has increased in real terms over the past 20 years. And how much that is as a multiple of average earnings there.

In the city I live, there is still a lot of housing stock for well under 100k. There are dozens and dozens of 70k listings on rightmove. They're still inflated from what they were worth in real terms 15 or 20 years ago though. There are a smattering of places in the country where this isn't the case, but the fact that a house costs 70k now doesn't mean the price isn't hugely inflated.

Of course, very low interest rates and spiralling property prices are inextricably linked. They feed each other.

Exactly. Prices have risen because affordability has risen. And affordability has risen because there are now expected to be two wage earners and repayments are at a lower rate. Prices will continue to rise until one factor (demand, ability to pay) becomes rate limiting.

A true cynic might suggest that women’s lib was allowed to occur as it was more about getting two taxpayers into the tax system then any desire to actually free women.

The whole system funnels a lifetime of earnings into the pockets of either private landlords or whomever holds the equity in your house. And people who owe money are nice and biddable. Get them in debt earlier from uni, make them work constantly to feed the housing machine, numb them with social media and TV and consumer goods and you can do anything you please.

I really do sound like an old commie.., I am honestly quite centrist in my views. I do think there are several very deeply ingrained and worrying developments in society over the last forty years - the housing debt thing being one of them.

Yep. And honestly, this being presented as something that's in any way a matter of opinion is nonsensical.

The spiralling cost of property over the past few decades is something that has happened and is happening. Your choices are to agree with this or be wrong. It isn't a comment on whether it was easy in the past, it just means it's even harder now. Anecdotes about you/your parents having to live on beans for a couple of years in the 70s or millennials going on city breaks are literally worthless as arguments against this. The fact that some people paid very high interest rates for a while are similarly irrelevant.

Flowing from these inescapable, doesn't matter whether one accepts them or not facts, are consequences. People caring less about a system they feel they have no stake in, people being unable to house themselves, the hollowing out of London.

The only thing anyone gets to decide is whether they care about it or not. That's all.

Who benefits from all this?

Banks
Private equity companies
Land owners, developers
Private landlords
Corporations who keep wages at a sub living level and get topped up by the taxpayer.
Successive governments who see no need to change the status quo

That’s where our ire needs directing.

Boomers just lived their lives, they didn’t set out to bugger up their kids housing market.

I'm happy to save some ire for people who'll deny what's happening. And who'll vote for those who wanting it to continue.

That's not all boomers and elderly though, by any means. My parents are boomers and they totally get it, whereas some people younger than them don't.

Everything onionshite said.

And as ana said who benefits? Great your house has quadrupled in value, most will be using that equity to help their kids on the ladder, funding their social care, etc.

Granny - I'm guessing you're not in the southeast if you can buy a decent house for 120k. You've highlighted the issue though - the type of doerupper you bought just isn't available anymore. No not the south east but quite an expensive city. It wasn't what I would call a decent house, two up two down, no parking, no garden, not a great area but getting more popular probably because people can afford it. At least you won't freeze in it anymore like we did.

My kids wouldn't consider buying my first house, even now it has been done up. They also wouldn't consider leaving school at 15, not having a car (let alone a second one) till they are in their 30s. The earliest any of them finished uni was 22, by then they had all holidayed in more countries than I have, in my 20s I longed to be able to afford a fortnight in Spain but they go to Bali, or Cuba or New Zealand. They will moan about how much easier I had it though, even when I give them a five figure some to help with the deposit and that's after handing over £5k a year to help them at uni. I really should try harder.

They also tell me how hard it is having a baby in the house but when I mention babies with no disposables, no washing machine, no cleaner they just laugh.

Is it tough getting on the housing ladder? Yes of course it is, was it tough in the 70s? You bet it was and we had no idea inflation would turn our homes into valuable assets, we just needed somewhere to live.

I don't vote Conservative, deplore what this government is doing to people and don't begrudge young people any advantages they get in life.

RavingRoo makes an interesting point in writing that in some industries, incomes are higher in India than the UK. I suspect that the UK is right at the edge of the wave of global wage levelling, and here wages are levelling down. As English is the global lingua franca, the US and UK were the first and most vulnerable economies to succumb to the outsourcing of lower skilled service jobs. At some stage, the trend will probably turn again.

Anecdotally, many years ago, my DSis paid her ironing lady in Taipei more than I paid mine in the SW UK. There was no pool of unskilled labour left there, so service sector wages inflated.

It's odd though that your response to it is tough getting on the housing ladder is to say yes, it was also tough in the 70s. If you understand that there's no comparison, it's not particularly helpful to compare them like that. If you don't understand, there's a problem.

Why is it odd? It is tough now and it was tough then. They are facts. I know exactly how tough it was in the 70s because I lived it. I know how tough it is now because I have children and friends who are just getting onto the ladder. Do you want me to pretend it was a breeze getting a mortgage in the 70s?

I think one of the problems is someone will say well my mum and dad had it easy and then think it was like that for everyone and that applies now as well, I know young people in their 20s buying £450k flats in London but they are both on good salaries, not everyone is as lucky.

It is all a bit of a lottery, I said earlier my first house, modernised, is worth about £120k now, well we sold that house after two years and made £2k on it mainly due to the work we did as we bought close to the peak of a boom so when we sold we had been through a dip and prices were just recovering. We invested in a much bigger house, it cost approximately 25% more than we got for the two up two down house. It was a bargain as it wasn't a popular type of house at the time, 4 bed Edwardian semi than had been a HMO. We did it up and it became trendy. It is now worth £500k. We could have stayed in the first one or bought the second one, we would still be the same age but are much better off having bought the second one. That was pure chance plus some hard work doing it up.

Grannytomine, the way you describe your kids does not describe my experience. Thinking through my university friends, none of us really had cars in out twenties, many still rent with little hope of buying and it is only relatively recently (mid to late thirties) that any of us have bought homes. We haven't been on lots of extravagant holidays (they might seem it in comparison as we went abroad, but with the advent of cheap flights, a £30 flight and a youth hostel was hardly luxurious). I don't know what your first house was like, obviously, but I know when my parents were young there was the concept of a starter home with the idea that you would be able to move somewhere larger as the family grew. Now I think many people are not hoping to buy their 'first' home but their 'only' home as the thought of the costs of selling and moving again are too much and often people are buying at a time children are also settling into schools etc so it is understandable that they want those homes to be family-sized if at all possible.

It is tough now and it was tough then. They are facts.

Well no actually. If you want to look at the facts, you should be looking at how much a house costs now in relation to the average salary and how that has changed since the 1970s. It may have been hard for some people in the 1970s, but if you look at the price to income ratio, you will see that it is much harder for far more people now!

DH and I bought a 3 bed terrace with reasonable deposit £25k in 2001 - the mortgage was still 4 x our joint salary at £120k

So we each earned £15k, same job now pays £23K, same house costs at least £300k

So in 15 years house has more than doubled in price, so you save £50k deposit (double), but need a mortgage of more than double - net salary nowhere near has doubled, and how do two people earning £23k each save £50k - room in a shared house is £600 per month (more if a couple).

Our savings came from DH having lived at home paying a tiny amount of board. Mine was because I’d bought a property in 1996 when I graduated and there had been rapid property inflation in that time.

I will be encouraging my DC to stay living at home and save hard so they stand a chance of investing in property somehow. The plan when we were still in SE was the DC could club together to rent us a retirement flat so they could share the family Home and we would get peace!

No granny, I want you not to post anything that might imply it was as hard as it is now, since that would be incorrect.

It would also have been useful to see more analysis of just why the younger people you know are less inclined to want to buy a doer upper. Ie, the concept of the ladder not really existing in the same way any more. The need for ready cash/other resources such as family help or lots of free time that doer uppers tend to require which can actually make them less accessible not more. And people being forced to purchase at older average ages, meaning that buying a smaller property then incurring more moving costs when more space is needed in the nearer future might actually make wanting to buy a home they can stay in more sensible, not less.

They also wouldn't consider leaving school at 15

Well you're not allowed to for a start....but don't let facts get in your way...