To be so sad about my slide in living standards?

[ColdNow]

I grew up in a not so nice area, but my parents had a big house with a huge garden that they bought on two fairly modest salaries when they were younger than I am now. My mum took years out of work when I was born and although things like holidays and eating out weren't a regular occurrence, my parents admit they were never really stressed about money despite having several children and easily paid off their mortgage.

Fast forward to now, where I did my very best to do the 'right' things. I got a good degree, decent and stable job, married and bought a property before TTC. I'm now pregnant and feeling so sad about our financial situation. We purposely went for a modest property with a tiny garden to give ourselves a buffer, but now with the huge increase in our mortgage repayments and other expenses we're struggling to keep afloat. I would love to work part time when I go back but it's now looking very unlikely that we'll be able to make it work without being extremely stretched. I'm always worried about money and already buy all my clothes second hand, shop at budget supermarkets etc. The main cost is housing though, because we live in an expensive city, but this is the city I grew up in and where all my family and friends are, and moving away would be a very difficult choice to make and remove us from all our support networks.

I just feel so sad that within a generation the things my parents were able to offer me (space, time) I'm not able to offer my child, despite me earning far more comparatively than they did. I'm also the youngest in my family and the older siblings are much better off than me, again just because of time - they got onto the property market much earlier before prices sky-rocketed and now although I don't earn a lot less than them, I'm only just scraping by. I notice this at work too, I have colleagues at the same level of seniority and pay to me but a decade or more older, and the houses and lifestyle they sustain far exceed mine.

I don't know what the purpose of this thread is except to just say that it makes me sad that this is the situation I'm in, and people younger than me (I'm in my early 30s) are even worse off.

Children and teenagers in general were much happier and more mentally healthy than now, the difference now is the debt load, basic property costing decades of debt, yet until the interest rates were jacked up the public happily went along with it (many are still spending like drunken sailors!) and eagerly embraced the banker enriching stupidity! Society needs a re-set, a proper recession 70`s style would focus minds a bit I think.

Nailed... money inevitably filters upwards because ordinary people spend every penny they get, whereas rich people run businesses that generate profits, have more money than they need and save.

Then you free up lending and the rich can start competing for ordinary houses against the ordinary people who want to live there, and they can pay more because they have bigger deposits and more disposable income to cover voids or costs or losses. Then ordinary people can;t set their housing cost aged 30 when they buy, their housing cost goes up with inflation every year that passes so they need to maintain their full time waged income until the day they die.

The normal state of affairs is that the richest, greediest, nastiest, cleverest, most devious, most talented get to the top, and once they're there it's reasonably easy to stay there (unless it is 1250 and you're the king and someone comes along and kills you and your entire family because they want to be king!) If you want ordinary people to have decent lives (and by ordinary I mean the bottom 75%, or 90% or 95% or 99.9999% dependent on the precise context - the top 0.0001% have so much compared to the 5% or the 10% or the 25%) you have no choice but to make their lives reasonable by redistributing wealth from the richest. This actually helps rich people as well as their businesses thrive more when ordinwry people have spare money to spend.

43 years of UK economics and politics has basically been the Republicans and Tories saying "ordinary people, trust us... if we set up the economy in the way that most suits the rich, but especially the super-rich, then you will benefit as wealth will trickle down" whilst Dems and labour have pretty much gone along with it too (albeit a bit less full on). Wealth DOES NOT trickle down, there was no reason to believe it would, and now we have the evidence it doesn't.

To be clear, if the UK was communist I would advocate for neo-liberal policies and that would encourage growth, wealth and improved living standards. It might have even been a decent idea for 5 years from 1980 to remove the worst problems from excessively powerful unions. But other than that it is EVIL, i tis literally by the rich and for the rich and regards the ability of tory donors to buy £20 m houses to be more important than the right of nursery workers to earn enough to feed their own kids.

How is not borrowing money going to get me, or anyone else a pay rise?
And who can buy any sort of property without borrowing. It's called a mortgage.
What a ridiculous statement. Did you buy your house with cash?

It’s a global problem. I heard on the radio this morning that the world’s 26 richest men - they’re all men - own as much wealth as half of the world’s population combined. Why? They can’t possibly spend that quantity of money, however luxurious their lifestyle.

There is some truth in that, but ultimately buying a house is the best financial decision you can make because you fix your lifetime housing costs at the purchase price, whilst inflation pushes you wages up for decades. In contrast renters will never see light at the end of the tunnel as their rent will always go up broadly alongside their wage rises.

However much ordinary people can fight it by buying second hand things they need, not shiny new things they want to show off, they can't fight the cold hard fact that every time they fail to outbid a property investor ordinary people are more and more screwed.

The less debt you have the less of a pay rise you need, the less people borrow (mortgage applications and house sales recently plummeted) the cheaper property gets and less you need to borrow for it.

You are comparing where you are now to where other people are when they are older, no reason to suppose you won't catch up. And no doubt people younger than you will be having the same complaints. When I was young all my older friends and relatives seemed to be so much better off, but that's not surprising they had had more time to earn and save.

Why? Because rich people have spent billions in operating media which encourages ordinary people to vote in parties for the rich and super rich, and because lots of people are selfish and stupid and would rather get one over someone they see as lazy or too politically correct than to vote for their own interests.

Under neo-liberalism the "haves" are the sort of people who can have six kids, send them all to the most expensive schools in the country and buy them houses when they get older... and not have to work OR worry abut money at all whilst doing so.

I know this doesn't sound right to a single parent on minimum wage who is REALLY struggling, but the current system isn't even there to benefit the sort of person who goes to Oxbridge, then gets a decent job in a City Law Firm and is able to buy a nice detached house in a nice area and send a couple of kids to private school. They are much less screwed under neo-liberalism than those on minimum wage, but they're still not the winners

House prices haven’t plummeted. They’ve gone down slightly in the last 18 months and the market’s slowed right down. As soon as interest rates start to fall the merry go round will start again with pent up demand accelerating it.

"buying a house is the best financial decision you can make because you fix your lifetime housing costs at the purchase price, whilst inflation pushes you wages up for decades."

No, you are at the mercy of bond/credit markets for the lifetime of the mortgage debt as to how much that debt will cost you, as people now coming off fixes are finding out. There has been no meaningful wage inflation in the UK for decades (people thinking their house was worth lots kept them distracted, funny how the strikes more or less started as the property bubble started to pop?)

You can walk a way from a rental, you can`t walk away from a big mortgage debt.

I know @AnonnyMouseDave, the “why?” was rhetorical.

The parents bought a detached house in the early 30s and brought up 3 kids there.

The eldest daughter has a better job, but lives in a two bed flat with her husband, which she has no chance of trading up from and has one child which is all she could afford. How is she going to catch up?

Well, you can take out a 25 year fix.

But you miss my point. Pretty much by definition - certainly in a crowded country like the UK - the cost of renting or buying a house goes up over time, like the price of bread goes up and wages go up. Inflation is real.

In contrast the cost of interest on a £200,000 mortgage does not rise over time. It might go up, it might go down, it might stay the same, but it is categorically not the case that year on year interest rates are higher than they were before, but with rents that is the case.

Nope, all that has happened is there is less properties on the market and prices have started to rise slightly due to lack of supply, in past, even in the most severe recessions, prices don't really fall, people just don't move, its very small movements in price for the average property

In order to live independently, you have to have a mortgage OR rent, inflation recently, so we are told, has been driven by wars and covid, 2 things beyond any individual to deal with, in past it has been banking crisis's, oil supply, govt mis management...

You appear to have a very simplistic view of the housing & jobs markets.

As for wanting us to have another 70s recession? all i can say is you must be well off to weather that, no one in their right mind would wish that on the general population.

That`s because RM etc. use methodologies that allow a small number of sales to skew the figures, you need to look at different ways of measuring the market

https://twitter.com/UkPropertyLion

My advice remains to buy a property as soon as you can even if you have 1 hour commute to work as I had in the 80s (we couldn't afford inner London then or now). So expensive were London prices in the 80s my teacher husband's school offered school flats to teachers and we spent the first 6m onths in one - I slept on the floor on a mattress when pregnant in that flat until we bought a house which might have felt silly given we had subsidised school flat and outer London prices were massive even then, but it felt worth the sacrifices to own something. Those houses cost abotu £450k today and the same couple - trainee London lawyer and head of dept teacher can still buy them today.

The secret has often been either in the area where you buy (in Bishop Auckland my grandparents' house - terraced with cellar costs about £130k today) or else having 2 full time professional salaries like lawyers etc. I was a very good singer as a teenager and now and might have done that proefssionally but I wanted to buy a house and keep my children so I picked law. 4 of my children are lawyers.

If there's no meaningful wage rises (I agree) then being a renter is even worse than in a world where wages do go up a fair bit!

You can;t walk away from needing a roof over your head, and I would MUCH rather own a house and know my costs may go up or down, and that I can rent it out for income if I need to, than rent a house and KNOW FOR A FACT that my costs will go up every single year until I die, and that I can never generate an income from it.

Not Rightmove.

https://www.statista.com/statistics/751605/average-house-price-in-the-uk/

It is very simple, the cost of debt goes up and so do the job losses while the price of property (based on demand for borrowing and job security) comes down.

https://www.wsj.com/economy/housing/uk-house-prices-fell-sharply-in-december-b52588e1

Yep... I work in property... a random example (the last thing I worked on.)

Small block of flats, all flats identical, figures approximate but give or take correct.

December 2022 sales price / value - £320,000
December 2023 asking price - £320,000
December 2023 theoretical value based on last sales price adjusted by reference to house price index - £340,000
Interest at December 2023 asking price - zero
December 2023 actual value - uncertain but circa £280,000

That’s based on the Rightmove data you just told us is unreliable.

Is this still true in a world where there are a lot of very very rich people who can simply pay cash and they don't even need the yield to be more than 2or 3%?

So that shows perfectly the effect of QE/Zero Rates and manic sentiment, was that the point you were making? The graph should be like a mirror image as the line starts to fall at the other side as all those things are stripped away. So glad I didn`t get into mortgage debt during the stamp duty "holiday"! (Read "Holiday" as exit point for the smart money, whether that was deliberately planned or not is open to debate)

Yes it is unreliable, the price falls are way bigger than that, anyone using PropertyLog can gauge for themselves how much sellers are cutting prices by.

Then why not show us the data that actually proves your point instead of figures you discredited five minutes ago?