Why have people tolerated the housing catastrophe of the last 30 years

[nomemono]

I know it has been good for those geared up or alt the top of the ladder in the mid 90s, and to a declining degree, most years since then, but really, how has this been allowed to happen. Just as one illustration, houses in the frankly crime ridden North London estate I grew up now cost 4 times their real, inflation adjusted, 1997 price. £420,000 to live in one of the worst areas of London, in an old, poorly insulated house. Oxford, affordable when I was a student, now almost worse than London. Cambridge, Brighton, anywhere well linked and with good transport links or local jobs, the same. People casually posting on this website about having £900k to spend on a house. Single people shafted, ditto those without inheritances. How has it come to this?

Because older people are more likely to vote than younger and they’re the ones benefitting from house price inflation and shortages of homes to buy or rent.

Maggie thatcher bought peoples votes with the council house give away

then the free market and making money above valuing people

acttually don’t think it’s the average OAP - all the ones I know are shocked at the value that is put on their homes

This is a good question OP. Maybe it’s the boiling frog analogy? Prices just kept going up and up and up, with a couple of slowdowns or plateaus, and it took a while for a significant number of people to realise that property is now out of reach for a large number of the population?

My husband and I bought our house in 2000 for £97,000. Current value? Just shy of £500,000. We have no mortgage.

We are in an incredibly fortunate position solely due to the fact that we’re in our 50s and thus were buying a home at the time we did.

When we bought the house (which was at the top end of our budget), we put down a £5,000 deposit and the monthly payments were very affordable.

It sickens me that what we took for granted is beyond the reach of anyone at the age now that we were when we bought this house. I work mainly with people in their early 20s and not one of them is looking likely to be able to buy a property any time soon. Most of them can’t even afford to rent so still live at home!

I’m not going to pretend I have the answers to this situation but how on earth are we in a position where home ownership is out of reach of most people in their 20s nowadays? People seem to have to choose between buying a home or starting a family - both should be achievable!

It’s been allowed to happen bevause what actual choice do those having to live with it actually have?

… and then there’s the steep rise in the U.K. population in a short time, a lot of it old and in owner-occupied property. House building rates lag way behind the rise in the numbers of people in the country.

Because it made some people feel very rich. Many people.had a vested interest in keeping house prices high.

My parents bought their house for £27.5k in 1980 and my mother sold it 2 years ago for £350k. That will have made her feel like one of the wealthy.

I remember when it was worth around £80k in 1993. She used to talk constantly about what her house was worth. She saw it as a direct reflection of her own worth. She'll have felt like a millionaire selling it for £350k.

It made other people feel wealthy too and when people feel wealthy they're more likely to spend on luxury items. So they borrowed and spent and kept the economy looking good.

Where can you buy a house for £420,000 in North London?

I’m interested 😂

I think what people are doing now is buying a starter home. The fact that you’re still in your house in your 50s suggests it was more of a ‘forever home’. I don’t think young people can jump straight to that rung of the property ladder anymore, no.

Also, more and more people are sticking with their starter homes instead of upgrading, and prioritising other things like experiences, holidays etc.

"The average loan by building societies in the first quarter of 1982 was £ 15,385, or 1.68 times borrowers' average income" - from the Bank of England files.

Now you can borrow so much more. Ds is saving for his first house, he knows he is limited by what mortgage he can get on his salary so his house deposit is the thing that gives him more choice. Luckily he is very sensible and has already put away a good amount.

This here.

Houses used to be homes. Now they are investments, buy to lets, second homes, air bnbs. Go to central London in winter and see how many lights are on in the apartments overlooking the Thames in the evening.

We didn’t intend this to be our forever home - ironically, we got our house for a reduced price as it’s in the middle of nowhere, incredibly rural and in 2000 that didn’t seem to appeal to many people. Reading threads on here and seeing what people are saying in real life, it seems this is actually what many people are after nowadays!

But one thing I do have to slightly disagree with (sorry!) is that in my experience, many people in their 20s can’t even afford starter homes at the moment. Starter homes, when we were buying, were 3 bed terraced properties, priced at around £35-45,000. That was incredibly achievable only 25 years ago and now even those properties are selling for upwards of £250,000. I don’t know any youngsters who can afford that, especially if they’re single.

Because it’s easier to believe the lies that young people are spending their money on avocados and wasting money rather than admit there is a housing issue. Using housing as a money maker for landlords to own multiple properties rather than people’s homes was always a terrible and selfish idea.

Houses should be homes.

Gary Stevenson, Economist has an excellent you tube channel.

This video explains the house price situation.

The housing ladder is no longer a thing. When you can’t afford a property till you’re over 30 and have moved multiple times due to renting, why would you buy a tiny flat?

The problem of wages not rising belongs to tax credits. The generation x and millenials all became addicted to tax credits and preferred to work the minimum amount of hours they could possibly get away with because the rest of it would be topped up with tax credits anyway so why bother working. Of course, t his means that you can only ever have £6k in savings which means that you can't afford a house deposit.

The problem of house prices also lies with Gen X and Millenials. They are the ones paying those prices. Them. Not baby boomers, baby boomers didn't pay those prices - they haggled and they haggled fucking hard too. Didn't pay £50k more for a house coz someone put some Aesop handsoap and John Lewis Towels in the "downstairs cloakroom".

It's easy to blame the boomers. Perhaps look inward a bit more because thats something you can control.

So there are a number of factors:

1. double income families. Double income families put pressure on house prices because they increase demand. By having 2 incomes you end up increasing the value of houses because the same number of purchases are happening against 2 incomes instead of 1.
2. Supply being outpaced by demand. Population grew by 600k in the last year alone with 230k new dwellings built. This is insufficient
3. lower density: the increase in the rate of divorce and the increase of people using the bank of mum and dad to get on to the property ladder as single people. Over the last 20 years the average people per dwelling has decreased from 2.5 to 2.1 (roughly a 20-25% decrease).

all these factors and probably a few more have resulted in sustained pressure on the house price because they all indicate an increase in demand which has outpaced supply by a significant margin. For instance in the 60s people would spend approximately 8% of their income on accommodation which is now sitting in the 20-25% region (on average, the portion for lower income is vastly higher). That’s a 3-4 fold increase in the cost of housing in real terms (taking mean wage as the indicator).

There have also been real terms increases in the wealth and productivity of the UK which also naturally puts pressure on house prices. And inflation of any kind (real or monetary) always benefits people with assets and debts (assets continue to appreciate while debt value is destroyed in real terms). This is why it’s always better to take on as much debt as you can as early in your life as you can reasonably sustain. I work with people who today had mortgages of £500/month and thought that was a monstrous sum. I work with other people paying £2,000-£3,000/month for their mortgage today. Over time inflation makes fools of us all.

Because it made some people feel very rich
This. We've tolerated desperate wage erosion for years because enough people feel rich as their homes have rocketed in value due to a strategic lack of social and private housing. Throw in an inheritance and/or a buy to let and you're golden. Of course the real beneficiaries of all that unearned and untaxed wealth are the super rich - and keeping the wealth of the country in the hands of the few seems to be both Tory and Labour policy these days.

I wasn’t at the top of the ladder in the mid 90’s, I was just graduating university but I have a house now. Even now both my dd and my dsd are buying houses within 3 years of graduating by working hard

Because for some people it’s all they can afford at that point in time. I bought a 2-bed flat in Zone 3 at the age of 31. Houses in the area were literally 3x the price.

and keeping the wealth of the country in the hands of the few seems to be both Tory and Labour policy these days.

Yes. The super-rich seem to have brought up all the worlds resources and are now selling them back to us for 20 times more :(

I have three in their 20s and they have just decided not to play the ‘housing ladder’ game. They can’t join in and they can’t win.

Some bloke at work who has several buy to lets was banging on about 40 year mortgages and shared ownership and commuting 2 hours as options for them. They MUST buy something. It worked for him! No. They won’t be inflating this bubble any more. He didn’t like that I said flats were slowly deflating and it was a good thing that landlords were being squeezed. Like he was clever to have made money instead of just lucky with timing.

What are we supposed to do except tolerate it? I went on a housing protest in 2013 and it made bugger all difference.

Also surely this comment isn't serious:

baby boomers didn't pay those prices - they haggled and they haggled fucking hard too. Didn't pay £50k more for a house coz someone put some Aesop handsoap and John Lewis Towels in the "downstairs cloakroom".

All of my millennial friends have ended up buying absolute wrecks cause that's all the could afford. One couple bought a house with no floor or running water and still ended up in a bidding war over it. Aesop handsoap, give me a break.