Social consequences of house price boom

[Upwind]

comment at the guardian.co.uk [click]

One of my pet subjects but I have not seen this in the mainstream media before:

"If food or energy prices were rising at 8% per year, let alone at 20% there would be outrage. There would certainly be alarm that such price rises were not sustainable and that increasing numbers of people were unable to afford a basic commodity.
Academics at the university of Aberdeen are currently running a project on this, and other, changes in society and believe that "when the implications of these developments are taken together, they hold the potential to produce profound and, as yet, largely unanticipated social consequences for this age cohort, as well as for UK society as a whole".
Astronomical prices mean that couples who cannot afford to buy, or move to larger properties, or lose half a joint income, are having children later in life when their fertility rates are lower. You do not have to own a home before you have children but many people desire at least some stability before they do so. "

I think one of the problems is that actually for a very long time now, people have expected to own a house. It must be at least 50 years before people on above average salaries felt they had no hope ever of home ownership.

Maybe we are headed back to a Dickensian situation where slum landlords ruled the working classes? I think a more likely scenario is that a whole generation will consider emigrating to places where they can achieve their aspiration to own their own home. It's not a huge ask of the society they live in, where over 70% of people do currently own their own home.

I think it is naive of older people to assume that younger generations are just going to sit back and pay the final salary pensions, healthcare bills and taxes for a generation of elderly people living in relative luxury, while being offered no stake in the wealth of society themselves.

I know many talented people who will go elsewhere.

'I think it is naive of older people to assume that younger generations are just going to sit back and pay the final salary pensions, healthcare bills and taxes for a generation of elderly people living in relative luxury, while being offered no stake in the wealth of society themselves.

I know many talented people who will go elsewhere. '

I agree!

I am already actively encouraging my children to leave. They are dual nationals and so their options are there.

have to disagree the relative luxury bit. People a few years ago had miras and at one point up until about 20 years ago double miras which helped. people dont have that now but their is more of an expectation. The issue of an elderly generation which lives for longer each year had many complexities, health care, mobility, carers for the elderly non of these services are free. We live in an age of nuclear / step / single parent families so these have to be provided by someone. If you are incapcitate or your faculties are impaired it does not matter whether you pay privately for your care or whether the state provides it if your cares are abusive / take advantage. With few people around, which employer can attract someone good becomes a lottery. If its hard to get good people now to do healthcare what will it be in 20 years? no time to finish this now school run (walk)

I remember back to the 1960s when I think mortgage interest tax relief was not capped. My father as a fairly modestly paid hospital consultant was paying under labour 66% tap on his upper income and 85% on building society interest. It got so it wasn't worth saving. The conservatives got top rate tax down to 40% but we lots lots of reliefs before that.

I just think the housing market goes in waves and yes it's got expensive in terms of prices in the last 10 years but it will probably not increase much in the next few - tends to go up and down so things even out. Gone are the days when infliation was so high you could get a huge mortgage and if prices and inflation and eage infliation was 10% a year you knew that mortgage sum owed in 5 years might be actually half what it was then worth in a sense.

Romania is fairly cheap still. I bought my island in Panama which was not expensive. I hope instead my children will stay here but pick jobs which allow them to buy somewhere.

modestly paid consultant' 'bought my island' fgs!!!!!!1And as for romania is fairly cheap that is a bit like tebbit saying get on your bike and find work!Xenia you live in a parallel universe

Yes, or let's get all single mothers on benefits to pick up litter for a few hours a day. It's dignified and great experience for the CV.

I think all we have accomplished here is to show how impossible it is to judge the relative affordability of housing across the generations - once you take into account MIRAS, salaries, inheritance, interest rates, tax rates ad infinitum. No matter which way we slice it, we cannot explain why first time buyers in such huge numbers are exiting the market. It could be herd instinct and a general feeling that they cannot afford it, or it could be genuine affordability.

No doubt somewhere in the middle. Doesn't anyone else find it strange that in a time where consumer spending has hit record levels, and people have a higher standard of living than ever before in almost every sense, that people currently locked outside the housing market are increasingly pessimistic about ever having that one commodity that their future depends on - a home of their own?

sorry i can't find a way to shorten that sentence.

Xenia - but what about the poor Panamians - who are priced out of their own island market!!

What really p*es me off about the British housing boom is the way we are exporting it to other countries. You can't pick up the broadsheets with out an article on buying in the latest east european/ cape verde property hot spot. Do people not think that the locals might actually want to be able to afford to buy homes to live in??

I think that there are statistics to show that the elderly are the poorest group in society today - so I am not sure where the view that they are all living affluent lives comes from.

I agree though that provision for the old will become almost impossible to fund from taxation probably within the next 20 years or so. It makes it vital that people save for their retirements in some way or other - or accept that they will have to work into very old age. Actuarial assumptions are that the first person to reach 120 yo will be a woman and it will happen in 2068, so that person will soon be retiring and will have to fund almost 60 years of retirement.

I'm not sure that going elsewhere will really resolve much tbh - house ownership and pension issues abound in most of the developed world.

I think what people are saying though Cloudhopper - is that there never has been a long held culture of home ownership for much of society. It was only really on the back of the Thatcher home ownership drive that people had the notion that that was something which they should aspire to - and of course much of the social housing stock was sold off to help them accomplish this.

In terms of social history, the Thatcher years are relatively recent. Prior to that living in a nice council house on a nice estate was what many people looked to for thier housing needs.

the kind of houses you can buy has changed since the sixties..then you could pick up a victorian house in a dilapidated state for next to nothing because no one wanted one..the expensive houses were modern little boxes on estates

even 25 years ago a thirties semi with a garden was alot more than a town cntre terrace now it's the other way round

just thought I'd throw that in

also seaside homes and those with views have gone up disproportionately

I couldn't disagree more soapbox.

Being a homeowner been the norm for the past 20 years, with 74% of homes in this country being held by owner occupiers at the moment.

Not only is it hugely the most popular means of setting up a household, it is also now the only secure way to do so, because there is an acute shortage of social housing for new applicants and a very insecure private renting model.

All of this leads to a feeling of complete impotence on the part of people who cannot either afford to buy a house or qualify for social housing.

20 years is a blink of an eye in social history terms(and is infact the middle of the Thatcher era - so not sure what you are disagreeing about).

I think house prices will stop rising for a bit and wages will go up and this temporary issue for first time buyers will disappear.

As zt says it's interesting what is popular and what isn't. Usually in rising markets smart flats do fine but in falling or stable markets it's the small house which can cost the same as the flat in some area which hold their value better. Top end isn't doing too badly at the moment either - hasn't a very big flat in London just cold for a record sum to an arab?

On my comment about my father in 1961 I don't think NHS consultants were paid that much actually then. We certainly never had a holiday for example until I was 10 and if you're paying 66% tax on some of your earned income it's faily punitive. It was around that time some pop stars were on 99% tax on unearned earnings under labour ( very left wing confiscatory measure like inheritance tax) that people started moving to better tax regimes. The incentive to work was removed.

ch, but haven't they always had that impotence right back to times like them being cleared off the land with the Enclosures and living at the whim of the local landowner as serfs to those living in employer provided slums whilst working in factories etc

'I'm not sure that going elsewhere will really resolve much tbh - house ownership and pension issues abound in most of the developed world. '

Definitely NOT to the extent they do here.

In most parts of N. America, it's far more affordable than it ever will be here to own a home - and one that's not a dinky flat, either.

so few people have access to social housing it is not worth regarding for most

in Edinburgh for example there was a piece on the radio the other day which said that a council flat had had either 750 or 7500 bids

not sure which and for most people it doesn't matter as they aint going to get one wwhichever of those figures is accurate

20 years is not the blink of an eye in social history. Nearly everyone over the age of 35 has had a bloody good opportunity to own their own home.

Now the generation below them have, within 3 or 4 years, seen that opportunity almost completely closed off to them. I don't think you can expect people to adapt their expectations that quickly. You have a situation now where people's overall wealth is almost completely dependent on when and if they bought their home.

If you look at the history of working people and governments, you will find it littered with social unrest caused by just this sort of phenomenon.

yes indeed- i vote to start a revolution forthwith. who's with me? hands up now, don't be shy

ch, yes, I was thinking of the social unrest below - enclosures fighting and even burning down holiday homes in Wales more recently. I don't think first time buyers though are that inflamed or put out at the moment that that could result. Presumably they just live at home longer until their parents get so fed up they try to find a way to help them buy if they can.

The US will always be a cheaper housing market as they have so much more land. We've always had people leaving the UK for more lands - going to farm in Australia etc. In or about 1900 my grandfather paid for four of his brothers (apparently they were all alcholics) to take a ship to the US and Canada to forge a new life there.

So if first time buyers can't get on the first rung what are they doing? A lot of people 10 years ago or more used to have to buy with friends 3 or 4 of them to buy a flat. Isn't that being done any more?

Expat - yes but once you factor in medicare, pension costs etc etc the overall standard of living is probably not hugely different! I concede though, that you are the expert not me

CH - I really don't know where you get the notion that those people over the age of 35 have had such a brilliant opportunity at home ownership - many, many people lost out during the late 80's and early 90's with record numbers of repossessions and the real cost of owning a home became all to clear to many! Negative equity abounded too!

Equally, there were still swathes of society who have never been in a position to own their own home!

You do seem to be looking at the past through very rose tinted glasses!

We'll have to disagree on 2o years being a blink of an eye - maybe it just seems that way to someone of my age

I have heard of some completely barmy schemes to get on the housing ladder at the moment. How does a 10% equity share strike you. You only own 10% of the house, but you are liable for all the maintenance and capital costs.

The only benefit you get is security of tenure. Is this the future?

Ooh, can I really buy a 3 bed house in London for 220K? I had no idea that was possible. Where do I go then?

We bought a 1 bed flat in a fairly nice bit of North London for £84,000 in '97, on a joint salary of 32,000 with a 2.5times joint income mortgage and small deposit. Current equivalent salary is easy to work out as we have NHS jobs, so on todays pay scales would be around £52,000. So todays equivalent professional but fairly junior NHS staff in London could probably just about afford a 1 bed flat somewhere in a not very nice outer London suburb, but not anywhere bigger or nicer. And the flat we had would be too expensive now at about £230,000
But doesn't everyone think house prices are currently particularly unnafordable? Thought that was widely accepted. But apparently not...

no xenia becuase some of use didn't plan our lives out to a tea like you - yes chastise me - tell me what i should have done

however i wouldnt day that a grewat proportion of society actually do plan their lives out - certainly not the section of society which i frequent - which isn't the same as yours.

so here i am - 34, no house - live on south coast. and with 3 children i cannot afford to buy a house within the area my children go to school ( a good school) and commutable to Hove where i work.

a 3 bed house ( no my teenage daughter cannot share with her twin brother and older brother) costs upwards of 200k

thats a monthly repayment of over 1350 = a month.

i realise that you and i come from different planets and that you may not realise this but i earn 26k a year.

and thats not considered a bad salary.

my husband earns slightly less.

and still at 3x both our salaries we could not get a mortgage for 200k

oh we could get a 5x salary - but we would seriously be on the edge.

i find your assertions that i am somehow lazy or stupid in not having bought property distateful.

'Expat - yes but once you factor in medicare, pension costs etc etc the overall standard of living is probably not hugely different! I concede though, that you are the expert not me '

Oh, yes, yes indeed it really is.

And yes, to answer the next question, I think about that. Often enough.