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. "

yes that happened to a friend of mine too .. 3 years paying her rent with no issues, eviction with no redress because landlord not paying his mortgage .. 3 weeks notice of eviction .. no concern paid to the fact that she was a single mother with teens at exam stage, a severly disabled younger child and foster children .. in the end the fostering service had to put pressure on to find her somewhere to move to because they didn't want to move the foster kids .. if she hadn't had them then she'd have been in B&B with an autistic child who wouldn't have coped

its an appalling situation .. tenants have NO RIGHTS against defaulting landlords

Twiglett, you are spot on in your analysis - it's just very rare to hear someone whose house has doubled in price expounding the negative impact of high house prices.

Funnily enough, I do own my flat, making me an 'existing homeowner' too. I pay a fortune every month for a tiny space, with no prospect of moving up the property 'ladder'. But that is a far better option than renting and friends who are renting with families have been moved from place to place until they are worn out.

There is no other option, which is what makes it so depressing for first time buyers at the moment.

The prices have become unsustainable imo.Wages are not rising in line with prices and people are being mortgaged for 40 yrs and at 6 times their salaries.Even a small rise in interest rates could put some people into serious trouble and as for the new fashion for dipping into equity to fund holidays etc it is a recipe for disaster if prices drop as many will be in negative equity.We have all been brainwashed to see our houses as a never ending piggy bank and as a consequence very few people save now The only wa y for prices now surely is down?

But you're making assumptions about what kind of homes people need. If my neighbours opposite an Indian family are happy to have 3 generations in one house who is to say that's wrong? If my grandfather in 1901 could live with 21 other single young men in one house was that wrong? Perhaps we've just got too high expectations of some sort of entitlement to privacy or square footage per person and if we lowered the expectation we'd be happier.

"Mortgages are simply "renting money", and roughly equivalent to rent. " I wish . Our rent is approximately 1/2 to 2/3 what it would cost us in a mortgage to buy the house we are currently in. This is a three-bed house for a family of (soon to be) six people - so not exactly palatial accommodation either!

The other thing that doesn't help buyers of their own home, is the ridiculous housing benefit system. Currently dh and I are out of work - we get 2/3 of our rent costs paid (the council won't pay it all because they say our property is overpriced but that's another story). If we owned our own house and lost our jobs, we would get no help with our housing costs at all. This happened to us before and we lost our house - twice. In today's fragile job market it is not unlikely to happen again in the future. Yes of course, you are supposed to save up for such an eventuality - but the cost of housing is so high that we will barely be able to afford a mortgage anyway - so what the hell are we supposed to do??

Xenia - would you be happy in the future if your children, their partners and your grandchildren all had to keep living in your house because they could not afford to move out? Would you have enough space for a room per family?

It is a genuine question. I remember some newspaper articles a few months back complaining about "KIPPERS" or some such - basically the new trend of grown up children who do not leave the parental home.

Xenia, your comments are reminding me of someone else, now who is it? Oh yes, "Let them eat cake".

Seriously, you have no idea what the issues and expectations are for people who are vastly down the income ladder. You are the one making assumptions that they have an entitlement problem - bringing in bizarre examples of people living in overcrowded conditions - as though that were acceptable.

When you have lived in a space far too small to accomodate you and your children, with no prospect of ever escaping the trap, then I will come and say that your expectations are too high and you have an entitlement attitude.

without short assured tenancies there would be a massive housing shortage though

the buy to let boom entirely relies on that

prior to that it was hard to rent a property never mind buy

and the number of households has increased disproportionate to the number of people needing housing ie it was unheard of for single people to be in a household alone

I think that is part of what xenia is saying

To an extent Xenia I do agree re. the type of homes we "need". There are proportionately more single owner homes in Britain now than ever before. We do have this view that each child should have their own room (and bathroom ), which to my mind is an unsustainable rise in standards. My kids will always have to share bedrooms unless we win the lottery. I think that is acceptable but I know some parents think it is irresponsible of us to have four children when we can't provide them with a room each (not said explicitly but implied, I should add!)

Zipi, I don't understand how Short tenancies increase the housing stock? Surely those properties would still be lived in, whether owned or rented out?

It is almost unheard of for young single people to live alone - if you break down the statistics the increase seems to result from a combination of divorce and people living longer

Well, expectations have changed in line with reality. Our generation are either putting up with sky high prices for tiny places or they are emigrating.

The problem with the rapid escalation of prices is that it puts people who have not owned yet at such a huge disadvantage compared to those who have.

Planners have decided that more flats are needed to accomodate the rise in single occupancy households. The problem is that many single occupancy households already have a lot of equity and have no intention of downgrading to a flat. However, families are having to occupy the flats because that is all they can afford.

Within a couple of generations it will have evened out, but unless you live on the ground floor or have a lift, a flat can be a real PITA with pushchairs etc.

My twins share a room as I've got 5 children. I think it's good for them. You learn give and take and putting yourself out etc when you share a room as anyone with a husband will know. Many parents used only to be able to have sex on Sundays when the children were at Sunday school because they had to share bedrooms with their children at other times.

Yes, I can see people saying I'm taking a let them eat cake thing as I have a nice house already but we went without a lot to get it. It certainly wasn't easy at all.

In fact on this issue of getting children to leave a lot of parents help them raise a deposit just to get them driven out so the parents get some peace, where they are able to do so.

Some people think communal living, lots of families together, sharing cooking and childcare etc is a better method of living than these two parents two children households and the cost of supporting them.

My children (if we have any more) will also have to share rooms. I don't see anything wrong with that.

I would like to be able to afford to live in a reasonably safe area, with enough space for them to have their own room rather than sharing with us! Perhaps unrealistic expectations, even for people earning above the average

Ah ch yes I saw some letters fro mOAPs rather cross that they were regarded as "bed blockers" because they were taking up more space owning their own homes when they should be selling them to large families. There's alos a shortage of property for sale, a huge one, not just people wanting to buy. It's taken my brother ages to find a house having chosen to come out of the market (waiting for this crash that hasn't happened) for 4 years.

Communal living would suit me fine, unfortunately living in a flat with three generations would be a very desperate measure. We can just about manage people coming to stay by sleeping 4 to a room, but I think that would be a very stressful way to live your whole life.

Actually then I would rather emigrate I think.

Exactly Xenia - I don't really blame them for being annoyed. I would hate someone to lecture me on what sort of property I should aspire to live in.

I think it has really gone way beyond status and expectations. Maybe in the early days there was an element of that, but in my experience of the highly paid professionals that I know and work with, just having enough space to swing a cat would be nice.

I'm also with Xenia and Miaou on the space per person issue.

We moved into a big 4 bed house here in Midlands from a 2-bed flat in London. It's far too big for our needs and we could live in somewhere half the size. I'd love to - why pay all that money on council tax and heating? - but DH doesn't want to move.

I console myself with the thought that, at least if I have to take in elderly parents, there is a the space to do so without our falling over each other. Other friends who have bigger houses rent rooms or take in B&B.

there are far more people living in single households than ever before

the people who pay for new housing and many conversions and refurbishments of dilapidated housing stock are very often buy to let purchasers

as the costs of housing and the prospect of amking money from buy to let goes down then the developers reign in the building of new developments

there is probably a fifty fifty split in economists views as to whether there will be a sharp correction in house prices

I don't think there will as there are a lot of people who are well able to own several properties

Yes, we have corrections sometimes as I remember from the negative equity days in the early 90s but we never get long term houses costing less. We didn'tstay down after the 1920s or was it 1930s stock market crash. We're above the 1970 crash levels. We returned those of us who survived it the negative equity days of the 1990s. We bought ahouse in about 1990 and sold it for exactly the same price in 1997. During that period it went down in price quite substantially as many homes did.

Each of the family houses by the way my brother has just viewed including the one he is hopefully buying were divorcing couples with chidlren who couldn't afford to stay there after divorce (very sad) but one reason houses are freed up plus death.

moving after divorce makes two households from one

i don't know the details is it balanced out by two households becoming one at the other side of the relationship scale

A big cause for the bubble is the "rent is dead money" fallacy.
Actually it should be a fallacy, but ain't entirely. A mortgage is dead rented money just the same.
However there are vast tax breaks for home ownership over any other investment.
If I invest in a company, creating jobs, then sell it, I can easily lose 50-60% of it in taxes.
Money made from house price inflation is tax free.
Even buy to letters are the beneficiaries of tax distortion in the way that interest payments are taxed in a much softer way than capital appreciation.
However, let us nail the Guardian reader notion that the prices aren't "real". They are as real as the price of anything. There is no inherent value in anything. Why do strawberries cost less than diamonds ? Why does someone on minimum wage in Britain get a higher price for their labour than most of humanity who live in poorer countries ?

Prices are more likely to go down than up at this point in time, but whilst we can assume that the government stops house builidng we can assume that in the long term prices will grow at the same rate as earnings which is normally rather higher than general inflation.

When I was growing up in Edinburgh (late 70s-1980s) our estate was full of families with kids. Reasonable sized houses, 3/4 beds and a bit of garden. Affordable on one reasonable salary, say £20,000 in today's money.

Now there are almost no kids about. Mostly its because the people living in them are the same people and the kids have moved on (like my parents) but also the house values are insane. No-one I know with kids, including the ones I consider wealthy, could afford to live there.

My dad worked part time for a charity after he retired. He and one other guy in his early sixties were the only people in the office who lived in Edinburgh as no-one else could afford to. The traditional suburbs of Edinburgh are getting very grey...

What will happen to these houses when my parent's generation downsize/go into care/move nearer family/die? Will the market crash because so many unaffordably expensive properties will start coming on to the market over a fairly short period of time or will it just start evening things out?

It is all very well for people in huge houses to bleat about how other people need to downgrade their expectations of size of property they actually need rather than want, but for those faced with no choice at all, it is more than just a platitude, it is a reality.

Our second bedroom is tiny, and with bunk beds can just about accomodate two children. Their stuff will have to be kept in our bedroom though, and they will never really have 'stuff' of their own etc.

I grew up in that situation, so I know it is survivable, but that was because my parents had 5 children. Now I only have 2 children, whose living space will be the same sized as I had as one of 5.

Anyway, although I have strong views on the topic, I wouldn't say I lie awake at night thinking about it anymore. Yes, there are consequences socially of this situation, but maybe it is just another shift in history of the rich suppressing the poor. What's new?

DC, mortgages are NOT equivalent to rent, they're just not! Hence buy to letters ought to be reducing since yields are low.