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. "

the reason a lot of people rent is because they get a better house/standard of living that way

is that bad?

is it not just coming in to line with europe

it is also more flexible as lots of people move for work and a house hinders that

it's easier to budget if you rent as the outgoings are predictable

True Zippi, if we bought the house we're in (bog standard 3 bed) it would cost about £1.5k in mortgage per month (say it's worth £250k, which is prob about right)
We currently pay £850 to rent it
Whereas if we were to pay £1.5k in rent we'd get a 6 bedroom farmhouse like this

We had children really cramped in in the early days of our marriage/house buying. I remember one second bed room when once the cot and bed were in there was basically no floor space. The difference we had was one career where wages would grow fast so we could move up.

My brother is finding at £800k in the bit of Yorks he's buying in just about every house is going before it's on the market officially so there are a huge lot of people who have moved up there usually from the SE or are on very high incomes who can still afford those places. If there weren't then the houses at those prices wouldn't sell. Most houses sold around here where I am recently have gone to families with children (but one or two parents are in high paid jobs or own companies). It's local teachers who have the hour's drive to work every day from the grotty part of XYZ where they have to live who have the problem but in 1982 when we moved here it was no different. My ex husband's school had to provide school flats for teachers because otherwise they just coudln't afford to buy a thing, even much of a one bed flat.

Wickedwaterwitch I said "equivalent", not equal.
You are renting money.

A mortgage is just renting the money.If you take out a 100k mortgage at the end of the term you have paid about double

Yes but you may get some capital appreciation tax free plus that nice feeling that you own it. We owned our last house outright. We would have paid the mortgage off on here in the last 2 years if I hadn't got divorced. My ex husband has a mortgage free house etc. Then you don't pay a penny more for the next 40 years of your life except council tax and for repairs etc.

Zippi - yes that's true - BUT if you own your own home no-one can tell you to leave within two months whether you want to or not. We are VERY lucky - we actually found a nicer house in an area we knew. But because of the move I had to give up my job (too far to commute) and we have to find an extra £140 per month in rent out of our benefits. The kids had to move schools after only 18 months of being in their previous school. I am terrified of it happening again but we have no other option.

Eh, what's the difference between equivalent and equal then DC?

You said "Mortgages are simply "renting money", and roughly equivalent to rent" I do get that a mortgage is renting money but that doesn't make them equivalent to rent. Or am I missing something?

xenia very few average joes will be mortgage free and with only council tax and bills for the next 40 yrs!In fact quite the reverse and any money/equity people have is being drawn down to pay for extensions etc as people can't afford to move.Until you make the last payment on your mortgage the bank effectively holds the deeds and owns your house

I suppose historically we have never had a time when the average Joe would own a house at all, beyond the pocket and expectation of most people, always. Even if we became communist people wouldn't own homes because no one would own anything but at least then the state could give identical homes to families which might appear fairer than the position now where if you inherit or are born with a high IQ or strong work ethic or just loads of luck or choose a well paid career you get a nice house and if you don't you don't.

Average wage is £20k. For example on fish4homes there are 92 properties in Scotland which cost up to £60k and about 7 in Newcastle only.

There are plenty of London coucils which won't allow new builds without a good proportion being reserved for the low income social housing end which is one means to try to ensure those people are housed.

IQ and work ethic have nothing to do with being able to afford a house.You can have a strong work ethic and a high iq and still have a salary which just won't allow you to buy a house.

It has always been thus but high IQ is likely to lead more easily into jobs which mean you can afford a house like an actuary or lawyer or doctor. Also if you never work you'll never earn enough to buy a house. If you work very hard you're more likely to, That's all I meant. I can never foresee a time when refuse workers or nuns will find it easy to buy their own homes on their salaries

if we were communists then the existing housing would be redistributed which would mean corrupt officials wrecking the most prestigious homes and the poor crammed in any old way

Average wage may be £20K but in places where the homes are worth £60K the wages are probably nowhere near average.

Also, yes, you may earn higher wages if you have a degree, but these days you'll probabky also have a £15 to £20K debt before you even start.

We could make gains on sale of a house subject to capital gains tax. We could increase the highest tax ratees to say the 85% on investment income my father paid in the 1970s and 66% on earned income. We could get interest rates up - I remember paying double what you pay now to borrow.
We could have a huge local tax on homes much bigger than council tax.
Lots of things could be done if the will were there. I don't think I'd approve of any of those.

So if I would like each of my 5 children to be able to buy something that's going to be hard for them. Our first home cost us £40k in 1983 and houses on that road now cost £220k. Duaghter 1 is lucky that her starting salary has kept pace with both inflation and house price inflation but daughter 2 if she makes a different kind of career choice might well find she can't buy unless she marries someone well off.

'she can't buy unless she marries someone well off.'

lol at that Xenia - now we don't want her choosing someone on the basis of his future earnings now do we?

I remember paying interest rates of maybe 14%. Shocking!

Xenia, property looks cheaper in Scotland because we have an "offers over" system. Selling price is usually at least 1/3 over asking.

I looked at the site you used and this delightful flat jumped out at me. Not an especially nice or convenient area, not enough space for a family and yet out of reach of the average earner.

Sag, I might be meeting her latest boyfriend this Easter. He is not as responsible looking as the last one. So we'll see. I don't think she picks them by income, not consciously anyway.

Yes, good point on Scottish property.
What about this - £89k Orkney? That's outside my £60k limit though. Even in 1982 we needed both our incomes to buy somewhere.

Perhaps it's TV and MTV and magazines to blame and people have these silly expectations of money and things and land and houses and house makeovers when they should be concentrating on relationships and saying their prayers and helping others and being content with what they have rather than what they don't have.

Marries someone well off!what an attitude

Well I bet people on this thread who are scrabbling around in awful rented places they have to move on from again and again might be wishing they or their other half earned enough so they weren't in that position but I hope all my children if they choose to marry at all marry someone they'll be happy with and in fact I find it politically disgusting for women to live on male earnings anyway.

DC, you are talking nonsense on your renting/mortgage idea. In the majority of cases (unless there is a huge crash) throughout recent history, people have 'made money' on property, i.e. people sold their property for more than they bought it for, they had equity.

Whereas those living in a rented property (for whatever reason) will not benefit financially from the rise in property values BUT their rent will still increase (the person who bought their house will be able to take their equity to move 'up the ladder' to a bigger house, but the person renting will still have to pay higher rental proces year on year).

I must be missing something in your point, because the above to me is just common sense.....

Having enough space and security does not make you happy.

But believe me, the lack of both can make you unhappy - we have had to move at least every couple of years. The stress of that puts strain on relationships.

I think that people's expectations are set more by their family and friends, which is why it is hard for people in their mid-twenties now. Colleagues and friends who managed to buy a home sooner are doing well. And they grew up thinking they could aspire to a similar standard of living as their parents.

We owned a house, and lost it (well we got to sell it ourselves, but the proceeds went on other bills) when DH was ill and not working, a few years abck. So we rent, and at current prices cannot see us doing anything else, even though Dh is a middle manager and I should be qualifying in teaching in 2 - 3 years, we'd still be £20K short of a house price here, and we can't just up and move.

Plus we'll have a honking great student loan to pay off after that.

And do 't even start me on pensions..... Dh doesn't have one, me neither as I am a student. But even if we did- Dad lost BOTH his after the companies he worked for were sold to Americans who just withdrew under their law (so i think not eligible for the govenment pay off) and as such after yrears of putting everyting into a pension- no owned house, no holidays, no anything, they're on hand outs in 2 years as thats all they have left until retirement and their health isnt good enough to work.

Goof for you Xenia. Teach your girls to identify which man will never get ill or be made redunadant- er sorry? Couples become dependent on each other for loads of reasons you know. When you amrry, you take that on board- or you should.

And as for earning more- I still haven't worked out the mechanisms of this socirty where everyone can earn max, no-one has to do the basic infrastructure jobs thata re low paid but on which we are all dependent. You know, childcare, shop work, caring.

Now MY kids are beingr aised to do the best they can and to be proud of what they achieve, nort measuer themselves against someone elses notion of what is politically acceptable or whatever.

PC, I would like my children to be all those things and ideally able to buy themselves a home too perhaps for the reasons upwind gives, that generally most of us probably want what we grew up with. If your parents live happily in a handmade hut in a Keynan village you probably will too (ditto UK council estate). If your parents own their own house with garden you probably have an expectation of the same.

I don't really care how much my children earn but I want them to have the information which says be a nurse/cleaner etc and you can afford X, become a banker and it will be Y and here are the pros and cons and here is your choice.