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 didn't know 30% of new builds had to go to HA's, which I don't think is very efficient.

mumfor1standfinaltime, here's a question for you. I'll assume you are the sort of person HA's are supposed to be helping.

The developer is effectively being taxed for your benefit. Assuming average house prices, that means that your HA house costs them 50K.

If you could choose, what do *you8 think would maky your family's life better ?
a) 50K cash tax free
b) your current renting arrangements.

But the outer London terraced house we were in (the £220k at current prices) there was nothing wrong with it. I could live there now. Obviously we moved up because our salaries increased, we did lots of bits of extra work, marking exam papers, my husband working in school holidays, £5k inherited from his grandmother etc. so we moved up after 3 years to one that was a bit more - semi detached this time, still 3 bed. But either of those houses was acceptable, although not if you are a footballers wife, huge aspirations, I must live in Chelsea or nowhere kind of person. I wasn't unhappy in a smaller house at all.

Then we moved to a detached one with 4 beds and then this one over 14 years. The last move was exceptional as I'd suddenly started to earn a lot of money working for myself. Until then it was a fairly average progression. We also really didn't spend much at all, bought 2 flats to let out, put all spare money on that, did loads of work including physical labour on those.

On inheritance surely inheritance take on estates over £300k is going to stop those inheriting to some extent moving further and further ahead and care costs. My father is unlikely to have any money left at all as he needs and pays for day and night care.

We've given up hope.

But I bring up my children with the intent of encouraging them to use their dual nationality to make a better life for themselves elsewhere.

Because it just isn't going to happen here.

I know their Scottishness will be a huge boon to them elsewhere.

This isn't just 'becoming' a Dickensonian place to live, it is, IMO.

DC you argument is base, crude even. We live in a soiciety which perpetuates capitalism.

how can we expect conformity, suits, commutes, and other drone like behaviour and buying into the system

when you just give 50k away to people instead of building a home. what incentive would that be to buy into the aspirational yet elite systme we have at the mo?

which BTW - it is not that partic tenants home for life. It will house more than one family over its lifetime. - and i think looking at it that way - it wouldnt necessarily be financially effective

DominiConnor - love the phrase 'supposed to be helping'.

50k would not be much use to me towards a house. I would still have a very high mortgage which I couldn't afford or a very small flat with a small motrgage! (although 50k in the hand would be nice and not to turn one's nose up at!)
I often think 'if I came into money would I move into my own home or would I just pay 10 yrs rent etc'.

I used to live in a 3 bed Council maisonette before ds was born. We were offered a smaller property. I got offered the maisonette as soon as my parents bought their council house, as on paper I was effectively 'homeless'.
I was offered the maisonette to buy for £23k in 1994. They now sell for £130k. We didn't buy because we were told that the building had a lot of structural problems.
I often wonder if I should have bought the bloody thing.

£50K wouldn't help us to buy, either.

The prices are that far out of most peoples' leagues.

Think I would probably have a good holiday, pay a few bills off, put some into ds trust fund and buy a new car. There, sorted.

I'd leave the country if someone gave me £50k.

Not a bad idea expat!

I'd be off like a SHOT with that kind of money, mum, with DH dragging me by the hand.

Im off to buy a lottery ticket!

expat - where would you go?

Continental Europe, Early. I have British nationality now.

Ah expat - continental Europe a real possibility then. Based on your past posts, I didn't think a return to America would be a consideration.

Back to topic - I can't figure out how so many people are managing the current prices. I was fortunate enough to buy a 2 bed flat in a great area 11 years ago. It was/is fab for a single person who is out and about (as I was then), but beyond cramped with a child/their gear. I can't see how I could ever move into a 'family' flat/house in this area without completely crippling myself financially. IMO, far better to live with the frustration of cramped conditions than be frantic with stress/worry over an astronomical mortgage.

Message withdrawn

May be it differs around the country. I can accept in my field my 1983 salary when my daughter receives its equivalent might have gone up by more than inflation (we have the £40k house now worth £220k example and she about my age then) So house gone upo times 5.5 in that period. Her salary will be 5.5 times what mine was in 1983. Her father's teacher's salary when we bought was £7,500 - he was about 28, head of department. That would presumably be about £30k now so again his teacher salary went up as much as the house price did for that house too. So is that just a strange example of houses not going up that much in this area or is it that teachers' wages did go up radically in that period? My point is that she and a husband, if she had one, would not find the finances any harder now than I did in 1983.

xenia - no, 7,500 to 3,000 is a 4 fold increase, not a 5.5 fold increase. That is a huge difference and could easily mean the difference between being able to get a mortgage for the house and not being able to get one.

So, was he a maths teacher?

essbee: but actually, if you gave tennants stability then fewer would feel the need to buy. I know I wouldn't bother buying if I had decent rental terms. I don't see it as throwing money away, but as giving money to a landlord rather than barclays.

Buy to let isn't the biggest problem though - I think it's a combination of people seeing property as an investment, second homes, and a general panic among buyers.

That's really, interesting. The legal salaries have gone up less than teachers! I think there was a period when teachers did get some very good pay rises and he benefited from it. it was his colleagues on one income in 1983 who had no savings who found it harder to buy. Some bought with a brother. Others with another teacher. Some just bought a cheap place in France. Some bought somewhere just in the country for the holidays etc. So say two teachers on that level of pay in London now wanted to buy that house they could probably borrow 3.5 x their joint annual salary and do it or 3 x with some deposit and interest rates are much lower now.

So is the difference that people are not content with small terrace houses and seduced by TV advertising and jealousy want more?

When we had stability, rent controls and rent acts and no right to make a tenant leave and rents in effect frozen (some tenants are still rent act protected) there was virtually no property to rent in the UK.

I need a calculator here. Yes the teacher wage is up 4 x over that period. The lawyer is 5.5 so lawyers did a bit better but not hugely so at that level of qualification.

The problem we have with our small terraced house is that my DS's nursery measures 8ft by 5ft. We will really struggle to use that as a proper bedroom for him when he's older. God forbid that I was to get pg again.

When we bought our previous, larger 2 bed terrace 6 years ago we borrowed 3 times my salary at the time (DH's is variable so we didn't risk using that to borrow on).

We had to move 2 years ago when I got a new job, slightly better paid with better prospects. This was just about the cheapest 2 bedroom house we could find in the area and smaller than our last one - if we'd been getting a mortgage from scratch we'd have had to borrow 6 times my new salary. And I am a graduate working in a professional job, albeit in the public sector.

Larger 2 bed or 3 bed houses in the area that are even half-decent would require us to remortgage to 5 times my salary, even taking into account the equity from this house. Even if we could get the mortgage we wouldn't be able to afford the repayments.

What hope is there for first time buyers in most areas who earn anything less than about £45k?

To finish illustrating my point, I've just done a quick guesstimate.

Between 2001 and 2007 my salary rose by around 25%.

The value of the houses in this area rose by around 185%.

I suppose what I was saying is that the first time buyers in this area of outer London (where I accept some people wouldn't necessarily want to live..) are in the same position they were in in 1983 in regards to the house price/wages radio. I am not sure if I can work it out on the average wage though just on the teacher's wage. That 3 bed terrace had a very small box room which fit one cot and 2 reasonable other bed rooms and we also had fun putting pannelling and ceiling in the loft area and a ladder but that was for storage, no window etc. Perhaps everyone on two incomes should flock to outer London boroughs then. There are probably better job prospects too if you're prepared to commute around a bit too.

"Between 2001 and 2007 my salary rose by around 25%. The value of the houses in this area rose by around 185%. " But if you did the sum inculding the 1990s when we had negative equity and houses sold for much less than they were bought you wouldn't get the same calculation. You just picked that period. Someone buying now may well find wages rise from now year on year and property doesn't rise in value - in fact when everyone piles into a market is usually the time to come out or hold tight.

Oh yes I appreciate that - I know these things have to be looked at long term . I just feel really sorry for people who didn't manage to jump on the bottom rung of the housing ladder before prices got silly.