Did the over-45s ruin life for the rest of us?

[goldenticket]

Interesting article - it's certainly been my and DH's experience in the workplace (withdrawal of perks, pensions, travel arrangements etc etc). Wondered what anyone else thought?

Clearly I went to a low-rent university then expat. I am talking about the mid-80s.

BadgersPaws - it is true that people sit there refusing to take a loss on the house they bought. Indeed banks refuse to let them sell if they cannot pay back the mortgage. Moreover, banks are also refusing to recognise losses on repossessed property or even to take possession of property. They are doing 'extend and pretend loans' to put off that evil day.

That is why there are so few houses being sold at the moment. However, there is no immutable law in markets that people sould always be abe to sell an asset for more than what they bought it for. This is the mega shock that the housing market has yet to go through. The realisation that house prices can fall - just like the price of every other asset - and it will destroy peoples imutable faith in housing. See share prcies for example.

People and Govt have yet to accept that house prices can down. That is what happens in Depressions. A mass liquidation or repossessed property, bank failures and people losing their livelihoods. This happened in Japan - where houses prices fell 50% or more.

This is what Govts in UK, USA and elsewhere are desperatley trying to prevent by pumping the economy up with Govt spending. It will not work. They are running out of money.

ABD - I'm really cheered up now!!!!

No pension to speak of despite having paid in for years, dh on crap salary, crap house falling to bits, going to have to work until I'm 75 so probably won't get a retirement anyway oh and it's only going to get worse

I was trying to have an element of denial in my life

"However, there is no immutable law in markets that people sould always be abe to sell an asset for more than what they bought it for."

No but people will always try to avoid having to do so. People in negative equity don't really have a choice, they will usually have to sit there.

And those people who are in negative equity or close to it, and there's a lot of them given the house price slump we have seen, will act as a buffer on further house price falls.

Simply put they cannot sell even if they want to, so they reduce supply, which protects value.

Sure you might be able to pick up a repossession cheaply but all of those people who can't accept a below equity value or won't accept that their bricks and mortar have lost value will keep their property off of the market.

I'm not sure I'd mind working till I was (eg 70).

I mean, I might live to be 100+ so if I retired at 60, what the hell am I going to do for the next 40 years?

So many people dont enjoy their lives in their 20s/30s/40s because they're saving for retirement, but if they accepted they're going to work a bit longer they could have more balance in their lives now rather than living for a tomorrow they might not see.

More employers are now recognising the benefits of employing older people. I think it's got to become a growing trend. Go Gran's army!

One of the obvious solutions to the state pension crisis is to increase the age at which the pension can be claimed. Already it's gone up from 60 to 65 for women (which is perfectly fair IMHO seeing as women have a higher life expectancy than men). I expect to see the 65 age limit creep upwards. Certainly I would support the raising of the retirement age to 65 in all the public sector - at the moment I think some professions can retire at 60 (teachers?) and some even earlier (police & firefighters?).

But one of the downsides of this would be even fewer job vacancies for younger people, with all the oldies still carrying on working.

But if more people are working longer then they have more disposable income which creates jobs so it might balance out.

Also, realistically, some jobs you're not going to be able to do much beyond 60 (which is why some public sector jobs have lower retirment ages). People may therefore rotate into other jobs as a stop gap between main career and pension.

BadgerPaws - what you say is correct.

Eventually, old people will die though and their relatives will sell their house for what they can get and others will be repossessed and they will have their house sold for them. Eventually the market will correct but it will take a long time.

That is why this recession will drag on and on as it has in Japan for several decades with people and banks unwilling and unable to take losses until circumstances force them to.

I think that all the answers lie in the demographics. People on this thread are confusing the immediate post-war generation and the Next baby-boom, with its largest cluster around 1963. There were two significant baby booms; the post-war lot, of which my parents were the co-indidental but lucky members, and the cluster around 1963.

Good point about university education.

In the next few years, think of a cluster beginning in 2011, a huge cohort born in 1945 (men) and 1950 (women) leaving the workforce and claiming pensions. Look at the high birthrates in the fifties and you will see that the numbers leaving the workforce and receiving their pensions is a great big bill for the taxpayer waiting to be paid in terms of pensions at just the time the economy doesn't want people to stop spending.

The generation clustered around 1963 are turning 47 this year.

47 is the age that people as a mass stop spending and start saving. See Japan.

The other way to deal with this problem is to engineer a burst of inflation. In such an environement, old people typically on fixed incomes will see the real value of their pensions and and their houses and their assets fall as compared to wages.

Young people will benefit from wage inflation which makes their debts smaller in real terms which eventually will make it possible for them to borrow to buy a house.

God help us if we get deflation though.

I've been thinking about this thread a lot and I'm wondering if the alledged benefits are regional? I'm from the South originally but now live in West Yorkshire. I don't think many baby boomers in this part of the world enjoy the kind of security we're discussing. Also, as I've said earlier, my parents certainly don't.

I still think the main people who have benefited from the baby boom stuff are those that I would consider middle class which, when I was child, was equated with owning your own home, etc.

This, also, is a genuine question, doesn't anyone think that this obsession with owning your own home has contributed to this? The firm belief that everyone has to own their home seems to me to have become prevalent in the 80s. Prior to that, I don't remember it being seen as so critically important.

Again, though, I am asking, not stating a case!

The House thing is so much the luck of the draw. e.g.

A - an only child, parents die in their 60's , inherits family home, moves family in mortgage free -

B - parents both need long term care, their house sold to cover care costs, B has to shell out for extras -

C - widowed mother dies, but sister, her long term carer gets the house

D - grandmother dies, parents move into her cottage, D + sister sell family home and each buy a house, with small mortgage

E - parents die, rented flat, E spends house deposit savings on 2 x funerals

Could go on but you get the idea! It is a lottery.

DSM - good points. I do not won my own home but I invest in companies for a living but the tax treatment of the shares I own is vastly different from that on property. One of the main reasons I think there has been an obsession with property is that all capital gains on property are tax free. It is also the case that it is one of the very few ways that people can borrow money at relatively low interest rates.

Finally, and most importantly, the law on letting property really is in favour of landlords. Tenants have little security that they can stay in a property if they pay their rent. They can be thrown out with a few months notice. It is really hard to bring up family in those circumstances. Lots of threads on MN testify to that.

I alays negotiate long leases, it is possible and feel I have a good deal compared to renting but not everyne can do that. Reforming tenancy law would be a big step forward and young people would stay renting for longer as they do in Germany. There I have a friend who rented a house for 5 years. He could not be thrown out as long as he paid the rent.

Politicians have consistently designed polices around home ownership. People have been encouraged to buy their own home. It has become a mantra people do not question. However, the reason I do not own a property is because the net rental yield on housing is dreadful after all cost of ownershipare taken into account. Rents are actually falling and have bene for several years. Fundamentally, that is why houses have to fall in price. Yield drives price in the end. I am dispassionate about it. If rents rise and property values fall I will buy. It is just an investment decision for me.

..feel I have a good deal compared to owning

Another issue with investing in shares vs houses is that you cant easily leverage to buy shares (certainly not to the extent that you can with a house) so you dont do as well when prices rise.

If you think about it if you buy a house for £220k with £20k down and then prices rise £10k, the price has only gone up 5% but your return on your equity of £20k is 50%. However, if you'd paid cash, your return on equity would only be 5%

However, I think the main reason people like investing in houses is because they're something everyone understands.

A burst of inflation is quite possible - will trash the pound unless interest rates rise though - bad if you're going on holiday but good if you're an exporter.

"Finally, and most importantly, the law on letting property really is in favour of landlords. Tenants have little security that they can stay in a property if they pay their rent. They can be thrown out with a few months notice."

Isn't that kind of fair though? Many people rent out a property for a number for reasons such as needing to move away either temporarily or when there stuck with a house in negative equity. I'm not sure that it can be fair that they can't then get their house back when they want it.

However some tightening up on the rental market could have substantial effects on the housing market. It might make many landlords give up renting or put off those considering doing a buy to let. Neither will be good for renters as the reduction in rental property will drive rents up. However in return it will reduce the number of people chasing a property to just someone who wants to live there which will help keep prices down.

"Eventually, old people will die though and their relatives will sell their house for what they can get and others will be repossessed and they will have their house sold for them. Eventually the market will correct but it will take a long time."

I'm not sure that deaths or repossessions have that dramatic effect on house prices as a whole outside of a few bargains here and there.

Right now banks are also relatively keen to avoid repossessing as they know they could only get a fraction of what they are owed from a negative equity house sale. Better to get what money they can out of the owners and hope they either get back on their feet or that they can repossess and sell at a higher price later.

"That is why this recession will drag on and on as it has in Japan for several decades with people and banks unwilling and unable to take losses until circumstances force them to."

As I think I've said the stagnation this could cause would probably be the easiest way to start to correct some of the nonsense in the housing market.

ArcticFox - I agree with all your posts. I agree especially that Governments would all secretly quite like a burst of inflation in prices and wages and asset prices. It would solve a lot of problems by inflating away the burden of private and public debt.

While Governments have managed to get share prices back up and house prices have gone up a bit by pumping public money in to the banking system the chances of seeing general wage and price inflation are low. Unfortunately with wages in China and other emerging market economies so low the chances of being able to get significant wage inflation in the UK (except in a few areas of the economy) is pretty low. It is the main reason residential rents are not rising - people just cannot afford to pay more.

As BadgersPaws says the best we can hope for is long drawn out correction. That would also gradually rebalance the economy and correct the imbalance between genertaions.

"They" the USA and UK have to be planning to engineer inflation it's the only way anybody will come out of this whole mess without people starving in the streets.

"the USA and UK have to be planning to engineer inflation"

"Quantitative Easing", or as it's better known "printing money".

Still theft though however you want to dress it up, we will benefit from both the pound tanking and inflation though so I'm afraid I'm not complaining.

BadgersPaw, the figures you link to are dated 2001!

The birth stats for 2009 show a marked rise in the birth rate.

The number of children born in England and Wales is the highest since 1972

I think is bad news myself, for a variety of environmental reasons and agree with expatinscotland that we shoudl work until we are 70, just as I plan do, God and health willing.

Yes the current birth rate has hit a "high", however that "high" is still lower than the rate of sustainability (which is believed to be about 2.1 children per woman) so it doesn't fix the problem at all.

And it's only hit a "high" compared to 1971 which was when the real decline in birth rates dropped and the current low birth rate set in. It's like saying "this is the warmest month since January" and expecting to go out in shorts, January was still rubbish and you're not comparing to when things were "good" (well in theory anyway) in the last summer.

The best it's done is to slow down the slide of our population into becoming on average older, it hasn't halted it and it certainly has reversed it.

We still have the problem that that big bulging band of middle aged people shown in the 2001 statistics is going to hit retirement and will be supported by an ever dwindling number of young people underneath it.

There are more recent population pyramids here:
www.bbc.co.uk/schools/gcsebitesize/geography/population/pop_changerev5.shtml

it doesn't fix the problem at all.

What problem, supporting the aging population ? I'm sorry but I do not see that as a problem that needs fixing, they are the generation of a boom, if the birth rate is lower then there's more to go around for that generation, tough luck to those who had it all and yet seem to have blown it from the accounts on MN.
Why should my children pay for them for the rest of their lives and have a lower standard of living.