Monday, Feb 01, 2010
Homeowners’ dreams are their children’s nightmares
Evening Standard: Homeowners’ dreams are their children’s nightmares
The most interesting point she makes is this: "But the worst thing the baby-boomers did to us on the housing front wasn't the years they spent driving up prices, it was infecting us with their obsession." I noticed with some of my colleagues who are younger than me and priced out, unbelievably still think house price inflation is a good thing.
Posted by tenant super @ 08:58 PM (1311 views) Add Comment
30 Comments
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1. mark wadsworth said...
What's even more amazing is that she refers to a book by Top Tory David Willetts lambasting the Home-Owner-Ist philosophy.
Now, let's see if I can get him on board with LVT and liberalising plannings laws...
2. mander said...
How the Baby-boomers Took Their Children's Future — And Why They Should Give It Back. Many boomers made their fortunes from property, but we — their children — can't afford these mad prices that they inflated.
Just to mention that the baby-boomers children will not pay for this, they will simply inherit their parents property portfolios. The children of normal working people without property portfolios will pay for this. But this time arround will be diferent cause for these children will not be feeling like an achievement to step on the property ladder. Ask the young Americans what hey think about property.
3. tenant super said...
Yeah I clocked that and looked him up. http://www.davidwilletts.co.uk/2006/12/06/case-lecture/
is an interesting piece.
"Such extreme differences in the benefits and burdens of different generations over their lifecycles may need to be ameliorated in order to avoid a breakdown in the informal intergenerational social contract, which has sustained support for the welfare state over several decades."
A breakdown in the informal intergenerational social contract; in other words, we need to sort the problem out or Generations X/ Y might rebel against the boomers, raid their assets, tear up their final salary pension contracts and leave them festering in their own excreta. I know I would! As I have said elsewhere, my fear is that generation Y has been so infantalised, they won't see they're being sh@fted
4. tenant super said...
Mander @2 ; "they will simply inherit their parents property portfolios"
Yes but my parents are aged 65 and 59 and in extremely robust health. If they live to the same age as their parents, It will be another 25 years before I inherit their home. Even if I was an only child (rather than one of six) and they abolished inheritance tax and I got their nice four bedroom detached house in a very nice part of Surrey... by that time they pop their clogs I will be 58, and long past the time to be having a family and therefore needing a family home. Chances are they will live much longer as life expectancy is increasing.
5. drewster said...
tenant super - I see no signs of rebellion in today's youth. Like it or not, the "rat race" seems to be a very effective means of keeping the population docile.
6. drewster said...
"Not a homeowner and over 40? You might as well be drinking White Lightning while lying in a ditch for all the respect you would get at a middle-class, middle-aged dinner party."
Agreed. I've taken to lying about my housing status when surrounded by certain (usually older) groups.
7. growler said...
@6. Most people like to feel comfortable that they "did the right thing" buying a property since 2005. I've no problem telling them I sold to rent in 2007. It's amazing the stuff people believe. There are far better investment vehicles that do not tie you to your house - and therefore to your job. Plus.... how stupid are we to pay for poor quality construction like in the UK? We are total mugs: we have come to cherish inflation, value poor quality and tie ourselves to mediocrity.
8. paul said...
Willett's book is sold out on Amazon and Waterstone's. Everywhere else is charging a premium because stocks are low.
Seems some people are taking an interest in what he has to say.
I find that I am now at an age when people no longer presume I might be renting - they simply assume I own property. Which I don't.
9. matt_the_hat said...
5. drewster - "I see no signs of rebellion in today's youth. "
The thing is for the babyboomers to prosper their young need to be competitive in the world stage. Disillusionment is the rebellion of todays youth and their lack of wealth generation for the babyboomers to chew on will be their revenge. No one is going to pay your pension and everyone can't have a house worth 180k - unless you show me all the buyers.
10. nomad said...
"Yes but my parents are aged 65 and 59 and in extremely robust health. If they live to the same age as their parents, It will be another 25 years before I inherit their home. Even if I was an only child (rather than one of six) and they abolished inheritance tax and I got their nice four bedroom detached house in a very nice part of Surrey... by that time they pop their clogs I will be 58, and long past the time to be having a family and therefore needing a family home. Chances are they will live much longer as life expectancy is increasing."
This from ts@4 seems representative of this thread. Envy and resentment towards your parents.
Well don't worry guys, it looks like the voluntary suicide lobby are rushing to your rescue - you will soon be able to start bullying your parents into taking the big decision.
Talk to your parents and you will find in their history periods of poverty and hardship - always when struggling to give the best possible start to young children. You may be able to relate to that, maybe not if you've spent too much time on this site.
11. matt_the_hat said...
10. nomad - and the evidence is there on a Friday night in cities up and down the country - you reap what you sow - their experience of poverty and hardship should stand them in good stead for whats coming our way.
12. paul said...
I'm sorry but @nomad and @matt_the_hat excuse me while I cough *bullsheet* into my hand. If you had no prospects, how would YOU console yourselves in a middle class respectable way exactly? By drinking Queen Liz sherry instead of budget lager no doubt. Hardship? Listen, if you were able to buy your first house at 20 and your job had a pension, you were set for life. You don't and will never know the kind of hardship the post-baby boomers know now and will know as their economic situation deteriorates.
The big difference between the young and baby boomers is that the young are not good at coping with hardship mostly because they (rightly) assumed their standard of living would rise as their parents' did.
Take responsibility for your generation!
13. mountain goat said...
If you bought a house or BTL near the top for fear of been left out or left behind by your aspirational friends, then you are like the "greater fool" of a ponzi scheme I'm afraid. Blaming the boomers seems a bit naive. Other generations lost their lives in war, you are going to lose your shirt.
14. cynicalsoothsayer said...
"baby-boomers children will not pay for this, they will simply inherit their parents property portfolios"
Along with the associated BTL mortgages.
15. tenant super said...
@ Nomad ... Actually, my parents (well my father at least), in fairness to them is not a home ownerist, has no idea how much his house is worth and would rather see prices collapse so he could get rid of his two adult sons still at home. He lives in a very affluent area and a neighbour once knocked on the door to gather signatures to protest at a small development of flats in the locality. My father told him to sling his hook pointing out "People have to live somewhere". I disagree with him politically (his belief in a paternalistic state and various varieties of sub-marxists drivel) but when it comes to the politics of property, his head is certainly in the right place.
But yes, I am envious and resentful to that generation. I had opportunities they didn't, primarily higher education, consumer durables, cheap food (my parents couldn't afford to go to pubs and clubs and restaurants), cheap flights abroad... but they could afford on a junior accountant's salary to buy a modest home to have a family and my mother could stay at home. I would certainly swap the benefits I enjoyed for that crown jewel.
My mother came to England in 1963 to escape apartheid South Africa (she's Cape coloured), my father grew up in a caravan because the home was repossessed so I know all about their poverty. But the hardships their generation may have endured does not excuse nimbyism and encouraging unearned wealth through house price inflation.
MTH @ 9 makes the most salient point. The well educated and motivated are doing what we are and heading abroad. Those remaining won't be able to support the boomers expectations any longer.
16. bellwether said...
I understand the frustration that many must feel at being priced out, but it is ironically this attiitude, the ire towards HPI, that drives it. Nothing has contributed to HPI like the irrational belief that being priced out is some sort of intolerable hardship.
17. matt_the_hat said...
16. bellwether - most people can't put their finger on it - but buying a house is one of the few 'bets' that working class people can make that plays the system - everything else has inflation tax.
18. letthemfall said...
It is not solely "baby boomers" who have benefitted from house price increases. Many people in their 30s and 40s, through earning a high salary and buying at the best time, have done very well. Conversely there are any pensioners on low incomes with little wealth. Some aged occupiers of big houses are actually pre-boomer - born before or during the War. This is not inequality based on age, but inequality that runs through society. Remember, bankers are mostly quite young.
19. dbc reed said...
As a baby boomer I don't dissent from a lot of this which has been a long time coming .But it was actually the born before the war generation that did well out of Homeownerist policies.Schedule A which docked rises in house value straight out of Income Tax (now unbelievable) was abolished in 1963 because of the whining of existing homeowners. (Baby boomers would have been only 18 max) .The result was that as soon as the money supply was increased by the infamous Tony Barber giveaway budget in the early70's house prices shot up with the biggest spike in UK house prices of all time,there being no restraining tax.In my area house prices went up 30-40% in a year ,so you youngsters don't know your born! HPI you ain't seen nothing. Only kidding.
People should vote for the Co-op Party and Green Party candidates in the imminent election as these parties support LVT which is ,despite the irritating habit of its proponents, including myself, popping up and saying its the solution to everything , is probably the best solution to this problem and is only a modification of Council Tax to focus on land values only.The Lib Dem candidate in Hexham is a land taxer.Alternatively House Price Crash itself should stand a few candidates in the marginal constituencies that determine elections and garner enough votes to screw up the other ancien regime parties.
20. tenant super said...
bellwether, to rent a family home where I live is my entire net salary and you have little security. For a young person, it is almost intolerable when you cannot have a family and the biological clock is ticking! As it happens, I bought a flat in London aged 23 (ten years ago) and my other half also owns so with one large one bedroom flat and one two bedroom maisonette with lots of equity, we are not priced out and are in a position to have a family (as I am in a good school catchment and could probably stretch to private school anyway).
I am simply unwilling to extend myself further just to upsize and pass my wealth up the generational ladder.
21. matt_the_hat said...
If 10% of the money in circulation is real 'money' and 90% is debt, i.e. fractional reserve 10%. Then if banks charge 5% on all loans they 'earn' then they charge 50% of the amount of real money every year. Then everyone wonders why you work like a pleb whilst the bankers dine in fine restaurants. If only a critical mass understood this instead of just the % of alcohol in Stella.
22. mander said...
tenant super,
I was referring actually to property portfolios assuming there are 2 or more properties in one portfolio. But correct, the children of baby-boomers owning one property only will have to pay. Maybe this why people owning one property only should think about their children too not only the negative equity but that may sound too socialist and I am probably not able to understand how capitalism works.
23. p. doff said...
I have no time for people who feel sorry for themselves, especially those who think drinking cheap lager OR not so cheap sherry provides any consolation. I used to resent the fact that my parents bought their first house for £250, when my first delapidated wreck cost me £20,000. I thought it extremely unfair that my parents mortgage interest was still fixed at 5% when I was paying around 15%. I hated the fact my father had a sinecure university job when I had to work my nuts off all day and then start DIY house renovations when I got home. Later on I resented my fathers secure and generous pension when my work pension with Equitable Life went t!ts-up. I hated how his endowment mortgage matured at almost double the amount required to pay off his mortgage when my 'red letters' were already predicting a significant shortfall on mine. Strikes me each generation feels the same about the previous one.
OK, so us boomers might not have lived in a 'hole in t' road covered wi tarpaulin', or 'lived for three months int' paper bag int' septic tank', but it wasn't always the privileged luxury you younguns seem to think it was.
24. letthemfall said...
I think some people born during or shortly after the War, or perhaps a little before, started off life in perhaps the most favourable environment. The deprivations of the 30s were gone, post-War govts attempted to make a more equal and fairer society (NHS, taxes on the aristocracy), companies as well as public jobs offered decent pensions, and there was more security in working life. If you were in a good occupation your standard of living rose quickly, and now some pensioners are living well. But not all of course. The trouble now is all this has gone into reverse, dating back to the late 70s.
25. bellwether said...
TS my comment wasn't directed at you personally. Your priorities are your own.
26. bellwether said...
“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy…”
Alexander Fraser Tytler, Scottish lawyer and writer, 1770
27. nomad said...
We did the usual saving and scraping to be able to afford a deposit and a mortgage that was continually fluctuating. At the risk of sounding like a Monty Python sketch - we went without a car, accepted hand-me-down furniture, lived in social housing and privately rented accommodation before spending a brief period back at home with my parents, had children when aged 24 and 27 before pooling everything we had, to buy a house near a station to ease the commute. In short we struggled.
It appears now that couples require the fully furnished house, the 15 grand wedding and the exotic honeymoon before even thinking about gaining a family.
So what's new with subsequent generations. You want it all on a plate and you want to blame bloomers if you can't have it. Stop trying to incite inter generational war.
28. shipbuilder said...
As Nomad says - my parents never had more than one cheap car, holidays in the UK, honeymoon in the UK, few nights out. Most of my work colleague's expectations are a new BMW/Audi, designer clothes, restaurant/pub at the weekend, weekends away, holidays in New York or wherever.
We have swapped one set of benefits for another, stability for the cheap thrill of material goods, but it is we who have made that choice as a society - kids and young adults are as materialistic if not more so than their parents.
Apparently we think the solution is more goods, more money, more profit, more instability, more competition, more i'm alright individualism, more dog eat dog.
So many whinge about the benefits of the NHS, free education, welfare state and so on that the boomers had, yet I see the same posters on here day in, day out, slagging these things off and decrying public services.
It's a laugh, really. Make up your minds.
29. Angus45 said...
For the record my "baby boomer" parents lived in a bedsit for years with and saved every penny they earned towards the deposit on a tiny house.
No holidays, no cars. They weren't lucky, no one gave them or most of their generation anything.
We seem to a have bred a generation with a monumental sense of entitlement who seem to think that people older than them have "stolen" their wealth.
I hope house prices fall, but taking out our frustrations by blaming a generation who did nothing but work hard to create the modern world the youthful completely take for granted.
30. matt_the_hat said...
Shipbuilder it's maybe because they did have after education and grants to go with it, a visit from a gp after hours and a union with teeth. Now we have debt from the previous generation which means they didn't pay for what they got. How easy it is for every generation to give away what they do not own, and the babyboomer did this on a gargantuan scale.