Wednesday, Nov 15, 2017

Put your life on hold for a mere five years and you too could be stuck in a studio!

Torygraph: Does estate agency's claim that millennials could save £33k in five years 'by quitting coffee and takeways' add up?

The maths is so wrong it's just dishonest - suggesting that food is free if it isn't takeaway, etc. But the real problem is if every renter cut their spending to the bone to save to sacrifice to the housing gods, the economy would absolutely crash.
When the money saved does hit the housing market after 5/10/20 years, it will simply push up prices. No meaningful economic activity occurs when the price of a home goes up (without this being the result of repairs or capital investment)

Posted by mombers @ 05:35 PM (2899 views) Add Comment

3 Comments

1. jack c said...

Well if S&P are keen to point out the savings people can make then surely that will also cascade down to the agent fees !

I had some protracted dealings with these people in 2016 and they took the clients eyeballs out and then came back for the sockets !!!!

Wednesday, November 15, 2017 08:43PM Report Comment
 

2. nickb said...

Worse. Since purchasing power is redistributed away from poorer people when price of a home goes up (which can be realised by sale or MEWing), or indeed when rents go up, and marginal propensity to consume is higher for poorer people, the consequences of HPI are negative for economic activity on that count. However, is this not complicated by the fact that most of the money supply in the UK is created as mortgage debt? In some circumstances HPI might lead to increased purchasing power in circulation in the short term. But now that transactions have been choked off by the high prices, and the mortgage repayments have to keep going, this should be a negative too!

Thursday, November 16, 2017 10:17AM Report Comment
 

3. mombers said...

@NickB Great point. The rich spend lots of their money buying existing assets, particularly land, whereas the poor spend it on things that require production...

Thursday, November 16, 2017 02:33PM Report Comment
 

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