Friday, Feb 16, 2018

A generation enjoying a better life than their parents. Not.

BBC News: Mid-earners 'locked out of buying a home'

The extent to which young people are locked out of the British housing market has been revealed in new figures from economists. The biggest decline in home ownership in the last 20 years has been among middle-income 25 to 34-year-olds, the Institute for Fiscal Studies said. In 1995-96, 65% of this group owned a home, but just 27% do in 2015-16, with the biggest drop in south-east England. Middle earners are defined as having take-home pay of £22,200 to £30,600. This can be either as an individual or as a couple. A third of them are university graduates, while 30% left school at 16. Three-quarters of them live with a partner, and around 60% have children.

Posted by quiet guy @ 09:17 AM (5778 views) Add Comment


1. stillthinking said...

here as well

But, if this does finally cause some reaction in westminster (and it still might not because there are a few BTLers there), then whatever the changes are, how can they be to increase supply? There are insufficient construction workers. Which leaves modular housing, only suitable really for detached plots from the ones i have seen, or tinkering with the -existing- supply. i.e. dumping stamp duty and encouraging oldsters to downsize, fleecing foreign owners, smacking BTL even harder. Is there even enough time before the election...
A better government would have tax incentives for businesses to move to the north of england, plenty of people would love to leave london if they could assure themselves of employment.

Friday, February 16, 2018 12:27PM Report Comment

2. taffee said...

There is no supply issue in the UK its a speculative bubble based on props

That's the real issue

Friday, February 16, 2018 01:39PM Report Comment

3. crash bandicoot said...

Once we've had a couple of interest rate rises we can come back and see how that's affected the fundamentals. I've no doubt that supply has an effect as that's the tool used by the construction industry to maintian prices but it's all underpinned by low cost, dare I say lax, lending.

Friday, February 16, 2018 01:44PM Report Comment

4. sneaker said...

Not just middle earners.

A professional earning £70-100k a year in London and paying an ordinary rent of £2.5k a month has little left at the end of the month. And if they do somehow manage to save for a deposit there’s no way they can get a mortgage big enough to buy anything decent.

We’ve built a world that works only for oligarchs. If you have a stolen, tax-free or inherited fortune, London is the best town on earth. For everyone else, it’s a daily struggle.

That isn’t how it was meant to be.

Saturday, February 17, 2018 05:10PM Report Comment

5. tenyearstogetmymoneyback said...

The information I thought was most interesting was:

"In 1995-96, 65% of this group owned a home, but just 27% do in 2015-16, with the biggest drop in south-east England."

The reason was probably that 1996, when I was one of the 65%, was the low of the Ten Years referred to in my Username.

At that point prices had been dropping for about six years in a row.
That year I was trying to sell the house I had paid £65K for in 1989 for £52K and after a few months my "buyers" tried to underzump me to £48K.

It was also around the time that repossession notices were as common as For Sale signs.
Looking at the first graph I found on the internet there was a peak in unemployment in about 1994 at over 10%.
Interest rates at 11% probably didn't help either.

Of course for the people who still had jobs, and those who hadn't been silly enough to buy a house in 1989 it was good news.
Lots of colleagues in their late twenties who at the start of the 1990s had been complaining that they couldn't afford a flat were buying three bed houses as first time buyers. That is where a large proportion of the the 65% probably came from.

To conclude the story of my username in 1999 I sold in 2 days and did get my money back even after the estate agents fees etc.

Saturday, February 17, 2018 09:57PM Report Comment

6. mombers said...

@5 have you factored in the rent that you saved during your 10 years (offset of course by the maintenance and insurance that you had to pay yourself)? And the effective high interest rate that you were paying yourself by paying down a mortgage. And then of course paying a lot less for your next home than if prices had increased over 10 years. In short, flat prices over 10 years were a good thing in the balance. Only a problem if you're highly leveraged and need to move.

Wednesday, February 21, 2018 11:14AM Report Comment

7. landofconfusion said...

1. stillthinking said...

"A better government would have tax incentives for businesses to move to the north of england, plenty of people would love to leave london if they could assure themselves of employment."

I've been looking at Cambridgeshire. There are some really nice, cheap places there but it's the professional jobs - or lack thereof - which is holding me back.

And of course the government could do as you suggest but why shoot yourself & your friends in the foot? I mean it's not as if those that don't currently own a home are making a fuss. And until that happens en mass there really is no incentive for change.

Thursday, February 22, 2018 12:38PM Report Comment

8. tenyearstogetmymoneyback said...


As noted prices weren't flat - They actually dropped at least 25% between 1989 and 1996 before recovering.

It would be interesting to know what rents were back in the 1990s.
Before buying the house in late 1989 I had my stuff in storage and was renting one of the bedrooms in a two bed flat for £140 a month.
In contrast the full interest on my depreciating house would have been at least £500 a month.

Of course the Rental market was very different back then. The first time I saw any mention of Buy to Let Mortgages was shortly after selling.

The worst thing was that I realised I had made a big mistake when choosing the house, and would really liked to have moved.
I have since joked that I had the Simpsons living on one side and the cast from South Park on the other, which isn't much fun when you are single.
I later found out from the previous owner occupier that she had moved because of the neighbours, but as she had traded the house in with a builder had no
comeback against her.On the plus side the previous owner occupier had spent quite a bit on a new kitchen, carpets etc so I doubt if I spent more than £1000 on maintenance and improvements over the ten years I was there.

The other plus was that I was never forced to move. Between 2008 and 2011 when renting I had to move three times against my wishes.
That was what made me decide to buy my own property again

The reason I joined HPC was to spread this story. Even by the early 2000s younger colleagues contemplating buying houses thought they only ever went up..


I agree with you completely about Government policy . Look at John Majors election results in 1997 after years of falling house prices.

Friday, February 23, 2018 06:10PM Report Comment

9. mombers said...

@8 prices were flat over 10 years as per your tag - so you suffered no nominal capital loss and had a bunch of rent savings to offset. Private rents march relentlessly up so over ten years you would have been spared that, and your capital payments (hopefully you weren't on interest only!) would have compounded. On the negative side you would have had maintenance and insurance to pay though, and would be in real trouble if you had to move. My point is that provided you can stay for a decade, you're fine with flat prices, even with a big dip in between. Unfortunately, the talk of the 'ladder', massive subsidy to housing, etc. leads to panic buying, i.e. people will buy as soon as they can, often ending up trapped in unsuitable accommodation for things like starting a family or moving jobs. A recipe for boom and bust, as well as massive mis-allocation of capital and labour.

Monday, February 26, 2018 05:39PM Report Comment

10. britishblue said...

In economics you look at the trend line. So a home ownership drop from 65% down to 27% is showing a downward trend, this could easily be down to 15% in the next ten years or worse in London. There will be a natural buffer of people that inherit, parents buy for them, etc, but it suggests for the average worker in this age group, without family help, getting their own house is virtually impossible. Also a large proportion of this age group will be in the older age group in 10 years time, still without a house and a family in tow. What we dont know is what comes next. We are raising a whole generation of people who are told they are lazier than their parents, scorned for buying cafe lattees, those that go to universities are saddled up with 50k debts and there are no longer careers for life, good pensions, etc. I seriously wonder whether they will punish the older generation at the ballet box. I suspect if a highly charismatic, far left politician emerged and put aside identity politics and worked the indigenous youngsters we could see a swing to a socialist state with housing for everyone.

Tuesday, February 27, 2018 09:18AM Report Comment

11. mombers said...

@10 we're seeing this already with the pummeling of the sitting duck BTL constituency. They are welcome to vote for Labour if they're not pleased with Section 24! What I'd really like to see is Council Tax made payable by the owner. It is beyond ridiculous that councils have any bad debt on this. Bills could go down at least 3% as bad debt disappears in all but the most dire cases. Staff and systems engaged in the higher churn in bills can also go. Alternatively, fire, police, bin collection etc can all be suspended for any property that has unrecoverable arrears

Tuesday, February 27, 2018 09:51AM Report Comment

12. tenyearstogetmymoneyback said...

I think Socialist might be a little extreme. In 1990 at the end of Thatchers premiership a 21 year old friend of mine got allocated a nice housing association flat because she was still living with her parents.

I wonder what Thatcher would have thought of todays situation given her aim of increasing the percentage of owner occupiers. I doubt if she intended council houses to end up in the prtfolios of BTLers. It was Blair who caused this by introduced short term tenacies making BTL mortgages viable. I guess in both cases imaking things more difficult for the average householder was an unintended consequence.

Thursday, March 1, 2018 11:31PM Report Comment

13. quiet guy said...

Sunday, March 4, 2018 11:14AM Report Comment

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