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xux42

The Lost Generation

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http://uk.finance.yahoo.com/news/The-lost-generation-yahoofinanceuk-355258552.html?x=0

(Can't insert proper link due to ludicrously old version of IE at our office)

Interesting that the author starts all sympathetic but inevitably drifts to worrying about house prices.

So it would be OK to have loads of unemployed if house prices remained high and climbing would it?

Anyway this really lays it on the line:

"And without first-time buyers, house prices lose the foundation that the entire market is built on."

The worshippers at the altar of property can't sing lalala with their fingers in their ears for much longer.

Can they?

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Anyway this really lays it on the line:

"And without first-time buyers, house prices lose the foundation that the entire market is built on."

True but so fat this is the end of the market that I am not seeing collapse (to my surprise).

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Perhaps we're seeing that the property market CAN thrive, or at least survive, without first-time buyers, at least for a considerable time, as wealthy people or organisations, whether domestic or foreign, plug the gap, increasing their portfolios.

Well that seems to be the case right now . However it will not work in the long term . The reason we have very few FTB's is because they have no jobs or badley paid jobs. If they could afford a house they would be buying instead of renting . They are not so investors are buying the houses and renting them to the priced out FTB , for this bussiness model to work they need people to pay high rent's and more and more young people are not going to be able to afford the rents.

Right now the 25-30 year would be FTB is working and unable to buy so is renting , the younger people 16-24 are either not working or earning a pittance and the way things are going they will always be either not working or earning a pittance . So they will not be moving up to renting in the next ten years to take the palce of those that are renting now ( who should move on to buying ) . If the jobs carnage and ever decreasing low wages carries on as it is doing now the 25-30 year old's now won't be able to pay their rent never mind buy and the 16-24 year olds will be staying at home . So who is going to pay the costs of those that have bought to rent out.

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"And without first-time buyers, house prices lose the foundation that the entire market is built on."

This is how I see it.. no foundation beneath it, a bubble carried away by low interest rates, SMI and forebearing banks.

disney-pixar-up-house-papercraft.jpg

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Well that seems to be the case right now . However it will not work in the long term . The reason we have very few FTB's is because they have no jobs or badley paid jobs. If they could afford a house they would be buying instead of renting . They are not so investors are buying the houses and renting them to the priced out FTB , for this bussiness model to work they need people to pay high rent's and more and more young people are not going to be able to afford the rents.

Right now the 25-30 year would be FTB is working and unable to buy so is renting , the younger people 16-24 are either not working or earning a pittance and the way things are going they will always be either not working or earning a pittance . So they will not be moving up to renting in the next ten years to take the palce of those that are renting now ( who should move on to buying ) . If the jobs carnage and ever decreasing low wages carries on as it is doing now the 25-30 year old's now won't be able to pay their rent never mind buy and the 16-24 year olds will be staying at home . So who is going to pay the costs of those that have bought to rent out.

So who is going to pay the costs of those that have bought to rent?.......difficult, the state can't afford to pay...the workers can't afford to pay....the savvy investors will buy only when the price is right and then they can charge the right rental price....the rest will just have to match that price... the over paid will lose out, shit happens. ;)

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So who is going to pay the costs of those that have bought to rent?.......difficult, the state can't afford to pay...the workers can't afford to pay....the savvy investors will buy only when the price is right and then they can charge the right rental price....the rest will just have to match that price... the over paid will lose out, shit happens. ;)

It's always a risk and people do not evaluate it!

I don't think you are asked for a "business plan" when applying for a BTL mortgage!

Perhaps you will be asked to in future!

After all it IS a business!

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Right now the 25-30 year would be FTB is working and unable to buy so is renting , the younger people 16-24 are either not working or earning a pittance and the way things are going they will always be either not working or earning a pittance . So they will not be moving up to renting in the next ten years to take the palce of those that are renting now ( who should move on to buying ) . If the jobs carnage and ever decreasing low wages carries on as it is doing now the 25-30 year old's now won't be able to pay their rent never mind buy and the 16-24 year olds will be staying at home . So who is going to pay the costs of those that have bought to rent out.

The problem is that those who would be FTB a decade ago are now living with mum and dad, those who would be looking to step up on the second rung of the property ladder are now renting (never having bought the first time) . Its now skewed by not just one stage, its skewed by two. The only FTBs I know of are those who have been helped by bank of mum and dad (now all but exhausted) or those 40 somethings who missed the boat the first and second time around who are now cash rich enough to lay down a 25% deposit themselves. All other buyers and sellers and diminishing in number and make up a classic ponzi scheme. They are going to find it harder and harder to find the greater fool.

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The problem is that those who would be FTB a decade ago are now living with mum and dad, those who would be looking to step up on the second rung of the property ladder are now renting (never having bought the first time) . Its now skewed by not just one stage, its skewed by two. The only FTBs I know of are those who have been helped by bank of mum and dad (now all but exhausted) or those 40 somethings who missed the boat the first and second time around who are now cash rich enough to lay down a 25% deposit themselves. All other buyers and sellers and diminishing in number and make up a classic ponzi scheme. They are going to find it harder and harder to find the greater fool.

Correct

The only other thing is inhereted money , Im 47 and have/am seeing a lot of this . I know a few couples who are both one of two children they are in their 40's and so both will be left half a share in parents houses . People next door to my Dad have been left 3 houses and their daughter married a guy who was left a house . Maybe only those who are left houses or large sums of money will own or buy houses and or buy them for their kids.

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Correct

The only other thing is inhereted money , Im 47 and have/am seeing a lot of this . I know a few couples who are both one of two children they are in their 40's and so both will be left half a share in parents houses . People next door to my Dad have been left 3 houses and their daughter married a guy who was left a house . Maybe only those who are left houses or large sums of money will own or buy houses and or buy them for their kids.

Inhertiance is playing an increasing role in our society. For example one person I know an only child was left ~£500,000. Well over a 35 year working life of a person that is like making £14,250 a year... after tax. That is around a lifetime's income for someone making £7 an hour.

And the inheritance doesn't stop him working his average job, it is just in addition. But they are so large relative to today's income, because of course homes are so expensve relative to income.. that it creates a society where a lot of your material wealth is from who your parents were, even for the average person. Of course this has always been true for the super rich, but for your average person I do not think it was such a strong factor 30 years ago.

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Inheritance is playing an increasing role in our society. For example one person I know an only child was left ~£500,000. Well over a 35 year working life of a person that is like making £14,250 a year... after tax. That is around a lifetime's income for someone making £7 an hour.

And the inheritance doesn't stop him working his average job, it is just in addition. But they are so large relative to today's income, because of course homes are so expensive relative to income.. that it creates a society where a lot of your material wealth is from who your parents were, even for the average person. Of course this has always been true for the super rich, but for your average person I do not think it was such a strong factor 30 years ago.

Economic and social mobility are declining rapidly in the UK. In the future a middle class life style will only be open to those whose parents were middle class and had the good sense not to have more than 2 children. Escaping the lower echelons through education, hard work and career progression will not be possible. Inherited wealth will be essential. (unless of course you have the family connections to get one of the higher paid public sector jobs)

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I've posted this before. One must consider the reality in YOUR own personal situation, if you don't want to emigrate.

Save hard or Save not so hard and wait until prices correct.

graph.jpg

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Inhertiance is playing an increasing role in our society. For example one person I know an only child was left ~£500,000. Well over a 35 year working life of a person that is like making £14,250 a year... after tax. That is around a lifetime's income for someone making £7 an hour.

And the inheritance doesn't stop him working his average job, it is just in addition. But they are so large relative to today's income, because of course homes are so expensve relative to income.. that it creates a society where a lot of your material wealth is from who your parents were, even for the average person. Of course this has always been true for the super rich, but for your average person I do not think it was such a strong factor 30 years ago.

That sort of level of inheritance will be pretty normal in the south east , but especially for people from small families where it could easily be many times more.

My own parents are sitting on about £500k of property, though that is a 3 way splt. However, my parents-in-laws have £1.5m a house and some unbeknown amount of other financial assets, again a 3 way split .

There will of course be people with a lot more in assets and only one person to inherit. At least one old school friend I know will get something like 200 acres in Surrey and a massive farm house as single heir.

As family sizes shrink, there is a good chance a lot of assets could end up very concentrated in the hands of a few. With multi-way inheritances there is probably a greatly increased tendency to sell the asset, but when an asset goes to one person, they could always hang onto it if the CGT bill isn't too large.

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1; Inheritance relies on a house being able to be sold.

a collapse in bottom rung, means the market generally stops. therefore...the inheritance path halts too.

2. Mass unemployment....in support of the £ in about 1990, Gillian Shepherd Tory MP said is was a price worth paying.

well, as always, we paid the price, but the £ still collapsed and we went into severe decline.

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1; Inheritance relies on a house being able to be sold.

a collapse in bottom rung, means the market generally stops. therefore...the inheritance path halts too.

2. Mass unemployment....in support of the £ in about 1990, Gillian Shepherd Tory MP said is was a price worth paying.

well, as always, we paid the price, but the £ still collapsed and we went into severe decline.

Which is what has helped keep house prices up.

It's rigged 100%.

If we'd been in the Euro, prices would now be 40-50% lower like Ireland, and RBS, Barclays, NR, Lloyds/HBOS et al would have all been too big to save.

Imagine the UK's £4 Trn housing stock being only worth £2 Trn, Darling and Now George wouldn't be able to Quantitatively Ease themselves fast enough.

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Economic and social mobility are declining rapidly in the UK. In the future a middle class life style will only be open to those whose parents were middle class and had the good sense not to have more than 2 children. Escaping the lower echelons through education, hard work and career progression will not be possible. Inherited wealth will be essential. (unless of course you have the family connections to get one of the higher paid public sector jobs)

It seems we are returning to a more normal time historically speaking. Its probably an anomaly that someone of say 95iq to 115iq who worked hard, saved, bought a home, worked their way up in a corporation or government.. could really improve their social standing in one generation.

What I see today is going back to who your family is mainly determines your relative wealth.. except for 1 or 2 percentage points of the population who are exceptionally talented or exceptionally bright and use those god given talents professionally.

But one of the class issues is the meritocracy of the mid 20th century mainly already allowed the families who were say in the top 10% cognitively, but who were lower or middle class, to rise up. So now I see families where like both parents are professionals, have a very expensive home, have investments.. and low and behold the children are quite bright too, and they become professionals. So you have doctors which make something like 7 times the average income now who also inherit a large estate.

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But one of the class issues is the meritocracy of the mid 20th century mainly already allowed the families who were say in the top 10% cognitively, but who were lower or middle class, to rise up. So now I see families where like both parents are professionals, have a very expensive home, have investments.. and low and behold the children are quite bright too, and they become professionals. So you have doctors which make something like 7 times the average income now who also inherit a large estate.

But every 25ish years you get an apparent shake out of the middle and upper middle classes though due to economic turmoil. It redistributes it and again it starts to polarise yet again.

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It seems we are returning to a more normal time historically speaking. Its probably an anomaly that someone of say 95iq to 115iq who worked hard, saved, bought a home, worked their way up in a corporation or government.. could really improve their social standing in one generation.

That's what happened to me but I now appreciate that it is not realistic to expect my own kids to get the same leg up.

However, they have enjoyed a much higher standard of living than I did as a child and teenager, and they are much better briefed on the importance of obtaining, exploiting and maintaining marketable skills than I was.

And they will (barring extended care home costs) have an substantial inheritance where Mrs xux and I are looking at a maybe the price of a nice flat tops.

In other words, they will have a similar standard of living as adults but only because of a head start and a big injection around retirement.

Its very depressing to think that bright and hard working kids like them but born into working class families face a lifetime of frustration and underpayment.

Although inheritance is beneficial to our family I don't think its a very good basis for financial planning and causes distortions.

I'd be happy to see it taxed much more heavily, but only if the changes were brought in fast enough to quickly bring sustained lower house prices and an improved economy with the redirection of funds aimed at the young.

Individuals, govts. and corporations spend far too much time and energy finding ways to make comfortably off older people even better off, keeping the workshy from rioting and protecting VIs, and too little on nurturing the young and young adults IMHO.

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Correct

The only other thing is inhereted money , Im 47 and have/am seeing a lot of this . I know a few couples who are both one of two children they are in their 40's and so both will be left half a share in parents houses . People next door to my Dad have been left 3 houses and their daughter married a guy who was left a house . Maybe only those who are left houses or large sums of money will own or buy houses and or buy them for their kids.

This is exactly the situation in less developed economies. Is the UK regressing?

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That's what happened to me but I now appreciate that it is not realistic to expect my own kids to get the same leg up.

However, they have enjoyed a much higher standard of living than I did as a child and teenager, and they are much better briefed on the importance of obtaining, exploiting and maintaining marketable skills than I was.

And they will (barring extended care home costs) have an substantial inheritance where Mrs xux and I are looking at a maybe the price of a nice flat tops.

In other words, they will have a similar standard of living as adults but only because of a head start and a big injection around retirement.

Its very depressing to think that bright and hard working kids like them but born into working class families face a lifetime of frustration and underpayment.

Although inheritance is beneficial to our family I don't think its a very good basis for financial planning and causes distortions.

I'd be happy to see it taxed much more heavily, but only if the changes were brought in fast enough to quickly bring sustained lower house prices and an improved economy with the redirection of funds aimed at the young.

Individuals, govts. and corporations spend far too much time and energy finding ways to make comfortably off older people even better off, keeping the workshy from rioting and protecting VIs, and too little on nurturing the young and young adults IMHO.

Your children if they are say above average intelligence and work ethic, but maybe not enough to become a doctor, will have to be careful and nuture the family wealth. They won't be able to blow a bunch of money friviously and expect to be able to get it back, like was possible a generation ago. And they will need to get a marketable skill.

But say a guy and a girl became a dental hygenist and a plumber.. with the leg up of the wealth you and Mrs xux42 have created for the family their future could look quite bright if they are careful.

I find in our society we worry about things we have no control over like global warming.. but don't worry enough about really important things like good paying jobs for young adults, the type of jobs you can have a first world standard of living on. And these really important things are things we can actually do something about.

Edited by aa3

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lost.jpg

Oh please, the previous generation didn't save every single penny they had and had a much easier time saving for a house.

My Dad spent more on Vinyl and his Triumph than I spend on music and my 20 year old banger.

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1; Inheritance relies on a house being able to be sold.

a collapse in bottom rung, means the market generally stops. therefore...the inheritance path halts too.

2. Mass unemployment....in support of the £ in about 1990, Gillian Shepherd Tory MP said is was a price worth paying.

well, as always, we paid the price, but the £ still collapsed and we went into severe decline.

...just a thought...debt dies with you, yes.......a pension dies with you (apart from maybe a small widows pension ) yes....why can't assets/property die with you?......then everyone will truly be born equal. ;)

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...just a thought...debt dies with you, yes.......a pension dies with you (apart from maybe a small widows pension ) yes....why can't assets/property die with you?......then everyone will truly be born equal. ;)

Actually, debt doesnt die with you, its charged to your estate....if that cant pay then it is defaulted upon...clearly you cant sue a dead person.

So the effect is if you die with debt and an asset, like in a bankruptcy, the asset is sold and distributed to the creditors...whats left goes to the decendants or will recipients.

It is interesting that they charge fortunes for an Annuity, and if you only claim for a year..they keep it....that sounds wrong to me, specially as the rates are tiny.

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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