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cybernoid

"with Home Ownership An Impossible Dream, Saving Money When You're In Your Twenties Seems Pointless"

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More HPC thoughts in the mainstream :

http://www.telegraph.co.uk/men/thinking-man/10940531/For-twentysomethings-saving-money-is-a-waste-of-effort.html

Sometimes when I speak to people of my parents’ generation, they ask me if I worry about being able to afford a place of my own in London. I don’t, in the same way that I don’t worry about being able to afford a yacht on the French Riviera. It would be nice if it did come off, but realistically it’s not something I’m ever going to be able to do under my own steam.

I can see where the boomers' concern comes from. Every day there’s a story along the lines of house prices in the capital jumping by £80,000 in a few months, or house price inflation rising to its highest level in a decade, or the prices of homes in the commuter belt increasing at a faster rate than those in the centre. The average house in the capital costs around 20 times my annual salary. Even with the Government’s Help to Buy Scheme, which allows people to buy a home on a reduced deposit, the figures are overwhelming.

Yesterday, figures released by the ONS showed that we now have to wait around a decade longer to reach the height of our earnings power than people did in the 1970s. Admittedly, we get paid more when we reach this peak - but it still makes saving money during our first decade in work extremely difficult.

Instead of this producing a sense of panic, among the 20-somethings I know who live here it produces one of resignation – even liberation. None of us ever discuss home ownership because we know that unless the bubble bursts or we inherit later it will never happen for us. (Either that or we’ve already had help from our parents to get us on the property ladder, which people tend to avoid drawing too much attention to.)

In the debate about ‘savers versus sinners’ we know which side we’re supposed to be on. There doesn’t seem much point in putting money aside for a house, though, when you know prices will have risen at five times the rate of your salary in the meantime. We’ve all seen the figures about how if the price of everything had increased at the same rate as houses since the 1970s a chicken would cost £51.18 and a loaf of sliced white bread £4.36.

Occasionally someone like Kirstie Allsopp pops up to remind us that we can’t have it all. “[Young people] want to go to university, they want to travel, they want to eat out frequently and they want to buy their own flat,” the presenter said last year. “It has never been, and never will, be easy.”

(I’d forgotten about my student debt until I reread that interview, incidentally. That’s either because a) it’s being taken out of my salary automatically, so it doesn’t feel like I’m paying it in the first place, or B) the last time I opened a letter from the Student Loans Company I was so traumatised by the amount I owe that I’ve replaced the moment in my mind with a screen-memory of me rolling around in a bed of £20 notes.)

Anyway, you can see where Kirstie and her kind are coming from - but there remain a couple of problems with the 'can't have it all' approach to Generation Y browbeating.

First, that even if we never went out and brought packed lunches to work every day, we still wouldn't be able to save enough for a deposit and then pay a mortgage on a London flat unaided. Rent prices are extravagant and seem to increase at a rate that far outstrips advances in salary.

And because of this, I’m not sure we do want to buy our own flats as much as we want to study or travel, or even go to the theatre, or drink, or buy clothes or take recreational drugs, or whatever else it is we do with the money that's left after rent. The numbers around home ownership are so astronomical, so unreachable, that they give us an excuse to spend now rather than save.

It’s true that a journey of a thousand miles begins with a single step, but when the journey’s an average of 475,940 miles, and gets longer as you take it, it doesn’t seem worth starting in the first place.

Perhaps we should feel angrier at propping up the rentier class, but it’s hard to know where to direct this anger. I’m sure some of you will have strong feelings about this, so do let me know in the comment section below who this might be best aimed at: buy-to-let investors, rich Russians, rich Chinese, rich Arabs, the current government, the last government, Clement Attlee's government, Margaret Thatcher’s government, the bankers, the baby boomers, our parents, ourselves; all or none of the above.

There’s a strong case for ourselves, I know. We could always move out of London; with house prices elsewhere in the UK a mere ten times earnings, there really would be no excuse not to save for a deposit.

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When I was that age I spent it all on a "smashing motorbike!!

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Articles like that must scare the living crap out of Kirstie Allsop and her counterparts. When the priced out decide they aren't even bothered any more, the whole game is well and truly up.

Good times are over, sweetie.

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Articles like that must scare the living crap out of Kirstie Allsop and her counterparts. When the priced out decide they aren't even bothered any more, the whole game is well and truly up.

Good times are over, sweetie.

Words with more than two syllables scare the crap out of kirstie

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So who is going to buy the boomers houses from them for 'what they're worth' so they can downsize and live off the proceeds?

Oh right, nobody. That was it.

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There are 168 hours in every week and young people clearly don't work enough of them.

They should be given the opportunity to work at least 80 hours servicing their 50 year term 5.5x joint income mortgages and live the dream.

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There are 168 hours in every week and young people clearly don't work enough of them.

They should be given the opportunity to work at least 80 hours servicing their 50 year term 5.5x joint income mortgages and live the dream.

Pay for working only 80 hours.

They should be working 16 hours a day, 7 days a week to pay the bankers their rewards. 116 hrs minimum week. Housing for workers not shirkers!

Edited by interestrateripoff

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Well then just in case she's reading:

Depreciation, devaluation, deflation, dietitian.

Enjoy the weekend, love.

:lol:

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Perhaps we should feel angrier at propping up the rentier class, but its hard to know where to direct this anger. Im sure some of you will have strong feelings about this, so do let me know in the comment section below who this might be best aimed at: buy-to-let investors, rich Russians, rich Chinese, rich Arabs, the current government, the last government, Clement Attlee's government, Margaret Thatchers government, the bankers, the baby boomers, our parents, ourselves; all or none of the above.

He forgot iPods!

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My advice to any 20 something year old now would be ENJOY LIFE and don't get sucked into the 'must buy' Ponzi. I wrote a post a year or so ago basically saying that I do think we will have a generational revolution of sorts in the next ten years. Much like in the 60's and the hippies (baby boomers now?) rebelled against the establishment (or whatever) and went their own way, I honestly do think we are going to have a revulsion to HPI amongst the new generation in the same way.

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I honestly do think we are going to have a revulsion to HPI amongst the new generation in the same way.

All I see is indifference. Buying is just not on the radar. Like buying a yacht as the article says. It'd be nice but its just not going to happen.

But this relative poverty will ripple up the chain. The boomers with all their 'equity' in their house they think is worth buckets of cash are actually dirt poor. They just don't know it yet.

With no buyer, they cant swap their house for the cash they need. Those young aren't working for the oldies retirement any more.

Cant pay won't pay.

How will Gen Y folks pay the rent if they retire?

That will be the rest of societies problem when that time comes. In the same way that making housing unaffordable for a generation is currently that generations problem.

Cant pay won't pay. How much will property be worth when no-one can pay any rent?

I'll do what I want and the next generation will just have to sort it out. Sounds familiar.

Edited by cybernoid

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Break the problem down to a simple principle...

How do you control somebody? By ensuring they have something to lose.

Once everything's been taken away from them you don't control 'em any more.

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Jesus, I felt like that when I was twenty-something. Now I'm double that age and nothing's changed. At least they have a chance that something might have gone right by the time they are my age, the bubble was just beginning in my day.

Still, I've had a lot of fun, no complaints there, but it needn't have lasted quite so long, had I been born just 5 years earlier I would have had it all.

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Break the problem down to a simple principle...

How do you control somebody? By ensuring they have something to lose.

Once everything's been taken away from them you don't control 'em any more.

I'm amazed the Conservatives appear to be entirely unconcerned that they're creating an entire generation of people 99% of whom have no significant assets and nothing much to lose. Where do they think their future voters are going to come from? People in that situation tend not to want to conserve the status quo.

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I'm amazed the Conservatives appear to be entirely unconcerned that they're creating an entire generation of people 99% of whom have no significant assets and nothing much to lose. Where do they think their future voters are going to come from? People in that situation tend not to want to conserve the status quo.

Spot on as usual.

Tories degrading aspiration are like fish who stop swimming. Dead in the water.

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Tories degrading aspiration are like fish who stop swimming. Dead in the water.

Yep. The Generation Xers running the Tories today (Cameron, Osborne, Shapps) think that all they have to do is parrot Maggie's catchphrases about aspiration and homeownership and magically we will be transported back to the 1980s when ordinary working people were able to have such things and the Conservative party was able to win general elections (clue for the Tories: those two facts are connected). It's part cargo cult politics, part nostalgic karaoke act that keeps Boomers and pre-Boomers happy by denying that the world has changed in scary ways and the rules of the game they learned in their 20s and 30s no longer apply.

Edited by Dorkins

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Yep. The Generation Xers running the Tories today (Cameron, Osborne, Shapps) think that all they have to do is parrot Maggie's catchphrases about aspiration and homeownership and magically we will be transported back to the 1980s when ordinary working people were able to have such things and the Conservative party was able to win general elections (clue for the Tories: those two facts are connected). It's part cargo cult politics, part nostalgic karaoke act that keeps Boomers and pre-Boomers happy by denying that the world has changed in scary ways and the rules of the game they learned in their 20s and 30s no longer apply.

I think the Tories threw away a MASSIVE opportunity to reframe the debate when they took over from Brown. If they had said to the electorate in the run up to voting just how fecked the british economy was due to housing costs, and that they were prepared to lose unless they had a clear mandate to slash and burn the existing system, bring in massive immigration controls, etc, they would have either i) won massively or ii) lost and watched labour completely feck up. Imagine a Labour/lib dem gvt post 2011 with the international markets judging their actions of spend and splurge! We would have had IMF in by now.

Problem is Cameron and Osborne put self above country.

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Yep. The Generation Xers running the Tories today (Cameron, Osborne, Shapps) think that all they have to do is parrot Maggie's catchphrases about aspiration and homeownership and magically we will be transported back to the 1980s when ordinary working people were able to have such things and the Conservative party was able to win general elections (clue for the Tories: those two facts are connected). It's part cargo cult politics, part nostalgic karaoke act that keeps Boomers and pre-Boomers happy by denying that the world has changed in scary ways and the rules of the game they learned in their 20s and 30s no longer apply.

I've a few relatives who I am attempting to enlighten on this front. Amazing how quick you'll get the line "Well, home ownership isn't for everyone(ie other people) is it?". Obviously a deeply-held principled view(the rhetoric about aspiration and equality which comes frothing out at other times without any hint of irony). Edited by Joan of The Tower

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Pay for working only 80 hours.

They should be working 16 hours a day, 7 days a week to pay the bankers their rewards. 116 hrs minimum week. Housing for workers not shirkers!

Damn right, vote UKIP, get Britain out of the EU and stop those vile evil bureaucrats in Brussels denying our children the God given right of every true Brit to work 24/7.

Vote UKIP!!11!!1!

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