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The young people struggling in the 2020 economy.


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A message to boomers (like myself).
Its time to stop salivating over the increased value of your house and think about giving back to the younger generation.

Several years ago I predicted a shift in the political landscape, unless our spoilt, greedy generation stopped thinking only of themselves and focused more on creating opportunity for the young. The new generation need to be able to get decent jobs, buy houses and start families like we did. They need to have the opportunity to enjoy what generations before considered to be their right, and soon that demand will work its way to the ballot box to reshape politics. Today I find myself reading an article on BBC news, talking of a political shift in the USA (https://www.bbc.co.uk/news/election-us-2020-54471388) and it made me want to have my say.

The article talks of a generation of young people, priced out of the housing market and paying the price for the financial crash (which they had no part in). It hints at the beginnings of a rebellion, by young people, who increasingly reject more conservative political policies and even capitalism as a whole. This is happening here too and what we’re going to see is the inevitable kickback from a disenfranchised generation who are on the verge of being excluded from owning homes and joining a club, now increasingly seen as being exclusive to an older generation. What’s more, they have to be continually reminded of it every time they turn on the TV and see a property program or overhear a conversation between middle aged couples, gloating about how much their house would sell for and how little they paid for it. When did we become so disgustingly obsessed about property values and why do we celebrate every time they increase without concern for young people trying to get onto the housing market?


No doubt, some older people reading this will disagree and think that they worked hard for what they’ve got and spin some story about how they struggled in the early years. Well in many cases that’s probably true, but dragging up old anecdotes about sitting on packing crates while you saved for a sofa won’t really win you any sympathy from today's 30 somethings who can't afford their first home. The truth is that millions of home owners born in the early post-war years, enjoyed jobs for life, generous pension schemes and free university education for themselves and their children. Most households based their income on a single wage and housing was still affordable. There was a abundance of social housing bridging the gap between the public/private rented sector with private ownership seen as just an option which many didn’t want the responsibility of. There was empty property and spare land for building on in almost every street and nobody obsessed over the value of their houses. Absolutely nobody would have tuned in to watch a television show devoted to buying and selling property because they weren’t all that interested. They’d rather turn on the TV and watch quality entertainment like an episode of Love thy Neighbour 😳. My generation (born in the mid 60’s) have enjoyed most of this too. We might have endured entry into the property market during the the 80’s property boom, lived with negative equity, seen our defined benefits pension schemes closed mid term and our children might not have qualified for free university education, but we still had most of the privilege of the generation before us. Our tales of tough days when starting out don’t compare to youngsters today who are often only able to earn minimum wage and face average house-prices of over £300,000 (that’s nearly 20 times salary for someone on minimum wage). Remember also, we had MIRAS (some people choose to forget this), and of course we had the biggest public giveaway in our nation’s history with the right to buy scheme. How different the country would look today if millions of council house tenants hadn’t been offered the total “no brainer” decision to buy their homes at prices massively below market value and become the home owners that they would never otherwise have been.
I remember all too well, the feeling of exclusion I felt when I left school in 1982 and we were in the middle of a phase of high unemployment. It was very hard for a young working class lad with no work experience, to get a properly paid job with any prospects. I remember the bitterness I felt from seeing that people as little as 2 or three years older than me had opportunity that I felt I would never have. They simply benefited by accident of timing and were already through the turn-style before the gates were closed. Fortunately for me and people like me, this was relatively short lived. A period of realignment and social economic change, brought growth again and opportunities followed. I prospered from this but I’ve never allowed myself to forget that feeling of desolation and lack of hope for the future. What I experienced, is nothing compared to the bleak future that's being forged for young people right now.

Today we have a generation who have been punished by an unprecedented global financial collapse, brought about by the greed and irresponsibility of the generations before them. This has already had a profound impact on many of their lives and it could continue to do so for decades to come. They are the best educated generation in our nation’s history and, regardless of what some think, they’ve generally worked a lot harder at their study than we ever did. In spite of this, swathes of young people are unable to find secure gainful employment. A greater number than ever before live with parents due to their inability to afford their own homes. Rented accommodation has been out-priced, partly due to the lack of social housing and the greed of the buy-to-let sector. Any notion of being able to take the next steps toward adult life must feel totally out of reach to them. Then, just when it must feel that it can’t get worse, we’re hit with the worst public health pandemic in living memory. Worst affected by this has been lower paid workers, many of whom are younger people who’ve been unable to get the proper apprenticeships or get onto a secure career path which was so easy for older generations to do. All of this must already be hard to endure by people, looking at getting onto the property market. Things can’t get much worse surely? Then, the government goes into panic mode. Massive financial decisions are being hurriedly taken without proper due diligence. Decisions that will affect the economy and the prospects of young people for decades to come. Billions of pounds of public money being thrown at people to fill their faces with cheap restaurant food at the cost of the tax payer, a poorly policed furlough scheme (open to fraudsters everywhere) and a surprise reduction in stamp duty. The latter might be seen as something which finally helps young people but look closer, and that’s not really the case. Before the 8th of July 2020, first time buyers were already exempt from stamp duty up to the value of £300,000. Raising this level of stamp duty relief to £500,000 is only going to affect first time buyers purchasing a home for over £300,000. This probably doesn’t account for a very high percentage of first time buyers and any saving for those it does affect is only on the cost above £300K and below £500K. So probably fair to say that the help this offers to young first time buyers is probably negligible. However, and here’s the rub, what it does do, is cause a new property buying frenzy. People who already have homes, wrestle each other to try to take advantage of a short term opportunity to save some stamp duty on moving house. Suddenly, just like the hoards of people queuing to get into every third rate restaurant to scoff food on the “eat out to help out” scheme, they now all wrestle to take advantage of a stamp duty concession. The result of all this, is a reignited buying frenzy and a spike in asking prices for property, way in excess of the tax saving that as made. So who really wins from this? Probably, virtually nobody (except the estate agents). However, of the gains that are made by buyers, the biggest are all taken up by the older generations who already own property and are just swapping houses. In reality, this is nothing more than a poorly thought through, reflex reaction to try to buoy the housing market. Just like "eat out to scoff out" it's doing more harm than good. The longer term effect of it is will only be to further inflate an already massively overpriced housing market. Prices are being pushed even higher and further out of reach of the young. Well done Rishi, give yourself a big round of applause!

If you’ve read this far then you might be asking “if he thinks he’s so clever then what does he think the answer is?”. So always willing to give my opinion on such matters, here it is……

Firstly, governments have to be brave enough to face an electorate living with falling or stagnant property prices. Perpetual property price inflation, above wage inflation, should be seen as toxic and the public need educating to comprehend this. Successive governments have believed that you can’t win an election on falling house prices. Well, wake up and smell the coffee is what I’d tell them. A whole generation of young voters are coming your way and you need to think again. A slow, sustained drop in property prices should be desirable and if the public find that hard to swallow then at least a long period of stagnation coupled with moderate inflation. While governments and central banks continue with monetary policy which distorts normal market forces in order to protect property prices, they will only continue to go in one direction. Lowering of interest rates leading to low mortgage rates, is a short sighted policy and you’re just building the most enormous house of cards. People always borrow to the maximum or above when taking on mortgages because they’ve been conditioned into believing that it’s a safe bet, house prices only ever go up. Low interest rates only mean people borrow more and market driven house prices just rise relative to affordability governed by the ability to borrow more. It's a viscous circle, an increase in how much money can be borrowed doesn't make homes more affordable. It is cancelled out by an equal increase in average property prices as market forces take up the slack of the new money. The net result is that property is no more affordable (in real terms) due to low mortgage rates, but the sums borrowed grow ever greater. The more indebted we become, the harder it is to bear even the smallest rise in interest rates and the more the hands of central banks are tied in the future. We’re now down to practically zero percent base rate and talking of a adopting a negative base rate. I can see the incentive for low rates in order to inspire growth and investment in the wider economy but it’s having the most dangerous effect on household mortgage debt and governments know it but do nothing to rein it in.
In my most humble opinion, the best way to start to address this problem is by totally scrapping stamp duty. Treat private property in exactly the same way as any other asset and make it eligible for capital gains tax. Set a fixed start date for this to be calculated from, let's say 1st January 2000, and establish an indexing scale to calculate the market value of a property on that date (based on average annual house price inflation worked backwards to January 2000). Upon sale of a property bough after 1st January 2000, the purchase price is simply deducted from the sale price and an adjustment made for inflation, giving the capital gain. In the case of a property bought before 1st January 2000 the index scale is used to calculate the market value, backdated to 1st Jan 2000. This calculation is deducted from the sale price and an adjustment made for inflation to produce the capital gain. CGT is levied at the standard rate on any profit that was made. This will instantly change the entire mindset of the country and totally remove the totally absurd burden of stamp duty chargeable to the buyer, shifting it instead onto the seller (but by way of CGT). The beauty of this is that the amount of tax payable is directly proportional to the gain in price (damping down the vulgar enthusiasm for property speculation). The cheaper the property sells for, the lower the tax burden so there's less incentive to make profit. Also, first time buyers will always be totally exempt because no profit is ever made. Additionally, people will fear house price falls a little less as they will pay no CGT on a lower sale price and could even qualify for GCT relief for future years. Finally, it closes any tax loopholes on second properties because they're all treated the same.


It is essential that we, as a nation, get over our short term greed and make way for a more sustainable future. A future that doesn’t leave some gorging on the proceeds of property speculation, only to exclude the young from home ownership and build up a massive burden for them in the future. We can either start to face it and address it now or we can sit back and wait for the youth revolution. It will come and who can blame them?

 

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Did you write this yourself?

Some interesting comments in there and I have said it on this forum before that once the electorate is majority renting the political paradigm will shift. I think this won't just affect housing but other issue involving wealth and income inequality. 

It'll be interesting to see how the political narrative changes once Brexit is out of the way. The politics of Sanders and Corbyn were popular with young people for a reason. I can see policies that were previously seen as extreme becoming more and more mainstream.

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I've come across a lot of middle aged folk over the years who love shouting from the rooftop about their house price increasing but then bemoan the ability for their children to afford a house. Got to laugh.

Edited by PaulTW
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I've come across a lot of middle aged folk over the years who love shouting from the rooftop about their house price increasing but then bemoan the ability for their children to afford a house. Got to laugh.

I think some middle aged/older folk are starting to put the two together now.

  • When your 23 and 26 year old are still in their childhood bedrooms after university
  • When your offer of £10,000 for a housing deposit isn't enough.
  • When your three adult children have given you only two grandchildren between them as they can't afford more space, despite them earning more than you ever did.

It starts to bring it home.

 

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The problem is humanity and money. We are hard wired to get one up on each other (even your own siblings) and to only think of yourself. 

This could be a perfect time to reset and give young generation a massive chance to own a house, add real value to society, correct issues like climate change, etc...There has to be a revolution by the young generation soon but I bet in 30 years time when we are older, there will be the same mistakes, same inflation of money and value, and the same discussion on the internet.

And that's only if we haven't had a total global nuclear annihilation. 

 

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Large university debt, many thousands of pounds, 0% on savings not covering for inflation, certainly not HPI, high private rents, totally priced out of buying in the area grew up in, fewer jobs, very insecure working income with regular gaps.....to top it all, pensions, any kind of retirement moving further and further into the distance.

Make work pay......when work very often does not pay, not enough pay to save for a rainy day..... swimming naked, debt keeping them under water.

Any young person without having access to family financial help or support is fundamental disadvantaged at birth.;)

 

 

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This is an extract from Sajid Javid’s speech when he became housing secretary in Nov 2017. It shows they know exactly  what problems the ponzi scheme is causing/will cause.

 

What we need now is a giant leap.

You wouldn’t know it if you listened to some people.

Even today, I still hear from those who say that there isn’t a problem with housing in this country.

That we don’t need to build more.

That affordability is only a problem for Millennials that spend too much on nights out and smashed avocados.

It’s nonsense.

The people who tell me this – usually baby boomers who have long-since paid off their own mortgage – they are living in a different world.

They’re not facing up to the reality of modern daily life and have no understanding of the modern market.

The statistics are well-worn but they do bear repeating.

Nationwide, the average house price is now 8 times the average income.

The average age of a first-time buyer is now 32.

People in their early 30s are half as likely as their parents were to own their home.

A third of all men in their 30s are still living with their parents – a stat that will send a shiver down the spine of all mums and dads everywhere!

Where once it would have taken an average couple 3 years to save for a deposit – 3 years – it will now take a quarter of a century. Assuming, of course, they can afford to save at all.

And last year, the average first-time buyer in London needed a deposit – a deposit – of more than £90,000.

£90,000!

That’s a lot of avocados.

Now, like some kind of noxious oil slick, the effects of our broken housing market are spreading slowly but steadily through all our communities and all demographics.

And if we fail to take decisive action, the impact will be not just be felt by those who are directly touched by it.

And that’s because your home is so much more than just the roof over your head.

It’s not the backdrop to your life, it’s a fundamental part of it – and of society too.

Our home is supposed to be our anchor, our little patch of certainty in an uncertain world.

And once you have that certainty, that stability, then you can start to put down roots.

Start making friends.

Become part of your community.

You can begin to play your role in those Burkean “little platoons” that have long been at the heart of much political thinking, for 2 centuries or more.

So our homes are engines of society, and they’re also engines of social progress.

In purely fiscal terms, yes, but in so many other ways.

A safe place where children can do their homework, spend time with their parents.

It’s much, much harder to get on life if you’re constantly forced to move from school to school, from place to place because your parents can not afford the rent.

And homes are the rocks on which families and communities are built.

If, like me, you believe in the importance of a strong, stable family unit, if you got into politics to help protect it, then you must also accept that homes should be made available.

You simply must.

[Political content removed] At the heart of British life – is the idea that if you work hard you are free to enjoy the rewards.

It’s an idea that has been articulated by countless politicians over many generations.

But it’s an idea that is fundamentally undermined by our broken housing market.

Because working hard no longer guarantees rewards.

There is no guarantee that you will be able to afford a place of your own, to buy your own home, build your own life, pass something on to your children.

With wages swallowed up by spiralling rents, there’s not even a guarantee that you’ll be free to spend your money on what you choose.

Opportunity is increasingly limited not by your own talents but by your ability to make a withdrawal from the Bank of Mum and Dad.

The generation crying out for help with housing is not over-entitled.

They don’t want the world handed to them on a plate.

They want simple fairness, moral justice, the opportunity to play by the same rules enjoyed by those who came before them.

Without affordable, secure, safe housing we risk creating a rootless generation, drifting from one short-term tenancy to the next, never staying long enough to play a real role in their community.

We risk creating a generation who, in maybe 40 or 50 years, reaches retirement with no property to call their own, and pension pots that have not been filled because so much of their income has gone on rent.

A generation that, without any capital of its own, becomes resentful of capitalism and capitalists.

And we risk creating a generation that turns its back on the politicians who failed them.

A generation that believes we don’t care.

[Political content removed]

We must fix the broken housing market, and we must fix it now.

And what have they done to fix this injustice?! Absolutely F**k all....

Edited by ForGreatLager...
Spelmimg as usill
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It is essential that we, as a nation, get over our short term greed and make way for a more sustainable future. A future that doesn’t leave some gorging on the proceeds of property speculation, only to exclude the young from home ownership and build up a massive burden for them in the future. We can either start to face it and address it now or we can sit back and wait for the youth revolution. It will come and who can blame them?

Jim Cramer's "Age of disorder" awaits the UK, as it does the US.  As you say, either the existing government "owns" this disorder, or finds themselves replaced by it.

I don't think politicians in the west have the guts to do what is right anymore, so disorder + political chaos it is.

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This is an extract from Sajid Javid’s speech when he became housing secretary in Nov 2017. It shows they know exactly  what problems the ponzi scheme is causing/will cause.

 

What we need now is a giant leap.

You wouldn’t know it if you listened to some people.

Even today, I still hear from those who say that there isn’t a problem with housing in this country.

That we don’t need to build more.

That affordability is only a problem for Millennials that spend too much on nights out and smashed avocados.

It’s nonsense.

The people who tell me this – usually baby boomers who have long-since paid off their own mortgage – they are living in a different world.

They’re not facing up to the reality of modern daily life and have no understanding of the modern market.

The statistics are well-worn but they do bear repeating.

Nationwide, the average house price is now 8 times the average income.

The average age of a first-time buyer is now 32.

People in their early 30s are half as likely as their parents were to own their home.

A third of all men in their 30s are still living with their parents – a stat that will send a shiver down the spine of all mums and dads everywhere!

Where once it would have taken an average couple 3 years to save for a deposit – 3 years – it will now take a quarter of a century. Assuming, of course, they can afford to save at all.

And last year, the average first-time buyer in London needed a deposit – a deposit – of more than £90,000.

£90,000!

That’s a lot of avocados.

Now, like some kind of noxious oil slick, the effects of our broken housing market are spreading slowly but steadily through all our communities and all demographics.

And if we fail to take decisive action, the impact will be not just be felt by those who are directly touched by it.

And that’s because your home is so much more than just the roof over your head.

It’s not the backdrop to your life, it’s a fundamental part of it – and of society too.

Our home is supposed to be our anchor, our little patch of certainty in an uncertain world.

And once you have that certainty, that stability, then you can start to put down roots.

Start making friends.

Become part of your community.

You can begin to play your role in those Burkean “little platoons” that have long been at the heart of much political thinking, for 2 centuries or more.

So our homes are engines of society, and they’re also engines of social progress.

In purely fiscal terms, yes, but in so many other ways.

A safe place where children can do their homework, spend time with their parents.

It’s much, much harder to get on life if you’re constantly forced to move from school to school, from place to place because your parents can not afford the rent.

And homes are the rocks on which families and communities are built.

If, like me, you believe in the importance of a strong, stable family unit, if you got into politics to help protect it, then you must also accept that homes should be made available.

You simply must.

[Political content removed] At the heart of British life – is the idea that if you work hard you are free to enjoy the rewards.

It’s an idea that has been articulated by countless politicians over many generations.

But it’s an idea that is fundamentally undermined by our broken housing market.

Because working hard no longer guarantees rewards.

There is no guarantee that you will be able to afford a place of your own, to buy your own home, build your own life, pass something on to your children.

With wages swallowed up by spiralling rents, there’s not even a guarantee that you’ll be free to spend your money on what you choose.

Opportunity is increasingly limited not by your own talents but by your ability to make a withdrawal from the Bank of Mum and Dad.

The generation crying out for help with housing is not over-entitled.

They don’t want the world handed to them on a plate.

They want simple fairness, moral justice, the opportunity to play by the same rules enjoyed by those who came before them.

Without affordable, secure, safe housing we risk creating a rootless generation, drifting from one short-term tenancy to the next, never staying long enough to play a real role in their community.

We risk creating a generation who, in maybe 40 or 50 years, reaches retirement with no property to call their own, and pension pots that have not been filled because so much of their income has gone on rent.

A generation that, without any capital of its own, becomes resentful of capitalism and capitalists.

And we risk creating a generation that turns its back on the politicians who failed them.

A generation that believes we don’t care.

[Political content removed]

We must fix the broken housing market, and we must fix it now.

And what have they done to fix this injustice?! Absolutely F**k all....

To be fair to Javid he was booted out

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I've come across a lot of middle aged folk over the years who love shouting from the rooftop about their house price increasing but then bemoan the ability for their children to afford a house. Got to laugh.

True cognitive dissonance!!!

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Of course they don’t. There’s so many people in the casino now they can’t, and don’t want to shut the doors. 

I think we'll see the printing machine turned.

But......the money needs to get to workers first, before companies get their hands on it.

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I've come across a lot of middle aged folk over the years who love shouting from the rooftop about their house price increasing but then bemoan the ability for their children to afford a house. Got to laugh.

If it wasn't so true it wouldn't be so funny!

I've even had to bite my lip while I listened to someone once complain,  "It's unfair that there's no council houses left for my son to buy like I did. How can anyone expect him to ever afford to buy his own house at these prices? The council need to build more houses."

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The original post summarised the situation very well. I think the bigger picture is that Britain has always been a class ridden society with a small group of landlords/ landowners and a mass group of renters below them. The group in between them have been squeezed out.

Edited by ucnvpe0
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If it wasn't so true it wouldn't be so funny!

I've even had to bite my lip while I listened to someone once complain,  "It's unfair that there's no council houses left for my son to buy like I did. How can anyone expect him to ever afford to buy his own house at these prices? The council need to build more houses."

+1  Same folks that bought at a discount from 'Right to Buy', traded up, then started protesting about any new builds (despite criticising all the protests on little things like BLM, Me Too, Global Inequality, Climate Emergency).  Then wail when the dregs of remaining council houses are given to 'fecund single mothers' and 'dirty immigrants' as they lap up the drivel from the elites and the Daily Heil mouth pieces.

Do they have any idea of self or the dissonance they suffer?  It's worse than Turkey's voting for Christmas, its Turkeys saying Without intensive farming, hormones, and mass slaughter we'd be worse off

 

 

cookie.jpg

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+1  Same folks that bought at a discount from 'Right to Buy', traded up, then started protesting about any new builds (despite criticising all the protests on little things like BLM, Me Too, Global Inequality, Climate Emergency).  Then wail when the dregs of remaining council houses are given to 'fecund single mothers' and 'dirty immigrants' as they lap up the drivel from the elites and the Daily Heil mouth pieces.

Do they have any idea of self or the dissonance they suffer?  It's worse than Turkey's voting for Christmas, its Turkeys saying Without intensive farming, hormones, and mass slaughter we'd be worse off

 

 

cookie.jpg

think most humans are just driven by emotions, and actually quite stupid.


If you get a group of people, all thick, all doing what they feel like doing, and thinking based purely on emotions, then it creates a feedback loop, when people dont have any critical thinking, and happy to blame others (never themselves), strong opinions with no merit. 

these are people who's opinions are worthless... except they are not, they are the loud majority, they are there to be played by the smart and rich, 

how else would the party of the 1% convince soo many of the 99% to vote for them? they just throw out a few words that appeal to the masses of thickos, like Brexit, etc, immigration etc.

A lot of boomers never grew up with having constant internet, constant answers to questions, they relied on their small social group of often small minded, less traveled, thick. They didn't develop nuanced arguments, or see the 'grey area' they formed their heartfelt opinions based on little information, and now they are old they just dont care to read up and find the answers.

its always easier to call the young lazy, blame immigrants, or foreign aid, avocado toast etc. What i struggled with is i know some extremely smart boomers, engineers etc, and it took them years to even get a bit of a feel of the hell that the young of living through, and even then still wont fully come to terms with how easy they had it, its too much for their self worth the bare. 

Edited by jiltedjen
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  • 439 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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