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The Uk Population

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There's been a bit of chat about the baby boom generation recently. The chart below clearly shows the baby boom population. Even more clearly it shows the children of the 60's, an even bigger pension nightmare on the horizon.

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If your age corresponds to an age of high occurance what can you expect?

Longer hospital waiting lists in retirement?

Greater voting power for your demographic?

Basically anything with an age restriction will be busier.

How important a bearing is this on the economic cycle?

Could it be the sharp increase in people aged 32-45 has helped fuel the housing boom?

If so there appears to be a significant shortage of people aged 20-30 to perpetuate all this.

Also there appears to be a baby boom beginning again. Are people settling down?

All replies are welcome, let's start the debate. ;)

.

Edited by ?...!

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Could it be the sharp increase in people aged 32-45 has helped fuel the housing boom?

If so there appears to be a significant shortage of people aged 20-30 to perpetuate all this.

See 'Federal Reserve: The Baby Boom: Predictability In House Prices And Interest Rates.':

http://www.housepricecrash.co.uk/forum/ind...showtopic=21315

'The Baby Boom: Predictability in House Prices and Interest Rates' [744KB PDF]:

http://www.federalreserve.gov/pubs/ifdp/2005/847/ifdp847.pdf

Abstract: This paper explores the baby boom's impact on U.S. house prices and interest rates in the post-war 20th century and beyond. Using a simple Lucas asset pricing model, I quantitatively account for the increase in real house prices, the path of real interest rates, and the timing of low-frequency fluctuations in real house prices. The model predicts that the primary force underlying the evolution of real house prices is the systematic and predictable changes in the working age population driven by the baby boom. The model is calibrated to U.S. data and tested on international data. One surprising success of the model is its ability to predict the boom and bust in Japanese real estate markets around 1974 and 1990.

Take a look at 'Figure 16. United Kingdom: Simulated and Real House Prices'.

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It's an interesting idea. Looks like the demographic pressure will be downwards on property for a long time the way things are. Perfect storm brewing?

I don't see a new baby boom happening either - it's just picking up slightly from a historic low.

Some interesting stuff on the beeb news page at the moment about demographics. Disturbing how people fail to see that their choices regarding children have huge implications. We urgently need more babies - though not nearly as much as Russia/Italy.

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You need to overlay the availability of housing over this, to understand whether there has been a shortage of housing coninciding with the baby boomers volumes to then determine whether it is this that has caused a rise in house values. I suspect there is no housing shortage.

The reason for higher house prices can be 90% laid at the door of lower IRs.

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There's been a bit of chat about the baby boom generation recently. The chart below clearly shows the baby boom population.

There are clearly two separate "baby boom" effects. The first is a large spike over a short period of time (1946 - 1949 -- I think your graph is about two years out of date.

The second is a big lump over a longer period of time, about 1956 - 1970.

After the early 70s, the birth rate is far lower, so the baby boom was well and truly finished.

I am guessing this:

The first baby boom was behind the early 70's house price peak, when the first-boomers became FTBs.

The mid-80s house price peak was a combination of the first-boomers trading up and the second boomers becoming FTBs.

The recent bull market is a case of the second boomers being FTBs and trading up. There were so many second-boomers that it was a massive and long bull market. The youngest of the second-boomers is now 36 so has probably bought already.

The interesting thing is that first-boomers are now hitting retirement. Second-boomers will be wanting to trade up, but there is a shortage of post-1970 FTBs.

Also there appears to be a baby boom beginning again. Are people settling down?

All replies are welcome, let's start the debate. ;)

I don't think so, the birth rate has now dropped to levels not seen since the middle of WWII. Any uptick from this low level can't really be called a boom.

frugalista

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I've a feeling the equation should be demographics + cheap oil + technological improvements. All of these seem to be running out of steam more or less concurrently...could well be that perfect storm.

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The first baby boom was behind the early 70's house price peak, when the first-boomers became FTBs.

The mid-80s house price peak was a combination of the first-boomers trading up and the second boomers becoming FTBs.

The recent bull market is a case of the second boomers being FTBs and trading up. There were so many second-boomers that it was a massive and long bull market. The youngest of the second-boomers is now 36 so has probably bought already.

No offence frugalista, I normally enjoy your posts but I think you're confusing cause and effect here maybe.

The first boom was people having kids because the war was over and they could see a future, and the second is the first boom having kids.

I don't think anyone's ever gone 'My house is worth lots, I think I'll have another kid', have they? Surely the effect on those paying off huge mortgages and putting off having kids would more than cancel the 'have a kid on MEW' brigade anyway evern if they exist.

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With regard to the fed article on baby boomers...

Note the fig16 shows real house prices. i.e. I assume this is corrected for wage inflation.

If you were to correct it for nominal prices (in £££) you can kiss a fall in nominal prices goodbye for over 20 years in the UK. (if you believe the model)

However, I'm sceptical of highly complicated models that fit old data well and then go on to make predictions.

There may well have been many cups of coffee drunk on many late nights refining the model to support historical trends to gain credibility. Such models can go crazy when trying to predict the future. Especially if you change country as well.

Also, what if we join the EURO? is that in the model?

Rising energy costs?

Also, there is immigration?

The population in the UK is growing, not falling.

Surely any sudden change in demographics would lead to govt/council purchase and demolition of tired/surplus houses in order to maintain healthy supply and demand? (a bit of Keynesian 'govt job creation' perhaps?)

This would lead to increased money supply and inflation.

Using such a model to predict HPI over the next 50 yrs is sheer folly IMO. (but the fig16 graph is interesting!)

Edited by Without_a_Paddle

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No offence frugalista, I normally enjoy your posts but I think you're confusing cause and effect here maybe.

The first boom was people having kids because the war was over and they could see a future, and the second is the first boom having kids.

I don't think anyone's ever gone 'My house is worth lots, I think I'll have another kid', have they? Surely the effect on those paying off huge mortgages and putting off having kids would more than cancel the 'have a kid on MEW' brigade anyway evern if they exist.

Sorry, I didn't express myself clearly -- I meant that the demographics caused (to some extent at least) the house price fluctuations, not vice versa, although maybe there is a weak effect in that direction.

frugalista

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With regard to the fed article on baby boomers...

Note the fig16 shows real house prices. i.e. I assume this is corrected for wage inflation.

If you were to correct it for nominal prices (in £££) you can kiss a fall in nominal prices goodbye for over 20 years in the UK. (if you believe the model)

However, I'm sceptical of highly complicated models that fit old data well and then go on to make predictions.

There may well have been many cups of coffee drunk on many late nights refining the model to support historical trends to gain credibility. Such models can go crazy when trying to predict the future. Especially if you change country as well.

Also, what if we join the EURO? is that in the model?

Rising energy costs?

Also, there is immigration?

The population in the UK is growing, not falling.

Surely any sudden change in demographics would lead to govt/council purchase and demolition of tired/surplus houses in order to maintain healthy supply and demand? (a bit of Keynesian 'govt job creation' perhaps?)

This would lead to increased money supply and inflation.

Using such a model to predict HPI over the next 50 yrs is sheer folly IMO. (but the fig16 graph is interesting!)

The graph is indeed interesting....... I wonder if i should review the data input regarding wage inflation or just base my theory on what i want to see from it......

I think im going to crayon it in...........

Sheer folly....... I like it :lol:

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You need to overlay the availability of housing over this, to understand whether there has been a shortage of housing coninciding with the baby boomers volumes to then determine whether it is this that has caused a rise in house values. I suspect there is no housing shortage.

The reason for higher house prices can be 90% laid at the door of lower IRs.

Good thread this.

I'm a tad confused though, doesnt this indicate that there are less people coming on stream to buy houses.

The data might be wrong, of course but if its even slightly accurate doesnt it indicate a drop in demand for housing? Thus a drop in prices, therefore making a purchase at todays prices less attractive?

I cant believe Im saying this but ImUpNorth is probably correct in saying the housing shortage is not as acute as its made out to be.

@ImUpNorth - near to where I live there are vast swathes of 3 bed semis.

A huge number of these are seemingly populated by old ladies and their cats.

Dont you see this up north too; Singletons holding on to large valuable stock while young families are forced into 2 bed papier-mache terraced housing?

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Housing, why so central to so many things?

Design or accident?

Why are these simple products not treated like any other consumer good?

Ie, if there's demand make more, usually cheaper and replace frequently for the latest, hopefully better model.

There's no shortage of dvd players, TVs, cars etc.

There is no true "market" in housing.

That is the root of the problem.

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Dont you see this up north too; Singletons holding on to large valuable stock while young families are forced into 2 bed papier-mache terraced housing?

Needle, I see lots of this where I am (Dublin). Lots of pensioners living alone in nice 4 beds in mature areas well served by transport, while parents of young families commute 4 hours a day from provincial towns that might be as much as 70 miles away. We have shocking gridlock as a result.

There are whole areas of houses that were all built and bought in the 50s, 60s and 70s by people in their 20s and 30s, and most the original occupants haven't quite gotten around to dying yet.

So there's a large contingent of people in their 70s roughly that have a LOT of the good housing stock here (many of them bought them on council schemes, funnily enough, no 10x salary mortgages for them). But inevitably almost all of those will be on the market within 15 years. That's got to have an effect.

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I understand the demographics in the Republic of Ireland are quite different. Lots of young people coming on stream. CaptainClamp, can you confirm?

frugalista

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I understand the demographics in the Republic of Ireland are quite different. Lots of young people coming on stream. CaptainClamp, can you confirm?

ROI - 14.47 births/1,000 population

UK - 10.78 births/1,000 population

God damn reformation!

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I understand the demographics in the Republic of Ireland are quite different. Lots of young people coming on stream. CaptainClamp, can you confirm?

frugalista

I suppose I would be one of those so called 'young people' :)

There was a big peak from mid 70s to about 81, I was born in 80 and it was an era when there were kids everywhere, enormous class sizes in schools (I was in a class of 42 at one stage). I have no idea what caused that boom - David McWilliams seems to think it was something to do with the Pope's visit (and I've heard stories of people losing their virginity as the pope said mass, bizarrely), but I'd blame it on the fact contraception was banned up till that point :)

There's another echo of that boom forming now I think as the mid 70s lot are all start to spawn. There's also huge immigration, and most of the immigrants would be 20s-30s, so that age group is probably massively overrepresented given that we've the native demographic bulge and also 200k or so extra immigrants over the last few years (in a pop. of 4 million).

So while you lot seem to have a bulge around a median of ago 40 I think we have the same sort of shape but centered around the 30 mark and possibly more pronounced. It's probably because contraception caught on earlier in the UK and I'd imagine that the availability of abortion is also quite a big factor (illegal here).

ROI - 14.47 births/1,000 population

UK - 10.78 births/1,000 population

God damn reformation!

No, most of us are shockingly godless these days. Blame the difference on an influx fertile immigrant types** and lack of ready access to abortions, they make a fairly big difference to the numbers.

** There's a law whereby if you have a kid in Ireland it's an Irish citizen, though they tried to get rid of it it's in dispute, so it's been a popular place to come and sprog. Up till a couple of years ago you could come to Ireland, have a kid, it becomes a citizen and you get the right to stay until it's grown up because it's in the Irish citizen's best interest. This became quite popular in Celtic Tiger times.

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  • 302 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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