Excellent Debate On Ft Forum

[VacantPossession]

A typical Bear quote from the excellent FT property discussion forum, reasonably typical of its type.

There has been a lot of innocent self-congratulatory talk by longer-term home owners over recent years about the fabulous “profits†they have made on their houses and their BTLs. Equity withdrawal has enabled them to buy their new kitchens and their bathrooms and their dream holidays, or even to sell up and retire abroad on the profits.

But what is so often ignored is that this money hasn’t been magically conjured from nowhere. It has come directly from the pockets of other people – generally the young, at the bottom of the ladder. We are now facing a lifetime of debt to pay for the financial liberation of an older generation.

So first time buyers should simply refuse to supplement anyone else’s kitchens, bathrooms, holidays and early retirements by staying out of the market. If you buy now, I’m sorry to say, you are a fool. You might as well hand away your money to strangers in the street.

link:

http://forums.ft.com/2/OpenTopic?a=tpc&s=6...01561#650101561

VacantPossession

[Realistbear]

A typical Bear quote from the excellent FT property discussion forum, reasonably typical of its type.

There has been a lot of innocent self-congratulatory talk by longer-term home owners over recent years about the fabulous “profits†they have made on their houses and their BTLs. Equity withdrawal has enabled them to buy their new kitchens and their bathrooms and their dream holidays, or even to sell up and retire abroad on the profits.

But what is so often ignored is that this money hasn’t been magically conjured from nowhere. It has come directly from the pockets of other people – generally the young, at the bottom of the ladder. We are now facing a lifetime of debt to pay for the financial liberation of an older generation.

So first time buyers should simply refuse to supplement anyone else’s kitchens, bathrooms, holidays and early retirements by staying out of the market. If you buy now, I’m sorry to say, you are a fool. You might as well hand away your money to strangers in the street.

link:

http://forums.ft.com/2/OpenTopic?a=tpc&s=6...01561#650101561

VacantPossession

<{POST_SNAPBACK}>

"But what is so often ignored is that this money hasn’t been magically conjured from nowhere."

Not so sure. It has been conjured by artificially low interest rates and it will be the very homeowners who think they are enjoying a free ride that will pay the Tally man when he comes knocking after the HPC.

As they say in the US: There ain't no free lunch.

[Gwailo]

A typical Bear quote from the excellent FT property discussion forum, reasonably typical of its type.

There has been a lot of innocent self-congratulatory talk by longer-term home owners over recent years about the fabulous “profits†they have made on their houses and their BTLs. Equity withdrawal has enabled them to buy their new kitchens and their bathrooms and their dream holidays, or even to sell up and retire abroad on the profits.

But what is so often ignored is that this money hasn’t been magically conjured from nowhere. It has come directly from the pockets of other people – generally the young, at the bottom of the ladder. We are now facing a lifetime of debt to pay for the financial liberation of an older generation.

So first time buyers should simply refuse to supplement anyone else’s kitchens, bathrooms, holidays and early retirements by staying out of the market. If you buy now, I’m sorry to say, you are a fool. You might as well hand away your money to strangers in the street.

link:

http://forums.ft.com/2/OpenTopic?a=tpc&s=6...01561#650101561

VacantPossession

<{POST_SNAPBACK}>

It is in fact a situation where one (older) generation is taxing another (younger) generation.

I'm not convinced that it can continue though, because I understand that a majority of the property owning 'Baby Boomers' are the same people who have MEW'ed to buy a new Ford Focus and that nice place in Spain etc.

They might be the ones in the Shite at the end of the day because they face losing everything with little working life left to repair the damage and fund a decent retirement.

The onlu baby boomers who would have 'done well' out this situation are those who sold their homes 1-2 years ago, moved abroad and didn't withdraw any equity to buy lots of crap.

Time will tell.........I'd say give it 1-2 more years and the true picture will become clear.

Any other views on this?

[gone west]

The onlu baby boomers who would have 'done well' out this situation are those who sold their homes 1-2 years ago, moved abroad and didn't withdraw any equity to buy lots of crap.

<{POST_SNAPBACK}>

Ouch! You have described my situation very accurately! Scary.

The excrement will hit the rotating blades very shortly when the younger generations realise that not only are they paying for these peoples baubles, but will be paying extra for their pensions as well. For over 25 years we have known that the ageing boomers where going to create problems and seem to have done nothing to prepare our children and grandchildren for it. Have we stored up wealth to help them pay for an ageing population? No. Have we eased their other financial burdens like housing so that they may pay for our retirement? No.

If they rise up and slaughter every geriatric boomer, I will not be surprised.

[Gwailo]

Ouch! You have described my situation very accurately! Scary.

The excrement will hit the rotating blades very shortly when the younger generations realise that not only are they paying for these peoples baubles, but will be paying extra for their pensions as well. For over 25 years we have known that the ageing boomers where going to create problems and seem to have done nothing to prepare our children  and grandchildren for it. Have we stored up wealth to help them pay for an ageing population? No. Have we eased their other financial burdens like housing so that they may pay for our retirement? No.

If they rise up and slaughter every geriatric boomer, I will not be surprised.

<{POST_SNAPBACK}>

Mate,

Thanks for your reply.

I doubt there will be 'blood on the streets' over this issue, and personally I have no problem with baby boomers doing well with the market conditions......after all they have just taken advantage of the opportunities that have presented themselves over the past 5 years.

There is no conspiracy or anything like that to tax the young, it is just the way the UK has gone in the past few years which have caused this divide.

We can only blame the low cost of borrowing.......low interest rates are apparently the work of the Devil!

I have managed to side-step the UK's problems by living aboard since I was 19, I still own a UK property which I bought in 1997.......so technically I am almost as 'guilty' as the rest!

However, I really do feel sorry for those poor buggers younger than myself, 20-30 age range, the best option for those smart ones is to emmigrate for a few years and watch the mess from a distance.

In the meantime, those baby boomers who cashed-in their equity during the property boom......fair enough and I wish them all the best of luck, I just hope they moved to somewhere cheaper and put the rest of the cash off-shore as a pension.

Cheers.

[CrashedOutAndBurned]

But what is so often ignored is that this money hasn’t been magically conjured from nowhere. It has come directly from the pockets of other people – generally the young, at the bottom of the ladder. We are now facing a lifetime of debt to pay for the financial liberation of an older generation.

It's largely come from free and easy expansion of the money supply. This forum is weighted towards higher earners, but most FTBs have had their decision to buy made for them. We can only 'shadow' the market because we've done a huge amount of extra work and lived ultra-frugally over the years to get a deposit that helps us punch above our weight.

In the last two years, the only actual FTBs we know of had higher than average salaries for their age group AND, ADDITIONALLY, had some kind of large parental handout/inheritance/windfall. And still a daft mortgage after that!

For years the industry didn't need FTBs - 'good first-time buy' vanished from the ads, replaced by 'good investment'. Now that BTL's no longer a get rich scheme, the focus is back on young buyers and the reality is that few are anywhere near current prices, and those that are probably have no desire to pay huge sums to 'get on the ladder' only to live in a tiny shoebox in a block that a few years back was inhabited mostly by housing benefit claiments.

[laurejon]

I think what is often overlooked is the fact that wages have not gone up but everything else has.

Council Tax has risen at around 7% each year since Labour took office

Ciggarettes up 150%

Petrol

Food

Just about everything except wages.

So I think its the case that instead of complaining about the price of houses we should be addressing the issue of low wages that have never gone up.

The reason behind low wages is the fact that last year 160,000 work permits were issued to immigrants to work in the UK.

Business is using this loophole to reduce the wage bills and maximise profit, however with wages going down and prices in everything going up it is pretty clear that something is wrong.

I was earning 25K in 1996 as a self employed Brickie.

Today I think the wage is not much different but the spending power is.

[urban_hymn]

The reason behind low wages is the fact that last year 160,000 work permits were issued to immigrants to work in the UK.

Business is using this loophole to reduce the wage bills and maximise profit, however with wages going down and prices in everything going up it is pretty clear that something is wrong.

<{POST_SNAPBACK}>

Dead Right! - I don't normally agree with your posts LJ but from my own experience in the construction industry (Quantity Surveyor) I know that this is correct! The company I work for employs 70 - 100 labourers/chippies with temporary work permits who come come from India and Poland. The agency pay them peanuts.

Mind you, if there's a downturn in our workload they will all be watching daytime TV next day after just one phone call!

[Bubble Pricker]

So I think its the case that instead of complaining about the price of houses we should be addressing the issue of low wages that have never gone up.

The reason behind low wages is the fact that last year 160,000 work permits were issued to immigrants to work in the UK.

Business is using this loophole to reduce the wage bills and maximise profit, however with wages going down and prices in everything going up it is pretty clear that something is wrong.

I do not think that immigration is the main factor in wages remaining low, I believe it is globalisation of the exonomy in general, but otherwise you have hit it on the spot. I have been saying this all along: It is a myth that somehow incomes will catch up with house prices. On the contrary, economic globalisation has lead, and will in the future lead to more, downward pressure on incomes in the west. Admittedly, this has also led to some price falls, especially in certain consumer goods, but this is far outweighed by taxes, fares, petrol prices, alcohol prices, bills etc. rising very fast. People have less and less disposable income, which is incidentially also why nobody is making use of New Labours great savings incentives such as ISAs and Stakeholder Pensions, because there is no money to save. It is an incredible timebomb: the younger generation of today, when they approach retirement, will have no savings, no pension, and needless to say, there will be no-one with the money to buy their house which they believed was their "pension"

[laurejon]

Mind you, if there's a downturn in our workload they will all be watching daytime TV next day after just one phone call

From what I have read these people although in principle are not entitled to benefits can in fact use the Human Rights act to gain benefits if they become unemployed. In addition the Guardian quotes the Number 160,000 last year granted work permits. However under the permits they are allowed to bring members of their family such as parents if this is the case that number 160,000 could easily be tripled.

Now I myself have not heard of any new corporation startup last year creating 160,000 jobs and I doubt that anything like that number have been created.

So I think it is the case they are displacing the indiginous workforce.

Another interesting read is that 2.6 million people in the UK are now on invalidity benefit, now either we are a nation of cripples or someone is hiding the true unemployment figures under the quise of invalidity.

Given that our potential economic workforce is 22 million of which we have something like 2 million unemployed, and 2.6 million on invalidity I have to ask are we back to the 4 million plus unemployed ?.

If this is the case and as we know there is 25% of the workforce in public service then that is a hell of a lot of people hanging onto the back of the working productive population.

[urban_hymn]

So I think it is the case they are displacing the indiginous workforce.

<{POST_SNAPBACK}>

I'll speak about the construction industry which is all I know. When there is a boom in the construction industry which there has been for several years now, there is a shortage of skilled labour.

All the hard working home labour is employed and the shortfall is made up from immigrants with temporary work permits. The ones who suffer are the "home country dossers" if I may call them that.

Back in the seventies, lazier individuals were protected by strong unions. It's not like that now. Now that we have "open house" Britain anybody with the requisite skills can come in and ply his trade.

I think that this depresses wages for home country workers and displaces the less hard working indigenous population onto benefits.

The home country workers on depressed wages are still expected to purchase houses at the UK's extortionate prices while the Poles and Punjabis etc. send their money back home.

There is a housing bubble in the Punjab BTW at the moment!

[DonnieDarker]

In the last two years, the only actual FTBs we know of had higher than average salaries for their age group AND, ADDITIONALLY, had some kind of large parental handout/inheritance/windfall. And still a daft mortgage after that!

<{POST_SNAPBACK}>

Uncanny description of my good self (and partner).

Haven't bought yet and probably going to stay out of the market for 3-6 months.

[zzg113]

There is a housing bubble in the Punjab BTW at the moment!

Are you serious UH? Does India have a house price bubble?

[Jayne The Payne]

I think what is often overlooked is the fact that wages have not gone up but everything else has.

...

The reason behind low wages is the fact that last year 160,000 work permits were issued to immigrants to work in the UK.

<{POST_SNAPBACK}>

On the contrary, economic globalisation has lead, and will in the future lead to more, downward pressure on incomes in the west.

<{POST_SNAPBACK}>

I'll speak about the construction industry which is all I know.  When there is a boom in the construction industry which there has been for several years now, there is a shortage of skilled labour.

All the hard working home labour is employed and the shortfall is made up from immigrants with temporary work permits.  The ones who suffer are the "home country dossers" if I may call them that.

<{POST_SNAPBACK}>

Has it ever crossed your minds that the credit bubble may have something to do with your "everything else is has gone up", a credit bubble partially fuelled by rising house prices and MEWs...

It sounds to me that many of the immigrants are coming to this country to work in jobs that the locals are not prepared to touch. (Think hospitality industry, labourers, nurses, nannies, etc.) Why should they? They can make their fortunes without much effort on the property market, as shown on TV! :angry:

[Justice]

Gone West

The excrement will hit the rotating blades very shortly when the younger generations realise that not only are they paying for these peoples baubles, but will be paying extra for their pensions as well

Me thinks the coming tax rises will bring them out, not only that the baby boomers too.

Tinned food is good to stock pile, you can always eat it if nothing happens

[Justice]

laurejon

So I think its the case that instead of complaining about the price of houses we should be addressing the issue of low wages that have never gone up.

You think we should all ask for a pay rise. We would but the economic migrants keep coming in and are keeping wages down so that’s never going to happen is it.

Are we sitting on ticking time bomb