Tuesday, Nov 17, 2015

What will this growing, powerful voting block be offered?

Torygraph: Generation no hopers: just a quarter of people in their 20s and 30s will own a home by 2025

Really scary, so much demand is going to be sucked out of the economy as more and more people are subject to ever increasing rents that bear no relation to the cost of production of housing

Posted by mombers @ 10:30 AM (6929 views)
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1. khards said...

But who will be the net recipient of these rental payment? The banks of course, via interest payments at least for the next 20 years.

Tuesday, November 17, 2015 01:20PM Report Comment

2. mombers said...

Yup - last time I checked, 1 of interest paid to a bank produces sqrt(naff all) useful economic activity

Tuesday, November 17, 2015 01:44PM Report Comment

3. libertas said...

No, they are displaced by the immigrant voting block.

Tuesday, November 17, 2015 03:43PM Report Comment

4. libertas said...

By the way, to say banks do not contribute to the economy is NONSENSE. Their role is to allocate and leverage the capital savings of the population.

Tuesday, November 17, 2015 03:44PM Report Comment

5. mombers said...

@4, I'm not saying that the banks contribute nothing. I'm saying that nothing is created when a house sells for twice what it sold for 5 years ago, but the person buying it has to pay interest on it, sucking demand out of the economy. People with low rents or mortgages have more money to spend on goods and services, which are what provide jobs and growth. If we all stopped buying anything except the basics of life and just spent our money on rent or mortgages, large parts of the economy would have to shut down obviously due to lack of demand. Unless of course the person collecting the rent or interest buys hundreds of cups of coffee, hundreds of seats in an otherwise empty movie theatre, etc?

Tuesday, November 17, 2015 03:51PM Report Comment

6. mister ed said...


Yes, the indigenous population will be forced to leave the country or will be exterminated in work camps.

And the immigrants who replace them will never want to own their own home, because immigrants never do. Thats why immigration is so good for the economy. They work, and they pay rent to landlords, creating a virtuous cycle of economic activity.

That's the problem with people on here. They just don't have a grip on reality like what you does Libertus

Tuesday, November 17, 2015 04:42PM Report Comment

7. libertas said...

Mombers, that is irrelevant, the fact is that housing is LEVERAGED to earnings. That will always be the case.

@6, you may not be so cynical of my concerns once London vastly exceed's the ONS's predictions of at least 11 million Londoners and over 70 million people in Britain by around 2030. With there being no Australian style vetting of such a vast volume of people, it could be a total disaster and certainly a cultural genocide for many places. No immigrant wave can successfully integrate at that rate, which is more like an invasion.

Tuesday, November 17, 2015 07:25PM Report Comment

8. mister ed said...


In what way did I say I was cynical about concerns about immigration? Those are your words, not mine. I agree totally that mass immigration has already had severe negative effects and should be curtailed.

Your assertion that immigrants will displace the indigenous population in terms of the vote doesnt make any logical sense. Firstly, indigenous voters will still have a vote, and mass immigration will make the housing crisis worse, increasing the number of people who cannot buy their own home.

And secondly, non-British citizens cannot vote, so they cannot displace any voters from the indigenous population.

As usual, you have invented what you think people think and then used your own made-up facts to make a non-point. Another classic Libbyballs to add to the collection.

Tuesday, November 17, 2015 08:36PM Report Comment

9. Billdarblay said...

Crikey! Comments in the Torygraph are starting to read like an episode of the Keiser Report!. The Winds of Change?

Tuesday, November 17, 2015 08:57PM Report Comment

10. libertas said...

By the way, again, the youth of today have such high expectations of location. As said, most folk with a little support could purchase something even in London, looking at places like Romford or Bexley. My parents bought their first house in Romford, and ended up in lovely neighbourhoods later on, only because they chose to buy rather than rent.

Tuesday, November 17, 2015 10:20PM Report Comment

11. quiet guy said...

"the youth of today have such high expectations ..."
- Like affordable housing which was once a prime objective of our politicians.
- Versus the ultra-low expectations of some of our immigrants.

Competing with cheap labour in an era of rocketing house prices won't be fun. This thread touched upon an important issue. We have experienced net immigration levels of approximately 250,000 per year for a decade. If we do the same again for another decade - the projection period for the PwC report - how will that affect our political landscape?

Wednesday, November 18, 2015 01:42AM Report Comment

12. libertas said...

Sharia law

Wednesday, November 18, 2015 05:41PM Report Comment

13. icarus said...

@4 - "By the way, to say banks do not contribute to the economy is NONSENSE. Their role is to allocate and leverage the capital savings of the population."

First sentence: Take a look at Michael Hudson's latest book 'Killing the Host' in which he argues that nowadays finance is more than just useless and is in fact a looting activity (MH is an economics professor with a long CV in banking.) At least be aware of such arguments and be prepared to contradict them before you make such statements.

Second sentence. If you're talking about allocating the savings 'of the population' (households?) to the real economy that's plain wrong. Corporate savings around the developed world are enormous (because profits are strong and investment is weak) and corporations are net financers of these economies. Public accounting will therefore show the obverse of the surplus of corporate savings over corporate investment, i.e., some combination of fiscal deficits, capital account deficits and household financial deficits (the last applies especially in the US and UK).

@7 - "housing is LEVERAGED to earnings". What does that mean?

Wednesday, November 18, 2015 06:16PM Report Comment

14. libertas said...

@7 - "housing is LEVERAGED to earnings". What does that mean?

HUH? Obviously, you can get your deposit and multiply it to a house value five to ten times higher.

Then take your mortgage and borrow 4.5x more.

So, as wages rise and deposits balloon, houses rise many times more, hence there being an inflationary mega trend in housing so long as wages rise, albeit with prices periodically gyrating around that trend when it gets a head of itself.

Thursday, November 19, 2015 07:54AM Report Comment

15. libertas said...

When it gets ahead of deposit values, and house prices pause for a period whilst people build savings.

Thursday, November 19, 2015 07:55AM Report Comment

16. icarus said...

So, you're saying that house PRICES are leveraged to earnings and the multiple of house prices to earnings can change so that houses can become more affordable or less affordable.

When they become less affordable, and rents and mortgages take up a greater proportion of incomes, the effects on the economy outlined by mombers @5 kick in, so why say that those effects are irrelevant @7?

It seems that 'irrelevance' comes from your idea that if house prices outstrip earnings that's a cyclical, not a structural thing (@13 and 14). But how would that sit with the fact that charts of wages and house prices over the last 20 years show the latter rising sharply and the former pretty stagnant?

Thursday, November 19, 2015 09:53AM Report Comment

17. libertas said...

Icarus, the irrelevance now is that the normally subdued factor of population growth is now in hyperdrive, particularly for London, which the ONS claims will have 11 million people by 2030, up from the existing 8.5 million and all their prior forecasts have been woefully under reality.

Essentially, given that building will not catch up, in part due to Community Infrastructure Levy and affordable housing requirements, leverage will be levered up, ratcheted up consistently over the next decade or more.

Thursday, November 19, 2015 11:37PM Report Comment

18. libertas said...

Given that there are no borders, higher prices are THE ONLY factor that will limit population growth via immigration, also forcing emigration. Essentially, politicians have resigned themselves to market forces and given the paltry employment opportunities outside the UK in the rest of Europe, there is a lot of suppressed price discovery to be had.

Prices will likely shift downwards ONLY when prices become completely untenable, and yet that point will be difficult to pick because people tend to be drawn into a bull market, with it self feeding as people invest into the bubble, but we are not yet in a bubble with prices barely above 2007 levels almost a decade on with interest rates up to five times less than they were, with wages and employment and population higher than they were, yet housing provision not much shifted.

Thursday, November 19, 2015 11:41PM Report Comment

19. icarus said...

libertas - the relevance or irrelevance at issue - going back again to mombers' point @5 - is the effect of a high house price/wages ratio on spending and consumption and therefore on economic growth.

Friday, November 20, 2015 09:24AM Report Comment

20. Pricedoutmouse said...

@17 If you look at the Nationwide graph Libertas, prices are barely above 2007 levels because the crash is probably still underway. The small bounce back of the last 3 years is simply due to government meddling (near zero interest rates, as you point out, help to buy, etc) but I think this effect is artificial and cannot last for decades. Look at the smooth valley shapes of the crashes in the 70s, 80s and 90s. We're nowhere near the capitulation phase of the 2000s bubble.

Monday, November 23, 2015 08:11PM Report Comment

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