Bishop Bashes Boomers

Percy1983

IveSeenTheLight wrote: »

Not quite true though is it.
In 2001, house prices were on a par with circa 1989 when adjusted for inflation and below the 36 year trend.

It does backup what i was saying about 2001 being the tipping point, now factor in the average 18 year old is earning below the average wages. Add 4 years for my wages to look more average and bang out of reach.

As said its not the worse time to be born and I am grateful I wasn't more in 1988 as an example.

The whole central heating, bigger TVs etc arguement is getting old, I am not going to say my children should pay 5x more for a house in relative terms because medicine is star trek style they have triple glazed self dimming windows, 90' holograhic TVs and flying cars.

Generali

IveSeenTheLight wrote: »

Query, how has wages risen in comparison with inflation?

I think it is valid to consider the cost of a property against wages.
I think it's also worth considering disposable household income and how that has changed over the years.

On average by about inflation + 2%, that is very slightly behind GDP. The difference is mostly accounted for by Government spending although a little by growth in company profits too.

Long term, UK housing has risen roughly in line with wages. If you think about it, prices can't really rise very much faster than that without lifestyles being squeezed.

IveSeenTheLight

Generali wrote: »

On average by about inflation + 2%, that is very slightly behind GDP. The difference is mostly accounted for by Government spending although a little by growth in company profits too.

Long term, UK housing has risen roughly in line with wages. If you think about it, prices can't really rise very much faster than that without lifestyles being squeezed.

The red line above is inflation + 2.8% per annum.
So your right, house prices have broadly increased in line with wages if your inflation + 2% is correct.

To that point then, are house prices too high if they have broadly matched wage increases?

IveSeenTheLight

Percy1983 wrote: »

It does backup what i was saying about 2001 being the tipping point, now factor in the average 18 year old is earning below the average wages. Add 4 years for my wages to look more average and bang out of reach.

Remember the graph above is inflation adjusted, making the graph appear to peak / trough more than it nominally did.

ukcarper

Percy1983 wrote: »

It does backup what i was saying about 2001 being the tipping point, now factor in the average 18 year old is earning below the average wages. Add 4 years for my wages to look more average and bang out of reach.

As said its not the worse time to be born and I am grateful I wasn't more in 1988 as an example.

The whole central heating, bigger TVs etc arguement is getting old, I am not going to say my children should pay 5x more for a house in relative terms because medicine is star trek style they have triple glazed self dimming windows, 90' holograhic TVs and flying cars.

The thing is people buying now are not paying anywhere near 5x what I paid in early 72 they are paying about 20% more and if I had waited 1 month later prices would have been out of my reach.

dryhat

Fantastic news for all you youngsters ...

You might not be able to buy a house with one wage like your parents and grandparents did ........

BUT ..... wait for it ....... drum roll......


At least you'll have central heating and double glazing in your rented house - which your parents and grandparents could only dream of.

JencParker

This is why you can't see the big picture - there's more to life than house
prices and ownership...

Very true, but we all need a roof over our heads unless we want to be homeless.

The problem started with getting rid of rent control - landlords who didn't have sitting tenants putting rents up and tenants had limited security of tenure. Those that did either decided to wait till they died or bought them out. Add to that, more families had two salaries to take into account when buying so they could borrow more (specifically, allowing two lots of tax relief on interest), so banks were lending people more than the x3 annual salary. Prices increases in rent meant it was cheaper to buy than to rent. Then the BTL trend where people were borrowing on interest only, putting in a tenant and getting the mortgage paid while sitting on a rapidly increasing asset.

Put it all together and you have the situation we are in now of highly overinflated housing costs. Unless the rental market is more controlled and offers security for tenants I can't see the desire for owning your own property will lessen.
Who would want to live in a place where they have limited security of tenure (6 months or a year) not be able to do anything to make it more to their taste, and then have to find somewhere else to live. Fine for the young, unattached, but what about those who have families - children at school etc. Not to mention the cost and stress of moving every year!

Percy1983

JencParker wrote: »

Very true, but we all need a roof over our heads unless we want to be homeless.

The problem started with getting rid of rent control - landlords who didn't have sitting tenants putting rents up and tenants had limited security of tenure. Those that did either decided to wait till they died or bought them out. Add to that, more families had two salaries to take into account when buying so they could borrow more (specifically, allowing two lots of tax relief on interest), so banks were lending people more than the x3 annual salary. Prices increases in rent meant it was cheaper to buy than to rent. Then the BTL trend where people were borrowing on interest only, putting in a tenant and getting the mortgage paid while sitting on a rapidly increasing asset.

Put it all together and you have the situation we are in now of highly overinflated housing costs. Unless the rental market is more controlled and offers security for tenants I can't see the desire for owning your own property will lessen.
Who would want to live in a place where they have limited security of tenure (6 months or a year) not be able to do anything to make it more to their taste, and then have to find somewhere else to live. Fine for the young, unattached, but what about those who have families - children at school etc. Not to mention the cost and stress of moving every year!

Nail on the head, you didn't mention they can kick you out with 2 months notice.

If renting was deemed as secure we may have considered it, but the only way we can be sure we won't have to move is to buy so we did. Nevermind the fact I was then free to put holes on the walls to run extra wiring for a sound system etc, one I would be allowed, 2 if I was allowed it would be a lot of work for me to be then given 2 months notice.

Controls on rents and landlords are needed now.

CLAPTON

wotsthat wrote: »

You're only seeing the small picture.



This is why you can't see the big picture - there's more to life than house prices and ownership...

1918 - 23% owner occupiers
1971 - 50% owner occupiers
2001 - 69% owner occupiers
2011 - 64% owner occupiers

1971 looks like a peak time for boomers to be buying - why did only 50% buy if they were so cheap?

If your big problem is that you didn't buy between 1983 and 1993 you really need to get a hold of yourself.

one thing to add the the graphs;

they show that home ownership fell from a peak at 69% to the current figure of 64%

whilst this is true it is also true that the ACTUAL number of owner occupiers households didnot fall

as the population rose by about 1.5million in this period it seems that the vast majority of the increase in households were in the rented sector.

JencParker

Percy1983 wrote: »

Nail on the head, you didn't mention they can kick you out with 2 months notice.

If renting was deemed as secure we may have considered it, but the only way we can be sure we won't have to move is to buy so we did. Nevermind the fact I was then free to put holes on the walls to run extra wiring for a sound system etc, one I would be allowed, 2 if I was allowed it would be a lot of work for me to be then given 2 months notice.

Controls on rents and landlords are needed now.

There quite a few things I didn't mention. For one, having to pay an average of £350 fees when you take on a tenancy! When I rented, property was a long term investment for private landlords. They didn't speculate by borrowing money to make money. As a tenant I didn't have to pay fees just to rent a place! Landlords did not rely on rent to pay their own mortgage, so were not in financial difficulty if the rent was not paid. Don't get me wrong - I paid my rent on time and it should be paid on time, but the current btl is just a financial game where the banks, letting agents and landlords want their piece of the pie, funded by those who cannot afford to get a mortgage and most probably never will given the high cost of renting. We have sentenced a large number of people to living lives without security so that the few can make money out of them.

Helen Keller may have been blind, but it didn't stop her seeing how the system works.