More evidence of increasing wealth gap

westernpromise

cells wrote: »

It seems to explain why ownership for the younger groups 25-44 fell even in a period of cheap prices like the 1990s

I think there were several things going on.

First, young ownership would necessarily have fallen because if they did not yet own, their rent (crash insurance premiums if you like) went up in consequence of house prices falling. This made it harder to save the ever-higher deposits that ever-tighter lending criteria required. In addition, mortgage lending multiples on offer were low, and expensive fixes often insisted on by lenders. Those who had disappeared off the electoral register to dodge paying their poll tax usually couldn't get credit anyway.

Also, recessions always hit hardest those with fewest skills or least work experience. This means the young. They are more likely to be laid off and lose their mortgaged home, or to be unable to get a job to begin with. The latter is evident in the job market figures of pretty well every country at all times. Yoof are always likelier to be unemployed.

The only exceptions are sectors heavy in low-skill manual jobs like waiting tables or working in bars. These tend to be dominated by young rather than older workers, but are still at indirect risk in recession - if nobody can afford to eat out, even low-paid waiters get laid off.

Older workers have a credit history, their equity will re-accumulate faster because they're already leveraged, and they're typically both more secure and better-paid at work. In consequence, the people who own property after a crash are in the main the same as those who owned it before.

There were FTBs in the mid-1990s who were able to skip the starter home, and go straight for the second or even the third rung, given the prevailing prices. I knew someone who did this. In about 1992 she paid less for an unsold 3-bed flat in my block than I had paid in 1988 for a 1-bed. She was, however, quite minted already and she got that deal because she was a cash buyer. Normal FTBs doing this on mortgage finance at X times their salary were vanishingly rare. They either thought prices were still falling (see threads from Usenet in 1996 that I've posted before) so were scared to buy; or they thought prices never went up or down much so there was no rush to buy now rather than later; or they couldn't raise the deposit in any case.

Property turns over at a low rate and is a complex transaction. If the likelihood of anyone buying in any given year is a, the chance of doing so as an FTB is b, and the chance of snapping something up at a bargainous price is c, I would maintain that abc = a very low number indeed.