UK Affordability still very good

GreatApe

Parents have always helped their offspring the difference in modern times is that now women have 2 or fewer children thus inheritences are concentrated each generation gets more and more. Back when women had 6 children wealth had to be diluted.

Now grandparents have 4 grandchildren and grandchildren have 4 grandparents so its a 1:1 ratio and thus the children inherit all the grandparents wealth

In the not too distant past grandparents had 36 grandchildren and each grandchild had 4 grandparents so it was a 9:1 ratio. So grandchildren only inherited 1/9th of their Grandparents wealth.

Most people have not thought about this and the ramifications for everything in the economy are huge.

GreatApe

ukcarper wrote: »

For some people but not the majority and in my opinion property is not affordable if it's only affordable for people lucky enough get gifts.

That's not how the housing market works. Its a game of musical chairs. We have 28 million homes in the UK and add about 0.2 million each year. Clearly new supply is a tiny tiny portion so who gets to live in the better homes is decided by how much people earn and how much they inherit. There is no way around this at all.

Its like 20 years ago prices were a lot cheaper so people could afford to buy bigger homes....however this is clearly not true because most the housing stock that exists today existed 20 years ago too that is to say people were not and could not have end mass purchased bigger better homes. It might be that a small fraction of the population for a small number of years were able to buy above their means due to a recession low 92-97 low just like the 2008-2010 recession low meant a small number of people could buy above their means thanks to a recession low.

Anyway as this thread shows some 7-8 regions are cheap. The expensive areas are explained by the fact that huge sums of money are gifted and inherited and earnt outside of jobs and that in those areas the buyers by those means not with a 4 x income mortgage. Think Kensington super expensive relative to other areas even 20 years ago that's because then and now the buyers are were not buying with income multiples but were inheriting and had other wealth to buy with

ukcarper

GreatApe wrote: »

Parents have always helped their offspring the difference in modern times is that now women have 2 or fewer children thus inheritences are concentrated each generation gets more and more. Back when women had 6 children wealth had to be diluted.

Now grandparents have 4 grandchildren and grandchildren have 4 grandparents so its a 1:1 ratio and thus the children inherit all the grandparents wealth

In the not too distant past grandparents had 36 grandchildren and each grandchild had 4 grandparents so it was a 9:1 ratio. So grandchildren only inherited 1/9th of their Grandparents wealth.

Most people have not thought about this and the ramifications for everything in the economy are huge.

Most people's main asset is thier home if you say average life expectancy is 84 and most people have children between the ages of 25 and 35 probably younger if you go back to boomers and before. The children will be between 59 and 49 when they can expect to inherent. There is no doub that people are able to buy because of gifts but in most cases they would still need to be earning a high salary as the gift would just help them towards deposit.

GreatApe

ukcarper wrote: »

I think looking at regions is not very informative for example the south east covers a large area and the price of property in Dover are not relevant to to living in Guildford.

But to ans your question without taking the time to analyse the data I would say it's some where between what you think and what Windofchange think.

I can't afford Kensington prices, I couldn't afford it ten years ago nor will I be able to afford it in ten years time.

That I can't afford Kensington property does that mean Kensington property is unaffordable?

No it means Kensington is unaffordable to me but clearly affordable to Kensington buyers. The price of Kensington property will move with the ability of Kensington buyers to bid more or less. Over the decade these people have generally become richer so Kensington prpeprtt went up in price.

That I couldn't afford Kensington property ten years ago did not mean that it was a bubble about to crash and as we see it didn't crash it boomed.

So the new question would be why limit it to just Kensington? I'm sure we both would agree it's also true for Chelsea and Westminster. But why stop there? In sure you could add another half dozen boroughs. Maybe even all of zone 1-2 And most of zone 3.

Simply put that I or the average person can't afford expensive area x does not tell us if x is due to go down in price or if x is unsustainable or unjust. And there is no reason for x area to be static it can and we should expect it to expand with an xxoandong population and expanding UK and world wealth

ukcarper

economic wrote: »

a lot of the present wealth has been accumulated by the baby boomers. they are in their 60s now and their offspring are in their 30s. the parents in their 60s would have had 40 years or so of working life and bought a property which is their home with no mortgage now with significant equity since they bought.


imagine the savings accumulated over the years by these baby boomers and the potential for this to be passed to their offspring. yes wages have been stagnant and living expenses risen, so the baby boomers would help their children out in sympathy.


this is happening on a large scale. and has a massive impact on house prices.

The majority of boomers do not have great wealth other than thier homes and can expect to live another 20 years before they die.

economic

ukcarper wrote: »

The majority of boomers do not have great wealth other than thier homes and can expect to live another 20 years before they die.

how do you know this? any proof?

GreatApe

ukcarper wrote: »

Most people's main asset is thier home if you say average life expectancy is 84 and most people have children between the ages of 25 and 35 probably younger if you go back to boomers and before. The children will be between 59 and 49 when they can expect to inherent. There is no doub that people are able to buy because of gifts but in most cases they would still need to be earning a high salary as the gift would just help them towards deposit.

In my experience from what I have seen from friends and family is that the kids get a whole house or a significant deposit for a house when they get married. Its not uncommon. You nay think its just the circles I mix in but I know lots of people most of whom are very average

The last wedding I went to the kids got over £100k as an early inheritences and they used it as a deposit to buy a home. The one before that got a £500k house outright. Another person I know a nurse getting married this year will be given a house outright which her taxi driver father owns and which was given to him by his father.

To ignore these people exist just leads to a poor model of the housing market and Mr bags of wind and co get frustrated when their median wage including kids and part timer earnings isn't able to buy the median for sale house.


Some £200 billion moves from the old to the younger each year. That's over a million homes worth of capital per year each and every year

ukcarper

GreatApe wrote: »

I can't afford Kensington prices, I couldn't afford it ten years ago nor will I be able to afford it in ten years time.

That I can't afford Kensington property does that mean Kensington property is unaffordable?

No it means Kensington is unaffordable to me but clearly affordable to Kensington buyers. The price of Kensington property will move with the ability of Kensington buyers to bid more or less. Over the decade these people have generally become richer so Kensington prpeprtt went up in price.

That I couldn't afford Kensington property ten years ago did not mean that it was a bubble about to crash and as we see it didn't crash it boomed.

So the new question would be why limit it to just Kensington? I'm sure we both would agree it's also true for Chelsea and Westminster. But why stop there? In sure you could add another half dozen boroughs. Maybe even all of zone 1-2 And most of zone 3.

Simply put that I or the average person can't afford expensive area x does not tell us if x is due to go down in price or if x is unsustainable or unjust. And there is no reason for x area to be static it can and we should expect it to expand with an xxoandong population and expanding UK and world wealth

You are arguing about a different thing, I'm not arguing that prices as they are aren't sustainable just that they are unaffordable for more people than they have been at any time in the last 50 years.

I first bought near the peak of the 70s boom and couldn't afford to buy in my home town where I still worked so had to move 20 miles further from my work in outer London, now I wouldn't be able to buy where I did and would not be able to buy in a commutable distance that tell me property is less affordable that when I first bought and that was when prices in relation to earnings were at a level only beaten after the 2000s boom.

GreatApe

ukcarper wrote: »

You are arguing about a different thing, I'm not arguing that prices as they are aren't sustainable just that they are unaffordable for more people than they have been at any time in the last 50 years.

I first bought near the peak of the 70s boom and couldn't afford to buy in my home town where I still worked so had to move 20 miles further from my work in outer London, now I wouldn't be able to buy where I did and would not be able to buy in a commutable distance that tell me property is less affordable that when I first bought and that was when prices in relation to earnings were at a level only beaten after the 2000s boom.

Buyers now have access to 40 years more capital returns and higher inheritances and gifts compared to when you were a lad

Back then it might have been mostly just income multiples now its income multiples plus a share of £200 billion annually. At least that's true for London and the expensive areas.

economic

GreatApe wrote: »

Buyers now have access to 40 years more capital returns and higher inheritances and gifts compared to when you were a lad

Back then it might have been mostly just income multiples now its income multiples plus a share of £200 billion annually. At least that's true for London and the expensive areas.

we really have become a wealthy nation/city. we are very lucky to be alive in this day and age!