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I just see the rise and rise of house prices as being linked to the advent of easy to get credit, there's a very large market that survives on people taking out, or having easy access to credit, and if wages aren't increasing fast enough, then there has to be value put somewhere else to fund that market. Unfortunately for us, it's houses.
It's the same with everything just now, look at Crypto, it went mad when the markets started getting involved, NFT's are the same now, it's just the market putting a value on something, mostly artificial, to allow the funds to be higher.
You'd think folk would learn after the crash back in 2007, but nope, and being able to buy a house now involves a lot of credit for youngsters who are now signing up for 30+ year mortgages, government initiatives, parents assistance, etc, the weird one is parents may take out some of their house equity, to get credit, which then feeds the market for house price increases!
When our parents bought houses in the not so distant past, they sacrificed everything to buy the house.
Yep, my parents bought their house in 1963 for £2,800. Dad lorry driver, mum typist. They struggled for years to be able to pay there and could only buy it because my dad did the work (Modernisation) that was required.
That was a relatively cheap house then and remains so today (~£220K) so it hasn't really changed that much.
It was decent money – but but a hard and responsible job. I felt well off.
TJ - like you I wasn't comparing 1992 to a graph, I was comparing it to what I was earning, and it was near enough the same as you.
TJ – like you I wasn’t comparing 1992 to a graph, I was comparing it to what I was earning, and it was near enough the same as you.
But the evidence shows (and TJ confirmed) that in 1992, £22k was a pretty decent wage. somewhere in the region of 35% higher than the national average. Whether you personally felt well-off or not is another matter.
It’s why we need to tax success.
??
In 1990 i was earning £10k, and got a £30k mortgage to buy my first house for £36k - three years of overtime, no holidays, no partying and a Mini Metro to raise the £6k deposit.
Sold it in 1996 for £30k, losing all my own money. Should have stayed living at home and bought the MR2 I'd had my eye on.
Did your (our) parents sacrifice everything or do they say they did?
My parents bought a 4 bed house in a sea side town in 1976. Dad was a 28 year old builder, my mum didn't work. The house needed work, which my dad did over a few years. We were there for about 8 years before my parents split up, but in that time we had a nice 2 or 3 week holiday every year and my parents social life was packed with parties, dinner out, weekends in the pub (plus most weekdays for my dad), etc. Their social circle was all very similar. All of this on the wages of a self employed builder. I know the trades are doing well at the moment, but I don't know any 28 year old builders who could afford that kind of life today.
My mum is in her 70s now and has only ever worked part time, my step dad is a mechanic and never really earned much. They live in a very nice 3 bed detached house with a nice big garden, they also own a flat in the town which is rented out and gives them a decent income, and they have a large pot of money in the bank from the sale of their parent's houses.
Don't get me wrong, I'm happy for them and very glad they are comfortable and enjoying their lives. However on the rare occasion I talk to my mum about this stuff she is of the opinion that she has worked hard all her life and earned everything she has. In my opinion she's deluded and it's all down to the luck of being born a boomer, but she cannot see that.
The only way my kids will get a decent start in life is by my wife and I downsizing to a smaller place and giving them money, and inheriting from my mum. Even then they'll probably have to get themselves into some serious debt.
Things are broken.
??
I meant financial success but kind of thought that was obvious.
Job security hasn't really been mentioned yet. I have survived enough redundancy rounds to know I can't drop my whole savings on a house. I don't know how that compares to the past but it means I need what, 35k+ to safely drop a 10% deposit on an average house? No mean feat. And don't talk this bollocks about "just buy a cheap house" the average is the average for a reason.
Also
Encougaing net emmigration would be a start.
Right so how about all the homeowners **** off and leave some space for the people grafting away beneath them then? Do you own a house by the way...? Have some compassion eh
However on the rare occasion I talk to my mum about this stuff she is of the opinion that she has worked hard all her life and earned everything she has. In my opinion she’s deluded and it’s all down to the luck of being born a boomer, but she cannot see that.
This echos my experience with my parents, and the conversations they have with my kids are some-times more than a little painful. I don't blame them, they have really no experience other than their own. My father's view on things like pensions for instance, is ridiculously skewed, they have no real understanding that their post war generation have lived lives that were (and continue to be) exceptional, and largely paid for by everyone else.
I can't link to the source, as its from an update email, but some food for thought from Savills (and apologies if its been posted already, but I CBA to read 5 pages):
<li style="list-style-type: none">
- the value of housing stock held by mortgage-free homeowners rose [in 2021] to £3.27 trillion – a figure that has risen by 93% in a decade. In comparison, the net housing wealth of mortgaged owner occupiers has risen by 66% over the same period to £2.89 trillion.
- With more housing wealth concentrated in the hands of a growing band of older homeowners, we estimate that over 65s now hold more than 42% of all owner-occupiers net housing wealth
I meant financial success but kind of thought that was obvious.
Not really, hence the question. I don't agree. self made success is a different thing to being handed a leg up that you've done nothing to contribute towards.
It is possible to work and save hard AND be lucky enough to be a boomer. I think parents only see one side of the equation though.
They cannot see that I will not be able to retire at 58, that their grandkids may never own their own home. Or if they can see it, they can't see that choices they've made - economically and politically have influenced that.
However on the rare occasion I talk to my mum about this stuff she is of the opinion that she has worked hard all her life and earned everything she has. In my opinion she’s deluded and it’s all down to the luck of being born a boomer, but she cannot see that.
Pretty similar to what @tonyd has to say really
My own parents acknowledge their luck in this regard. The in-laws?
The M-i-L is a Daily Mail reading Tory voter who's never worked a day in her life because she was in the now unbelievable position where you could get married, then buy a nice 3 bedroom semi in a good area, then raise kids with a decent standard of living (nice holidays, decent car etc) with only one salary coming in.
They also have money sat in a bank account from the sale of a council house her parents bought under Thatchers taxpayer-subsidised Right to Buy scheme which was then sold for vast multiples more.
The disconnect from modern day reality is unreal
This echos my experience with my parents, and the conversations they have with my kids are some-times more than a little painful. I don’t blame them, they have really no experience other than their own. My father’s view on things like pensions for instance, is ridiculously skewed, they have no real understanding that their post war generation have lived lives that were (and continue to be) exceptional, and largely paid for by everyone else.
For balance my folks & a lot of their friends care very aware of their good fortune. Some are doubtably in denial but there are definitely those who are fully aware of their luck..
For balance my folks & a lot of their friends care very aware of their good fortune. Some are doubtably in denial but there are definitely those who are fully aware of their luck..
Not disputing that at all, thankfully I think that is probably the case with the vast majority of boomers. It's just frustrating when it's your own mum who appears stuck in a parallel universe.
Yep, my parents bought their house in 1963 for £2,800. Dad lorry driver, mum typist. They struggled for years to be able to pay there and could only buy it because my dad did the work (Modernisation) that was required.
My parents' experience would be similar a decade later. I think the purchase prices had increased a lot in that time (I think they paid about 15k? (or perhaps it was a £15k mortgage on a 20k house?)) they sold it 20 years ago for about £50k - but having put in central heating, double glazing etc, a quick look suggests similar properties in the same street sell for roughly £100k today. BUT I think what people miss is whilst property headline prices seem cheap back then interest rates in the 80s were huge. So mortgage payments on the same value of loan would be double what they are at today's rates.
That was a relatively cheap house then and remains so today (~£220K) so it hasn’t really changed that much.
did the income of a "newly married couple"*, working in a clerical role and as an HGV driver increase by 50x (allowing for the difference in interest rates etc) in those 60 years?
I don't think its quite as simple as that. Rates changed to council tax, utility costs have changed (in 1963 a landline would be a luxury for most new home buyers, realistically broadband is fairly essential in 2022), I do get the arguments about scrimping and saving - its exactly what I did. I also see some of my staff earning above UK median wages in their late 20's still living with parents with no (or virtually no) bills and complaining they can't afford a house, or save a deposit for one and shake my head. On the other hand my in-Laws were in a fair sized council house by the time they were that age, which they then bought cheap, sold for a nice profit and moved up the ladder. That sort of "leg up" is no longer a realistic prospect. I don't know if it should be - but certainly, the generation that got it, and their kids who benefit from inheriting it should be cautious about criticising those who no longer can.
*apologies for the stereotype - but that's most likely the earliest stage of their life that people were buying property in the 60s.
I'm aiming to save for a huge deposit to buy my 1st house in the next 5 years, or before I'm 45, buying on my own (unless a miracle occurs) and I live in Kent...
£50k deposit + £45k pa would give me £250k.
Even at today's prices that doesn't buy a lot down here. Good location + nice 2 bed non terrace, with parking? Hahaha jog on, no chance.
I just hope in 4-5 years that remote working is accepted/still normal enough that if I'm employed here in Kent I can choose to live somewhere cheaper and nicer, like Scotland. I'd be leaving behind friends and family but if I want to buy something decent that's what I'll have to do.
Not disputing that at all, thankfully I think that is probably the case with the vast majority of boomers. It’s just frustrating when it’s your own mum who appears stuck in a parallel universe.
I can imagine it is..
somewhere cheaper and nicer, like Scotland.
The nice bits aren't cheap.
Found this interesting and its relevant to this thread: https://www.bbc.co.uk/iplayer/episodes/m0013xch/the-decade-the-rich-won
Summary - quantitative easing aka printing money led to increase value of assets, the more assets you have the better off you are, so the more unequal it is, therefor brexit/trump/populism
somewhere cheaper and nicer, like Scotland.
There are good reasons why a semi in Haghill or a croft on the west coast are cheap.
There are good reasons why a house in Auchterader, the 'right' bit of Edinburgh or East Lothian are not cheap.
Overall though, you do get more for your money on average, but not by as much as you may think.
Same applies to anywhere outside of SE of England.
£50k deposit + £45k pa would give me £250k.
Even at today’s prices that doesn’t buy a lot down here. Good location + nice 2 bed non terrace, with parking? Hahaha jog on, no chance.
Well yes that's correct you won't get a decent 2 bed non terrace with parking for 250k in your preferred area. That's why most people get something smaller or without off street parking. Or a flat/maisonette. You can't have everything straight away. I was fine in a ground floor flat for a while without off street parking. Saved up to add off street parking, sold it and moved on.
Job security hasn’t really been mentioned yet. I have survived enough redundancy rounds to know I can’t drop my whole savings on a house. I don’t know how that compares to the past
mmm... I'm not sure job security is so different? mining, steel, ship building, car manufacture, etc. Or 3 day working weeks?
The nice bits aren’t cheap.
Compared to Kent, they are. And 'nice' is relative... I know there's some run down areas up there but there is here too.
£260k - 2 bed terrace in a 'village location' aka a slightly dodgy small town on the Medway
https://www.rightmove.co.uk/properties/119380460#/?channel=RES_BUY
Vs the same price in Perthshire (first decent one so nothing special)
£260k - 3 bed detached, double garage. On a main road, meh.
https://www.rightmove.co.uk/properties/116357492#/?channel=RES_BUY
That’s why most people get something smaller or without off street parking. Or a flat/maisonette. You can’t have everything straight away.
That's fine when you're 25 and have plenty of time to move up the ladder, or can accept living in a flat with parties above and below until 3am. But when you're 45 buying your first house, moving up the ladder age 50 or 55, you're going to run into issues. Not to mention I'm already too old and grumpy to deal with horrible neighbors or to have to wheel a mud laden bike up 4 flights of stairs... 😁
It's interesting reading through this thread as a young first-time buyer.
Quit a contrast between the realities of the current situation vs. what people at my age 30+ years ago had available.
Yacht prices are through the roof too, poor billionaires.
Superyacht sales soar 77 per cent as billionaires splash out in pandemic
Don’t get me wrong, I’m happy for them and very glad they are comfortable and enjoying their lives. However on the rare occasion I talk to my mum about this stuff she is of the opinion that she has worked hard all her life and earned everything she has. In my opinion she’s deluded and it’s all down to the luck of being born a boomer, but she cannot see that.
My parents are the same ago group, but my Mum is always saying how lucky her age-group were (and are).
Professional job and well educated, never voted Tory.
The comparison to a feudal system falls down because there would have to be a small number of people in the elite landowners category. In fact something like 65% of UK households are homeowners, so it's not even a minority.
A better comparison may be the caste system where landless labourers are unable to move up to own their own property.
Not even 30+ years ago.
My parents bought a 3 bed house in Peterborough in 1998 for £28k.
When they sold up in 2012 they sold it for £100k. It was last sold in Feb 2021 for £170k.
Wages most definitely haven't gone up 6x since 1998. UK average in 1999 was £17.8k, currently it's £31k.
It’s interesting reading through this thread as a young first-time buyer.
Quit a contrast between the realities of the current situation vs. what people at my age 30+ years ago had available.
30 years ago house prices were really restricted to what folk could 'afford', ie mortgages available. So no real difference today.
As I said in my previous post, my Son's monthly mortgage payment is less than ours was 30 years ago - for the same type of property, in the same area.
BUT I think what people miss is whilst property headline prices seem cheap back then interest rates in the 80s were huge.
This is true, but the flipside is that inflation was high, which in turn took wages with it.
My folks took a mortgage of £10K in 1980. They were then walloped by scarily high interest rates, but within a decade that £10K debt was a pittance and the mortgage repayments were peanuts. Average wages went up by around 10% a year, and in 1980 alone went up by 18.6% (!) For some posters on this thread, by then 10K was less than 6 months wages. If you could see the initial shock out, you were laughing.
In contrast, my house cost about 9 years worth of the average wage. Now, most of a decade on, that purchase price is about 7 and a half years worth of the average wage, and the mortgage payments are still a significant expense. (The bonus is, of course, that I didn't have to endure a year of poverty)
Did your (our) parents sacrifice everything or do they say they did?
My 'step-father-in-law' was well aware of his fortune. He bought his first house in the 1950s, then a new build in Derbyshire. It cost 5 months' wages. He was 22 (admittedly had been in full time employment for about 8 years by then). Set him up for life.
It depends what part of the country you're in, but the biggest challenge is more the deposit amount - not so much the interest % you pay. That's been my experience so far.
Most of my friends also understand this factor, and so don't have leased German cars and spend all their money on Starbucks and holidays.
If the current trends continue what happens for the next generation's kids - will houses be like 20x the avg. wage in many places? Mental.
I guess that will depend on what proportion of her taxable income was a grant (or indeed SEISS) compared to earned income. If her figures showed a modest income without the grant then it would make sense to see her as a risk.
You're right and I should probably have explained better. The issue wasn't the % of income as grant payments but rather that she had taken one within a 3 month period of application. If it had been as you describe I don't think anyone would have raised an eyebrow.
Folks its ok...
I have just read the government will are going to create more first-time homebuyers in all areas, and reduce the number of "non-decent rented homes" by 50% before 2030.
I'm not sure how this will help. I am sure Michael Gove doesn't know either but its all about levelling up something bla bla, voters up north somewhere bla bla, poor people bla bla.
30 years ago house prices were really restricted to what folk could ‘afford’, ie mortgages available. So no real difference today.
What you can afford depends on the mortgage you need, not the price of the house. After a few decades of huge house price inflation you will get people whose grandparents have bought cheap houses and are now selling at half a mill and leaving the cash to them. This will allow prices to continue to rise, but only for those who have grandparents leaving them money. Which means their grandparents need to have been homeowners.
Not really, hence the question. I don’t agree. self made success is a different thing to being handed a leg up that you’ve done nothing to contribute towards.
The point I was making in a previous post is that self made people have often been given a leg up in some way even if that is by accident of birth.
My bestie is a great example of this. She has worked harder than anyone I know; tirelessly and unstintingly, sometimes 70+ hours a week and has had to survive through many failed attempts to start her own venture.
She hit the big time a few years ago, wealthy enough to solve the problem of whether to buy a Porsche or a Ferrari by buying one of each.
Her efforts easily justify the rewards she is enjoying, BUT we cannot overlook one salient fact that is critical to her success, and without this being true, it simply would not have been possible to do what she has done, and that is a brain busting IQ. She is a country mile smarter than everyone else I know.
Not every job requires an IQ in the 99th percentile (although it accounts for about 25% of your life outcome) but even where those that are self made have done so with only average levels of intelligence, there will usually be some other trait or characteristic that is to some degree inherited that will have helped.
Now I realise that this is trending towards a 'social darwinist' perspective, but if it is that, remember that the consequence of this (flawed) philosophy so popular with the Victorians, was philanthropy.
We tend to over estimate our success as being due to personal brilliance rather than circumstance or luck but even if that turns out to be true, society has contributed by making it possible for you to be that successful. We have a free market economy, open society (just) and everyone else making it possible for you to entrepreneur your way to a vast fortune.
You did not get there all by yourself (heck even my bestie had a stay home mum who raised their two kids, at least until the marriage fell apart!) and so you owe society your (generous) tax bill.
Something else I forgot to mention - the demographer friend told me that the problem with the housing market is less about inadequate supply and far more about under occupancy; lots of very large houses (usually occupied by baby boomers) with only two, or maybe even one person living in them. If we all traded places to optimise the size of house we need, we would largely solve the housing crisis.
This is starting to remind me a bit of when that dude in Scotland was mates with all of those badass martial arts dudes that earned 300k a year and used to break each others jaws all of the time.
The two properties in Kent and Logierait are totally different proposition.
Kent: 'village’ with cafe, supermarkets, garages, multiple local towns with employment, public transport etc.
Logierait: you need a car to get anywhere. CoOp in Pitlochry or Aberfeldy is small, very little employment, other than a travel to Perth which is not even the size of the town's near the Kent house, etc....
Nice place, but if you want employment, good luck.
To be fair, the Co-Op in Pitlochry isn't that small, and Perth is only 20 minutes away, you are also in the centre of a wide area for work, depending on what you do. Unfortunately, not my line of work, would love to move back to my old area.
The two properties in Kent and Logierait are totally different proposition...
The other thing to consider is that the market functions differently and the advertised prices generally represent something rather different.
@judetheobscure another thing to consider is that for every successful businessperson who's worked dead hard to build a business, there are millions who are working dead hard just to put food on the table for their families.
The two properties in Kent and Logierait are totally different proposition.
Agreed, so here's a comparable 2 bed detached house in a country location.
£400k.
https://www.rightmove.co.uk/properties/117728015#/?channel=RES_BUY
I was trying to show what the same money get you, I would certainly prefer to live in a country location than a town.
Nice place, but if you want employment, good luck.
Which I why I did say that remote working would need to normalised, so I could work in my current industry and be earning enough.
I'm aware that the SE/London job market is a massive reason that houses are so expensive here, and why a lot of other places have cheap houses, due to little employment. If more people couple work remotely it might actually go some way to leveling out the prices across the UK, as the London commuter belt premium would mean less if someone from anywhere in the country could do the job.
In the end, if the remote working thing doesn't happen and I can't relocate and keep my job in Kent, unless I'm happy either buying a decent place in a grotty location (plenty of those in Kent), or a tiny flat/house in a good location, or by some miracle I find a partner/someone to buy a house with (a 2nd applicant on 20k with 10k extra deposit take a possible mortgage from £250 to £350k), I'm ****ed. And I don't have a pension because I've only just started to earn above the national average wage and have had rent etc to pay for the last 20 years, so I'll be paying rent and working untill I keel over. Yay.
Fair points.
Perhaps as Scotland's population starts shrinking as forecast in the next couple of years we may see more employment and house buying opportunities...
@judetheobscure another thing to consider is that for every successful businessperson who’s worked dead hard to build a business, there are millions who are working dead hard just to put food on the table for their families.
I agree 👍 this is why Rawls' veil of ignorance is so important.
Late to the party on this thread...and haven't read all of the comments but my tuppence worth is that we need to desperately re-establish local authority housing like what we had when I was a kid. my mum, was separated from her partner about 13 years ago and she had to buy him out which left her with a mortgage she could only afford to pay as interest only. She still owes 85,000 and is 76 so has had to arrange a lifetime mortgage so she could stay in her home as she has no energy to move at this stage of her life.....anyway point is that the whole owning your own home doesn't always end up as you had expected/hoped and I strongly believe that everyone should have the opportunity to just rent via a non profit type establishment "local authority" and not have to have the spectre of several hundred thousand pounds of debt hanging over you for ever. I might be fantasising here but I seem to remember in the 70s and early 80s growing up we had all sorts living next to each other in the street because every one rented from the council...doctors, bin men, engineers, etc and it seemed like this diversity made for a well rounded society where the good elements rubbed off on the negative elements but now there's a definite division where anyone / some, with enough money to move out and to a "better neighborhood" does so leaving many areas the domain of the poor and this in my opinion very much polarizes society. My reference to this is mainly from my old work colleagues who all bought and upgraded their way out of their first residential areas in a bid to "be in a better place". But what does this do for the rest of society without the means or funds to do this??
If house prices remain or continue to increase the way they are then the government will seriously need to relax their planning laws to allow people to extend. My kids are 21 and 14 and the oldest has absolutely no plans to move out anytime soon. He's on a very low salary without unfortunately any real qualifications so can't realistically rent or buy for the forseeable. When I was his age we house shared with upto 5 mates and it was a riot. Renting a house was piss easy with only a small deposit...no real background checks or issues with 5 stoner blokes dossing in someone's house for a measley 25 quid a week each. From all accounts that's a very rare occurrence these days with most landlords or agencies shutting the door on this kind of house share unless it's a desperate HMO type set up.
I really do hope remote working opens up options for those of us who just can't afford to buy the house they'd like, in the location they're forced to work in, in order to earn enough to buy a house, where they can't afford to buy, but can't work anywhere else...
All of my teammates in my new job have been working 100% remotely since March 2020. There is literally no reason they have to be within 50 miles of the 'office'. And even in the event of a major outage which requires a physical presence, someone in Scotland could be there in 8 hours.
Unfortunately I can see most companies enforcing a hybrid scheme when things start going back to normal(ish), with 2 days a week in the office, and the chance of getting a 100% remote role in writing will be slim.
Even the shared ownership schemes down here are over subscribed, you'd need to reserve a £350k 2 bed new build off plan, 6-12 months in advance to have a chance. And then you only own 25% of it unless you staircase up to 100% over time.
Up until 2018 I only ever earned about £20k a year, that's age 37 - it's only in the last few year have I been able to progress my career and earn good money, with the aim of hitting £45k within the next 4-5 years.
I think the issue is the economic policy of the government over the past twenty years. Whenever a recession is looming the Bank of England/government print money and buy up bonds etc to stimulate the economy and drop interest rates so people spend rather than save. Thy never boost wages. If they did bump up the minimum wage then people wold have more disposable income and the economy would grow. However there would be high inflation. So we have had low inflation for the past twenty years (until this year) and the price to pay for that is low wages and high property values.
No point keeping your money in the bank or building society so who can blame anyone for investing in property. The real problem is low wages in comparison to property prices. The government will claim they are doing great because unemployment is low and try to hide the fact we are a low wage economy.
Perhaps as Scotland’s population starts shrinking as forecast in the next couple of years we may see more employment and house buying opportunities…
House buying opportunities yes, but shrinking population leads to a shrinking economy which will mean fewer jobs.
No one mentioned landbanking and the effect of dwellings being treated as investment vehicles. They were lightly regulated (less so now) and in some circumstances subsidised and given tax breaks, therefore encouraged by successive governments for years. Why build council housing when you can get the private sector to ruthlessly manage these people.
We have a generation of politicians with the same conflict of interest as their core voters!
we bought our 3 bed eight years ago, after many years of renting. We refinanced it to 80% of the value and use it as an investment property, and the tenants pay our mortgage and we have some over to invest. The money we took out paid for our deposit on new house. it was hard, but worth it
we've done this so we can give our girls a tangible asset when we retire. imagine WCS of trying to get a couple of hundred k together on a zero hours contract?
I grew up on a council estate, and everyone had a nice house with a garden they rented from the corporation. when they didn't need the space they got a bungalow, and then a sheltered flat in old age. cradle to grave guaranteed accommodation. Now that estate is all private or renters.
@ta11pau1 - in Oz lots of people from the big cities have been 'tree changing' and 'sea changing' house prices in the attractive regional areas have sky-rocketed and has forced people out. Rent quickly becomes unaffordable. An estate agent friend has been selling properties unseen for ridiculous sums.
10+ years ago my Dad (a Boomer) sent me a book called The Pinch all about "How the Baby Boomers Stole Their Children's Future"
It may be written by a Tory, but here's a fairly positive review in the Grauniad about it: https://www.theguardian.com/books/2010/feb/07/the-pinch-david-willetts
I presume my old man sent it to me to prove that he hasn't stolen my future (I count myself extremely lucky that my parents worked hard, were relatively successful, but fairly frugal and have supported me) and to recommend me to approach my future and my kids' futures with similar care.
There's a number of factors to consider housing is a big factor, but not the only one. I'm not sure if it's Social mobility rather than just plain old wealth inequality you're talking about OP.
I'd say social mobility (individuals and families clambering up and down the hierarchies, partly through their wealth) is such a thing anymore, we still have a hierarchical society but up to a point wealth and background play a limited part, where in the Victorian age and prior it was far more enforced.
But wealth inequality, a disproportionate amount of wealth accumulated and held by a relatively small number of people, that's a growing issue. And one of the tools for accumulation of wealth is indeed buying houses and riding the price inflation where those with less wealth can't afford to buy and are trapped trying to grow their wealth with minimal interest savings and escalating rents...
I think the issue is the economic policy of the government over the past twenty years.
That's the thing, the policy is even stated, although rarely in the same sentence.
Increase the value of assets.
Control inflation by suppressing income rises for paid work.
Although I would say for 40 years not just the past 20.
I’m not sure if it’s Social mobility rather than just plain old wealth inequality you’re talking about OP
Well it's both and while they are separate problems they are correlated.
but up to a point wealth and background play a limited part
Until recently I would have said the same as you but I've been told differently by someone who is an expert in this area; obviously nothing is absolute but the data she cites (from the cohort studies) is starting to show that social mobility has ground to a halt.
But wealth inequality, a disproportionate amount of wealth accumulated and held by a relatively small number of people, that’s a growing issue.
Indeed, and wealth inequality tends to correlate very positively with levels of violent crime and civil unrest. And given that those examples are the extreme ends of expressed negative emotion (and therefore relatively low incidence when compared to the population as a whole), it's reasonable to suggest that there's a very long tail behind those data of people feeling disenfranchised, depressed, angry, combative and hostile etc etc. My point is that while violent crime may be relartively high compared to long run trends, the frequency of it happening is still relatively low, but this belies a far greater under current of general ill/negative feeling in the population as a whole. And that comes at a price; it makes people dysfunctional and limits their ability to maximise things like life achievements or economic output.
And I don’t have a pension because I’ve only just started to earn above the national average wage and have had rent etc to pay for the last 20 years, so I’ll be paying rent and working untill I keel over. Yay.
Eh?
No excuse for not saving into a pension from the minute you start working, irrelevant of earnings - I started full time work at 18, and have saved into pensions since then. And the vast majority of employers also pay in, so that's 'free money' AKA deferred salary you've missed out on.
we still have a hierarchical society but up to a point wealth and background play a limited part
Not that limited. Look at the stats of how your upbringing and background affect your future life. Sure, it's not based on a notion of inherited class, but it's systematic now. I'm not sure which is worse.
And I don’t have a pension because I’ve only just started to earn above the national average wage and have had rent etc to pay for the last 20 years, so I’ll be paying rent and working untill I keel over. Yay.
Eh?
No excuse for not saving into a pension from the minute you start working, irrelevant of earnings – I started full time work at 18, and have saved into pensions since then. And the vast majority of employers also pay in, so that’s ‘free money’ AKA deferred salary you’ve missed out on.
Absolutely - compound interest is very much your friend here! Not paying into a pension is inconceivably bad advice. Even my part time job I had as a student I was paying into a pension at something like £15per month, even though I could only afford £10 per week for food. (at mid 00's prices.).
That pot alone will be worth multiples of what I was paid in total over the entire duration of the 4 year job, low paid, customer service job.
That's a discussion for another thread, however I spent 8 years working in financial services, specifically pensions (SIPP, drawdown, property investment etc) - so seeing the industry from both sides probably clouded my decisions...
Seeing the amount of pension actually required to be able to buy an annuity to give say £25k a year doesn't help, bearing in mind if theres no mortgage paid off, then there'll be rent to pay.
Hint, 500k doesn't get you that much. 20k a year from an annuity, aged 66.
Anyway, without wishing to derail the thread, even 15 years ago my choices were pay money into a pension, or pay off debts and try to buy a house. My choice was the latter, and still is.
One thing is for sure, I won't be the only one in the same situation in 25 years time.
Edit: just done a quick Aviva annuity calculator, based on age 65, 3% increasing per year, zero tax free lump sum, gives £15k before tax. £1200 after tax. Add the £180 state pension and that's £2k a month after tax. Rent is going to be half of that gone, instantly. Food/household bills another 50% of the remainder. So that's £4-500 a month left. That can so easily get swallowed up by general stuff, then of course if you're retired you probably want to do more than sit around there house bored out your mind...
No excuse for not saving into a pension from the minute you start working, irrelevant of earnings – I started full time work at 18, and have saved into pensions since then. And the vast majority of employers also pay in, so that’s ‘free money’ AKA deferred salary you’ve missed out on.
But what if you'd put that money into property instead? Yes its free money in a pension, but especially given this thread and bonkers property price rises you may well have been financially better off. Both are valid, there isn't a single best solution. Also buying a house gives you somewhere to live, which is nice.
Hint, 500k doesn’t get you that much. 20k a year from an annuity, aged 66.
One thing is for sure, I won’t be the only one in the same situation in 25 years time.
Well aware and nearer a 1/40th than a 1/25th TBH.
Agree, they'll be like the OAP's you hear about now who don't turn their heating on...
I spent 8 years working in financial services, specifically pensions (SIPP, drawdown, property investment etc) – so seeing the industry from both sides probably clouded my decisions…
Seeing the amount of pension actually required to be able to buy an annuity to give say £25k a year doesn’t help
Eh. Why are you discussing annuities after 8 years in the industry?
Any fule no annuities are a waste of money.
But what if you’d put that money into property instead? Yes its free money in a pension, but especially given this thread and bonkers property price rises you may well have been financially better off. Both are valid, there isn’t a single best solution. Also buying a house gives you somewhere to live, which is nice.
Several analysis pieces out there, but broadly speaking global equities and UK house prices have, broadly, risen at the same rate for decades. so your £ invested in either would have yielded same or similar return. The difference being you can take out a loan to buy a house (so magnify your investment returns) but you'd be, generally, ill advised to take out a loan to invest the money instead.
That's before you consider a house *should* be a home to live in and prove a degree of security, not seen an investment, In my opinion.
Eh. Why are you discussing annuities after 8 years in the industry?
Any fule no annuities are a waste of money.
True, but income drawdown brings other risks, if you actually want your money to keep growing.
I got out the industry in 2010 although am sort of back in it (banking) now but from the IT side.
I was there in the early 2000's for the stock market crash, dealing with customers who's ISA's had gone from 30k to 8k in the space of a few years...
That’s before you consider a house *should* be a home to live in and prove a degree of security, not seen an investment, In my opinion.
This is it really, I'd personally rather have bricks and mortar, paid off with no rent or mortgage to pay, than have a big pension pot but still be having to pay £1000, £1500 a month rent.
I will buy a house in the next 5 years, that I'm certain. I'm currently at the stage where I can put away £750 a month for a deposit and that'll only go up over the next few years, plus I'm already 1/5th of the way there for my deposit target. It might not be the house I really want, but it'll be a house nonetheless.
Seeing the amount of pension actually required to be able to buy an annuity to give say £25k
I don't know much about pensions but one of the things I do know is... "F.uck Annuities". they've been terrible value for ages.
@ta11pau1 Financial services IT is one of Scotland's largest employers. If you want to move up here why don't you look for a job in Scotland rather than pinning your hopes on a South East job allowing you to WFH anywhere in the UK. That way it is you proactively changing your living circumstances.
Not paying into a pension is inconceivably bad advice. Even my part time job I had as a student I was paying into a pension at something like £15per month, even though I could only afford £10 per week for food. (at mid 00’s prices.).
Interesting you frame it as 'advice'. I wonder if this type of education is another thing (besides money) that people who have done well out of life pass on to their kids.
When I started full time work (unskilled roles where my employer didn't contribute) I had - literally - no idea what a pension even WAS. I thought it was something that just happened to old people. My parents never had that chat with me, and I had no concept of the importance. I didn't start a pension until 34. I wish I had known!
I am always amazed at these people who started doing financially prudent things in their teens and 20's. How did they know? What was the difference?
Financial services IT is one of Scotland’s largest employers. If you want to move up here why don’t you look for a job in Scotland rather than pinning your hopes on a South East job allowing you to WFH anywhere in the UK. That way it is you proactively changing your living circumstances.
Interesting, thanks - tbh I've not looked into it hugely yet, I've just started a new role in infrastructure engineering (8 years in total in IT, starting as a service desk 1st liner) so should be in a decent position in a few years to branch out/specialise, and Scotland will be worth a look then. 👍
Interesting you frame it as ‘advice’. I wonder if this type of education is another thing (besides money) that people who have done well out of life pass on to their kids.
When I started full time work (unskilled roles where my employer didn’t contribute) I had – literally – no idea what a pension even WAS. I thought it was something that just happened to old people. My parents never had that chat with me, and I had no concept of the importance. I didn’t start a pension until 34. I wish I had known!
I am always amazed at these people who started doing financially prudent things in their teens and 20’s. How did they know? What was the difference?
No - it was school, not my parents. Standard grade maths and the lesson about compound interest and (I think Einstein?) quote of it being the "8th wonder of the world".
This was in a very mixed school with a goodly proportion of the pupils coming from housing schemes.
I am always amazed at these people who started doing financially prudent things in their teens and 20’s. How did they know? What was the difference?
I had it drummed into me by my parents who, other than a mortgage, never had any debt. My mother would tell me stories of her, as a child, having to lie to the debt collectors that her parents weren't at home. I'm not suggesting that things weren't easier for me as I hit working age in the 70s but even then I was amazed at what many of my peers saw as normal expenditure - foreign holidays, expensive cars etc.
I had – literally – no idea what a pension even WAS. I thought it was something that just happened to old people. My parents never had that chat with me, and I had no concept of the importance. I didn’t start a pension until 34. I wish I had known!
I am always amazed at these people who started doing financially prudent things in their teens and 20’s. How did they know? What was the difference?
Same here. When I look at the very different cross section of friends that I have, and our varied levels of success (measured not just in financial terms), it's the ones whose parents provided sound advice and guidance who have done the best.
Of course, I wasn't the most receptive to advice and guidance so anything my parents did throw my way was generally ignored. I'm trying to make sure my own kids don't repeat the cycle 🙂
Sold it in 1996 for £30k, losing all my own money. Should have stayed living at home and bought the MR2 I’d had my eye on.
Lost £5k on the first house and was only able to move due to a negative equity mortgage where we paid the £5k off in the first 5 years in the new to us place. Thanks Norman Lamont and the Tories (again).
Sound advice and living frugally might have worked in the past, but this is nonsense now - there are no bootstraps to pull up.
If you don't have inherited wealth and live in the south it does not matter how many avocados you forgo, you are stuck in a cycle of rising house and rent prices.
God, I've just been looking at the local area around that house I linked in Logierait...
I would give my left nut to live there.
Aldi/Tesco supermarkets within 25-35 mins drive, dunkeld/pitlochry/aberfeldy all within 10 miles, stunning scenery on the doorstep, Aviemore an hour one way, Dundee an hour the other, fort William under 2 hours, Edinburgh 1 hour...
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That looks amazing. I'm surprised it's not listed for a fair bit more.
God, I’ve just been looking at the local area around that house I linked in Logierait…
I would give my left nut to live there.
Having left around the other end of Loch Tay 8 years ago, and just sold a 3 bed property in Aberfeldy, I would say it is a lovely area. Has it's challenges, but is lovely and amazing access to natural spaces and places.
And house prices are now hot topic in our house as mrs_oab has a viewing of a new property on Monday....
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that looks lovely. I keep thinking I want to visit that area... and then I look on google maps. for 6 minutes more driving time I can be in Morzine.
that looks lovely. I keep thinking I want to visit that area… and then I look on google maps. for 6 minutes more driving time I can be in Morzine.
That's one good thing about Kent, I suppose. 12hrs drive to that house, or about the same to the Alps, with channel crossing.
I'd rather have that on the doorstep and the Alps 2 days drive/a flight away though.