Thank goodness for austerity

[Ben@Forest]

Wasnt particularly thinking of France, I would be heading for Oz. France will be back anyway.

Spoken to quite a few colleagues from Oz over the last month or so about the poor state of their economy and the resulting austerity cut backs. Think you'll need to find somewhere else.

Some years ago I worked with someone who's speciality was climate change (I know this thread is going everywhere). His opinion was that emigrating to Australia was very short-sighted and that within 50 years Australia would be the first westernised country to have climate change refugees. Ironic in a country where immigration is so tightly regulated! But his opinion was - nice for you, maybe even nice for your kids, but not a place your grandchildren will be staying.

I don't know whether he was (is?) right - but an interesting viewpoint.

[Psamathe]

Wasnt particularly thinking of France, I would be heading for Oz. France will be back anyway.

Spoken to quite a few colleagues from Oz over the last month or so about the poor state of their economy and the resulting austerity cut backs. Think you'll need to find somewhere else.

Some years ago I worked with someone who's speciality was climate change (I know this thread is going everywhere). His opinion was that emigrating to Australia was very short-sighted and that within 50 years Australia would be the first westernised country to have climate change refugees. Ironic in a country where immigration is so tightly regulated! But his opinion was - nice for you, maybe even nice for your kids, but not a place your grandchildren will be staying.

I don't know whether he was (is?) right - but an interesting viewpoint.

Also ironic given Australia's determination to mine vast coal reserves - very very bad from a climate change perspective.

Ian

[Vorpal]

As it happens, I have been poor. I wasn't being smug, and I agree that those on low incomes cannot afford to save to buy a house. But that has hardly changed in 3 generations, with the exception of those who bought council houses under the 'right to buy'.

My post was meant to include those who are 'excluded' from the property ladder according to media, discussions etc. I know that there is a problem in London in particular, and it tends to skew the numbers, but otherwise, houses remain affordable for the middle class who have traditionally been able to afford them. Housing is a much higher proportion of of income than it used to be, but other essentials, such as food and clothing cost much less. I think I've posted this on the forum before http://www.telegraph.co.uk/news/uknews/ ... homes.html

It's becoming dated, and I haven't seen a recent revision, but it shows that the average person has more, rather than less disposable income compared to a generation or two ago.

I know that a young person on a moderate London salary has a choice between paying more than half his/her income for housing, rough neighborhoods, or silly commute times, but there isn't a major city in the world that doesn't have that problem. That's not to suggest that something should be done about it, just that the UK is not unique in that regard.

If you look at something like http://www.economist.com/blogs/dailycha ... use-prices housing prices have grown in all terms in the UK, more than in other places. However, it seems likely that outside of London, British property was actually somewhat undervalued (thus the rise), probably as a result of the previous housing bubble collapse.


If you look at something like http://www.numbeo.com/property-investme ... ountry.jsp you can see that the UK doesn't look so bad compared to other countries, and has a somewhat lower ratio than France. There are all kinds of reasons for this, and some factors that aren't included (such as the size of the homes available for purchase).

[al_yrpal]

Sorry Vorpal, you are well out of date. Housing for the young is unaffordable in most of the country. The bank of Mum and Dad is de rigeur for most to afford a house these days. There has been a massive hike in prices in the last 6 months and that is getting reflected in rents rising too. The number of youngsters around here living at home trying to save with Mum and Dad is truly staggering. There are several families with kids doing it in my street. Lower cost areas have lower wages and lower job opportunities. As for the 14% considered poor, they have no hope because there are very few council properties being built. Not all youngsters are into feckless spending, some are and a higher proportion of the youngest do it just like we did.
And… there is the other problem, mortgages, the banks and building societies no longer allow huge multiples of income, thus, like my daughter who had been paying a 160 grand mortgage for 4 years, when she wanted to move so her deaf son could attend a special school, the lenders refused to lend her no more than 100 grand! Thats why youngsters are having to save huge sums and the bank of Mum and Dad is having to step in. Without even thinking I can recall more than a dozen families who are having to step in with savings or remortgage to get youngsters into a first house or help with moving. Houses here have never been so unaffordable despite what all your links purport to prove. I am basing my comments on what is happening to my friends and family here and now. When they get their houses the youngsters are blessed with lower repayments because they havent borrowed so much and interest rates can be very low if you are canny. Austerity has many forms.

Al

[Vorpal]

I know that housing prices increased, though I think it's an exaggeration to say it's a 'massive' hike. The increase occurred because the coalition government introduced schemes such as zero interest rates, the Help to Buy Scheme, Stamp duty cut, and others to encourage the rise. Increasing house prices make people feel the economy is doing well, and that they personally have made good decisions to invest in housing. A majority of Britons are home owners and Tory strategists put this to good use.

[TonyR]

Also ironic given Australia's determination to mine vast coal reserves - very very bad from a climate change perspective.

That has been the cause of their problems. The economy is heavily dependant on mining natural resources but demand is falling and they need to find something to replace it.

[al_yrpal]

I know that housing prices increased, though I think it's an exaggeration to say it's a 'massive' hike. The increase occurred because the coalition government introduced schemes such as zero interest rates, the Help to Buy Scheme, Stamp duty cut, and others to encourage the rise. Increasing house prices make people feel the economy is doing well, and that they personally have made good decisions to invest in housing. A majority of Britons are home owners and Tory strategists put this to good use.

Well, thats what happened here, semis that were selling at 250 grand in the space of 6 months are now selling for 350 grand. I call that a massive hike. Its particularly affecting the least expensive properties. If you dont live here you wouldnt be aware of it. There are various reasons that homes for the young have become unaffordable and its proven by the steadily increasing age of first time buyers. The other factor at play is that folk are now cashing in their pensions to purchase buy to lets, several of my friends have done it. Its pushing up prices and rents even further. Next year even those with existing annuities are going to be able to cash in and that will make things even worse.

Al

[horizon]

Ah. I thought this was going to be about personal austerity; voluntarily going without what you do not need and/or cannot afford. Nonconsumerist living, broadly speaking.

Not to worry, I've started one:

viewtopic.php?f=15&t=98159

[Vorpal]

Well, thats what happened here, semis that were selling at 250 grand in the space of 6 months are now selling for 350 grand. I call that a massive hike. Its particularly affecting the least expensive properties. If you dont live here you wouldnt be aware of it. There are various reasons that homes for the young have become unaffordable and its proven by the steadily increasing age of first time buyers. The other factor at play is that folk are now cashing in their pensions to purchase buy to lets, several of my friends have done it. Its pushing up prices and rents even further. Next year even those with existing annuities are going to be able to cash in and that will make things even worse.

Al

Well, Al, the house that we owned when I did live there was more or less at median house price and still is. So, it's now worth roughly what it was worth just before the housing price drop in 2008, and a bit more than we sold it for. I don't claim intimate knowledge of the market these days, but I was there a week ago and I saw the prices on houses that were for sale in the village. They don't look much different than they did in 2007.

The steadily increasing age of first time buyers only proves that the age of first time buyers is steadily increasing. I know that he media would like everyone to believe they are simply being priced out of the market. I know that is true in some places, but it isn't true everywhere. They love the 'millions locked out of home ownership' headlines, but there are many things other than purely prices that have led to the situation...
-there are more limited numbers of homes at entry level value, new builds are typical at more mature buyer prices (because that's where the developers make their money) and very little is done to encourage developers to build entry level homes
-outside of London, expectations are very high for homeowners to have a house, not an apartment or flat; the ultimate goal seems to be a detached house for anyone who can afford it, this is unique to the UK. In other countries, people look for the space they need, and apartments are built family sized. This is much more cost effective than detached and semi-detached houses
-youth unemployment is higher; 14% of 15-24-year-olds are not in education, employment or training (Neets), so the age at which people begin earning is delayed

And we get back to my previous point, which I don't think I expressed very well. Not that young people are profligate spenders, but that middle class young adults have very different expectations of what they should have. My parents didn't go out to eat; I can remember only a very few special occasions. We had one car, a telephone (when it worked) and we got our first television (used) in 1974 or thereabouts. I don't remember them ever buying new furniture. When my grandparents bought a new piece of furniture, we got the old one. We also had a few pieces that were inherited from great aunts and things like that. They were covered to keep them nice around kids, and the covers only came off when we had company.

Now, middle class, or even couples on two relatively low incomes, but no kids, think they they *need* two cars, and a Telly the size of the movie screen, and a telly in the bedroom for watching late movies, and two computers and other devices (tablets?) and two smart phones, etc. Many, many people buy new furniture and soft furnishings on a regular basis. Spending on leisure activity has not changed significantly in recent years http://www.dailymail.co.uk/news/article ... -cash.html which means that at least some of those housholds could spend 7% of their income on leisure and recreation, and still save 5% toward a down payment. Or some other proportion that satisfies their need for leisure and allows them to save money. But saving, or investing in anything other than brick and mortar is discouraged by austerity and current government policies.

[bigjim]

I agree with Vorpal. Youngsters expectations are much higher now. I bought my first house in 1971. I saved hard for the deposit and was still single though, horrors of horrors, we were living in sin. We eventually got married in a register office, a salad meal over the top of a local pub and back to our house for a do. My house cost £4,600 and I earned £20 a week. Interest rates were horrific! It was a new house but had no kitchen or central heating and no laid gardens. These things were all extras, Somebody gave me a S/H electric cooker and the in-laws gave us one of those big stand alone kitchen units that fold out. Ironing board served as a table and as the floors were tarmac and we had no money for carpets we polished them. An old 3 piece suite was obtained from the in-laws cast offs and we rented a telly. My married son is in rented accommadation but is saving for a house deposit. He views plenty and I say "that looks good" lots of times. he dismisses them as "it needs work". he just wants to walk straight into something and sit down. He is no different from his peers. They are all the same mindset. They wil not give up their "toys" to save more or get their hands dirty.

[TonyR]

[youtube]http://youtu.be/qlIXn0r0AY8[/youtube]

[townbikemark]

https://www.youtube.com/watch?v=8K-4r_D26q0

[Cunobelin]

... and the public sector

Having seen a real 11% reduction in my wage compared to the cost of living, we are now to see 4 years of further less than inflation pay rises increasing the deficit even further.

Depending on the sources I will have seen up to an 18% reduction in what I should be earning if my pay had simply kept up with inflation.

[Mick F]

I agree with Vorpal. Youngsters expectations are much higher now. I bought my first house in 1971. I saved hard for the deposit and was still single though, horrors of horrors, we were living in sin. We eventually got married in a register office, a salad meal over the top of a local pub and back to our house for a do. My house cost £4,600 and I earned £20 a week. Interest rates were horrific! It was a new house but had no kitchen or central heating and no laid gardens. These things were all extras, Somebody gave me a S/H electric cooker and the in-laws gave us one of those big stand alone kitchen units that fold out. Ironing board served as a table and as the floors were tarmac and we had no money for carpets we polished them. An old 3 piece suite was obtained from the in-laws cast offs and we rented a telly. My married son is in rented accommadation but is saving for a house deposit. He views plenty and I say "that looks good" lots of times. he dismisses them as "it needs work". he just wants to walk straight into something and sit down. He is no different from his peers. They are all the same mindset. They wil not give up their "toys" to save more or get their hands dirty.

+1

We were cushioned to some degree. Married in 1973 and within six months we were given a married quarter, but for the first six months we lived in a rented bedsit. We didn't have two pennies to rub together and Mrs Mick F sold her No6 fag coupons so we could buy some food and a gallon of petrol so I could get to work.

After ten years in married quarters we bought our first house. £19,000 with extortionate interest rates. Mortgages may be hard to get these days, but they are as cheap as chips if you do get one.

We had no furniture, no cooker or fridge, but we had a twin tub washing machine. Luckilly, the house we bought had carpets. We bought secondhand everything and made the curtains even using patchwork curtains from cheap remnants. I made some furniture - a record player stand and cupboard for the LPs, a telly stand, a couple of bedside tables, and did all the shelving and cupboards in the kitchen. I'm no joiner, but I did it out of sheer desperation.

I may have been in the RN, but we were not well paid. We were on the bones or our wotsits back then, but still managed.

[al_yrpal]

I can tell the same sort of story about our early married life. We werent born with silver spoons and had no parental assistance. We got our first house, a 3 bed semi in Sandhurst Berks in 1967 at the age of 25 as a result of trying to move from a rented flat to another. A fly estate agent showed us this little house and told me to borrow the £200 deposit from the bank, which I did. It was furnished with hand me downs from relatives and diy projects from chipboard.

But now things are fundementally different, banks are no longer allowed to lend big income multiples or liar loans. The smallest flat around here is £200 grand. A semi costs £300 - £400 grand. Young people cannot get a house the way we did. They must save a huge deposit, get help from relatives all the while paying eye watering rents. Thats why so many have moved back to parents homes to save. Others, like my daughter was, are trapped in homes unable to move because they are not allowed to get a new mortgage as big as they one they have already got and have been paying without default for years. Its a mess.

Al