In Britain, Austerity Is Changing Everything (NYT Article)
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Thatcher started the housing crisis and successive governments since have failed everyone on housing since.
Thoose houses sold of by the state still exist (largely) the shortage of (total) affordable housing can't be solely attributed to right to buy.....
I think importing millions of people in a generation might just be partially responsible as well.. ...
Also factors like the changes in average family compositions
Was speaking to a chap that moved down here 20 years ago, who bought a large tract of land for £20k. He used that land to set up a small but profitable business.
He's now selling, and wants £300k for the same land.
So that's at least one area of opportunity that younger people don't have. You sure as hell can't start a business requiring land these days.
Even renting shop space is massively more expensive than in years gone by. Many small businesses have come and gone in small shops near us. When they close, they all say the same thing: "Just couldn't afford the rent."
Anything to do with land, rent, housing, etc, is now expensive to the point of denying opportunity to those without very deep pockets.
And lastly, we know from various sources that the concentration of wealth into the 2% (and 0.5%) is happening quicker today than at any time in modern history. Obviously we're doing something very wrong, because that's not a healthy situation; neither do many analysts believe it is sustainable. And no, that doesn't just mean old paintings, before someone says "wealth isn't just money" or some bumkus.
He's now selling, and wants £300k for the same land.
So that's at least one area of opportunity that younger people don't have. You sure as hell can't start a business requiring land these days.
Even renting shop space is massively more expensive than in years gone by. Many small businesses have come and gone in small shops near us. When they close, they all say the same thing: "Just couldn't afford the rent."
Anything to do with land, rent, housing, etc, is now expensive to the point of denying opportunity to those without very deep pockets.
And lastly, we know from various sources that the concentration of wealth into the 2% (and 0.5%) is happening quicker today than at any time in modern history. Obviously we're doing something very wrong, because that's not a healthy situation; neither do many analysts believe it is sustainable. And no, that doesn't just mean old paintings, before someone says "wealth isn't just money" or some bumkus.
Opportunities constantly change and you can't rely on the oppurtunties of yesteryear still being there......
Arguably the richest man in the world, Jeff Bezos, made his money from Amazon.... How much real estate does Amazon use vs a far smaller outfit (profit wise) like a chain of supermarkets?
The richest man in the Times list this year, Jim Ratcliffe, was hardly born into massive wealth.
Of course the get rich, whilst not doing much, schemes from property are not there so much anymore.... The countries a lot more populated then it was a generation or two ago!
.... And despite what people will claim about the percentage of the UK which is urbanised (and hence the percentage they beleive is available for further building) there are some real issues in actually using more land for housing, other buildings or other intensive human activity which include providing sufficient infrastructure, water run off and supply and preservation of the various habits remaining for wild animals and plants in the UK
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Associate
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I honestly think that you're both right and completely wrong at the same time. In those days (60s/70s), even in a Northern coal mining town if you worked hard you could *actually afford* a house, and didn't *start* work with £60k of debt. Do I think we all need to work hard, yes, but equally I think those that do work full time should have the opportunity for their own home, the opportunity to have a decent standard of living. The older generations don't seem to understand that those in their mid 20's today are still working hard, still "grafting" but they're getting nowhere. They're stuck throwing money down the drain on rent because they can't afford to buy, they're saddled with tens of thousands of debt getting an education the government say they need (and often do) and salaries (or purchasing power equivalent) aren't what they where. You can do *all* the right things, work hard at school, work hard at a job and still end up getting £18k a year stuck in some mind numbing call centre job with no chance of getting a home of their own or affording to raise a family with a decent standard of living - and that's not fair.
I do think that as a country we need to prioritise anyone who works full time getting a certain baseline standard of living. I think that starts with guaranteeing anyone who has been in full time work for at least 10 years is offered a 0% deposit mortgage on the lowest cost available housing available. We also need to make sure we pay our employees enough (because minimum wage isn't enough to run a home and even think about having a child).
So how do you see this panning out with the push for automation?
We've had 100% LTV mortgages before, the consequences of just dishing out credit freely like that have already been seen, it isn't pretty and it is part of the reason we've then had all this austerity since then.
You're rambling is getting on my nerves. The opportunities have not changed, it's just that only a small minority can now benefit from them. The point he makes is valid, 30 years ago, at least 40% of the population (the middle class) had the opportunity to invest and profit from real estate. Today, only 10% have the disposable income to invest and profit from real estate, the richest 1%, and the highly skilled professionals/small business owners (~9%). This is happening across the Western world and it will have major long-term consequences because each country's wealth is funneled into the hands of a shrinking minority.
Associate
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So sub-prime mortgages and 100% LTV (and even today we have 95% LTV) are related but not the same issue. But I totally think we'd see higher default rates either way, but I do think it's something we must do if we want all full time workers to have a base line standard of living - I.e. personally I'd take a tax hike to make sure any 10 year + full time worker has access to least some sort of mortgage (even if that meant a 2% base income tax rise).
In terms of automation, I don't fear it like others do. Automation of one form or another has been happening since the industrial revolution.
Not particularly, you may just be thinking of just mortgages for people with bad credit ratings but high LTV and self certified mortgages fall under the same broad umbrella really. Anyway these days they don't like using "sub-prime" and refer to things like the "specialist" mortgage market etc..
I don't think it is a good idea for that part of the mortgage market to expand much, it should stay fairly niche IMO.
Associate
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Not particularly, you may just be thinking of just mortgages for people with bad credit ratings but high LTV and self certified mortgages fall under the same broad umbrella really. Anyway these days they don't like using "sub-prime" and refer to things like the "specialist" mortgage market etc..
I don't think it is a good idea for that part of the mortgage market to expand much, it should stay fairly niche IMO.
I disagree, looking at some of the lending approaches used in the US for sub-prime (or specialist lol) mortgages they where just terrible criteria, reselling these types of mortgages made the situation even worse - but I do see your point in saying it's not a great idea, but I don't see a viable alternative personally.
Please provide support for you claims please..... I'm not sure that 30 years ago the 'middle class' (good luck defining that) were that much better placed to 'invest' in real estate (as opposed to just buy a home to live in) then now to the degree you claim....
and had they 'invested' circa 1988 in the UK (as you claim they could to such a high degree) it would be just in time to lose a shedload of money in the property crash of the late 80's and early 90's!
Obviously property prices have massively outstripped inflation in the last 20 years. (at least partially due to the population going up from just under 57 million to over 65.5 million 1988-2016 figures)
The internet wasn't widely in public use 30 years ago either (just one example) so to say the opportunities haven't changed for the young is nonsense
There's always the ignore button if just the sight of one of my posts causes you some nervous affliction... personally I block zero people here
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You said the opportunities changed - they didn't. Instead, the number of people who can take advantage of the opportunities has decreased substantially because the house price to earnings ratio went from 3.5 in 1986 to 7.8 today.
https://www.independent.co.uk/news/...-are-now-even-more-unaffordable-a7004796.html
https://www.express.co.uk/life-style/property/951719/house-prices-uk-salary-gap-revealed
PS. In the context of real estate, buying = investing, even if you live in your investment.
Yes the oppurtunites have changed.... I even provided an example!...... Mr Zuckerberg didnt make his money (as a startup) from real estate....
Perhaps you just need to broaden your horizons and stop expecting that a gravy train of getting rich from property as an 'opportunity' is something that is at all sustainable?
If larger and larger proportions of the population are spending more and more of their money on property (mortgage/rent) then there's surely going to be less to gain elsewhere in terms of business unless it's finance.
I'm missing something here. How it all just carries on regardless.
I'm missing something here. How it all just carries on regardless.
Soldato
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It really is a sad state of affairs. My biggest problem, that I think would help some of the problems would be to make a law that does not allow people to be billionaires. Or at least when reaching a certain threshold, you have to by law re-invest in the economy. It's extremely troubling that the globe's richest 1% own half the world's wealth and those same people are becoming increasingly richer and the rest of us poorer.
Basically the longer the richest 1% continue to benefit from a system that really only serves to their gain, will only increasingly widen the gap between them and the rest of the world, causing more discontent and anger. I really cannot see how this is sustainable and think it will not end well if governments across the world do not get to grips with this.
I have absolutely no problem with people being wealthy and living comfortably, but when we have billionaires increasingly growing their wealth further and further and companies like Facebook and Amazon managing to pay very little tax through very clever accounting, you can understand why there is this problem, especially when lots of economies are actually struggling still since the 2008 financial crisis. I know there is this talk of recovery, but the reality is we are nowhere near recovered to pre 2008 levels - certainly not with the growth of wages, and the austerity measures many economies both here in the UK and Europe have endured with cuts to public services and welfare and other sectors of the economy.
I know it hasn't been easy for lots of people in the UK for the past 8 years, and I think by the nature of how our economy's growth continues to shrink, the government will have to have a re-think on its economic policies, but can I just say for as bad it has been, you only have to look to parts of Europe to see how fiscal irresponsibility has also deepened many of their economic problems. I am by no means completely defending the UK government (as they have made have made some very poor decisions and still are), but it was right to get some of the spending under control, which the government has now done. So I think the argument now is rather than our government continue pursuing the target of getting the deficit to 0 by 2022 and further penny-pinching, they should really start spending a little bit more and start investing in key areas.
Basically the longer the richest 1% continue to benefit from a system that really only serves to their gain, will only increasingly widen the gap between them and the rest of the world, causing more discontent and anger. I really cannot see how this is sustainable and think it will not end well if governments across the world do not get to grips with this.
I have absolutely no problem with people being wealthy and living comfortably, but when we have billionaires increasingly growing their wealth further and further and companies like Facebook and Amazon managing to pay very little tax through very clever accounting, you can understand why there is this problem, especially when lots of economies are actually struggling still since the 2008 financial crisis. I know there is this talk of recovery, but the reality is we are nowhere near recovered to pre 2008 levels - certainly not with the growth of wages, and the austerity measures many economies both here in the UK and Europe have endured with cuts to public services and welfare and other sectors of the economy.
I know it hasn't been easy for lots of people in the UK for the past 8 years, and I think by the nature of how our economy's growth continues to shrink, the government will have to have a re-think on its economic policies, but can I just say for as bad it has been, you only have to look to parts of Europe to see how fiscal irresponsibility has also deepened many of their economic problems. I am by no means completely defending the UK government (as they have made have made some very poor decisions and still are), but it was right to get some of the spending under control, which the government has now done. So I think the argument now is rather than our government continue pursuing the target of getting the deficit to 0 by 2022 and further penny-pinching, they should really start spending a little bit more and start investing in key areas.
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A country's economy grows, over long periods of time, which increases its wealth. When houses were affordable, most people who earned the average wage had the opportunity to invest a part of their income in real estate so their wealth would increase over time, along with their earnings. They got a piece of pie (the growth of the economy). Today, the house prices are so high compared to the wages that most people who earn an average wage have lost the opportunity to gain anything from the real estate market. When they do make an investment, they get long-term mortgages with interests that will erode the investment's profit. Only those who pay up-front (the 1%) and those whose wages allow them to pay off mortgages quicker can profit from the market now. They get richer, while the rest get nowhere.
Interests rates are historically very low, I bought a flat a few years ago in London, it has almost doubled in value whereas the interest I've had to pay on my mortgage has been a little bit below 2% a year.
As for the opportunity to invest, there are lots of opportunities to invest in any number of assets - investment doesn't need to take the form of a leveraged investment in property. I suspect we'll see things stagnate for a bit in the housing market now if not even drop a little - the BTL market is taking a bit of a hit at the moment (partly a knock on effect from Osborne's tax changes aimed at BTL landlords).
(I'm not saying that there isn't an issue with affordable housing btw... I'm just addressing the points you're making about investment)