Wednesday, 28 October 2009

House buying, 2009 vs 1973

I'm staying with my parents. We're talking about house buying. They've offered us all some money towards getting on the housing ladder when we're ready. I asked if a yurt counts. They say it doesn't.


Long and animated conversations ensue, and a bit of random hunting for yurts and mad people across the fields of Suffolk with my middle aged, posh-and-loud voiced mother...

So. Housing.

My Dad earnt £2.5k a year when he bought his first house in 1973. He was supporting himself, my mother and my eldest sister, then a babe in arms. He was 26 years old.

He bought a 4 bed house in Stoke Newington for £11k. He inherited £4k from family for the down payment and got and a £7k mortgage from Islington council.

Wind forward 36 years. It's 2009. I'm that man's daughter. When I was 26 I was earning £28k a year in a comparable job, so let's use £28k.

To stick to his proportions,

I'd be buying a 4 bed house in Walthamstow (a comparable area to Stokey of the 1970s) for £125k.

I'd have a family contribution of £40,000, and a mortgage of £84k.

O, and I'd be supporting a husband and a baby on that.

So I looked at 4 bed properties in Walthamstow and the cheapest I could find was £250k, exactly double what my Dad would have paid proportional to income. My parents' kind offer of support for bricks and mortar is generous, but it is nowhere near £40k.

So. Why.

Why are the houseprices I face pretty much double those my Dad faced?

Level 1: increased demand without an equal increase in supply = increased price.

Level 2: the increased demand is not really about population increase. In 1973 there were 56m people here, today there are 60m.

Level 3: So what is leading to the increase in demand? Around the kitchen table we've identified four drivers:

One: Increased availability of credit has made a larger proportion of the population able to buy houses. That has increased competition.

Two: Women work too now. That's raised household income. People are willing and able to pay more for what they want in competitive circumstance.

Three: Some people earn A Lot of money. And some get high bonuses. And they buy property and let it out as a good way to turn money into more money.

Four: Smaller household sizes. People are marrying later, divorcing more, and living longer. So the same number of people need more dwellings than ever before.

Ok, Judgement Time.

One. (easier credit). Fine. Apart from it's maybe contributed to the financial crises which would have bought the whole system to its knees were it not for trillion dollar bailouts that are coming from..???? Public services for one, says my sister who's a government economist.

Two. (women work too). Problem, says my ma. Families need time. Relationships need time. Bodies need time. People need time. Communities need time. Cooking needs time. Friendships are really important all through life and they need time. She doesn't mind whether it's men or women putting in the time, she says, but if everyone's energy is going mostly into work, then lots of important things get fucked up.

Three. (some people earn lots). My Dad says that 1% of people earn over £55k a year. He got that off a radio programme where MPs were moaning that at £57k they didn't earn enough, and an economist said, you're in the top 1% of earners, stop complaining. (sorry for the tipsy sources: if this were a book I'd sharpen them up :). Problem, say I. I'm concerned about the ongoing growth of economic inequality within the UK and around the world, and the impact it has on everyone's life. I put it down, largely, to the plc model of company ownership and finance, whereby companies effective suck money from the many and deposit it with the few by maximising profits (created by the work of the many employees and the money of the many customers), and distributing them among the few shareholders and the few top bonus-receiving employees.

It's like holding a salt cellar upside-down over a table and pouring the salt down so there's a big peak in the middle and an ever widening periphery. Except this dynamic works in the opposite direction, so resources are hoovered from the many, the periphery, and piled up in the central cores. I think that's problematic. I think it's better to balance the interests of employees, customers and original financers (shareholders). So it's the people towards the tops of those peaks of salt that are earning high incomes and buying property and contributing to the fact that if I buy a house I have to effectively pay twice what my Dad did back then.

Four.  (more people living alone). My mum's given me one minute to write this because dinner is ready.
That is SHIT because it's LONELY and SAD. Especially when you're old, but even when you're not, living alone is just SAD. Ok there are other issues but food is ready so I'm done.

No comments:

Post a Comment