The two Britains
Today鈥檚 trading statement from , the property agent, is fresh evidence of a decoupling between Britain鈥檚 two economies, that of the super-rich and that of the majority of Britons.
It talks about a cooling of the UK mainstream residential market, with the market for new homes in 鈥渃ertain provincial cities鈥 showing signs of 鈥渙ver-supply鈥.
Savills says housing demand in London and the South-East remains strong, which may reinforce the determination of the hawks at the to raise interest rates this week (although the softness on the high street which I recently highlighted suggests the earlier rate rises are biting).
But what the Bank of England has almost zero influence over is what Savills calls the 鈥渟uper-prime markets鈥, or homes selling for many many millions of pounds each. These are still soaring in value, due in large part to 鈥渋nterest from international purchasers鈥 (the Russians, the Chinese, Arabs, the non-British partners in hedge funds and private equity).
The country-hopping billionaire class is untouched by whether the Bank of England raises interest rates by 录 per cent or not. They are the human manifestation of another phenomenon which the Bank can barely influence at all 鈥 the loose international credit conditions which have led to the boom in hedge funds and private equity, whose spoils have swelled the ranks of the super-rich.
If that credit bubble were pricked, then the super-prime housing market would deflate 鈥 but then so too would the price of many other assets.
There is an asymmetry here. The economy for most Britons can and probably will slow without much of an impact on the very wealthiest. But if the wealthiest were to feel the pinch from chillier conditions in global financial markets, well then we鈥檇 all have a bad case of the sniffles, or worse.
I'm 
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I would suggest that there are 3 Britains now, the mega rich, those just floating and now an underclass - mainly my generation (mid-30's and lower) who cannot afford to get on a housing market especially those who are single. It will be our generation who will be paying for everyone elses debt. By the way I refuse to own a credit card as I don't believe in it. If you cannot afford to pay cash then go without.
When a private equity firm injects debt into that firm, it pays debtinterest to its bankers without deduction of tax. It also pays less Corporation tax itself. The bank pays tax on its increased profit margin and also deducts tax from the interest paid to its fresh deposit holders.
Taking all this together, it does not suggest a loss of Tax revenues paid to HM Treasury. What it does suggest is that, usually, the total of Income & Corporation Taxes paid within the City will rise. That may distort geographical analyses of GDP. Whether we should be alarmed about that is another matter.
I actually do not understand why people want to buy unless they really believe that house prices are going to have capital growth by at least bank base rate + 3% per annum.
If I purchase at a two bedroomed flat with garage in Hertfordshire, I am looking at 拢200k which if I went for a 100% interest only mortgage would cost me 拢1,075 a month. I can rent the same property for 拢750 a month with the landlord responsible for maintenance and repairs. I do not have stamp duty and legal costs on purchase or estate agent fees and legal costs on sale. I can move on within 28 days notice. If I am made unemployed, can get Housing Benefit to pay a large contribution to the rent. They won't pay my mortgage interst for 9 months.
I recently read some (speculative?) comments about renewed interest in imposing a substantial tax on buy-to-let properties. The news that flat prices are coming down, possibly due to over-supply, is an interesting development because it suggests that the time may be right to do just that. This downward trend suggests that it is no longer a small minority that is trying to get rich from letting, and so long as enough people continue to buy to let, it may present a potentially viable new revenue stream for the Treasury (until there is a property crash, at least). In truth I doubt such a tax will be proposed - after all, if the Chancellor wants to keep increasing the tax burden, the rich need to remain rich so that they don't feel any tax increases.
If membership of the "super-prime market" means you are not effected by the increases of the Bank of England interest rate, can you tell me how to join this band of happy people please?
> if wealthiest were to feel the
> pinch from chillier conditions in
> global financial markets, well then
> we鈥檇 all have a bad case of the
> sniffles, or worse.
My parents lived through the depression and the
war, and didn't make a fuss about it. Now we
get told there's a few rich folks in London
who could make life hard for us if they wanted to.
Ha, don't make me laugh! Bring it on, I'm ready.
We Brits can get by no matter what the toffs do,
although they'd have a harder life without us,
that's for sure.
John wrote:
"By the way I refuse to own a credit card as I don't believe in it. If you cannot afford to pay cash then go without."
So you won't be wanting a mortgage either....
Easy one, Andrew!
By having sufficient liquid funds not to require a mortgage (although their UK savings and investments may be affected).
Can I just point out that the reasons areas are poor is *because* house prices are low?
Debt based fractional reserve monetary system. It always seemed dumb to me because a debt based monetary system is always going to exaggerate the effects of being rich and being poor. Exponential functions have that kind of effect...
Low value loans means little money entering the local economy from the banks which means poor incomes for businesses which means poor wages which means little demand to live there which means low house prices which means low value loans.
To change it you've got to give people a reason to live there. Usually it's wages, but monstrous 1960s & 70s tower blocks don't help. Neither do useless olympic villages.
Oh lord,
John who doesnt want a credit card - have a credit card, pay for the stuff you can afford with it (yes i know that means careful budgeting). put the cash in a savings account, pay the bill in full when it comes in and you have earned a bit of interest (not much i admit) that you wouldnt have if you paid in cash.
John anderson - will you be able to afford the 拢750 rent when you retire? Personally i would rather own the house and only have to worry about maintenance.
I am of course assuming that you dont intend sponging off the state.
Whenever I read stuff like this I recall what our glorious new Chancellor said to the FT yesterday which was "鈥淚 do not believe in economic patriotism. I think it is nonsense. Economic patriotism is protectionism and there is no other name for it.鈥
Nobody with such an idiotic mindset is ever going to do anything about house prices. I suggest you do what two of my sons have done.. Get an engineering degree and go and work in the USA.. They view the UK as industrially dead in the water.
As the DG of the CBI Richard Lambert said recently: "In today's rapidly changing economic world order, we must create more global enterprises if we want the UK to remain in the top tier of world economies. Yet in the past 20 years the number we have built from scratch has been low."
He's right of course.. We do consumption not investment.
At 01:56 PM on 04 Jul 2007, Steve K wrote:
John wrote:
"By the way I refuse to own a credit card as I don't believe in it. If you cannot afford to pay cash then go without."
So you won't be wanting a mortgage either....
No I don't need one - I own my own boat, paid by cash.
Thanks for asking.
Britain is now a thirld world economy. A third world country. Look around you. It's right out of Human Geography, Introduction, O Level texts, circa mid-to-late 1970s. Oh the days when pupils, i.e. me, got taught about faraway, hot countries where there was nowt but an enormous 'capital' city thronged with migrants serving an entirley separate first-world elite. Rio de Janeiro, Mexico City, Johannesburg, Bombay, Calcutta, (etc.,etc.) anyone?
Funny that too how up to the late '70s, UK still had a manufacturing activity to speak of. Coincidence I think not.
Britain, not UK, forget N.I., that's now more in the orbit of the EU cash-bloated celtic tiger on the same island, is an oddity, always was, only more so now than ever. It's just a megalopolis, Greater London, with the financial centre, 'The City', being served at the centre of that.
Britain now we are told is tremendously reliant on the fantastically enormous wealth generation of the 'City'(City of London). Or is it the case that the vaunted tax receipts from this financial dynamo end up not in the UK Exchequer but off-shored in Caribbean tax havens or out of reach by virtue of non-UK domiciled status. In return, the UK 'benefits' from the 'London House Price Asset phenomenon', apparently the last major unpricked non-stock market bubble in the whole wide world: price inflation rates of conservatively 60% a year for properties in the over $4 million bracket. Britain's a booming I hear you say! So in return, the BofE is compelled to escalate interest rates for all citizens to subdue year-on-year 10%+ house price inflation averaged out across the UK.
Where is Britain's equivalent of Lyon to Paris or Munich to Berlin or Milan/Turin to Rome, even St. Petersburg to Moscow? As I say, a one-megalopolis, non-manufacturing/financial serving(whatever that means), effectively otherwise third world country with a third world economy(metric: Government spending as a proportion of populace's total income, a half or greater).
I agree with John the first post.
I am a nurse, 32, cannot find work as a nurse. One day - If I am really good I will be able to afford a shoe-box of a house, meanwhile my works pension and personal pension was with equitable life. All went down the toilet, to pay for those who screamed to get their 10% P.A.
Meanwhile I get to live in a bedsit and am unable to afford a house or even think of having children. Even if I did it would be in a shoebox full of social problems that my kids would inherit.
I simply watch as the tax goes up while working full time to keep the seond home owners even richer and also looking after all the hoodies on benefits - to ensure that their SKY and cider never runs out.
My visa for Canada is arriving soon, I grieve to leave my family but clearly, in my opinion this country has not a future that I feel is worth having.
With no one under thirty affording housing - how is the UK going to adapt? I would love to stay but all I would ever do is be taken advantage of, I want something better to offer when I have kids.
Sorry Eddie, I completely disagree with you. I appreciate that the house prices at the minute are ridiculously high, and that it is hard for first time buyers (ie 20-25 year olds) but I am 26 years old and I not only have my own house, but I also own a house (now mortgage free I may add)which i let out. I have owned my investment property for 5 years and I think that if you had planned in advance and thought about your future and kids a little earlier you would be in the same position now.
I agree totally with Eddie, Britain has and is increasingly becoming even more a country for the rich and the wasters, with life becoming harder and harder for the normal worker who has to pay for both. I saw this trend years ago so I decided to leave, I now live in a supposed 3rd world country, Mexico, where I live a lifestyle only affordable by the rich in the UK. Good luck in Canada Eddie, having lived there for a while too I know you'll find the lifestyle much better than the UK slog
Interest rates going up will not stop ordinary people buying stuff, because ordinary people cannot afford to buy stuff anymore. The uber-rich are who are keeping inflation high from their buying.
If the MPC put interest rates up it's going to hit the population right where it hurts, and not the uber-rich who will just keep on spending.
John Anderson (Post#3) says "I can move on within 28 days notice." But you can also be moved on by your landlord at 2 months notice, for which no reason is necessary, and if he is a buy-to-let landlord and defaults on the mortgage (perhaps increasingly likely now) you can have as little as two weeks notice of eviction. Add to that the common arbitrary restrictions on tenants (no smokers, no pets, even no children!), and you can see why people still want to own a home. But I don't see Gordon Brown making housing affordable. He spent ten years as Chancellor doing the opposite, and his replacement's comments on Capital Gains Tax reform imply no real change is imminent.
Personally, I don't know why most Britons stay in the UK. The salaries are miserly, the cost of living amounts to extortion, and there isn't even anything fun to do unless getting drunk and vomiting in public is what you would consider fun. Perhaps that's only in the scally north, but I really do pity the British.
enjoy canada eddie, but sweeping statements like 'with no one under 30 affording housing' do no one any good.
both my daughters are under 25, in normal jobs and own their own properties with their partners (who also have normal jobs). Yes they have mortgages - who doesn't (except John with the boat), but it can be done it's a question of priorities
this country has been taken over by foreign mafias and flooded with cheap immigrant labour the government needs to remember germany in the 1930,s
Whats wrong with everyone? Moaning and bitching like something has been taken away from them.
House prices go up, house prices come down.
Interest rates go up, interest rates go down.
Why the hurry for everything - sit back, relax and enjoy the ride. You only have approx 8decades to enjoy.
No point wasting it worrying about trivialities. If you want a house save some money and buy one when the prices fall (which they will).
If you want to be uber-rich then dedicate yourself to the persuit of money - its really not that tricky.
Just dont stress over things you cant change. You can no more effect house prices than you can hold back the tides of the sea.
Sit back, relax and enjoy.
United Statsian, Thanks for your unhelful comments, when I was younger i was eager to live in the US, having had 15 mostly good holidays there I have no desire to live there (your national parks are super), an unequal society where the main pre-occuaption is spending in the mall and junk culture. The UK is not ideal but there is very little that is positive I would import to the UK from your country, from the president down.
OK Patrick-Lets ammend the statement to MOST people under 30 unable to afford housing.
If priorities mean getting a job which earns you enough to buy property then more fool Eddie for choosing to embark on one of the 'caring' professions.
Saving money isn't an option for many Britons at this point in time. I am now in my early 30's and am still paying off student loans (stupidly thought my degree would get me a well paying job). I have had to move 3 times in as many years because of the booming house market (landlords selling up whilst the market is hot and who could blame them) whilst being laid off without redundancy pay 3 times in as many years due to private companies buying up the businesses and 'turning them around' ie selling off any last assets and firing all staff.
I now live an hour and a half commute from work and am still paying 55% of my income in rent. It is unlikely I will own a house in this lifetime-this doesn't bother me and I know a lot of people will think I'm moaning but I'm sick of people telling me 'I should have thought have thought ahead' or scrounged off my parents a bit longer.
Bitter? You bet-but more scared of when the knife-wielding teens of today are my age and realise the economic legacy previous generations have left for them.
Sorry Eddie, but I think you are completely wrong. I am 28, I have one daughter and own a 4 bed detached house in a nice area with a good school. I bought my first house when I was 18 as I did an apprenticeship rather then go to university, I don't earn a fortune but I have always been able to afford a mortgage even when I was single. (I have moved twice.) The problem that I see in the under 30's group is that many of my friends spent 4 - 5 years partying ,sorry in university studying subjects that didn't mean a jot in the real world (media studies etc.) Then get jobs in call centres and expect to be able to buy a house!
Wake up life is not easy! But with a bit of planning and hard work anybody can buy a house.
UK: Free and high quality health service: US: 26 million people with no health insurance.
UK: Balance of payments deficit of 48 billion: US payments deficit of 631 billion
UK: Relative social harmony and equality of opportunity: US: Massive fear of crime and burgeoning crime; endemic racial discrimination.
UK: High quality housing (5 in 6 houses are terraced, semis, detached): US: wooden framed ephemeral type structures of little architectural merit
UK: Highly respected arts, literature, musical, software and broadcasting output
I could mention Rolls Royce, BAe, Astra Zeneca, GSK etc
Appreciate Britain or GO!
With the trading of gone religious beliefs for other, more materialistic mind preoccupations, people are left feeling the heat of social and economic changes with nothing to hang on to and give them joy. Surely our level of hapiness shouldn't depend on this culture of feeling sorry for living next door to billionaires but living tight, shouldn't depend on economic decisions. One needs to get the facts straight: just get sufficient for your needs. Human needs are basic but are engroosed by advertising and the flooding of information on how much money the elite makes. Example given: sociological studies are very telling. Following reunification with West Germany, East Germans prospered and very soon became less happy, despite being freed from the communist craze. And the story goes on. Life needs planning , but wisdom in its wants and honesty in its needs. Do a good job at work, be honest, get the best education you can, get a decent housing. And if some other people have much more, well, remember more doesn't, hasn't and will never mean better.
The UK is still a great country (take it from a Frenchman), graced with a decent economy and opportunities. The country will not go down the drain because some business is going to India or India is coming here too much (according to some narrow-minded thinkers). As I was waiting for my wife at the station a few years ago, I read a poster: "This life is not a rehearsal: get it right now!" Blaming, pointing, accusing, fleeing, depressing, envying...is not a step in the right direction. Have a great day folks!
Robert, since you haven't blogged it, can I just say how great your piece on Today this morning was about collateralised debt obligations. A great example of taking something highly technical and explaining it for the general public.
A suggestion - a deeper look at the high street music business. With Fopp having gone bust, and HMV reporting a slump in profits, while Apple continue to dominate online and Amazon plan their entry into the download market, it's a market in transition. Will there be any High Street CD shops in 5 years time? For the top 20, the supermarkets will dominate. For the bottom 200,000, the online retailers can master the long tail - especially if they don't need physical copies.
We do have serious issues in this country and they must be addressed swiftly.
House prices are well out of the reach of many people even if they do live like withdrawn, non drinking, fasting, naked Tibetan monks.
All of you need to take a look a what has happened in Hull over the last 2 weeks.
In 2007, The "Glorious UK's" 11th biggest city has 20%(30k)of its population technically homeless with the city economy bordering on finacial collapse.
Plenty of cheap houses "up ere" for 1st time buyers but remember to bring your wellies and portable pumps !!!!
Go Save the Queen wherever she is !
Bill Miller - BAe, Rolls-Royce, GSK, AZ?! These are examples of the worst kinds of businesses that live off huge hidden state subsidies yet proclaim a belief in markets. They are yet another reason to abandon the hell-hole that the UK has become...
I suspect that you are one of the older generation that has screwed up this country by not saving for your own pension, voting for this Labour Goverment,and expecting people like me to pay - well I won't! I'm going to the US, which has a much better quality of life than here, with its high taxes to pay for Chav spongers.
Well said Sam Carter.
Catherine, i dont want to seem harsh, but i get fed up with people (and i am not including you in this) who moan about not being able to afford to buy a house but then fill their rented place with a plasma tv, top of the range hi-fi, plasma screen tv and go on foregin holidays. Thats not to mention the brand new car on the drive. Ok, may be i am exagerrating slightly but you get the idea.
Is it such a hardship to stay a couple more eyears with parents and save up to get a deposit to buy a place? If people really want their own space earlier then fine, go and rent...but dont then moan that they cant afford to buy.
The bottom line is that too many people in this world simply dont take responsibility for their actions or the consequences of their actions. They want everything now, they dont plan and they cant see beyond next weekend. Then when they cant get a house or whatever else they want they moan and blame someone else...often the government.
And as for the 'knife wielding' teens....if their parents had bought them up properly, like parents used to in the past, instead of abdicating responsibility ('oh woe...no one taught me to be a parent..i cant cope!!) then the teens would be doing their homeowrk so they can get a job that pays enough to buy a house.
Rant over
jasper
i DONT KNOW WHAT KIND OF LIFE STYLE YOU HAVE BUT YOU MUST BE LUCKY TO SAY.
I AM A GRADUATE 26 NOW WENT TO UNIVERSITY TO GET A BETTER CAREER, LEFT WITH 15K UNI LOANS, KNOW I AM EARNING 16K TYPICALLY 1K A MONTH AFTER TAX, 100 GOES TOWARDS FUEL ONLY TO WORK, 30 COUNCIL TAX, 100 CAR INSURANCE, TAX, MONTHLY FOOD 100, RENT n RATES 300, FOR A SMALL ROOM, TOTAL, 拢630, STUDENT LOAN 30 SAVING 拢400, NO GOING OUT WITH FRIEND, SO I NEED A DEPOSIT SAY FOR 100K HOUSE 10K SO YOU TELL ME HOW LONG WILL IT TAKE TO SAVE @ 400 A MONTH FOR 10K. IT A SHITE LIFE GO TO WORK @ 8 BE BACK FOR 6PM, EAT SLEEP FIVE DAY A WEEK, COME ON DON'T BE SALFISH , ITS OK, IS THIS THE FUTURE FOR THE NEW GENERATION, IF THE GOVERNMNET HELP US WITH A GRAND OF 5K LOAN I CAN BE ON THE PROPERTY LADDER SOON, BUT NO IT NOT WORTH IT, BUT WHEN YOU PAY 300 IN TAX ITS OK TO TAX YOU, PLEASE REPLY.
I like Jaspar's comment. Its true, sit back, and relax. The notion of home ownership is a virtue, but remember it is a market like any other market out there; like stocks, bonds, gold, and oil, prices rise and fall. Now admittedly, we havent seen a price fall in the UK housing market for a while now. However, some things to keep in mind:
1.) If you dont own a home, and want to some day, the best thing you can do is to save to achieve that goal. Savings rates are getting better.
2.) The market will crash one day, probably exacerbated by higher interset rates. Home owners are increasingly paying out more and more on their mortgage, when interest rates are moved up a small fraction (i.e. 25bp). What this tells me is that home owners who have bought over the last three years are increasiingly over-exposed to the slightest movement in interest rates.
3.) Once those homeowners refi, when rates are at 6, 7, or 8%, they will find that either they cannot continue paying out 90% of their income to pay the mortgage, and they will capitulate: they will sell. So will anyone just like them. The market will become flooded with properties. Reposessions will rise (they are already at a record), and banks will be forced into a fire-sale of properties. House prices will fall. Quite dramatically.
4.) Then you can take your shiny deposit which has been earning increasing savings rates, while home owners have no savings as its all gone into their home (which is now being sold for 70% of the value at which it was bought). You are the winner.
But im sure someone will say 'houses are safe, theyll never go down, theyll only go up.' Well, the same thing was said of internet stocks in the late 90s. Conversely no one thought Gold would be worth $650 now when it was going for $200.
The nature of markets is that people have to get caught up in order to create movement. I think people are caught up, and overexposed, and when rates do rise, house prices will fall
To United Statesian, regarding the USA: 200 years of history and no culture!
There may be a lot wrong with the UK but it isn't Belgium! (I say this from experience)
"If membership of the "super-prime market" means you are not effected (sic) by the increases of the Bank of England interest rate, can you tell me how to join this band of happy people please?"
Andrew W Merrill
You could start by gaining a full grasp of the English language, Andrew.
Honestly, the number of people spouting opinions on this website (usually of the 'isn't life unfair for me, and isn't it all the government's fault' variety), who lack the most rudimentary written English is appalling.
If you lack such basic skills, then frankly you have no chance (nor should you) of reaching a level of affluence such that 0.25% on base rates is an irrelevance.
I like Jaspar's comment. Its true, sit back, and relax. The notion of home ownership is a virtue, but remember it is a market like any other market out there; like stocks, bonds, gold, and oil, prices rise and fall. Now admittedly, we havent seen a price fall in the UK housing market for a while now. However, some things to keep in mind:
1.) If you dont own a home, and want to some day, the best thing you can do is to save to achieve that goal. Savings rates are getting better.
2.) The market will crash one day, probably exacerbated by higher interset rates. Home owners are increasingly paying out more and more on their mortgage, when interest rates are moved up a small fraction (i.e. 25bp). What this tells me is that home owners who have bought over the last three years are increasiingly over-exposed to the slightest movement in interest rates.
3.) Once those homeowners refi, when rates are at 6, 7, or 8%, they will find that either they cannot continue paying out 90% of their income to pay the mortgage, and they will capitulate: they will sell. So will anyone just like them. The market will become flooded with properties. Reposessions will rise (they are already at a record), and banks will be forced into a fire-sale of properties. House prices will fall. Quite dramatically.
4.) Then you can take your shiny deposit which has been earning increasing savings rates, while home owners have no savings as its all gone into their home (which is now being sold for 70% of the value at which it was bought). You are the winner.
But im sure someone will say 'houses are safe, theyll never go down, theyll only go up.' Well, the same thing was said of internet stocks in the late 90s. Conversely no one thought Gold would be worth $650 now when it was going for $200.
The nature of markets is that people have to get caught up in order to create movement. I think people are caught up, and overexposed, and when rates do rise, house prices will fall
Oliver Hodson's post hits the target. The lack of basic writing skills displayed by most of these moaners suggests to me that they are the authors of their own misfortune. As there seems to be so many of them, I fear for the economic future of our country, particularly as some of them claim to be graduates.
Well first it'd be good to remember that Savills has a vested interest in stoking up the market for high end property - after all, that's where they make the biggest commissions.
Second, the rate rises we are seeing just now come after a period of historically very low rates and low inflation. Many folks think the current cycle of rises is about to peak.
Third, house prices are underpinned by supply and demand. Not enough of the former and too much of the latter should conspire to see prices stay high. Perhaps we will see price rises just slow down. I don't think there will be a crash - but that view doesn't sell newspapers does it?
The housing market has been pumped up by two factors
-the buy to let brigade who are really providing for their own pension because they don't trust the financial institutions to do so
- the financial institutions with their sponsorship of the makeover programs of the last 4 years, you know the ones, "clean out the junk, fit new curtains sell it for an extra 20K" these makeover shows were sponsored by (amongst others) the little red telephone insurance co, part of one of Britain's largest lenders, with a direct interest in inflating the property market.
BTL landlords have also suffered the interest rent rises of late, and now like all social housing many will now be subsidising their tenants, this will only happen for so long before the wiser ones quit BTL and start putting their portfolio (average 10 properties) on the market, this will cause a further drop in flat prices, then you will see a stampede out of BTL and the bubble will break, to help it along stay renting.
'United Statestian'
The reason I stay in the UK is because life can be very good.I live in a small historical,vibrant market town.There are 35 pubs,a theatre,several street cafes,ancient buildings,museums etc.Live music by local,national and international bands occurs every night and next week is a free 2 day music festival with 22 stages/venues.A 10 minute cycle ride leads to beautiful countryside.
I bought a run down house in 1993 that no one else wanted(poor condition-no heating/hot water/a dilapidated shell).We sacrificed holidays,new clothes,furniture,had no car etc for several years-life was hard.Now life is good.
There are too many whingers on here.
agreed with Dean.
If the universities turn out people who can write like Harry, who apparently is so well educated he can't find the CapsLock key, we are in trouble.
How many people have said what dgrees they took? Presumably Harry's wasn't English or anything to do with computer technology.
In life, there are always going to be winners and losers no matter what the situation. My parents were incredibly poor and so was I. Now we are well off. However, during my time of struggle, I heard the same stories. The current phenomena is not a new one.
harry wrote,
I AM A GRADUATE 26 NOW WENT TO UNIVERSITY TO GET A BETTER CAREER, LEFT WITH 15K UNI LOANS, KNOW I AM EARNING 16K TYPICALLY 1K A MONTH AFTER TAX, 100 GOES TOWARDS FUEL ONLY TO WORK, 30 COUNCIL TAX, 100 CAR INSURANCE, TAX, MONTHLY FOOD 100, RENT n RATES 300, FOR A SMALL ROOM, TOTAL, 拢630, STUDENT LOAN 30 SAVING 拢400, NO GOING OUT WITH FRIEND, SO I NEED A DEPOSIT SAY FOR 100K HOUSE 10K SO YOU TELL ME HOW LONG WILL IT TAKE TO SAVE @ 400 A MONTH FOR 10K. IT A SHITE LIFE GO TO WORK @ 8 BE BACK FOR 6PM, EAT SLEEP FIVE DAY A WEEK, COME ON DON'T BE SALFISH , ITS OK, IS THIS THE FUTURE FOR THE NEW GENERATION, IF THE GOVERNMNET HELP US WITH A GRAND OF 5K LOAN I CAN BE ON THE PROPERTY LADDER SOON, BUT NO IT NOT WORTH IT, BUT WHEN YOU PAY 300 IN TAX ITS OK TO TAX YOU, PLEASE REPLY.
Isn't it lovely to think that our future is in the hands of Graduates who can't spell or use puncuation and not forgetting to mention using lower case. My 14 year old daughter writes with more clarity.
I couldn't agree more with Dean Hilton with regards to basic writing skills.
Whenever I look at someones CV or covering letter, if I notice poor spelling or use of language, then I have to think if I would be wasting my time interviewing this person?
Come on people, shape up.
I know lots of Super rich people and they are as thick as bricks. It might help being able to type English properly but its not the end of the world.
Harry,
Whats wrong mate?
I graduated uni & started my first job on less than you earn.
I have bills, rent, fuel etc etc. But it will be there whether I worry about it or not.
If you awnt a house then you should save, invest wisely. Look into ISA's - then you will get the tax breaks. Look at how to sped less and save what you can.
As someone who works in financial services I'm pretty confidant that the housing market will see a revaluation in the not too distant future (that is to say within approx 2 years). So now is the time to save - not overstreatch yourself with a mortgage.
Before you ask, no, I dont own my own home. I have no intention of doing so within the short term. The money supply is tightening, liquidity is being squeezed and capital values will fall. Then is the time to buy.
Time is the friend of those who are patient.
Japser.
I find it rather odd that so many judge the quality of others by the standard of their grammar. I am a graduate, but find some of the most affluent and successful people I know of a similar age (31) have what many of you would constitute as limited communication skills.
I also find it rather patronising that those who joined the housing ladder a decade or more ago judge those who could (or did) not. If you purchased a property for 拢100K ten years ago, you currently have good equity and a much lower mortgage. If you purchase a property of similar original value today (est. 拢200K now), your mortgage will be at least 拢1,100 per month, and you are more at risk.
That may be affordable for a couple, but not a single earner.
I have literally today exchanged contracts on a house - at .5% lower rates than currently available. I have 10% deposit - saved, but there is no way I could afford a similar property without purchasing with my brother.
Frankly, if you are an old hand at home-owning who has made a mint over the last five or more years, keep out of the conversation. You have no idea how the other half live.
Hi Jay.
When you look at someone's Curriculum Vitae in the future, and you see poor 'puncuation' and God forbid a spelling mistake, try to relax and realise that this person is evidently morally corrupt, evil and above all a ne'r-do-well. I utterly applaud your strong moral stance on illuminating to the massess the error of their ways.
I sincerely applaud you from the highest altar.
Call me old-fashion. However, I feel that if a person makes spelling mistakes - a dose of the cane would swiftly amend matters.
Thank you madam, your post was an all time classic. Also the spelling of graduate in the context should be lower case not 'Graduate'.
I agree a Curriculum Vitae should have absolutely no spelling mistakes -it is sloppy and lazy to do otherwise especially for presentation to an employer.
With fond regards.
Edward.
'fashion' - I meant 'fashioned'. I am hereby informing the board of my deliberate mistake to ensure you were on your toes.
with every good wish
Edward.
Going back to Eddie, I have to agree with many of the others here -I also agree that MOST people under 30 cannot afford to buy a house.
I bought a house at 24 and got married, while MOST of my friends carried on sharing flats, living it up and travelling the world for years at a time, (possibly to escape the monotony of UK working life I have to say) I missed out on this as I was married and a parent by 25. (Multiple parent by 27 and tri-multiple parent by 29). I now live in a 4 bed detached house and am very fortunate. I can't get the years of partying I missed back now, but in the eyes of my friends looking to finally settle down and have kids, I am 'lucky' to be where I am.
I can promise you, sometimes watching them party while I never went out much for 4 years, didn't feel lucky at time, but now I guess the shoe is on the other foot. Unfortunately for them, unless the market reverses, I will have this 'lucky' position for the rest of my life, though everyone had the choice at the time.
Sometimes it is better to think ahead a bit rather than just live for the moment (and I also don't have a degree which in this case was probably an advantage, as I entered real life a bit sooner than most.)
Welcome to Britain in the 21st Century!
Whats all the fuss about?
If this country is so bad, why are people falling over themselves (legally or otherwise)to get in?
No,angry of middle England, not all of them are here to milk the State of your hard earned contributions!
Greenland has no immigration problem,but will have to wait a while to achieve G7 Economic status,
Successful economies require a populace of distinct wealth classes (Mainly; wealthy & those aspiring to be,unfortunatley ,there will always be an underclass (AKA the poor))
Make your own luck.Frankly, no one else cares,despite the rhetoric.
It's like that, and that's the way it is! (cue for a song?)
Dic - at 03:56 PM on 04 Jul 2007 - alleluia! Successive governments, the City and financiers have failed miserably over the last 3 decades to invest in this country but have chased the bucks around the world in the pursuit of short-termism. Globalization and global trade by all means, perhaps even the globalization of labour and employment, but it should and must be managed and controlled to ensure that it is fair and is seen to be fair to anyone and everyone in a country. Surely any government will find ways of controlling the excesses of capitalism by ensuring that any and all of their citizen share in the benefits accruing from globalization, through social policies, and not just those who own and manage companies and those who shuffle money in the City and finance sectors? Without real and sustained efforts to control the ever increasing divide between the richest and poorest levels in society without providing social safeguards then it can only lead to economic and social disaster for individuals and for individual nations and lead to a gradual breakdown of law and order. It has happened before and it can happen again.
When people talk of being unable to afford to buy property, I think what they really mean is that they can't afford the type of property they desire, in the location they desire.
That's the problem with many people, unwilling to settle for something unless it fits their perfect criteria.
Affordability isn't so much the problem as lowering one's standards...but you have to start somewhere.
When I bought 6 years ago, I couldn't afford where I wanted to live, and ended up in a less than desirable area somewhere further away. However, as the mortgage was cheaper than renting, I have managed to save a healthy amount, which coupled to the equity I have built up (even my poor little flat has doubled in value), now gives me the ability to buy in the area I originally wanted.
This of course required a little sacrifice, discpline and planning seemingly beyond those people who have a sense of entitlement and want it all today.
I think those who judge others by their spellings, are no different to those who would consider a house to be in good shape just because it's just been freshly painted, with no regards to the structural state. Yes, it is nice to have a nice looking house but this is of little value if the foundation is crumbling and unfortunately you see this in all walks of life. Only those who talk the talk are given chances and those with real talents are overseen for cosmetic reasons.
Scott:
In one breathe, you are complaining about people not settling for less desirable properties and in another breathe, you talk about your flat doubling in value within 6 years.
Good on you for getting on the housing ladder 6 years ago.
But I wonder if you would make the same decision to buy your flat at its current value today if you were still looking for your first property.
Would you'd even qualify for a mortgage on that flat with it's present value with your income 6 years ago.
My point was that this is a written discussion. When people meet face to face then our choice of language is secondary to the use of non-verbal communication. You have to use each form where appropiate. It was not meant to insult people. There are plenty of wealthy people who do not have a good command of the English language, but they are in the minority.
Anyway, anyway...
I agree with the point Scott was making. There are plenty of affordable houses left. It's just that they are not in the 'best' areas. If someone bought now, in 6 years then maybe they would be able to afford to make the move to where they would like to live. I did exactly that. I would rather have been able to live where I live now 6 years ago but that was not possible.
You have to start somewhere. It is tougher for first time buyers than it was for me but in 6 years time they will be saying the same things of first time buyers now. That's partly why we call it a ladder. We start at the bottom and.....
If you choose to rent then that is also fine. It has distinct advantages. You ask any of my tenants.
Edward, I like your style. Now where did I put that cane? swish...
Maybe they could make moaning an Olympic sport then maybe we could get at least one gold.
My wife of 30 plus years and I started from zero renting a flat and having cardboard boxes to sit on. Now we have a reasonable house, no mortgage and well adjusted, happy grown up children.
It can be done you youngsters, just takes a bit (okay a lot) of effort.
I am not ashamed to say I am still proud to be British.
I can't help but disagree with all those that keep saying the housing bubble will burst within 2 yrs (or similar time frame). The price of houses is at the mercy of supply and demand and reading the contents of all the messages above makes it abundantly clear that demand is very high (and likely to remain so). The supply of houses is not rising quickly enough to meet demand and therefore the price of houses is likely to remain high. In addition the days of 3.5% interest rates are probably over but the recent rises in interest rates are hardly a return to the 10%+ rates that saw mass repossessions and slump in prices in the 90s.
A couple of other points: I agree that those that bought properties 4-6 years ago should show a little more restraint in giving the "should have more foresight" lecture to those currently without a property. If they had foreseen the property boom as they claim, why are they not multi - millionaires by now? The real reason they are sitting pretty now is through luck in most cases.
It appears to me that many of the people happy with the condition of the property market are the ones who managed to buy a place some years ago.
As a single 29 year old with a 60k deposit and still no hope of borrowing enough to buy a satisfactory property I understand that it is my responsibility to increase my earning power and i'm working on it, however, I do feel let down by the government. The Cabinet must be happy to see Gordon's 拢10bn black hole filled by the rising proceeds generated by stamp duty and inheritance tax (he won't move those thresholds you know!). Is it a deft move on their part in provoking wannabe Rigsbys into buy-to-let to bolster flagging pensions?
Hang on, if the whole lot goes very badly wrong, don't we lose our savings too?!?!
Never mind, let's go and protest in Parliament Square. What's that you say? They've banned it?
I'd love to see them try this stuff on the French!
ACL, I understand the point you're making, but I think you've missed mine.
You ask whether I would/could buy the same flat now if I was in a similar position. Well although all prices have moved on, the situation would be the same, I would buy what I could afford. If that meant buying an even smaller, less desirable place today, then so be it.
I simply believe that it's better to lower expectations and get on the ladder than to do nothing and moan about not being able to get what you want. It just becomes even more difficult in the long run.
I cant agree with andy about the 'advice' being given by people who bought people who bought 4-6 years ago.
These people are'nt claiming to have foreseen the property boom, and nor are all these people ' sitting pretty'.
What those of us who purchased 4-6 years ago (or in my case about 30 years ago) are saying (or at least what i am saying)is that whenever you buy you have to make compromises and sacrifices. I had to do that when i purchased, my daughters (both under 25) had to do that when they purchased within the last 2 years.
And before anyone asks we are jsut an ordinary family...no massive wealth or anything like that. My girls just decided on their priorities and decided that buying was their priority.
Another point is that i am not convinced that historically it has ever been easy to buy as a single person...anyone want to correct me on that?
Any way my point is that in this instant gratification culture, people just cant expect to have everythin immediately with no planning and no sacrifices....that is what those who purchased some time ago seem, to me, to be saying.
So, i do feel that those who bothered to plan and to set their pri
WHEN DICK SUGGESTS THAT BRITAIN IS DEAD IN THE WATER THIS MAY BE BECAUSE TO MANY BRITS SAP THE EDUCATION SYSTEM THEN MOVE TO THE US AND CASH IN LIKE HIS SONS
My dad sought the services of an excellent plumber over the space of a couple of years. This plumber was a pleasant person and excellent at his job - like gold dust. But he was probably not very good at understanding interest rates and the economy. He didn't plan very well and is now in economic dire straits. He moved to a completely different area to try to sort himself out, so now we cannot use his service anymore, and now have to rely on a different plumber. What is the moral of this story? Different people do different things well, and we need all kinds of different skills to optimise everyones standard of living. You "its their fault, they should tighten their belts" fools out there do not understand that division of labour is just as essential as competition, and you rely on the services of the people that you condemn. Although I and my family are financially relatively secure, I don't want the rest of the society - plumbers, nurses, teachers, policemen, carers, doctors etc to be crushed by financial pressures, because at the end of it all I will suffer as a consequence. If their suffering is a consequence of frivolity, then fine, but I really don't think that is the case.
Shawshank,
I am afraid your rather lovely plumbing story is flawed
Understand that although different people do different things and have different skills it is important to have the right skills for what you choose to do.
If you run your own business then regardless of the quality of your buisiness work (plumbing for example) you also need to ensure your finances are run properly. Any businessman who doesnt understand or ignores the financial side fo his business (or who doesnt pay someone who does undertand) is asking for trouble.
It isnt sufficient just to be good at what you do, you HAVE to plan, cost jobs propoerly, plan for contingencies, put money aside for tax etc,etc.
Its always sad when someone who is really good what they do runs into trouble through poor financial control, but there is enough help available that there is no need for it happen.
So sorry, but in my opinion the moral of your story doesnt hold up.
There are certain skills in life everyone needs and controlling their finances is one of them.
My point is that even the financially responsible part of the underclass of non-homeowners cannot save fast enough for a deposit to purchase a property.
Our (wife and I) target have dropped from a 2bed terrace to a 2bed flat in Reading and from desirable locations to less desirable.
But we are still not close having enough for a deposit after saving 30% of our combined salaries for the past 2 years. And we are not financially irresponsible enough to get 100% or interest only mortgages or mortgages that are more than 5x our annual salaries.
So we'll just have accept being part of the British underclass and to continue renting.
However, it is still galling to hear sermons about financial responsibility and lowered expectations from the clueless brigade.
"Another point is that i am not convinced that historically it has ever been easy to buy as a single person"
I agree, and would add that it has also not been of interest to single people
A big factor in the shortage of housing is the increasing number of single person households - and that they all expect to be homeowners. When mass home ownership started in the '60s, it was only available to those on above average incomes - and only of interest to families.
I was lucky enough to buy in '95 - but this was not because i was good at planning, or financially astute - but was simply because i was in a stable relationship & it felt like the right time. If i had been single it never would have crossed my mind.
As long as this demand remains we will have increasing prices - as the supply cannot meet it. I predict a slow levelling off as attitudes change - and renting stops meaning membership of the underclass (as many posters here seem to believe).
I don't know what to say.
A HOMEOWNER just advised me to feel good about not being able buy a property.
Why? because renting is going to be the new norm.
Some might rent by choice but we rent because we cannot buy and need to live somewhere.
In response to Pat - post 63 - who commented on my post.
I agree that society is structured so that business people need to be able to run finances well, but my point is that this is a flawed system. Society works by division of labour - we need to utilise all peoples skills to the best of their ability. An electronics expert can't run a farm, a farmer can't design a mobile.
The problem is that the financially ignorant in our society are left behind - and at the same time society loses out because we aren't able to use their skills as effectively. The key phrase is "division of labour".
Do you really think that people who are wealthy have really fundamentally contributed more to our worldwide standard of living? The scientists who discovered the phenomenon of Global Warming can't "sell their discovery", yet if they are right, by warning us, they may have saved our future. Yet I bet they aren't as wealthy as the average City worker.
Although I do agree that there is a reasonable amount of potential social mobility in the UK, the polarisation of society is a worryng sign that we may be over-rewarding certain attributes in favour of other. This will essentially generate "market failure" - another economics term that everyone should know the meaning of.
Shawshank,
I agree with your point about farming and mobiles.
So if a farmer wantrs a mobile he sensibly doesnt design it himself he buys it. A sensible business man buys the financial skills from someone who doesnt have them.
This is not only division of lablur it is the selling/purchase of skills...bartering if you like, which is the basis of an economy.
Your point about scientists is also flawed. They are selling their skills to whoever i paying them to do the research.
The point is that if you dont have a particular skill yourself you find someone who has and 'buy it'.
Ignoarance of a field is no excuse. You dont just expect to buy a car 9from the person with the skils to make it) and drive away... you learn the driving skills first. The same principle applies to any othr field.
Interesting discussion though
Many interesting views and opinions i have read but lets face the facts.
Foreigners come here because they are prepared to work for less and also work longer hours. They also do not pay any tax for the first 12 months. They rent a property and share with others which saves them money. Can you blame them? Our government is generous to outsiders and we have a good benefit system as well. It is future prosperity to a foreigner. They are the people who can save. They are flling the gap for low cost employment as most british people will not work for minimum wage as they cannot afford to. Companys benefit from this as they have cheaper labour costs which keeps their heads just above the waterline. Many companys have moved to india and to asia already because of crippling service costs.
When it comes to the property market prices are at a ridiculous level which the mainstream cannot afford. If interest levels continue to rise then we are looking at even more people losing their homes. And guess who will buy these homes once prices drop dramatically. Yes the foreigners with the fat deposits they have saved up. Who can blame them. British people have been encouraged to borrow more than they can repay and credit card dept has been made to feel a normal every day thing to the young generation. Its sad because we as english are now materialistic and not thinking ahead. Buy now pay later and 0% on balance transfers on credit cards should be stopped. But until then we will keep spending and get more into dept. The cold truth is this country is in for a rough ride and already british people are feeling the pinch in many ways.
The government proposes affordable living through new homes. Just look at our flood defenses. Have they thought of that? These other stupid shared ownership schemes as well. The buy to let market now has left alot of landlords with hardly any profits as well. The tennants are the winners. Its all going wrong. Government and consumer spending has gone out of control. It appears national greed will be the ruin of us. Our government has helped its own people slowly walk down the wrong path with them. Our manufacturing has shrunk. Smoking bans have slowed pub trade already.
They should have just had designated areas.
Privatised transportation and hospitals have exstorted us. Computers in schools giving off radiation to our children and slowly damaging their eyes. Our government never put hardly any duty on whisky or cigars because they all buy it. We are conformist puppets whose voice is never heard and we are ignored and our opinions we just argue amongst ourselves. They look for any way possible to keep the economy strong because they know its a timebomb which will explode very soon. And who will suffer. Us as a nation. We will be a third world country unless they pull a new trick to rip us off further. Oh i have an idea right here. Why not put a new tax on retired people. If they have more than a few thousand in savings then tax their pension. Hey presto millions of pounds every week back into the economy. Who cares anyway they are only old people without a voice and they wont be around much longer anyway. My god robert maxwell would even turn in his grave.
I am 39 years of age and all i think of is freedom. Britain feels like a prison of conformic rules.
We agree with you Chris.
The country has gone to the dogs and most people I meet realize this.
It all started going seriously wrong about 12 years ago and we are being led to ruin by this government who noone trusts anymore. Look at the facts. Educational standards falling, over-population, social division getting worse, cultural division, crumbling NHS, crime & anti-social behaviour increasing and a lack of basic consideration for other people (most noticeable in the under 40s).
We find most people who claim the UK (particularly England)is so great, have never actually been anywhere else (except possibly on a 2 week package holdiday to the Costa del England). We have travelled extensivley but unfortunately Teddy is now too ill to emigrate.
A large part of our NHS service is no longer high quality and has not been for at least 7 years. It is not the envy of the rest of the world and most people with any sense would be very alarmed at the prospect of staying in hospital due to the superbug infection problem - again caused largely by inconsiderate hoards of visitors who don't seem to think they should even wash their hands and an unwillingness by the management to enforce any sensible restrictions on their selfish behaviour.
In Britain the majority are being impoverished not just by the asset price boom of the last decade,( that does few favours-as it's an illusion of wealth and not real wealth ),but by the punative taxation regime of the Labour Government.The myriad of taxes mean for most 50% is stollen away often clandestinely and wasted.
The "super-rich" are largely unaffected.Just the ordinary workers who must increasingly wonder what the point of bothering to work is anyway-if they can never move forward in life,as they never have the fruits of their labours.