On the punishingly depressing cost of housing in the UK in relation to median income and expenditure patterns
View this post on Hive: On the punishingly depressing cost of housing in the UK in relation to median income and expenditure patterns
I've moved to Hive, along with most other people, following Justin Sun's takeover of Steem in the Spring of 2020. I believe hive is a lot more decentralised than Steem!
Thinking about macro economic and politicial policies that affect this, Radio 4's 14 minute programme Financialisation provides a good explanation. Incidentally, to answer some of your other commentators, it says that, apart from a few bubbles, housing prices in Germany have been largely unchanged in the last fifty years: far less emphasis than Anglo-Saxon countries - UK and USA (funny definition of USA when Latina population is as large as it is, but I guess it refers to economic policies) - on home ownership. The programme link is from bbc sounds, hopefully accessible from outside the UK.
A few comments about your analysis:
I haven't looked at a comparison of housing and home ownership, so I'm not sure what figures are available. However, looking at ONS data for recent internet use, nationally the figure is that 78% of the population have used the internet within the past three months. There is also regional data available that shows how this varies (more and less usage) across the different regions of the UK - Leicester is about equal to the national average and London is greater.
Similar data for regional income/home ownership might reveal different patterns, some sustainable.
Of course, the UK is wildly skewed by London where both incomes and house prices can outstrip the rest of the country. It also demonstrates the greatest polarisation:
Household income in the World's End estate, on one side of King's Road in Chelsea, was £13,500pa. On the other side of the road, it was £100,000pa. Some of the wards in North Kensington are in the 10% most deprived in the country, although they are located in the richest borough in the land, the Royal Borough of Kensington and Chelsea. The borough's problems don't end there with more than a third of its homes owned as investments and unoccupied, driving down the local retail, restaurant and service economy and removing lower-skilled jobs from the market.
Not that it matters much within the totality of this upward funnelling of wealth towards to the top 10%, but pension growth is usually forecast at a modest six per cent.
I'll definitely listen to that podcast! The causes of this mess are something that interests me massively.
I am aware of the huge regional variations too, I just wanted to do a basic average analysis. I found it quite telling that the averages all 'match up' but with basically a 0 savings rate, which intuitively makes sense - half the population unable to save effectively because they're held back by housing.
I'm a lived example of benefitting from regional differences in property prices of course! I'm also aware that I'm lucky - how many people could do what I've done realistically - 10%? Most people have unbreakable family commitments or can't afford it due to lack of jobs where all the cheap houses are!
That 6% pensions growth figure is a bit optimistic, don't you think?
Cheers for the insightful comment, lots to think about!
Depends on your pension plan :) It's the figure thats commonly used by the financial industry (not that they are biased in any way) to forecast pension income and assess affordability. My pension plan varies wildly - 0% one year to 40% another - but overall about 10% a year. I find it nearly as fascinating as the Steem price :)
The programme is part of a series about New Capitalism. I was also reading yesterday about New Monetarism(?), which is starting to move away from neo-liberal economics. Although I'm always a bit worried about anything with New at the beginning: New Public Management hasn't been a great success.
My pension plan is to rely on my 16 yrs of teacher'd pension. Most of which kickd in when I'm 60 (of course that could change)...I don't think growth rate comes into it, it's just an inflation linked set amount.
10% is a very good rate of return, but I know a couple of people who've had nasty surprises by last minute crashes.
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Crashes are a part of our current economic cycle. Best always to speak to an independent financial adviser.
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I gave up on UK housing a while ago and expect to be poor in old age, unless this place does something akin to the magic wand.
A house deposit has always been way beyond my reach. Fuck it!
You're not the only one! It's tragic. And so much money to live in not such a great country.
There's lots of alternative Permaculture type opps around Spain and Portugal - maybe one of those if yr that way inclined?!
Having said that there may well be a housing crash... these numbers are ludicrous so you never know.
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Not aware of this permaculture business, will look into it.
Got plenty to sort out, including looking into paying years missed of NI contributions. Although that could turn out to be a waste of time/money in 27/28+ years.
It's probably still worth a gamble. It's only £150/ yr for full class 2 contributions.
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While you are at it with that magic wand, could you please also summon a pony? 😂
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No chance... it'd also conjur up bad memories of the horesy elite around Surrey... no problem for them to find a few spare grand for their children's horses and later house deposit!
I think the whole housing market has worked out very nicely for the top 10%@
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Home ownership just isn't worth it when you run the numbers (at least here in the states). After you consider insurance, interest cost, and cost of repairs/maintenance it's like a 20 year investment just to break even when compared to renting.
It's just that nostalgia of owning a home that makes it an emotional buy. Honestly, I wish I would have been explained shown this 10 years ago it would have saved me and made me a lot more money.
Surely it's still worth it even if it takes 20 yrs to break even... renting is just givng money to someone else!
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Well I guess I should explain. Owning a house is a terrible investment. It takes too long to get your money back vs renting. I'm not sure if it's 20 years or 10 years pay back, but regardless.
Owning a home is a terrible investment was my point. It's a personal decision to own vs rent. It's a better option to use the money you save on renting vs home ownership and investing that money.
Hopefully, that's a better explanation of what I was trying to say.
Yup gotcha... I thought you might have been thinking about investing elsewhere... You may have a point!
I just like the security of having my own home and it making me less dependent on finance systems once I've finally paid for the damn thing!
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I completely understand. I thought the same way and now it's just too big of a pain to move again. I think if we do ever move again we'll definitely be checking out rentals.
The other thing I don't like about rentals (especially when I lived in an apartment) was that you're at the mercy of price increases. It seemed like every time I renewed my lease my rent was going up by 100 - 200 dollars.
Not to mention the dreaded service charge when it comes to flats.
I NEVER want to move again, that costs a fortune too.
Is the UK particularly expensive compared to countries with a similarly high population density?
That's something I don't know.... but we are more obsessed with home ownership than most other Euro countries.
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I've heard that in Germany and Switzerland people with high incomes often rent their homes. But if housing is expensive, it is also expensive to institutions that rent out homes to people. It would be interesting to know whether housing is more expensive in the UK or Germany. The two countries are similar in GDP per capita. Localities of similar population should be compared because there is no single huge metropolis like London in Germany. The cost of housing is terribly high in London.
Yes fair point about comparing.
I tend to view renting as a bad move.
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Renting is a bad move unless you find yourself having to relocate more often than every 5-8 years at least where I live (Finland). That's because of the transaction costs involved in buying and selling a home. If you live in the same home long enough, they are offset by not having to pay your share of the profits of the homeowner be it a person or a corporation and the deducibility of 55% of interest payments on your mortgage from your taxes.
I also like owning my home because I'm not required to ask anyone permission to modify in a lot of ways.
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