Recently I was having a chat with one of my second
cousins at a big family get-together. The last time I had seen them their
children were in their early teens. Now their children are all grown up, have
partners, dogs and children. Wow – how time flies!
So, I got talking over
a glass of lemonade with my 2nd cousins and a couple of their
children, about the times of 15% interest rates and how the more mature members
of our family had to endure the 3 day week, 20% inflation and the threat of
nuclear annihilation in 4 minutes .. so, foolishly, I said what with all the opportunities
youngsters had today, they had never had it so good!
Trust one of my cousin’s children to have
gained some financial/economics qualifications before going to Law School, as
they debated with me the genuine economic predicament of Millennials and how a
combination of student debt, unemployment, global proliferation, EU migration
and rising house values is reducing the salaries and outlook of masses of the UK’s
younger generation, causing an unparalleled disparity of wealth between the generations.
So of course, I asked why that was?
They said Millennials were paying
the price for the UK’s most spectacular bookkeeping catastrophe to date (bigger
than the Bank bailout after the Credit Crunch). Back in the 1950’s and 1960’s,
nobody predicted us Brit’s would live as long as we do today, and in such abundant
numbers. The OAP pensions that were promised in the past (be that Government
State Pension or Company Final Salary Schemes) which appeared to be nothing
fancy at the time, are now burdensomely over-lavish, and that is hurting the Millennials
of today and will do so for years to come.
Bringing it back to property, the young 2nd
cousin once removed ‘soon to be’ lawyer, stated that baby boomers born between
1945 and 1965 have been big recipients of the vast rising house prices over the
1970’s/80’s/90’s and 2000’s. Add to that their decent pensions, meaning
cumulatively, their wealth has grown exponentially through no skill of their
own.
This disparity of wealth between the older and younger
generations could have unparalleled consequences for the living standards of younger
Millennials…. So, Houston Southampton – do we have
a problem??
Well Southampton Property Blog readers, you know I like a
challenge. I can’t disagree with some of what the younger family member said,
but there are always two sides to every story, so I thought I would do some
homework on the matter ..
Since 1990, the average value of a property in Southampton
has risen from £77,000 to its current level of £289,300. As there are a total
of 47,472 homeowners aged over 50 in Southampton; that means there has been a £10.08bn
windfall for those Southampton homeowners fortunate enough to own their own
homes during the property boom of the 1990s and early 2000’s.
I must admit that the growth in property values in the
1990’s and 2000’s certainly helped many of Southampton’s baby boomers. The
figures do appear to put into reverse gear the perceived wisdom that each
generation gets wealthier than the previous one
… and so with all this wealth, the figures do back up the youngsters
argument that Millennials are being priced out of home ownership.
Or do they? Are they?
Next week, I will carry on this discussion where I will
give the Baby Boomer’s defence to the prosecution’s case!
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