Have the Baby Boomers (people between the ages of 55 to 75) messed
things up for the Millennials in terms of getting on the Southampton property
ladder? They bought their own council houses in the 80’s and 90’s, meaning
there are no affordable homes for today’s youngsters, thus driving up the
demand for rental homes and the price of homes (making them unaffordable). So,
I decided to look at the figures, which do not make for good reading.
In
1980, the average Southampton household income was just under £6,000 per annum
and the average Southampton house price was £22,530; whilst today, the average Southampton
household income is £33,083 per annum, yet the average household value is £290,900,
meaning...
the average value of
a Southampton home was 3.75 times more than the average household income in
1980 compared to today, where it is 8.79 times a Southampton household income
… it’s no wonder then that Millennials are
pointing the finger at Baby Boomers!
And the problems don’t just stop there. Not only do
the newspapers state there is a housing crisis of affordability,
but also a crisis of the availability of homes for people to
live in. The political parties using housing as a ‘vote getter’ mentioned stats
such as in 1981 there were 5.1 million council houses and today there are only 1.6 million. This is important
because, as a substantial
number of people will never be able to afford
to buy, social housing plays a significant role in homing
them.
It all looks rather damning and the
phrase ‘OK Boomer’ looks quite apt.
(The phrase ‘OK Boomer’ become fashionable as it started as a way of showing Baby Boomers that things were
"easier in the past", yet now it has become just a way for younger
people to discredit the views of older people).
Well, checking the stats, the political parties seemed
to forget the number of housing associations homes (which are also social
housing) has risen from 0.4m to 2.6m homes in that time, therefore, whilst
there is a drop in social housing, it’s a net figure of 2.3m fewer
social-rented houses, instead of the 3.5m in the paragraph above.
Baby Boomers simply did the best they could with the
circumstances given - it's not like that these older generations have been
conspiring in the food aisles of Waitrose or M&S on how to mess things up
for the next generation. There are fundamental underlying problems in British
society that means things are difficult for our younger people - it's
everyone’s responsibility to solve those underlying problems - we can't just
blame the Baby Boomers. Millennials aren't morally superior to Baby Boomers
just because they didn't grow up in the same era of economic growth and house
price inflation.
What some people seem to forget is whilst Southampton
property values were lower, so were salaries. The true cost of affordability is
the mortgage payments. Assuming an average property was purchased in 1980 and
again in 2019, using a 95% mortgage at the prevailing mortgage rate of 17.8% in
1980 and the current 1.65%, today in Southampton the mortgage accounts for 40.7%
of the household income (assuming a single income) compared to 64.3% in 1980. This
has to be one of the main reasons why many families became two wage households
in the late 70’s/early 80’s as housing affordability was diminished with these
eye watering high interest rates.
Things were much tougher for homeowners in 1980….
|
|
Mortgage Monthly Payments in That
Year’s Prices
|
Mortgage Monthly Payments in Today's
Prices
|
% of Monthly Salary
|
|
1980
|
£321.66
|
£1,581.52
|
64.33%
|
|
2019
|
£1,123.55
|
£1,123.55
|
40.75%
|
The
issue here is something much deeper. Baby Boomers say it is the Millennials'
own fault they can't afford to buy their own home because they spend all their
money on three holidays, avocado on toast, going out down the pub 3 times a
week and buying the latest iPhone or suchlike whilst Millennials accuse the Baby
Boomer generation for ruining the housing market ‘per se’ by being selfish.
Both are right and both are wrong.
In my own involvement with friends
and family, many Southampton Baby Boomers are trying their best to help out
their now grown up children with a deposit. They are fully aware of current Southampton
house prices compared to when they bought their own homes.
I am
not a fan of attaching labels, be it Millennials, Baby Boomer or Gen-X. It’s
really a point of attitude and behaviour and circumstance rather than the date
of your birth. Every generation has had its fair share of feast and famine and
whilst I appreciate the irony of the title of this article, let’s stop
labelling people and making assumptions, everyone needs to understand each
generation’s issues and be more ungrudging to each other.
If you would like to pick my brains on the Southampton Property Market – pop in for a coffee or drop me a line on social media or email.
If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.
Email me on brian.linehan@belvoir.co.uk or call on 023 8001 8222.
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