The Shelter policy team has been lucky to have Mike Smith volunteering with us over the summer. Mike had a long career in finance before looking to move into a policy role, so we’ve benefited enormously from his perspective.
As news reports today show that house prices have risen at three times the rate of inflation over the last decade, Mike reflects on how his generation has benefited…but suggests that perceptions may be changing.
‘Having turned fifty a year or so ago, and having lived most of my adult life in west London, I’ve attended a fair few dinner parties in my time. So the other day my mind idly turned to what the dinner table chat of the last quarter century might tell us about recent history.
Of course, after all those sticky toffee puddings and bottles of rioja, my recollections might not be entirely accurate. But I’m pretty sure that the property market in one form or another has been the top subject of conversation over the years, even surpassing my own favourite topic, the fortunes of Queens Park Rangers FC.
In the early days, it was all about ‘getting a foot on the ladder’, something which my generation found relatively easy. For those in a reasonably paid job mortgages were easy to come by. After that, for many years it was about counting the gains as house prices rose. Occasionally we’d lament the one that got away, the house we nearly bought in an up and coming area, that would have doubled or tripled in value in a couple of years. Most of the time we all agreed that house prices were crazily high, but then again, once you’ve got the house you want, if you’re not about to sell it, does it really matter what it’s worth? So we were pretty relaxed when, every so often, prices fell for a year or two.
If we were relaxed then, most of us fifty-something home-owners are downright smug now, with record low interest rates on our mortgages, and house prices, in London at least, still rising faster than inflation. My generation has been pretty lucky. Perhaps that’s why housing has tended not to figure highly for my generation when polled about the most important issues facing the country. And why politicians sometimes seem to get away with soundbites and piecemeal ‘initiatives’ rather than coherent action plans.
But recent dinner party conversations might suggest that’s about to change. Some of our friends are getting to the stage where their children are graduating from university, getting jobs and…er… returning to their teenage bedrooms because they can’t afford anywhere else to live. The average deposit for a first-time buyer is now over £25,000 – and £66,000 in London, and rents are beating record highs every month. Parents are even discouraging their children from renting a place of their own, because rents are so high that they leave little or no spare cash to save for a deposit.
Having a grown-up child back at home, perhaps even with their partner in tow, is all very well. One dad I know has loved bonding again with his recently-graduated son. But how sustainable is it? How many children and their partners can fit into the house? What if they want to start a family of their own? And what does it do for your self-esteem if you’re living with your parents when you’re in your thirties?
Questions like these are suddenly looming large for some who thought the biggest housing problem they’d face in the future was finding a reliable plumber: the housing crisis isn’t somebody else’s issue anymore. And if there is any silver lining to this housing cloud hovering over us, let’s hope it may provide the impetus we need to move our dysfunctional housing market up the political agenda.’