Our greed - our children’s need?

15/11/2013
I can’t help myself; the regular check on Zoopla to see how much the value of my home has increased in the last three months. The glee at that growth in asset, seemingly so disproportionate to any other means of income generation and with so little effort! And then... the dinner party where we all bemoan how difficult it is for young people to get on the housing ladder these days.

Somehow, we won’t let ourselves see the connection between the two.

The average first time buyer in the UK spends £184,000 on their home (significantly more in London and the South East).  The year from September 2012 to September 2013 saw an increase in this average price of 5.3%, at a time when wage inflation was, at best, stagnant.

To afford that £184,000 first home, our notional son or daughter, nephew or niece, is going to have to go some.  Assuming a 10% deposit of £18,400 (my first deposit in 1977 was £1,500 and I struggled to raise that) they will need a mortgage of £165,600. With a multiple of 4 times earnings, they will need to be earning £41,400.

More than the earnings of the midwife who brings your child safely into the world.

More than the earnings of the teacher who educates them.

More than the earnings of the nurse who looks after them or the paramedic who rescues them.

More than the earnings of the police sergeant who keeps them safe. 

The politicians can introduce as many home buying programmes as they like but the fundamental issue remains – inflation busting house price rises do us all no favours in the end and make us a lesser nation.

David Whelpton - Director