Under-35s in the UK face becoming permanent renters, warns thinktank

http://www.theguardian.com/society/2016/feb/13/under-35s-in-the-uk-face-becoming-permanent-renters-warns-thinktank

by temp • 10 years ago

142 285 10 years ago

intrasight• 10 years ago

Perhaps true of fashionable London, but hey, that's supply and demand. Tax the Russians and Chinese more, and those addresses would come down in price.

kagamine• 10 years ago

London, Manchester, Edinburgh, [add your location here] and all surrounding areas.

The UK is expensive. Also from today's Guardian: http://www.theguardian.com/lifeandstyle/2016/feb/16/cost-of-...

with people in the comments claiming a nursery place is 1000 pounds a month which sounds right based on what friends tell me, compared to out capped ~£250 a month in Norway where everyone screams about high taxation but where the cost of living and quality of life are (probably) much higher.

s_kilk• 10 years ago

Agreed, cost of living in the UK (not just London) is steadily climbing while quality-of-life is dropping through the floor.

koralatov• 10 years ago

I live in Aberdeen, and you can definitely add Aberdeen and the surrouding -shire to that list. With the ongoing and very deep cutbacks happening in the oil industry, the prices have stabilised a little, but don't appear to have dropped any.

From speaking with friends and acquaintances with whom I went to Uni, it appears there's a pretty predictable pattern to housing costs: anywhere there's reasonably plentiful work, prices are very high. It's cheap to live in Stoke-on-Trent or Ayr, but good luck getting a job that pays much more than minimum, if you can find even that.

raesene42• 10 years ago

Whilst other areas are expensive London it totally in a league of it's own.

Edinburgh (most expensive part of scotland) average property price £234k. London, average property price £642k

Also people in Scotland and areas like Manchester can more easily get on the property ladder by buying in cheaper nearby areas. for Edinburgh places like West Lothian (average price £164K) make a much easier starting point.

Heck with improving internet access, if you can do your job remotely the western isles are nice and cheap (average price around £100k)

For me the UKs property market is heavily split between London and the south east and "the rest of the country", a lot of the stories about expensive UK property don't seem to cover those aspects.

m-i-l2• 10 years ago

It is an average of £28,000 per year to send two children to nursery in London [0]. In stark contrast, the cheapest house in central Bradford was £29,000 [1], and last year 120 homes in Liverpool were sold (with conditions attached) for £1 each [2].

[0] http://www.thisismoney.co.uk/money/bills/article-2385465/How...

[1] http://www.theguardian.com/uk-news/2015/sep/02/housing-marke...

[2] http://www.bbc.co.uk/news/uk-england-merseyside-34474378

yardie2• 10 years ago

No, they'll just pay the tax while making even more money. For a lot of rich in totalitarian countries the UK, and the US, is their bolthole.

Joeboy• 10 years ago

Why will taxing them mean they make more money? And also why is that a problem? Even if it doesn't improve the housing situation it makes sense to maximise tax income from rich foreign investors.

Disclaimer: I don't know anything about anything and it probably isn't that simple.

tomp5• 10 years ago

that's supply and demand.

It's not just supply and demand. The government is heavily subsidising house purchasing. This essentially means that I'm paying (through high taxes) for homes that I don't live, for people who can't afford them.

m-i-l2• 10 years ago

The government is heavily subsidising house purchasing... I'm paying (through high taxes) for homes that I don't live

How so? Taxes on property purchases, especially in London, generate significant income for the government - according to http://www.standard.co.uk/news/london/stamp-duty-burden-on-l..., London house buyers paid more than £3 billion in stamp duty in 2014, with one London borough (Westminster) contributing more than Scotland, Wales and Northern Ireland put together, and the most expensive London property (in Belgravia) raising more than the whole of Liverpool.

herge• 10 years ago

Hey dang, if this post doesn't get flagged already, perhaps change the link to the original Telegraph article (http://www.telegraph.co.uk/finance/property/news/12155466/On...) instead of the vice news aggregation page.

dang2• 10 years ago

Good catch. (It's better to email hn@ycombinator.com, though, because it's pretty random which of these comments we see.) We changed the URL from http://www.vice.com/en_uk/read/hangover-news-observer-propos... to the Guardian article it points to, which seems marginally more substantive than the Telegraph one.

Submitters: when posting, please follow the HN rules, which ask: Please submit the original source. If a post reports on something found on another site, submit the latter. This does take a little diligence, but only a little, and the benefit to site quality is high.

https://news.ycombinator.com/newsguidelines.html

JamesBaxter• 10 years ago

I feel like I'm burning money renting in London right now. I tried renting somewhere really cheap to save money for a deposit but it made me miserable. Now I spend a lot more and only have to share with one person but I can't save.

tomp5• 10 years ago

The funnies thing is the CPI (inflation index). The weight it assigns to housing/rent is about the same as the weight for "restaurants and hotels", and lower than "recreation and culture" and "transportation". While this might be true for the houseowners and for non-Londoners, for me rent represents about half (!) of my monthly expenditures. Renting "cheap" doesn't really help - even moving a few zones out of the center, rents would for 10-20% at most.

stegosaurus• 10 years ago

Looking at the CPI list now, it appears that the weighting of housing is broken.

It seems that rent is included whilst mortgage interest and imputed interest on equity is not.

The split in the UK is very roughly 33% rental, 33% owned outright, 33% owner occupied.

What that means is that essentially all the other items have roughly triple the weighting that they should - in a rough sense it ends up showing the housing costs of 1/3 of the population, whilst showing all other consumption of 100% of the population.

colinramsay2• 10 years ago

The UK is bringing in a second home tax:

http://uk.reuters.com/article/uk-britain-budget-housing-idUK...

http://www.bbc.co.uk/news/uk-scotland-scotland-politics-3511...

In the town where I live there are a lot of summer homes that are unoccupied in winter. In London, there are obviously a lot of homes that the rich use when they are visiting. This is an extravagance that is affecting the UK as a whole and a second home tax might help a little. I don't think that the above measures go anywhere near far enough though.

yardie2• 10 years ago

Florida makes its money primarily from income tax. If it's your primary residence you can get some tax relief. If its your vacation home you pay the full weight. It hasn't made an appreciable difference in housing prices. Lots of foreign owners know they'll have to cough up a few thousand dollars every year out of their millions of dollars in assets.

toomuchtodo3• 10 years ago

Florida has no income tax. It has a higher sales tax to compensate (and other tourist-related taxes, such as on hotels and rental cars). Our property taxes are very, very low compared to other states though.

You're correct in that you receive an exemption if the property is your primary residence, but you overstate the burden of property taxes on >$1MM residences (its really not that high).

People purchase a high dollar value home in Florida because there is no limit to the value protected from creditors (except notes tied to the house) in the event you're sued or declare bankruptcy (1/2 acre of land or less within a municipality, 160 acres if you're in an unincorporated area).

Source: I'm a Florida resident.

manyxcxi• 10 years ago

I think you mean property tax. Income tax would not have anything to do with their property (unless they were renting it out).

xlm1717• 10 years ago

Florida makes its money primarily from income tax.

You sure? I haven't had state income tax taken out of my pay check in... forever. I'm assuming you meant to type real estate/property tax, though.

petercooper3• 10 years ago

Ah, yes, I'm getting stung by this despite my case not being a target one.

Our house is not selling quickly (it needs "neutralizing" and showing as empty, not packed with a family in it) but we have grossly outgrown it. Luckily we can afford two mortgages so are buying the house we want and doing up the "old" one to sell. So because it's "expanding our portfolio", we'll get to pay the extra tax (some £10K+) although supposedly we can reclaim it if we sell within 18 months. So it's annoying but TBH at this rate I just want to move so que sera.. :-) For people on tight budgets, it's going to kill a lot of options though.

Someone1234• 10 years ago

For people on tight budgets, it's going to kill a lot of options though.

I don't follow this? People on tight budgets cannot afford two concurrent mortgages and WILL sell within 18 months.

petercooper3• 10 years ago

As an aside, this is the first time I've ever seen a -1 score on a HN comment. New HN feature? Even my troll posts have only made it to 0 before, and I'm seeing a -1 on something that's just a statement of fact, haha :-D

TheOtherHobbes2• 10 years ago

The UK is bringing in a second home tax:

To be clear - this is a one-time 3% tax on the purchase price of second/more homes, for both occupation and rental. It's not an annual property tax.

Interestingly, it's waived for corporate landlords with (I think...) at least fifteen properties.

The UK doesn't have property taxes in the way that the US does. There is an annual tax and it is charged on second homes. But it's barely related to market value, so the tax difference between a studio flat (apartment) and a mansion isn't huge.

There are mutterings about a mansion tax on very expensive properties irrespective of occupancy, but they won't come to anything while the Tory party is in power.

walshemj2• 10 years ago

I think councils can increase the council tax for second homes.

lucaspiller• 10 years ago

Even so, paying an extra £12k is a drop in the ocean if you can afford the deposit for a mortgage on a £400k buy-to-let, which will be around £100k.

From 2017 you will no longer be able to reclaim tax from mortgage payments, which should have a bit more of an impact:

http://www.ft.com/cms/s/0/2c0281c4-2570-11e5-9c4e-a775d2b173...

(Paywall, go via Google)

clavalle• 10 years ago

Is this the New Feudalism? The super wealthy buying property from all over the world literally for rent seeking? Will the world become a Company Town?

Is this desirable? Inevitable?

nextos5• 10 years ago

The situation is completely insane. For example, Cambridge used to be a relatively affordable place. Now, rents for 1 bed 50 m^2 flats are in the range of, at least £1200 per month (climbing at a rate of ~£100 / year).

It's sad, because it's a good place to do science in, but everything is really expensive. I come from Scandinavia, and things work much better there and are miles ahead in terms of affordability.

seivan3• 10 years ago

How is Scandinavia better? Queue for years or get scammed on Blocket?

I prefer a free market. At least people can rent out in UK and not get in trouble with the Co-op that only allows one year at a time.

Silhouette• 10 years ago

Cambridge is an excellent example of what's wrong with the UK housing market at the moment. What we need is a range of homes with enough availability to support a range of buyers. What we're getting is super-expensive flats (often with 7-figure prices or close to them) in the city centre aimed squarely at London commuters, combined with new estates built around the edge of the city. New estates typically have conditions attached to their planning consent about providing a certain amount of so-called affordable housing. In reality the developers seem to be able to build the high-end and most profitable houses first, drip-feed them into the market to maintain high prices, and somehow never quite get around to building and selling all the mid- to low-end property that was supposed to be part of the deal.

Until the government changes planning policy to be realistic, such that it's economically attractive for the big homebuilders to build at about twice the rate they are doing at the moment, or it's economically viable for individuals to buy a plot of land and get their own house built as more commonly happens in continental Europe, or both, no amount of tinkering around the edges is going to do anything particularly useful. Schemes like Help to Buy just pump money into the existing system, without actually generating much new housing stock. Token tax rises on second homes bought for letting out won't do anything either, as they'll just get passed on to the tenants through higher rents. And even if they didn't, many UK homes "earn" more than the people living in them, so taking a 3% hit on stamp duty is basically pocket change to professional landlords.

The bottom line is that what we need is lots more homes, but since any change in policy that brings that about will hurt the values of existing homes and/or the profits of the big homebuilders, it seems unlikely we'll see any meaningful change in this direction as long as the Tories are in power. That said, for a variety of reasons I wouldn't bet on the Tories still wielding much practical power in government by the end of the current five-year administration, and housing is the kind of issue that could come back to bite them at election time if we do see another 3-4 years of huge price rises between now and then.

PopsiclePete• 10 years ago

If you think £1200 per month is "insane", never, ever come to SF or NYC....

aninhumer• 10 years ago

Huh? I'm currently renting in a 1 bed 50sqm flat in Cambridge for £750/mo (up £25 over the past year). The only thing I can think is that you're only talking about really central properties? But Cambridge isn't that big, it only takes me 15mins to cycle to the centre.

ziszis• 10 years ago

Not sure Scandinavia is a good example of effective housing policy. Sweden and Stockholm in particular has one of the most severe current housing bubbles in the world. Housing prices have far outpaced GDP growth for several years.

http://www.businessinsider.com/hsbc-sweden-housing-bubble-no...

gaius2• 10 years ago

We could solve a lot of the UK's problems by taxing the crap out of any property whose beneficial owner isn't a UK citizen.

steaminghacker2• 10 years ago

hear hear. the UK is one of the few places in the world that a non-tax resident can buy land freehold. That means the owner pays no tax on gains and no tax on rental income (There's been talk of taxing them but how exactly?).

Here in London, all these new shiny builds with glass and metal balconies are selling (ok about 60%) to rich people overseas who are not UK taxpayers. They like new builds because they can buy off plan without ever seeing the actual property.

eru2• 10 years ago

Just tax away the (deemed) rental income that accrues solely from the value of the underlying land.

No need to discriminate against foreigners. Citizens are just as bad.

Nutmog• 10 years ago

That sounds suspiciously like a political way of blaming some other group that no voter will be a member of so it's pretty safe for politicians.

The fundamental problem is not enough houses, not that UK people aren't xenophobic enough. Just allow developers to build more and prices will come down.

maxerickson2• 10 years ago

Probably only once the property starts voting.

As it stands, residents can do lots of things to make outside ownership unpleasant, at least, once/if they decide that is the best course of action.

(I recall someone mentioning that property owners are the voters somewhere in or around London, but there were close to 0 residents there)

jgroszko• 10 years ago

You're probably thinking of the City of London, which is an area inside London that has it's own government and special privileges apart from the rest of what we think of as London.

https://www.youtube.com/watch?v=z1ROpIKZe-c

maxxxxx• 10 years ago

It's not inevitable but it would require some major changes in policy.

Not sure if it's planned that way but concentrating property is one way for powerful to keep their power in the future. It's pretty safe to assume that in some decades you can have a robot that will be able to provide with your basic needs for free and live autonomously and not have to buy many things anymore. The way to get around this for the powerful is to own the land and intellectual property so people will have to pay rent (tribute?) forever.

This sounds a little extreme but I honestly thinks it's where things are going without major changes.

gozur884• 10 years ago

It's a housing bubble that's going to end the same way all housing bubbles end. Much of this "wealth" is just paper wealth that's going to disappear over the course of a few months.

romanovcode• 10 years ago

Few months? Housing has been on steady increase for the last 10 years.

kamaal2• 10 years ago

>The super wealthy buying property from all over the world literally for rent seeking?

The super wealthy have been buying investment instruments for time immemorial.

>Is this desirable? Inevitable?

The least of evils. Think of yourself as a "temporarily embarrassed millionaire" not as a exploited serf under a feudal, everything will suddenly makes a lot of sense.

Shivetya• 10 years ago

Well one issue that has been pointed out by people who work in this area is the program Help to Buy. Many have claimed that this artificially raised prices of homes because of the guarantees and money built in the system.

The solution as with Vancouver is to ease the cost of building new homes and possibly using targeted property tax relief of those you are seeking to encourage into home ownership.

One other issue is apparently you can actually get a discount on taxation on your other homes if they are furnished because there seems to be some relation to the number of days it is occupied; unless I am just reading that wrong. If so this one area that needs adjusting, reducing tax because you don't actually spend time in the home but it otherwise is unavailable to others should not incur a benefit and if anything encourages buying up second and third homes

jimrandomh2• 10 years ago

This same pattern plays out in most places that're desirable to live. People want to move somewhere, demand for housing goes up, and prices rise because those people compete against each other for the existing housing stock. Ordinarily, this would be addressed by new construction: build enough housing units to meet the demand, and prices will be reasonable.

But construction is controlled by local governments through zoning law, and local governments are controlled by incumbent landlords who want the prices to skyrocket to unreasonable levels. So young people end up paying huge amounts of money to established landlords, while landlords distort the narrative to blame the problem on anything and everything except the lack of construction.

zdkl• 10 years ago

You could do similarly vague postulations about the effect of foreign buy-in of your local real-estate, or the relation between attractiveness/cost per unit of places where replacing existing buildings with denser housing is not desirable for many reasons (historical city centers spring to mind).

(EDIT: Speaking as someone who appreciates european-style preserved city centers, even though they do come with their own bag of problems)

jimrandomh2• 10 years ago

High prices mean there is a shortage. The solution to shortages is to create more, until there is no longer a shortage. Anything else is lame excuses and class warfare, and it has gotten old.

scotty79• 10 years ago

Progressive tax on how much estate you own could help by incentivising some owners to sell their houses the can't or don't rent.

Of course that would cause estate value to drop which is something apparently nobody wants except for poor people (99%).

pc865• 10 years ago

I am not in the 1% by either the income or wealth metrics, and I can assure you that a drop in housing prices would do nothing but hurt my family's net worth.

thaumasiotes• 10 years ago

What use are you getting from the nominal value of your house?

ksec• 10 years ago

I may get downvoted into oblivion, but i will still voice it out.

I read the US exported their Inflation of QE to other countries. And then gets the Chinese to spend buying property all around the world.

Most government are reluctant to act due to worry of popping another housing market like US 2008.

But it is good finally some* are taking notice, given we have 3 HN article the same week on property pricing. But it is likely too late. Those who are now 25 may have some hope to have some things sorted in their prime years. Those who are in their 30s like me will likely have to battle hard just for survival.

For those who don't know where this is going, take a look at Vancouver, Sydney, London, or a place call Hong Kong where many people could only afford to live in 10m2 "flat".

I maintain that unless there is social housing program in place to guarantee every citizen a place for basic living, housing should NOT be an investment options or should at least be heavily taxed / regulated.

dang2• 10 years ago

I may get downvoted into oblivion, but i will still voice it out.

Please edit this kind of thing out of HN comments. It's against the site guidelines (check the bottom of https://news.ycombinator.com/newsguidelines.html), and tarnishes your point.

contingencies5• 10 years ago

HK's answer, post-bubble, was apparently nearly free loans. Now that it's losing business to Shanghai and Guangzhou, and being flooded by mainlanders, we'll see how that goes ...

erispoe• 10 years ago

The problem faced by the UK, and many other countries, is not that people are renters, it's that they have diminishing financial security. Swiss people rent more than any other people in Europe (only 35% homeownership rate) but they are relatively more affluent and being a renter does not impair their ability to save and accumulate assets. Spanish people own their home in a large proportion and I'm sure Swiss people wouldn't trade with them.

Let's not conflate the means with the end. The goal is to make people financially secure, homeownership can be a mean to that but it's far from automatic. In fact homeownership can be a consequence of financial security.

Your home is an incredibly illiquid asset, and you are likely to need to liquidate it at the worst time.

x5n1• 10 years ago

I attribute their affluence to their direct democracy. When you delegate decision making to a oligarchy, they find ways to help their friends nickel and dime you and make you into serfs that are ever easier to exploit for their personal benefit.

clock_tower2• 10 years ago

homeownership can be a consequence of financial security.

_The Old Money Book_ recommends this: first get an income stream (outside of your salary), then divert some of it to pay for a house.

tomwalker• 10 years ago

I agree that homeownership is not the be all and end all for financial security and Switzerland is a great example.

I think the biggest concern is that many young people today will not enjoy the same standard of living as their parents in many categories such as job security, retirement prospects, child bearing, etc

colinramsay2• 10 years ago

In certain parts of the UK people are rejecting the norm and opting to live in boats, caravans, yurts and the like. Many of these people live outside the standard economy and work on a semi-barter system, trading skills, and some are artists who are working with modern systems like Etsy and the internet at large to sell their wares. I think that this is going to become increasingly common over time but it does tend to be younger people doing this; it begs the question of what these people are going to do in their old age when their lifestyle choices means that their savings (and pension contributions) are minimal.

wrong_variable• 10 years ago

Here Here !

As a recent graduate with a cushy programming job in london - I have been thinking strongly living in a van !

Its not because I cannot afford it etc. I hate handing my hard earned money to entitled baby boomers who couldn't get past grade 5.

contingencies5• 10 years ago

In London, cheeky people used to live on canal boats, but even that has become expensive. There are a few great documentaries out there on living small, though mostly US-focused, and mostly "avoid housing regulations by living in a trailer-mounted mini house and calling it a vehicle", there are some interesting exceptions.

Garvey• 10 years ago

Is there anything wrong with that? I lived in Italy for around 2 years and everyone there seemed perfectly happy with renting.

According to this article from The Guardian, it would appear to be similar in France.

http://www.theguardian.com/money/2016/jan/14/why-are-brits-s...

Futurebot2• 10 years ago

Local economic conditions (incomes and rising rents especially) and renter laws aren't equal everywhere. Here in NYC market rate renters can expect 4-10% rent increases a year and can be tossed out for almost any reason whatsoever. In SF they have the Ellis Act. My understanding is that in places like Germany, where renting is common, things are very different (renters are some kind of partial owners of the places they rent, and enjoy much greater protections than in other places.)

In the most difficult US markets, ownership is a lifeboat on a wild economic sea if you can come up with a downpayment or, even better, can buy outright, as rents tend to grow much more slowly than property taxes. This is doubly true if you own an apartment rather than a house and can just pay a maintenance fee rather than dealing with paying for it yourself.

iheartmemcache3• 10 years ago

The German renting market is really interesting. Some reasons contributing to such a low owner rate include, 1: favorable laws in rent control - preventing more than 15% over 3 years (~4% per annum), negating the need to buy to hedge against the risk of huge rent increases[1], 2: the tax policy is structured such that home-owners do not get to deduct things like mortgage interest payments, unlike in the US and Spain, 3: the German banks are inherently risk-adverse and as such have historically been pretty stringent when it comes to lending, 4: in tandem with (3) , there are no government subsidies or programs like the FHA which offers banks the ability to offer mortgages to people with only 3% down.

[1] http://fic.wharton.upenn.edu/fic/papers/03/0301.pdf, Banks' Advantage in Hedging Liquidity Risk: Theory and Evidence from the Commercial Paper Market

Futurebot2• 10 years ago

s/much more slowly/much more quickly/

eterm4• 10 years ago

The UK has few rights for tenants, and those it does have are frequently ignored. If you stick up for your rights you will find yourself homeless.

I am not exaggerating, there is no register of landlords, there are a lot of bad amateur landlords who bought into cheap "buy to let" mortgages. Agents don't stick up for tenants.

Here in England I have lost deposit money because of blu-tacking a poster to a wall. (That was pre TPS but still).

It is a culture where it is stacked against the renter. You don't feel like it is your home. And in many cases it isn't, the problem isn't just about renting,it is also about house sharing.

Lots of what were two bed houses are now 2 separate 2 bed flats (Convert downstairs room and basement to bedrooms, squeeze in extra kitchenette upstairs). The quality of housing is decreasing to match demand.

And even where that hasn't happened you'll find multi - tenancy is common.

draw_down• 10 years ago

There is an old joke - person A says "I wish I had enough money to buy an elephant." Person B replies "What would you do with an elephant?" Person A says "I wouldn't buy one, I just wish I had enough money to."

Before I wrote this comment I saw that less than a third of families in California can afford to buy a home. Perhaps for an individual family we could make the argument that they are somehow better off not buying, but I'm not sure it's a good thing that very few of them actually could if they wanted to.

matthewcford• 10 years ago

Well forget ever buying in London, my rent alone in central London is £2656 ($3800) a month. This flat would be more than £565,000 to buy.

How anyone saves for a deposit, while paying rent - without help from their parents is beyond me.

stuxnet79• 10 years ago

WTF!!? & here I thought Toronto was bad. I'm assuming rents don't get any higher than this right? You must earn a lot although I'm certain the rent erodes a significant amount of your take home, after tax pay.

robk• 10 years ago

That's like 50th percentile for central London for a 2 bed flat.

martinald• 10 years ago

Not expensive at all. Decent standard one beds in an ok area in zone 3 can cost £1500/month easily (about 10km from the centre of London).

keville• 10 years ago

How anyone saves for a deposit, while paying rent [...] is beyond me.

I couldn't agree with this sentiment of confusion more -- especially living in San Francisco, even with a reasonably healthy wage.

contingencies5• 10 years ago

My answer to London was to find a cheap, multi-bedroom flat and sublet the rest. After that I wound up paying about £300/week, or under half what you pay. 2009 Whitechapel, near Brick Lane.

spangry4• 10 years ago

Same problem in Australia. Just to define some terms for non-Australian folk:

- Negative gearing: A deduction received on net rental income losses (e.g. I'm a landlord who pays $100 in loan interest, receives $60 in rent, so I claim a tax deduction of $40)

- Capital gains: I buy a house worth $100,000. A few years later I sell it for $260,000. I've made a capital gain of $160,000.

The under 30s age group receive:

- 1% of total negative gearing tax benefits, whereas the 50+ age group receive 55% (http://www.macrobusiness.com.au/wp-content/uploads/2016/02/S...)

- 2% of capital gains tax benefits, whereas the 50+ age group receives 76% (http://www.macrobusiness.com.au/wp-content/uploads/2016/02/S...)

It's inter-generational theft perpetrated by the baby-boomers, aided and abetted by tax policy. These tax breaks also cause of financial system instability and capital mis-allocation. The tax breaks are regressive: the top 30% highest income households receive 62.2% of total negative gearing tax breaks (http://www.macrobusiness.com.au/wp-content/uploads/2015/04/S...).

Personally, I think the main issue is that the distortionary effect of untaxed land rents are greatly amplified by capital gains tax exemptions. That, and housing market supply inelasticities due to restrictive zoning laws, property transaction taxes (i.e. stamp duty), drip fed land releases by local governments etc.

Eat the young!

PebblesHD3• 10 years ago

The whole situation in Australia is infuriating at the moment. I feel like I'm in a reasonable position for a young professional but I have zero chance of getting any sort of housing security with the way things are now. Between bills and rent at the moment it would take me years to save the amount needed for a deposit, and even then I'd only be able to borrow enough money for a house more than an hour and a half's commute from work each way, which totally defeats the point. I've been willing to forgo a short travel time for a reasonable place to live for years, and it's really starting to get to me. Sadly, remote work is also out of the picture thanks to the sad state of my 'ADSL2' that tops out at 2mbit/s... It's just not a great place to be right now

adventured• 10 years ago

Does Australia have other nice but lower cost markets that off-set the high cost areas like Sydney or Melbourne? What kind of trade-offs does that require?

mahyarm• 10 years ago

If your a software engineer:

Come to Seattle. Reasonable housing costs, cheaper everything else and high american software engineering salaries.

SF has crazy housing costs, higher salaries, better weather and a bit higher cost of everything.

As an Australian a work visa is significantly easier for you than lets say a British citizen.

sien6• 10 years ago

Move to Canberra. Get a 80K job and get a 2 bedroom townhouse with a 15 minute commute to work for 400K.

nikdaheratik• 10 years ago

About the same situation for me in Aus. only I'm living in a rental that's 1-1.5 hrs out. At least I've got NBN. I'd like to blame it all on zoning, debt etc., but I suspect some of it is all that Chinese and other foreign money looking for a safe place offshore.

Still the jobs market beats the pants off of Midwestern U.S. when it comes to software dev.

cmdrfred3• 10 years ago

Social Security in the US is very similar, for many years before I was born politicians elected by my parents and grandparents generation voted to take money from the federal retirement program and pass them ahead as lower taxes for my parents and grandparents. Now they are all standing around with their hands out asking "Where is my retirement? Lets raise taxes to fund it!".

hackerboos4• 10 years ago

Who's talking about raising taxes?

poof131• 10 years ago

Agree 100%.

It’s frowned upon to talk about this as a generational thing, but it very much is. Debt is the instrument to have now and pay later, and the debt burden is rampant everywhere. Modern economics has essentially disregarded the role of debt in the economy.[1] All our government institutions seem hell bent on maintaining asset prices at any cost.[2] There’s no sensible plan to even remotely reign in government debt. The world’s stuck at zero percent interest rates, handing out money to the politically connected, and growth is still anemic. Even at low rates people can hardly afford to buy anything since asset prices are so inflated.

I would like to believe we can deal with this in a reasonable fashion, but am skeptical. As can already be seen by the U.S. elections and elsewhere, populism is rearing it’s head on both the left and the right. It feels like a storm is on the horizon and I only hope it doesn’t devolve into war.

[1] http://blogs.lse.ac.uk/politicsandpolicy/ignoring-the-role-o...

[2] http://blogs.lse.ac.uk/politicsandpolicy/ignoring-the-role-o...

spangry4• 10 years ago

Pretty much spot on, on every point. I've been starting to worry about the whole 'war' possibility as well. We might find out about the latter in a couple of weeks when the Saudis and about 10 other allies conduct massive 'training exercises' on the Syrian border.

On the bright-side, even the most conventional institutional macro-economists are finally acknowledging these problems: http://www.bis.org/speeches/sp160210_slides.pdf

FYI the Bank of International Settlements is 'the Central Bankers' Bank', and the slides are from a speech given by its 'Head of Monetary and Economic Department'. The last dot point on the 'summary' slide (#2) really jumps out:

   "Need to abandon debt-fuelled growth model"

Florin_Andrei2• 10 years ago

Personally, I think the main issue is that the distortionary effect of untaxed land rents are greatly amplified by capital gains tax exemptions.

Personally, I think the main issue is greed unchecked.

brbsix2• 10 years ago

The thing is, in a free market, greed is checked. IRS, not so much.

vacri4• 10 years ago

So, one thing these gen-Y-complains-about-the-boomers screeds always miss is how life was for the boomers at the same age. Home ownership also wasn't huge when the boomers were 20something. I'm a gen-Xer myself, and I always find it amusing when someone just out of tertiary education is complaining that they don't have the accumulated wealth of someone in their 50s, who has been working for the past few decades; that people somehow find it wrong that someone who has barely started their working life somehow doesn't own a string of properties.

Keep in mind also that negative gearing was brought in to try and stimulate house-building. It has overstayed it's purpose, but it wasn't brought in as a 'fuck the young' measure.

fratlas3• 10 years ago

No, we're complaining about baby boomers complaining that we just need to "work harder". The cost of houses (relative to inflation/wages) in their 20-30's was multitudes cheaper. Anyone who thinks the young have it nearly as good as baby boomers hasn't done the maths.

spangry4• 10 years ago

Actually I think the main cause is overly concessional capital gains tax discounts, which are exacerbated by, and amplify, the effects of untaxed land rents. By any conceivable measure, including price to personal income, residential property is about 4-5 times more expensive compared to 15 years ago.

See: http://i.imgur.com/t0RYpOo.png

The second graph is especially telling. The value of an investment asset is determined by how much income it is expected to produce in the future. Yet even though rents (i.e. the return to property) stayed flat, the price of the asset quadrupled.

And no, at the time it was brought in it wasn't intended as a 'fuck the young' measure. It was more, 'fuck the poor'. However, a 15 year head start on wealth accumulation and a selfish refusal by the baby-boomers to entertain the idea of fixing this glaring inequity (among many others) means it has since morphed in to 'fuck the young'.

And I don't want to own a string of properties. I just want to own one. I like the idea of owning my own shelter, as a form of insurance against homelessness.

contingencies5• 10 years ago

As an Australian, I came to say the same thing. I have one of the highest income brackets in Australia, when I choose to work. But currently I choose live in China. Renting. Why? All the reasons you mentioned, but also one big one...

Owing to the shorter engagement norm with any given employer, and the constant acceleration of change through technology, we cannot bet against entropy (unemployed, economy has tanked, etc.) as surely we once did. This is particularly the case for singles, who are faced with the entire gambit themselves, whereas traditionally more people were in partnerships which would effectively halve the chances of a particularly 'bad run', as it were.

In short, not only is it unaffordable, but the degree to which one takes ones chances even when committing to a long-term attempt at investment has increased significantly.

In my family, which is probably representative of upper middle class Australia, my brother has taken the conventional route and worked his ass off for most of a decade, and now has the deposit down and a fat mortgage on a shoebox with a view ... in conjunction with his 10-year long-term partner (they are unmarried). I on the other hand have studiously avoided such a commitment, living a year in London, a year in Hollywood, a year in Bangkok, traveling the world, seeing the Arab Spring first hand, spending months on end in 5 star hotels, having a family, and spending the rest of my time here in China, where I play with expensive toys like sailboats. In the end, out net worth is the same.

Most of my friends from youth in Australia, who are generally also higher income bracket people, are still unable to buy property or are locked in seemingly loveless relationships just to get past mortgage go.

My 'uncle' (actually somewhat more distant) recently sold the highest value property ever recorded in Melbourne (Toorak). He is the ex chairman of the board for Rothschild in the region, as well as ex-CEO of famous companies. When I last saw him, he said something is fundamentally broken in Australia, because his kids couldn't afford the downpayment on a house without his help (they have literally had all the opportunities you can pay for, and are not doing badly).

In Europe, the will to own is commonly seen as dissipated, in fact in Italy it has sunk so low as to be replaced by "the will to live away from one's parents", which many, many 30-something can ill-afford.

The world has changed. Travel gives you perspective. Individual countries, policies regardless, may have extreme difficulty changing this new reality. I say cheat. Leave your homeland, enjoy the differences. We are too intelligent to live stuck in a box. Eat someone else's young, or at least get drunk with them.

dilemma• 10 years ago

I'm in China for the same reasons, and to start a company. European, not Australian.

Gustomaximus2• 10 years ago

I know how hated negative gearing is in Australia but I believe removing this is solving the wrong problem and may exacerbate the top end owning a greater proportion of real estate over the longer term. It;'s a different view but hear me out.

Once negative gearing is removed, the wealthy can simply debt shift against asset classes that still allow negative gearing. e.g shares. The very wealthy have this asset base to increase debt ratios against share type assets, then buying property for that cash borrowed, effectively leaving them with the same negative geared net benefit just more higher leveraged against shares (and likely debt covenants against the property for collateral). Meanwhile the middle class can never do that so you just knocked them out of the property investment game reducing competition for the wealthy.

Secondly, removing negative gearing doesn't stop property hoarding of all those people that own a bunch of houses debt free.

Ultimately I believe the goal should be to allow people to own a home if they wish, and this group should always have a financial advantage to doing so over someone simply investing/spectating as residential property should not be a speculative asset class.

The best way to solve investment hoarding of residential property is to remove/reduce land tax on owner occupied houses, and place a premium % land tax on investment properties. This will influence people buying both with and without debt. Further it will be easier for government to increase/decrease the % land tax differential to get the ratio right between investment opportunity and not overheating the market. Whilst Removing negative gearing is a one time move.

I'd also look to do the same deal for farmland or we're likely to find rural Australia largely owned by corporate interests over the next couple of generations.

spronkey• 10 years ago

If you remove negative gearing for property investment in isolation, sure, agreed. But I think there are ways via taxation and other policy to effectively nullify any advantages to shifting to assets such as shares.

I mean, the general problem you describe is that money creates means, to create more money. How do you solve this problem now that existing policies have resulted in a skewed distribution of existing money?

Absolutely agree though that owner occupied houses should be massively incentivised compared to investment properties. IMO it's advantageous for society to have most people owning property. I think a good goal would be to have most people both owning property, and not being cash-poor at the same time.

stevetrewick• 10 years ago

theft

Alice takes some of Bob's property without Bob's permission and with the intent to permanently deprive him of it. Alice is a thief.

adaml_623• 10 years ago

Alice forces Bob to pay more than his fair share of a shared asset. Alice is committing ?fraud?

thesimon2• 10 years ago

Grace Dent writes for the Independent how "for the average person, marrying into property will be your best shot at 'owning it'"

http://www.independent.co.uk/voices/the-housing-crisis-is-cr...

Crazy.

But to be honest, why is everyone focused on buying a house? Does everyone want to own a house, 1.7 kids and a car or where does the need to buy instead of renting come from? Maybe I'm missing something, but the flexibility of renting seems a lot bigger advantage than the small advantages of owning a house.

cmdrfred3• 10 years ago

Depends I guess, for me I want to lower my cost of living in old age and not paying rent is a big factor in that.

NikolaeVarius• 10 years ago

You would probably come out far ahead taking the money you would have paid on the down payment and house maintainance and invested in the stock market.

Tends to be much MUCH better return wise versus homes.

undersuit• 10 years ago

Some places it's worth to own. You may be paying the bank for a few years, but the bank isn't setting rules like no smoking, walkthroughs to enforce compliance, no additional tenets, or "non-refundable pet security deposits." If you are going to live in one place you might just be better off throwing the same amount of money at the bank instead of at the landlord.

sehutson• 10 years ago

It's not always about buying into the norm or just having an investment - there are a lot of compelling reasons to want a house.

-More choices in terms of size, acreage, architectural features -No worry about landlords disapproving of your lifestyle, no drop-ins and inspections, etc. (I knew someone whose landlord let her cat out and it was missing for weeks) -You can change your property to suit your tastes -The only pet limits are those imposed by your government -With a fixed rate mortgage, your monthly costs stay basically the same. Yes, there are repairs, but you can save up for that and postpone many things in a pinch. Except in extreme cases coupled with poor emergency savings, rising property values are unlikely to push you out of your home (and if they do, you get something for it). With rent, your landlord can raise the price and you have no choice but to pay it or move out. -You can get attached. Some people just like that feeling of having roots, and there's nothing wrong with that preference.

mschuster913• 10 years ago

-No worry about landlords disapproving of your lifestyle, no drop-ins and inspections, etc.

In Germany, "inspections" are flat out illegal except in very strictly regulated circumstances.

The only pet limits are those imposed by your government

Not true either. Just look at the HOA crap in America. Worse than government, in fact. Laws at least have to act like they've been passed by a democracy and stand up to judicial review, HOA decisions more often than not are pretty much final.

With a fixed rate mortgage, your monthly costs stay basically the same

Good luck getting a long term fixed rate mortgage.

With rent, your landlord can raise the price and you have no choice but to pay it or move out

That is what regulation is for: in Germany, there are laws limiting rent raises.

jonesb6• 10 years ago

I think the biggest reason is that in most Western markets buying a home is a fantastic investment. In the Bay Area at least it lead a lot of families to a good pile of generational wealth.

monk_e_boy2• 10 years ago

Most people my parents age purchased a house, waited a few years and it doubled in price. Then they kept doing that until most of them are in £500,000 houses having paid off their mortgage.

So the pressure from them to their kids 'invest in houses' is very big. After all, house prices always go up.

I worked it out for my Uncle and he was making more on his house price going up than in his job (for a couple of years.)

You can't do up a renter. Most people want to 'nest' or have different requirements from a home than the renter has. Got a baby? Need a baby room. Go surfing? Need a surfboard storage room. Want to paint over the mould? Need permission from landlord.

And where I live no one rents out houses. So renters just can't live here.

majewsky• 10 years ago

looks up "mould" in dictionary

Do you mean the fungi that spread on wet walls? Because I would consider just painting over these a very bad idea.

st3v3r2• 10 years ago

Most rentals, you can't do anything to. So if you want to modify or change the place a little bit, you can't.

grecy3• 10 years ago

On the upside, if the place is modified outside your control (weather, damage, wears out, trees, etc) you don't have to pay for it

analog31• 10 years ago

The flexibility of renting is also the landlord's flexibility, and I could get kicked out of a rental.

Where I live is almost magically optimized -- My spouse and I can both commute to work without driving or parking a car. We're within walking distance of shops. Our kids are guaranteed of attending good schools. It would suck to be displaced from that situation.

Turning things around, why would you want to be a landlord? I'm my own landlord, I collect "imputed rent" from myself, and I have perfect tenants. ;-) Of course being a landlord has some risks, but if I had to move, I'd probably keep my existing house and rent it out.

duaneb• 10 years ago

the flexibility of renting seems a lot bigger advantage than the small advantages of owning a house.

Sure, until you consider the flexibility other have to do stuff with your apartment (or house, I guess?). There is no guarantee of stability.

s_q_b• 10 years ago

There is a massive fiscal advantage in owning vs. renting, because payments toward ownership build capital.

Let's take two scenarios:

(A) In scenario A, you pay rent on an apartment for $5000 per month.

(B) In scenario B, you pay a fixed-rate mortgage on a residence in the amount of $5000 per month.

Therefore:

In scenario A, you are essentially taking $5k and setting it on fire once a month.

In scenario B, you are paying that money toward a share of the property's ownership.

So instead of setting it on fire, you're gaining $5k of equity in the property.

YZF• 10 years ago

It doesn't work quite like that. Here are the economics in my area:

- Buy $1.2M - Rent $1800 a month. By law rent can only be increased a limited amount every year (and it's never been increased for me).

The landlord is getting 1.8% return on his money before his maintenance expenses, taxes, etc.

The only scenario this makes any sense is interest rates remain at 0% for the next 30 years. Even in this case it's not clear that house prices can keep appreciating at the same rate. Unless we go negative rates.

If I have 1.2M in cash why would I buy this house instead of renting? I'm taking a big risk with a lot of money. It's true that over the last 10-20 years people who have taken this bet came usually ahead (except in some parts of the US) but it's still a huge risk.

meric3• 10 years ago

What about interest? What about property price falls during housing downturns (it will happen). Interest is equivalent to setting it on fire IMO.

mrec2• 10 years ago

That's the shoeshine-boy story: "you can't go wrong with bricks and mortar". Coming at the end of a decades-long rise in leverage it's easy to see why people swallow it without too much examination, but the Great Unwinding is arguably upon us, and you're assuming (and ignoring) a whole bunch of things.

because payments toward ownership build capital

Money invested outside of property also builds capital. Money not spent on mortgage interest builds capital. Money not spent on maintenance builds capital. Money not spent on property transaction-related costs (surveys, legal fees, Stamp Duty in the UK) builds capital. Owning property when a major housing bubble collapses burns capital faster than your wildest dreams. (Not everywhere has a housing bubble at the moment, but an awful lot of places do.)

Obviously you can argue with a lot of that, but the picture is nowhere near as clear-cut as you're making out.

kazinator7• 10 years ago

How the heck are you getting 5K equity from a 5K mortgage payment? The loan would have to be at zero interest. But your point stands otherwise.

hackerboos4• 10 years ago

But to be honest, why is everyone focused on buying a house?

Because rental laws in the UK offer no long term stability. See a previous comment I made.

https://news.ycombinator.com/item?id=10916002

paulddraper5• 10 years ago

flexibility of renting seems a lot bigger advantage than the small advantages of owning a house

Want to paint a wall? Own a pet? Add a garage? Replace your grass with desert cactus? Build an extension? Knock a hole in the ceiling so you can hang upside down like a bat from the rafters? Build a dirt bike track in your backyard?

Owning is nothing if not flexible.

At the very least, you should agree that describing "flexibility" as a characteristic of renting alone is a incomplete summary of the situation.

kazinator7• 10 years ago

What flexibility of renting?

Let's talk moves. Every month, renters play a stressful game of "musical homes": they have to move in a single day. Those that are lucky happen to be moving to a place that has been vacant for some time, and can negotiate a head start to start moving there before their official move-in date.

Owners negotiate possession dates, giving themselves comfortable time zones for moving gradually, and can write clauses into contracts like "we will buy this place, pending the sale of our current place".

Payments. Many people who own have a mortage. But you can shop around for a mortgage independently of the property you're moving into. Mortgages have flexibility. They can be moved to a new property ("portability"). How many landlords offer "skip a payment" feature in the rent?

viraptor3• 10 years ago

Every month, renters play a stressful game of "musical homes": they have to move in a single day.

Why do they do that? I always took at least 3-4 days overlap between the rent on the old and new place. Assumed that's what normally happens.

dclowd99013• 10 years ago

It's a way to build wealth. If you're renting, you're building someone else's wealth.

vinceguidry2• 10 years ago

I hate this argument, even though I prefer to buy as well. Buy food rather than grow your own? You're building someone else's wealth.

Also, mortgage interest is no joke and is never accounted for in these rationalizations.

InclinedPlane• 10 years ago

Owning a house is a significant life change (not just having a mortgage, that's just a stage along the way to ownership). For one, it significantly cuts down your expenses and opens up your options, giving you a ton of freedom.

Want to take a long time off from work (either a sabbatical or by being between jobs)? Good luck doing that if you have huge monthly expenses. If your expenses are instead hundreds of dollars a month instead of thousands, then it's a lot easier to save up for a 4 month hike of the Appalachian Trail, or a month long trip to explore Europe or Japan or Southeast Asia or to travel around the US or whatever. Or to spend a year concentrating on shifting careers or focusing on a hobby (or turning a hobby into a career) or volunteering or raising your kids. Or, for that matter, just taking full advantage of your vacation time.

Also, owning a home is great for investing. For the first several years not much will change, but then you'll start building equity, after that you'll be well into the "market proof equity" range. But after you've paid off your mortgage you'll likely not be retired, so now you have massive amounts of cash ballooning out your savings and investments.

All of this is predicated on actually paying off that mortgage and building positive equity, which is not always going to be easy and may not be the most reasonable economic choice depending on the housing market and one's income. But if you can manage it then it can have tremendous benefits.

nommm-nommm4• 10 years ago

Maybe I'm missing something, but the flexibility of renting seems a lot bigger advantage than the small advantages of owning a house.

This varies a lot.

I don't actually care to own a house too much but we are going to buy one soon because the rental market in my area has gone in-fucking-sane in the last few years so its ao much cheaper to own in my neighborhood, I'm basically lighting dollar bills on fire every month with how inflated rents are.

Oh, and landlords are so stupid. We are model tenants, both very high income... but we have a cat so we are ineligible to rent 90% of properties, no exceptions.

That is because it is a landlord's market right now.

I don't think governments have any business promoting home ownership though and society shouldn't make you feel like you didn't "make it" until you are strapped with a mortgage you can't afford.

ionised2• 10 years ago

I could do with a car, but the house and kids I don't need.

mschuster913• 10 years ago

Hmmm... biggest shortage of housing is in the London area, I guess?

This is due to people parking their funds in real estate because interest rates anywhere in the stock market are basically zero when compared to real estate, and because transferring ownership of an estate holding company is a pretty nice way to launder/transfer money.

I'd propose a law that makes it illegal for an estate owner in housing-crisis areas to leave a home un-occupied for over 4 months a year; if this is not the case the state is allowed to choose an arbitrary person and let him rent the apartment at a rate similar to the non-luxury-housing market.

In Germany, in some areas this law is already in effect (e.g. http://www.hamburg.de/contentblob/3999156/data/hamburgisches...). The legal foundation for these laws is in the Grundgesetz: "Eigentum verpflichtet. Sein Gebrauch soll zugleich dem Wohle der Allgemeinheit dienen.", which basically means that if you have the privilege of owning something, you have to contribute to common wealth with it.

autotune• 10 years ago

How do you determine that someone has occupied the home before 4 months? How long should the length of the stay be? If some ridiculously rich person has a bunch of houses, this would mean they just need to visit each house once every 4 months, or send someone to do it, which for the people lucky enough to own a home in London I can't imagine being difficult.

mschuster913• 10 years ago

How do you determine that someone has occupied the home before 4 months?

Make the owner register his primary residence. I forgot not every country has something like we Germans have with the Meldewesen.

Seriously, using utility bills as proofs of residence... what a load of ...

paulddraper5• 10 years ago

So...you can't have a summer home? Ever?

And if no one uses a timeshare over the winter they lose it?

Taken literally, this seems horrible.

I'm assuming that the tenant gets rights and you can't just walk in and kick them out.

dragonwriter2• 10 years ago

So...you can't have a summer home? Ever?

Reading grandparent post, sure, you could, but if it was in a housing crisis area, the government would be empowered to appropriate it for the purpose of renting it out at rates comparable to non-luxury housing (presumably, with you receiving the proceeds of the rent.)

Clearly, such a rule would need an objective definition of "housing crisis", but the temporary seizure of property with compensation this proposes is actually fairly mild compared to the way critical resources are generally treated in times of genuine crisis.

dclowd99013• 10 years ago

This may be an astonishing question, but Why do you need a summer home? Seems like an incredible waste of resources, natural or otherwise.

Radim• 10 years ago

Right. Let's give government the right to check on people, see where they live, where they sleep, for how long. Hell, let's throw "with whom" in there as well, why not, honest people have nothing to hide.

And if the secret police don't like something, they'll take over your property and put "an arbitrary person" in there. Brilliant.

mschuster91, I don't know if this is really acceptable in Germany, but I downvoted your post because I find the proposition in(s)ane and harmful.

gozur884• 10 years ago

When I graduated from college you'd see exactly this sort of article in the paper every so often. And indeed, at the time the 20% downpayment for a house was going up faster than I could save money. And then the housing market collapsed and I bought a house.

Over long periods of time housing only goes up about as fast as inflation. Younger people in the UK are not facing "becoming permanent renters". They're just facing a bubble, for the time being, that will produce lots of bargain prices when it pops.

eterm4• 10 years ago

That's not true, certainly not in the south east. The bubble never burst here, house prices have been growing faster than inflation for decades.

Politically it is now impossible to let it burst, so all sorts of schemes are made up to keep it going.

Edit to add: a typical 2 bedroom terrace or end of terrace now costs between £350-500k ($500-700k) here. These are not large homes, don't have luxurious gardens, don't have a garage at all. This isn't even London, this is just outside London in the south east. And wages haven't kept up.

Imagine San Francisco house prices without San Francisco wages, that's why people are talking about a generation of renters.

mjevans• 10 years ago

This concisely points out exactly why we never recovered from the great recession of our time. It is politically beneficial to obey the rich paying for their campaigns, and placate the voters, then to deliver the harsh correction for bad behavior that a controlled lancing of the bubble would involve.

objclxt• 10 years ago

Imagine San Francisco house prices without San Francisco wages, that's why people are talking about a generation of renters.

As someone who lives in both cities, I can assure you that San Francisco is measurably worse. Before I moved here from London I didn't think that was possible.

Directly comparing the advertised prices of housing in London and SF is misleading, because houses in SF in most cases are being sold above their sticker price, whereas that's still very uncommon in London. It is not unheard of to pay a 30% premium on the price the seller has put the house on for in SF. For renters London also isn't nearly as bad: for comparison - an average one bed rent in SF is $3,500 per month [1], whereas in London even in central areas like Bloomsbury it's $2,500 per month (£1700).

This is not to detract from your argument, and SF also has a "generation rent" problem (as does the rest of the bay area). But London's market is more comparable to New York in terms of prices and pressures - both cities have a housing crisis, but one that is at least partly tempered by more supply and a far superior transport network than SF. SF is in an insane world of its own.

[1] http://www.sfgate.com/bayarea/article/San-Francisco-rent-cos... [2]: http://www.londonpropertywatch.co.uk/average_rental_prices.h...

taneq• 10 years ago

They're just facing a bubble, for the time being, that will produce lots of bargain prices when it pops.

All those 'old people' who we complain about are going to start dropping off the perch sooner or later. That's when the bubble will really burst.

gozur884• 10 years ago

No, that won't do it. As long as people think the market is still going up, when old people "start dropping off the perch" their property will be be snapped up at a premium.

The price of property can't keep going up indefinitely. When it stops going up, speculators will start to dump their stock, and that will turn into a panic.

bane11• 10 years ago

Here's an oldie but a goodie that I refer people to on this topic http://assayviaessay.blogspot.com/2014/04/rent-or-buy.html

guy_c• 10 years ago

Firstly there seems an inherent bias that young people want to be homeowners and not being a homeowner is bad for people. My first reaction to "Under-35s in the UK face becoming permanent renters, warns thinktank" is, "So what?". We are not talking about people being homeless.

Also I think lots of these reports never make any mention of demographic changes over time. The 35 year old of 1998 is likely to be a very different person to the 35 years of 2026.

In the 18 years since 1998 we have seen university attendance increase from 25% to 33%. We have seen the cost of university education increase, so most graduates now carry more debt. I suspect we've seen an increase in the average age of marriage. Probably also a reduction in marriage and number of people that are having children by 35.

pcardh0• 10 years ago

Thank god I am 48.

boredatnight12• 10 years ago

Phew. Wait! I'm still renting a flat.

kamaal2• 10 years ago

Don't want to rub salt of people's wounds here, but remember when you guys screamed on the top of your voices that real estate was a bad instrument. This is basically what happens when you follow that line of thinking, when your demands start popping up later in life you realize you could have easily made those investments a few years back, but you didn't. And may be even watch people who made far lesser than you in salary having better house than you.

May be if these under-35's had saved some money instead of blowing it all on "enjoying their lives", "travelling the world" and on those new iPhone models every year they would have a decent sum for a downpayment somewhere in the out skirts.

Also note that most landlords themselves probably went through hell to build themselves this portfolio for their rainy days.

If you think you can't buy yourself a home, you need to drastically rethink your priorities. Because like it or not, anytime is the best time for these things. Its about timing, location and money. Earlier you buy, the better place and lesser price you get to buy. For the perspective of the next decade now is the right time.

You an tax the rich as much as you won't, no matter anywhere in the world. Most of these people will never come to own a home. The true reason why these people can't afford a home is not because its expensive, but because they refuse to commit themselves to any kind of a long struggle, that doesn't interfere with the privileges they think they are entitled too.

Under-35s in the UK face becoming permanent renters, warns thinktank

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