A discussion I overheard in a coffee shop yesterday was taking place regarding how millennials believe the older generation (55-75 year-olds) have messed things up for them in terms of getting on the Tameside 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 Tameside household income was just under £6,000 per annum and the average Tameside house price was £17,650; whilst today, the average Tameside household income is £28,928 per annum, yet the average household value is £168,256. What does this mean?
The average value of a Tameside home was 2.94 times more than the average household income in 1980 compared to today, where it is 5.94 times a Tameside household income.
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 used housing as a ‘vote getter’, mentioning stats such as in 1981 there were 5.1 million council houses and today that stands at 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’ became 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).
In 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.
The older generation 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.
What some people seem to forget is whilst Tameside 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 Tameside the mortgage accounts for 35.3% of the household income (assuming a single income) compared to 50.4% in 1980.
Things were much tougher for homeowners in 1980s.
|Monthly mortgage payments in that year's prices||Monthly mortgage payments in that today's prices (inflation)||Percentage of monthly salary|
The issue here is something much deeper. The older generation 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 tothe pub 3 times a week and buying the latest iPhone or suchlike; whilst millennials accuse the ‘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 of Tameside’s older generation are trying their best to help out their now grown up children with a deposit. They are fully aware of current Tameside house prices compared to when they bought their own homes.
As always, if you’re looking for more information on the Tameside property market or for help with investment properties in the borough, my office door is always open for a chat and a coffee. Alternatively, I’m always available on the other end of the phone; just give me a call on 07709 505 442.