Recently I was having a chat with a second cousin at a big family get-together. The last time I saw them their children were in their early teens. Now their children are all grown up, have partners, dogs and children. Time flies!
Over a glass of lemonade I talked with my cousin and a couple of their children mentioning the times when interest rates were at 15%, there was a three day week, 20% inflation and the threat of nuclear annihilation! Foolishly, I said with all the opportunities that youngsters have today that they have never had it so good!
Trust one of my cousin’s children to have gained some financial/economics qualifications before attending law school. I received some pushback – they debated with me the genuine economic predicament faced by millenials and argued how a combination of student debt, unemployment, global proliferation, EU migration and rising house values is reducing the salaries and outlook of masses of the UK’s younger generation. They claimed that this has caused an unparalleled disparity of wealth between the generations.
So of course I asked why that was.
The argument: it’s millenials who are paying the price!
They said millennials were paying the price for the UK’s most spectacular bookkeeping catastrophe to date (bigger than the Bank bailout after the Credit Crunch).
Back in the 1950s and 1960s nobody predicted us Brit’s would live as long as we do today and in such abundant numbers. The OAP pensions that were promised in the past (be that Government State Pension or Company Final Salary Schemes) which appeared to be nothing fancy at the time, are now burdensomely over-lavish, and that is hurting the millennials of today and will do so for years to come.
Bringing it back to property, this ‘soon-to-be’ lawyer’s argument was that baby boomers born between 1945 and 1965 have been big recipients of the vast rising house prices between the 1970s and early 2000s. Add to that their decent pensions, meaning cumulatively, their wealth has grown exponentially through no skill of their own.
This disparity of wealth between the older and younger generations could have unparalleled consequences for the living standards of younger millennials…
So, do we actually have a problem?
Well Rotherham Property Blog readers, you know that I like a challenge!
I can’t disagree with some of what the younger family member said, but there are always two sides to every story, so I thought I would do some homework on the matter.
Since 1990, the average value of a property in Rotherham has risen from £57,000 to its current level of £138,700. As there are a total of 25,626 homeowners aged over 50 in Rotherham – that means there has been a £2.09bn windfall for those Rotherham homeowners fortunate enough to own their own homes during the property boom of the 1990s and early 2000s.
I must admit that the growth in property values in the 1990s and 2000s has certainly helped many of Rotherham’s baby boomers.
The figures do appear to put into reverse gear the perceived wisdom that each generation gets wealthier than the previous one… and so with all this wealth, the figures do back up the youngsters argument that millennials are being priced out of home ownership.
Or are they?
Are millennials being priced out of home ownership?
Next week I’ll post my next blog carrying on this discussion.