By News Team
The Bank of England should ensure that average house prices rise no more than average incomes. That was the proposed magic wand for generational unfairness waved this week by a think tank, Civitas. Its report claims the baby-boomer generation are “making capital gains at the expense of their children” (though in most cases it is surely at the expense of other people’s children…..)
It is the latest report to home in on the now burning issue of how older people benefit from house-price growth while the millennials are forced either to pay huge rents or service large mortgages.
Civitas says between 2000 and 2014, average earnings rose by 51%, but average house prices by 132%, so that “the younger generation is now expected to pay a much bigger multiple of its earnings to buy a home than their parents did – something that never happened previously”.
The think tank’s radical proposals include requiring the Bank of England, somehow, to “ensure that average house prices remain linked to average incomes”.
It also suggests giving tenants of private landlords a “right to buy”, like council tenants, an idea already mooted by Labour leader Jeremy Corbyn.
How landlords would respond to that is unknown – they are already facing a barrage of extra costs in the withdrawal of mortgage interest tax relief, other tax breaks, and a stamp duty surcharge.
Meanwhile another study on ‘Generation Rent’ has focused on how the bind on young people is “hindering their transition to adulthood”.
A paper in the Journal of Youth Studies finds that those living in expensive and/or rural areas may find it particularly difficult to ‘settle down’, and that a lack of a stable home environment is inhibiting their development as adults.
The researchers say many young people who flit from one tenancy to the next feel unable to fully meet their ‘home’ and security goals, which leaves them feeling thwarted.
Rhona, 29, told them: “I feel particularly frustrated with having been in rented accommodation for so long and having to move on every year – it’s difficult to put down roots and it’s just got really expensive.”
Sarah, 25, said: “We do want to have a family, we do want to get married, there are not going to be any of those things unless we have a solid house!”
The report noted that job opportunities and income security were closely related to the housing pressures, and also militated against settling down in one place.
A Scottish survey just out has discovered that over half of 18-24 year olds believe that university education is a good idea, despite the cost. But that optimism reduces as graduates get older, with only a third of 25 to 34 year olds believing it was worth it, and even fewer of 35 to 44 year olds, according to Bank of Scotland’s latest How Scotland Lives report.
Geography and job opportunity played a big part, with 46 per cent of respondents in the north-east of Scotland agreeing that the cost was worth it, but only 22per cent in mid-Scotland.
Meanwhile, a quarter of 18 to 24 year olds across the UK are say that they are behind with their council tax, Debt Advisory Centre has found.
Rising housing costs are the main driver of this – with 44% of those young people in council tax arrears saying that they put the money towards their rent instead.