Wealth more by luck than judgement?
It struck me recently that 40’s & 50 something’s tend to consider themselves as property magnates, cigar in one hand, white cat in the other, but truthfully many of us have just been really lucky! Back in the early 80’s the average price of a detached house was ￡45,000 so it doesn’t take a genius to buy it, live in it for 35 years and sell it for ￡366,000 (the average price of a detached property in Jan 2018) representing a whopping 713% increase!
Many of us (not me!) will also have a final salary pension defined as ‘The benefits you receive at retirement are based on your earnings and your length of membership in the scheme’ possibly receiving three quarters of your leaving salary, providing nobody ran off with it and left a little IOU in the safe saying ‘all the money is gone, sorry LOL!’
Many will be eligible to take a state pension of ￡8,500 a year, a winter fuel payment and have access to free NHS medical cover until the day they die. Not quite Norway with a first class 'cradle to grave' system but a great deal nonetheless?
Since Margaret Thatcher thought it was a fantastic idea to sell off all the council houses and we don’t build nearly enough new homes to satisfy the growing demand, the ones we do build get ever smaller and the prices keep going up. Developers buy land and sit on it building just enough homes to make sure they are all sold as soon as a footing is laid.
In 1960, the average first-time buyer was just 23 years old, paying a deposit of ￡595 on their first home – the equivalent of around ￡12,738 today. Most first time buyers of today are over 30 and need in excess of ￡20,000 as a deposit. in 1930 a three bedroomed semi could be bought outright for ￡500 with a ￡5 deposit but average earnings were about ￡165 a YEAR!
So what of teenagers, twenty or even 30 somethings that aspire to work hard, get on in the Country and have families, all the normal everyday stuff?
Now, I don’t live in an ivory tower (its jade actually!) but I know some teenagers, twenty and 30 somethings and its tough, particularly if you live in the southeast and do a ‘normal’ job with a UK average salary of ￡27,600 with an average rent of ￡924 a month! Saving a ￡20K deposit is going to be ‘challenging’ to say the least.
None of this is a surprise to any of you is it? and it’s been happening for decades! Just think yourself lucky if you are old and wrinkly with a property portfolio forming a buy to let empire, just spare a thought for those that are coming out of school thinking how daunting it all seems.
Sources information courtesy of:
Economicshelp.org, The Guardian, Homelet