beeswax wrote: Charlottesquare wrote:
No, it was always tough buying your first house as I did in in 1968 for about 2900 pounds and the mortgage and rates took half my income and remember we could not afford cheap garden tools and borrowed some to do the garden. I also had a weekend job collecting TV rents...PLus an old banger car that had virtually rotted away. I now see quite young couples living in detached houses with two cars in the drive..
But what I wanted to say is the increase in house prices is no use if then you have to pay the same or more for another house and no doubt your dad did the same when he moved...They are only ever useful if you move abroad for something cheaper or you die and leave it to your kids. Anyway the LA will take it if you need to go into care and so its not really a win win as some may suggest..
Well, in my father's case he downsized and bought two smaller properties and banked the change; he was a have.
My point was more that wage increases, which do not correspond with increased economic activity, tend, in the long run, to be inflationary, and inflation tends to favour the asset rich- so reduced immigration leading to recruitment problems cured, in the short term, with wage increases, tends to be a nil sum game in the longer term and may well make the gap between the haves and have not worse not better.
There is no magic cure for an economy whose bottom (and possibly middle with AI) quartiles do not have value adding employment at the wage levels needed to be comfortable, and wishful thinking re selling high cost production (as wages are a cost of production) to the ROW are a somewhat forlorn prospect until wages in ROW increase and wages in the developed world stagnate, or continue to drop in real terms, so that say the UK is competitive in the world re far more products.
Yes, we can gear an economy to high tech, niche, high vale added products, but as I posted in another post there is going to be a very finite market for these types of products (only so many nations can afford them en masse) and we have too big a population for everyone to have such employment.
Imho we all need to accept that the developed world will see a stagnation or reduction in relative standards of living, a smaller world has changed the economic dynamics.
I have no ready answers to the issue, but one answer i know will not work is Brexit, from a selfish ,developed world, perspective external tariffs protect EU employment, albeit slowing the development of the rest of the world, the situation we had within the EU at least allowed a more gradual leveling. A crash out onto WTO will accelerate the process and will likely be very painful for the lower paid.
Brexit is imho mere distraction from the real issues, it creates a tangible target, makes people believe (Imho erroneously) that it is a cure, but I suspect those who voted for it as a harbinger of a more equal society are going to be very, very, disappointed.
Brexit creates new opportunities. Whether we take them or not is up to us..If the EU existed just for trade and nothing else as most trading blocs in the world then no problem but it doesn't and so why do we need to be a member when we could have a Canada type trade deal and I think from memory the reason why it was rejected at the time was because it didn't include services and May's new deal doesn't and so why give all we have to the EU to basically want the same as Canada?
Your father must have bought either a very large property which most of us can't as a first house, he was very well off, or moved down into a less desirable area and had money to spare you say? I think I would need your or his workings to be convinced as just doing that on the back of an envelope it's impossible for me to have done that because two smaller properties in my area would always cost more than one property even quite a large one...eg . Two semi's 150 grand each vs one detached at what? 300K to break even and then cash to spare? In my area in 1970 semi's were around 3K and detached 4K...and so two semi's then would have been 6K vs the 4K and why I need to see his calculations?
To make it work I would have to sell the detached for 7K...and I could have bought a mansion for that back then...Of course he could have one left him?
No, he worked up to that family home, it was not a first home, he bought it in the 1960s and sold it in 1982 when we were all running away/ getting married etc.
In effect he sold a nine room/kitchen/ two bathroom three storey terrace in Learmonth Place, Edinbugh, and bought a three bedroom flat in Learmonth Court, Edinburgh (today worth circa £320k, valuation tricky as the three beds there do not come up for sale often) and then a couple of years later he also bought a 2-3 bed cottage in Cove, Berwickshire. The flat was £18,000, cottage was £15,000, he invested the difference (£17,000) towards his retirement which together with the sale of his legal practice gave him enough to stop working.
The sold family house today would be circa £850-£1,000k or more (last time it was up for sale a few years ago it was o/o £850k). The cottage was actually sold in 2013 after he died for £168k, likely nearer £200/210k now.
In effect you have the multiplier of circa £6,600 in 1967 to say £60,000 in 1982, 9 times multiple in fifteen years, that was the 1970s for you, the cottage was bought in 1985 at £15k and sold in 2013 after his death for £168k, only 11 times multiplier in 28 years (but actually lower as he did spend some money on it improving it in the interval- double glazing, new pastille roof, new doorway to rear created).
1970s inflation was great for the asset rich downsizer, if wages again start running away then the same will happen again; high inflation is a boon for non leveraged property owners but not so great for the JAMs, they are the ones who will suffer, galloping interest and job insecurity.
If I was self interested I ought to fully embrace Brexit/ devaluation/high inflation etc, I will also win as I own a house in Sweden, if sterling devalues that will be worth more in sterling terms if I sell it, the subsequent high interest we could well see in the UK will have negligible impact on me as I have been in my current house for 21 years this November, my mortgage is tiny, but I am not enough of a rogue to push an economic case for my own self benefit.
The fall out of the EU via Brexit if no agreement will hit all those who have not had a long working life to accumulate assets, the have nots, a lot of whom have been fooled into thinking it will improve their lot in life.