They live in a house, a very big house in the suburbs

I’ve never been that interested in financial matters. When the Chancellor announces the budget, for example, I may take a quick look at one of those handy “How might this affect you” summary reports but even then I’m scanning through for any big headlines (has beer gone up?!?) rather than reading with any interest. I guess this is probably because I don’t need to pinch every penny and, unless I lose my job tomorrow, I am fairly comfortable at the moment (for which I feel very lucky). However, talking to the 3 couples I know who are in the process of buying and/or selling a property got me thinking about something this morning on the way to work. In particular it was a conversation with Tim and his wife Loz where she was incredulously asking how anyone could afford to buy a £400k house. My immediate reaction to this was that I’m pretty sure my parents and almost all of my friends’ parents have houses worth £400k and generally speaking they bought them when they were significantly younger than I am and a good 10+ years younger than Tim and Loz are. Not only that but in quite a few instances, certainly in the case of my parents, at the time that they bought the house only one person in the couple was working full time while the other brought up the children.

A quick check on Zoopla proved me right about the price. In fact the average price for a house on Oaklands Avenue is more than £500k and number 57, the nearest one to my Dad’s that is listed, is valued at £450k. Now, I’m not an idiot and I realise that they didn’t cost even a quarter of that when my parents bought it 30 years ago, but then my Dad’s pay has increased significantly over the last 3 decades too. Would he be able to afford to buy it now? Who knows, I haven’t got a clue what he earns or whether he has any savings. Anyway, my point is that there is no way on Earth that I could afford to buy a similar house and I can’t even envisage a point in my life when I would be able to. My current flat is worth less than a third of that which, taking a very simplistic view, means my salary needs to increase threefold whilst house prices stay the same. Even if I were to one day get married to someone with a similar salary and we decided not to have any kids and both keep working it still seems somehow out of reach.

So where does this leave us? It seems to me that we’re going to end up with as a situation where older generations are living in large houses with big gardens whilst each successive younger generation will be living in smaller and smaller places. I thought it was tough for me to get my flat but if I had to save up a 20% deposit I’d have been living with my Dad for a further 2 years before I could have bought. However at some point, and I apologise for being slightly morbid here, the older generations will no longer be with us and their assets will presumably be passed down the generations. The thing is, with the advances in medicine and a little bit of luck our parents will be around for another 25-30 years or more so by the time we come to inherit from them we’ll be approaching retirement ourselves and will (hopefully) not need another house. Therefore it seems logical to me that these valuable properties would skip a generation and go straight to the Elliots and Edwards of this world. We’ll then be in a situation where all the younger people will be living in big houses while their parent (i.e. us) are in more modest homes. But then I realised that could have been what it was like for our Grandparents’ generation. Certainly my Dad’s Dad always lived in a much smaller house than my Dad does. So are we just in a continuous cycle where each successive generation switches around? Will this continue ad infinitum and, if so, will this cycle get gradually longer and longer as life expectancy and working lives increase? I have this image in my head of a graph with age along the x-axis and house value on the y-axis and an oscillating sine wave showing the relationship.

Of course, this may just be something that applies to middle class people like ourselves. Maybe both the parents and children in rich families will always live in massive houses while the poorer families will always be confined to council houses? I don’t know the answer, but it certainly gave me something to think about on the long, wet, passenger-free journey into work today.

Posted by Si

Published in: on 18/11/2010 at 11:42 am  Comments (6)