A middle income family buying a 3 bed semi in the late 70′s could expect the mortgage to be one full months income of one of the couple at an interest rate in double numbers at that time. For the same term and the same property with the current interest rate it would be half of one income

In the 70′s interest rates were 5 times the % to what is payable now.

This would be why houses on paper were sold for less but in terms of income was much more. Where the cost to buy was 5 times higher in interest, demand fell and so too did the prices.
Where the mortgage interest has reduced to a fifth, demand increases so the house prices do…. it is nothing to do with enjoying wealth and plundering it from a future generation. …….. as the debt chart shows the opposite is true

See my (big) article “The effect of baby booms on the housing crisis of younger people”. Especially see its later section “Trends in percentage house ownership of various cohorts”. I make the point, based on the graphical evidence there:

“There are 2 sorts of changes happening over time: older people are dying, and the percentages of each cohort who own houses is changing.

“There is no indication that people born before 1956 are increasing their house ownership. Indeed, it is possible that after peaking at up to 80% the percentages are declining, see the first 3 cohorts in the graph. Are some of these people selling their houses, and if so why? Are they moving into managed housing or long term care?

“It is clear that people born after 1955 are increasing their house ownership, although the 1956-1965 cohort appears to be peaking at perhaps the 80% level of older cohorts. It might increase from the current 21.5% of the gross housing wealth to about 22% or so.

“The 1966-1975 cohort here is about the same as the 1965-1974 cohort (see earlier graph in blue) that owns more gross housing wealth than any other 10-year cohort. And isn’t hasn’t peaked yet! It currently owns nearly 22%, and this might increase to 23% or so.

“It is too soon to predict the future percentages of people born after 1975. There is a consensus elsewhere that they are tending to start later, but there is no indication of whether they too will eventually reach about 80%, or more or less than this.”

I also make the point:

“The housing problems of younger people are often expressed in terms of their typical ages. But they should be expressed inter alia in terms of the average time since the end of full time education. In 1965, the average end of full time education was a little over 15, while nowadays it is about 19. This would be expected to increase the average “first-house age” by nearly 4 years over that time. It isn’t valid to be concerned about the higher “first-house ages” of younger people without accounting for such factors.”

Can anyone predict what will happen if the earlier cohorts are indeed reducing the percentages of them who own houses? And then as the ones who DO own houses die?

There is no doubt that financial products have become more expensive. Some of this may be to reduce the risk to all concerned. My endowment mortgage (thought to be respectable at the time) went badly wrong (as did lots of them) and I lost lots of money and it took a further 5 years to pay off my mortgage. (Had I had children I may have had to buy-down to afford the loss). I suggest it is wise to reduce such risks.

How much of the problem is a delay rather than failure for most to get on the housing ladder? The earlier cohorts achieved about 80%, not 100%. Even if young people reach the percentages of earlier generations, which I agree they may not, there will still be that 20% who don’t own a house and may be vocal about it.

1. As this article says, the number of “family units” (from 1 person upwards) who want their own home has been rapidly increasing. Reasons include longevity, being single, and (not mentioned above) immigration. And the consensus is that not enough houses are being built to match this increase in numbers of family units.

If the number of houses in the UK is (say) only 80% of the number of such family units, then moving people around, for example downsizing, still leaves a 20% shortfall. (I don’t know what the real percentage is). How has that helped?

Spare bedrooms are only relevant if they are in houses that can be afforded by the people who need those bedrooms. Therefore, people in houses that can’t be afforded by young people starting families should be encouraged to stay in them. And people who can afford houses that young people can’t afford, but are currently in houses that those young people CAN afford, should be encouraged to upsize to those more expensive houses. Better-off people should be encouraged to stay out of the housing market relevant to those younger people, because their extra purchasing power will make things even worse for those younger people.

(I suspect the above will be disputed, but if so I will be interested to learn where my analysis is wrong).

2. It is unsurprising that housing wealth is becoming concentrated in the hands of (some, not all) older people. Those older people have had decades to steadily move up the “housing ladder” and pay off their mortgages. Housing wealth would become concentrated like this even if there WERE enough houses.

(At the end of last month I made my last ever mortgage payment, after 38 years of paying a mortgage every month for a series of houses. For the first ever I own a house outright. Arguably it is too large, with what used to be 3 bedrooms. But why should anyone imagine that any young people starting a family would be able to afford a house that I signed the contract for at 40 while single and childfree?)

Take today’s young generation and project forward 30 to 40 years. Don’t we expect that cohort’s housing wealth in future to be vastly greater than it is today? (I’m not discussing whether it will match the housing wealth of today’s older people. I’m making the point that the housing wealth of any cohort will increase over time, just because of natural lifetime changes).

3. In 65 years I never heard of the “British Promise” that each generation should be better off than the one before, until reading it on this website!

But it is being viewed very narrowly here. If we listed (say) 100 measures of whether someone is better off than another, I’m pretty sure that the balance would be in favour of the younger generations. Naturally the other parameters get a lot of attention, but that is partly because so many parameters are taken for granted. Here are some examples based on legislative changes since I got the vote at 21:

Reduction of the voting age from 21 to 18 (1969). Reduction of the minimum age of an MP (and I think other elected officials) from 21 to 18 (2006). Increase of the minimum school leaving age from 15 to 16 (1972). Then gradually over the decades, increase of the proportion going to university from about 5% to about 35%. With a corresponding increase in the average age at end of full-time education from just over 15 to about 19. Introduction of Child Benefit which gives an allowance to the first child as well (1977), replacing Family Allowance which didn’t pay for the oldest child. Removal of the default retirement age (2011). Upgrade to a larger flat-rate state pension (expected 2016).

Generations typically DO try to leave things in a better state for later generations. They often temporarily fail in specific areas for all sorts of reasons including external factors beyond their control. But gradually things improve, often driven by people who don’t personally benefit from the changes but who simply think these are the right things to do. Here are some other examples:

Life expectancy (at birth) from about 68 when I was born to about 77 now. A more enlightened UK, with greater tolerance and acceptance as a result of various equalities and human rights legislation.

My cohort (I was born in 1947) wanted to ensure that later generations didn’t struggle as we did: born into severe austerity (and rationing), I was brought up (until 21) in a council flat on a council estate which would not be acceptable nowadays. We didn’t want later generations to be afraid of nuclear destruction during the cold war. Or to worry about such diseases as polio, measles, whooping cough, etc. All of those represent higher living standards.