The core argument here is reasonable but unfortunately the clickbait intro isn’t and borders on misogynistic. The core WASPI argument is about the unfairness of the 2011 hiking of the state pension age for a specific cohort of women who were due to retire not long after that and therefore didnt have the time or earning power (or, for some, the good health) to be able to save to compensate. Similarly, the argument about age 60 is not about whether women should be able to retire at the age set when they started work but rather about the maladministration in communicating the change meaning again that they didn’t have enough time to plan. Both issues are 100% different from intergenerational issues around housing costs and it is unhelpful to conflate them or indeed to claim that one sort of unfairness (affecting both sexes, by the way) compensates for another (affecting only women in a specific age range).
This is an excellent article. One thing I would be interested in is: Are these sums (broadly) based on SE England incomes/ prices etc? Would the gap between Linda and Jess be roughly the same in N Ireland) NE England?
I realise you can't cover everything. The article itself is great - will try to show it to my parents ( 83, 80) at the next opportunity 🙂.
One thing to add is that, of course not for everyone, but many Boomers also have gold-plated defined benefit pensions and will be able to retire rather comfortably with a guaranteed income and zero housing costs. My grandfather managed to retire at age 55 from a middle management job at the gas board precisely because of this combo of cheap housing and a good pension. The closer you get to present day, the more each of those deteriorates.
Good piece -- I will keep this as a good illustration of how the financial situation for young people can get better and worse at the same time, along different dimensions.
Would be interested to see the same exercise done in the US. My intuition is that our housing crunch is real but not as extreme as the UK's, such that millennials are have several "advantage" categories counteracted by higher housing prices, but don't wind up very far behind Boomers overall. But that's just an intuition and I should run actual numbers.
By the time Linda dies, though, Jess will be likely in her 50s, maybe older. Bit late....and it might be that much of the money will be spent on care costs.
Inheritance inequality is a huge divider within the UK. There are quite a lot of articles and papers about it, though it seems to have dropped from a peak of prominence in the last couple of years.
This long read in the Guardian seems to coincide with the publishing of several books about it, and then the start of the issue's drop into obscurity again.
Several people have rightly stressed the disastrous policy of council house sell - offs as a key factor in this situation. Another inflationary aspect is (ironically enough) probably the bank of mum and dad by virtue of their artificially high housing valuation. So in a way the boomers are part of an asset spiral by creating the demand for deliberately limited assets at "whatever price". Just like Help To Buy but at least not taxpayer money. The effect is identical though of course.
Great piece which totally sums up the broken state of our housing market. You haven't even mentioned the selling off of council houses which pushes more people into private renting, and makes that housing even more expensive. Aaaaasarrrrrgggghhhh!!!
Fantastic article and I think your point about how this generational wealth transfer has stunted the potential room for tax based funding of WASPI pensions (among other things) is the standout point. Right to buy proving itself to be the single biggest policy disaster in British post war history
Excellent article. As a Gen X I have benefited from the housing market, but am being shot by both sides as Linda is arguing for more cash from my taxes (to fund a pension that gets further away for me) while trying to help Jess get a home at the same time (who I also had to fund a lot through University, even with student loans, which boomers did not). The considerable costs of childcare now something you have missed out of the equation for Jess.
Banks in the 80 & even 90s would not lend more than 3x salary. They were not allowed to for much of the period, and after rules. were relaxed were very wary. Mortgage rates were higher but so was inflation which meant that while it was a struggle for a few years the burden dropped rapidly.
However, I think the thrust of your article is broadly right, Housing costs in the English-speaking World have exploded in a way they haven't elsewhere. Unwinding it without causing a banking crisis is going to be tricky and involves probably several decades of flat house prices given low inflation and growth. Countries like the UK do not have the luxury of a massive external surplus like Japan or China which could afford to crash things and limit the damage to financiers without materially affecting the lives of ordinary people other than making housing more affordable.
A decade of double-digit inflation would do it, but has other consequences
One other point, which isn't reflected in the numbers, is surety.
Linda has a guaranteed roof over her head, either through social housing or as a homeowner (although I acknowledge that many households did lose their homes in the early 90s recession). She (or her other half) likely has a DB pension (or guaranteed retirement income of some kind). The biggest uncertainties are covered.
Jess has to worry whether her private landlord will hand her a section 21 or not get the boiler fixed. She has an auto-enrollment pension - all the investment risk is hers and she has to work out how the hell she'll turn that into a retirement income, or whether it will ever be enough to retire.
I bought my first place in London in 1987. I earned just under £12,000. I had no savings and I had (quite a bit of) credit card debt. The flat cost £49,000. I got a 100% mortgage, very few questions asked. And, as someone else has mentioned, I had MIRAS, and I could have had a bigger loan if I had been less honest about my earnings. Even with honesty, I could have had a 105% loan. At that time lenders were offering 4x joint income loans. I'm not arguing that this is a good thing, it just drove up house prices, but it did make property more accessible.
I love this way of looking at things in your post.
No one should think of money as physical leaves on a tree. Then generations/interest groups can be pitted against one another, since there are only so many leaves to go around.
Money is more like the water in central heating system, only in the 1980s a bunch of scoundrels figured out how to pump it away for themselves, so there is less sloshing around to keep the rest of us warm. We could definitely pay the promised pensions without snatching avocado from the mouths of the young but someone might have to pay (more) tax on their offshore investment portfolio.
Good points but remember not every boomer got to buy a house back then. We bought a flat in 1990 and got repossessed in 1994 and ended up with an £81000 pound debt on paper as a result of the estate agent selling our flat at a knock down price to friends. We finally settled the (sold on) debt but couldn’t afford to buy again till 2006. I only own my flat now because I inherited some money from my father in India. My younger sister was told by DWP that her pension was fully paid up and on that basis she took early retirement and moved to France, only to be told a few years later that it wasn’t and she’d lose £180 a month. Is that fair? I have children paying outrageous rents and trying to make a living at a time when AI is taking work from them. I just hope I can leave them my flat and it doesn’t all go in care home fees whenI can no longer work. (I am 72 and still working because I can’t live on my state pension.) It’s all a disaster but I don’t think it’s the fault of either generation. It’s the fault of successive Neo-liberal governments that value money over everything and are busy transferring wealth from the poor to the rich.
Yes they lied to me as well. I still have the letter. And now the shortfall! I suspect the care home fees problem will be addressed if they eventually get that Bill passed into law ( see Canada and others).
Boomer here! I regularly point out - to show what a mess things are, not a complaint from me! - that the deposit on my first house was two-thirds of my current mortgage payment. OK, there are some factors to take into account - area, inflation, type of housing etc - but even so, it seems incredible.
The other issue that I've noticed about accommodation is that properties seem to be getting smaller - e.g. HMOs turning a living room into a bedroom, so more people and less space! Millennials seem to get shafted at every opportunity.
The core argument here is reasonable but unfortunately the clickbait intro isn’t and borders on misogynistic. The core WASPI argument is about the unfairness of the 2011 hiking of the state pension age for a specific cohort of women who were due to retire not long after that and therefore didnt have the time or earning power (or, for some, the good health) to be able to save to compensate. Similarly, the argument about age 60 is not about whether women should be able to retire at the age set when they started work but rather about the maladministration in communicating the change meaning again that they didn’t have enough time to plan. Both issues are 100% different from intergenerational issues around housing costs and it is unhelpful to conflate them or indeed to claim that one sort of unfairness (affecting both sexes, by the way) compensates for another (affecting only women in a specific age range).
This is an excellent article. One thing I would be interested in is: Are these sums (broadly) based on SE England incomes/ prices etc? Would the gap between Linda and Jess be roughly the same in N Ireland) NE England?
I realise you can't cover everything. The article itself is great - will try to show it to my parents ( 83, 80) at the next opportunity 🙂.
One thing to add is that, of course not for everyone, but many Boomers also have gold-plated defined benefit pensions and will be able to retire rather comfortably with a guaranteed income and zero housing costs. My grandfather managed to retire at age 55 from a middle management job at the gas board precisely because of this combo of cheap housing and a good pension. The closer you get to present day, the more each of those deteriorates.
Good piece -- I will keep this as a good illustration of how the financial situation for young people can get better and worse at the same time, along different dimensions.
Would be interested to see the same exercise done in the US. My intuition is that our housing crunch is real but not as extreme as the UK's, such that millennials are have several "advantage" categories counteracted by higher housing prices, but don't wind up very far behind Boomers overall. But that's just an intuition and I should run actual numbers.
I think there is one thing missing here:
Unless Linda at old age sells her apartment and spends all that money on avocado, Jess will inherit Linda's flat when Linda dies.
By the time Linda dies, though, Jess will be likely in her 50s, maybe older. Bit late....and it might be that much of the money will be spent on care costs.
So, maybe Jess' daughter....
Inheritance inequality is a huge divider within the UK. There are quite a lot of articles and papers about it, though it seems to have dropped from a peak of prominence in the last couple of years.
This long read in the Guardian seems to coincide with the publishing of several books about it, and then the start of the issue's drop into obscurity again.
https://www.theguardian.com/money/2022/dec/03/why-inheritance-is-the-dirty-secret-of-the-middle-classes-harder-to-talk-about-than-sex
Yes, but that is an inequality between individuals, not between generations. The Jesses will definitely inherit a lot more than the Lindas.
Unless Linda survives into old age but is so frail that she has to be moved to an Old People's Home. And/Or gets Dementia
Several people have rightly stressed the disastrous policy of council house sell - offs as a key factor in this situation. Another inflationary aspect is (ironically enough) probably the bank of mum and dad by virtue of their artificially high housing valuation. So in a way the boomers are part of an asset spiral by creating the demand for deliberately limited assets at "whatever price". Just like Help To Buy but at least not taxpayer money. The effect is identical though of course.
Brilliant.
Great piece which totally sums up the broken state of our housing market. You haven't even mentioned the selling off of council houses which pushes more people into private renting, and makes that housing even more expensive. Aaaaasarrrrrgggghhhh!!!
Fantastic article and I think your point about how this generational wealth transfer has stunted the potential room for tax based funding of WASPI pensions (among other things) is the standout point. Right to buy proving itself to be the single biggest policy disaster in British post war history
Excellent article. As a Gen X I have benefited from the housing market, but am being shot by both sides as Linda is arguing for more cash from my taxes (to fund a pension that gets further away for me) while trying to help Jess get a home at the same time (who I also had to fund a lot through University, even with student loans, which boomers did not). The considerable costs of childcare now something you have missed out of the equation for Jess.
Banks in the 80 & even 90s would not lend more than 3x salary. They were not allowed to for much of the period, and after rules. were relaxed were very wary. Mortgage rates were higher but so was inflation which meant that while it was a struggle for a few years the burden dropped rapidly.
However, I think the thrust of your article is broadly right, Housing costs in the English-speaking World have exploded in a way they haven't elsewhere. Unwinding it without causing a banking crisis is going to be tricky and involves probably several decades of flat house prices given low inflation and growth. Countries like the UK do not have the luxury of a massive external surplus like Japan or China which could afford to crash things and limit the damage to financiers without materially affecting the lives of ordinary people other than making housing more affordable.
A decade of double-digit inflation would do it, but has other consequences
One other point, which isn't reflected in the numbers, is surety.
Linda has a guaranteed roof over her head, either through social housing or as a homeowner (although I acknowledge that many households did lose their homes in the early 90s recession). She (or her other half) likely has a DB pension (or guaranteed retirement income of some kind). The biggest uncertainties are covered.
Jess has to worry whether her private landlord will hand her a section 21 or not get the boiler fixed. She has an auto-enrollment pension - all the investment risk is hers and she has to work out how the hell she'll turn that into a retirement income, or whether it will ever be enough to retire.
I bought my first place in London in 1987. I earned just under £12,000. I had no savings and I had (quite a bit of) credit card debt. The flat cost £49,000. I got a 100% mortgage, very few questions asked. And, as someone else has mentioned, I had MIRAS, and I could have had a bigger loan if I had been less honest about my earnings. Even with honesty, I could have had a 105% loan. At that time lenders were offering 4x joint income loans. I'm not arguing that this is a good thing, it just drove up house prices, but it did make property more accessible.
I love this way of looking at things in your post.
No one should think of money as physical leaves on a tree. Then generations/interest groups can be pitted against one another, since there are only so many leaves to go around.
Money is more like the water in central heating system, only in the 1980s a bunch of scoundrels figured out how to pump it away for themselves, so there is less sloshing around to keep the rest of us warm. We could definitely pay the promised pensions without snatching avocado from the mouths of the young but someone might have to pay (more) tax on their offshore investment portfolio.
Good points but remember not every boomer got to buy a house back then. We bought a flat in 1990 and got repossessed in 1994 and ended up with an £81000 pound debt on paper as a result of the estate agent selling our flat at a knock down price to friends. We finally settled the (sold on) debt but couldn’t afford to buy again till 2006. I only own my flat now because I inherited some money from my father in India. My younger sister was told by DWP that her pension was fully paid up and on that basis she took early retirement and moved to France, only to be told a few years later that it wasn’t and she’d lose £180 a month. Is that fair? I have children paying outrageous rents and trying to make a living at a time when AI is taking work from them. I just hope I can leave them my flat and it doesn’t all go in care home fees whenI can no longer work. (I am 72 and still working because I can’t live on my state pension.) It’s all a disaster but I don’t think it’s the fault of either generation. It’s the fault of successive Neo-liberal governments that value money over everything and are busy transferring wealth from the poor to the rich.
Yes they lied to me as well. I still have the letter. And now the shortfall! I suspect the care home fees problem will be addressed if they eventually get that Bill passed into law ( see Canada and others).
Boomer here! I regularly point out - to show what a mess things are, not a complaint from me! - that the deposit on my first house was two-thirds of my current mortgage payment. OK, there are some factors to take into account - area, inflation, type of housing etc - but even so, it seems incredible.
The other issue that I've noticed about accommodation is that properties seem to be getting smaller - e.g. HMOs turning a living room into a bedroom, so more people and less space! Millennials seem to get shafted at every opportunity.