From yesterday's Evening Standard:
Chris Roberts dismisses Rohan Silva's piece on housing costs by saying that "there are plenty of cheaper places to live than London" which misses the point.
Of course there are plenty of towns where the cost of living is £10,000 a year lower but in those towns wages are also £10,000 a year less. Any apparent saving in rent would be matched by a fall in wages.
To put it another way, half of all UK graduates move to London, attracted by the higher wages and better job opportunities, but landlords have simply increased their rents to soak up those extra earnings. Most of the official growth in the London economy ends up in the pockets of landlords or those who sell up and move away.
Younger people like Rohan Silva are caught between a rock and a hard place, and lucky Baby Boomers who bought their homes for a song 20 or more years ago should be thanking their lucky stars, not sneering at people who will have it so much harder.
Mark Wadsworth, Young People's Party
To say that baby boomers "bought their homes for a song 20 or more years ago" is incorrect. Baby boomers had to save sufficient money to cover the difference between 2.5 times salary and the cost of the house. Savings earned around 6% interest. The mortgage was repaid at 13% interest. Not easy.
ReplyDeleteBB I am a baby boomer and know about my parents paying off a mortgage after about 12 years, same for me. By and large, buying a house was a doddle and much cheaper than renting. a high nominal interest at rate on a small mortgage being eroded by inflation (i.e. a negative real interest rate) was not a lot of money.
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