Can we blame the 55 to 70-year-old Canterbury citizens for
the current housing crisis in the city?
Also known as the ‘Baby Boomer Generation’, these Canterbury
people were born after the end of the Second World War as the country saw a massive
rise in births as they slowly recovered from the economic hardships experienced
during wartime.
Throughout the 1970’s and 1980’s, they experienced (whilst
in their 20’s, 30’s and 40’s) an unparalleled level of economic growth and
prosperity throughout their working lifetime on the back of improved education,
government subsidies, escalating property prices and technological developments,
they have emerged as a successful and prosperous generation.
...Yet some have suggested these Canterbury
baby boomers have (and are) making too much money to the detriment of
their children, creating a ‘generational economic imbalance’, where mature
people benefit from house-price growth while their children are forced either
to pay massive rents or pay large mortgages.
Between 2001 and today, average earnings rose by 65%,
but average Canterbury house prices rose by 154.3%
The issue of housing is particularly acute with the generation
called the Millennials, who are young people born between the mid 1980’s and
the late 1990’s. These 18 to 30 years, moulded by the computer and internet
revolution, are finding as they enter early adult life, very hard to buy a
property, as these ‘greedy’ landlords are buying up all the property to rent
out back to them at exorbitant rents ... it’s no wonder these Millennials are
lashing out at buy to let landlords, as they are seen as the greedy, immoral, wicked
people who are cashing in on a social despair.
Like all things in life, we must look to the past, to
appreciate where we are now.
The three biggest influencing factors on the Canterbury (and
UK) property market in the later half of the 20th Century were, firstly, the
mass building of Council Housing in the 1950’s and 60’s. Secondly, for the Tory
party to sell most of those Council Houses off in the 1980’s and finally 15%
interest rates in the early 1990’s which resulted in many houses being
repossessed. It was these major factors that underpinned the housing crisis we
have today in Canterbury.
To start with, in 1995 the USA relaxed its lending rules by
rewriting the Community Reinvestment Act. This Act saw a relaxation on the
Bank’s lending criteria’s as there was pressure on these banks to lend on
mortgages in low wage neighbourhoods, as the viewpoint in the USA was that anyone
(even someone on the minimum wage) any working class person should be able to buy
a home. Unsurprisingly, the UK followed
suit in the early 2000’s, as Banks and Building Society’s relaxed their lending
criteria and brought to the market 100% mortgages, even Northern Rock started lending
every man and his dog 125% mortgages.
So when we roll the clock forward to today, and we can observe
those very same footloose banks from the early/mid 2000’s (that lent 125% with
a just note from your Mum and a couple of breakfast cereal tokens), ironically reciting
the Bank of England backed hymn-sheet of responsible-lending. On every first
time buyer mortgage application, they are now looking at every line on the 20-something’s
banks statements, asking if they are spending too much on socialising and
holidays ... no wonder these Millennials are afraid to ask for a mortgage (as
more often than not after all that – the answer is negative).
Conversely, you have unregulated Buy To Let mortgages. As
long as you have a 25% deposit, have a pulse, pass a few very basic yardsticks
and have a reasonable job, the banks will literally throw money at you ... I
mean Virgin Money are offering 2.99% fixed for 3 years – so cheap!
So, in Part Two next week, I will continue this emotive
article and show you some very interesting findings on why young people aren’t
buying property anymore (and it’s not what you think!).
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