House Price Inflation in the UK

Nordwand

Kingfisher
The comedian and TV presenter, Griff Rhys Jones, has sold his townhouse in London to artist Tracy Emin for £15 million. The property, in Fitzrovia, was acquired by Rhys Jones in 1998 for £1.45 million. Has anyone here seen their wages increase by a factor of more ten in the last couple of decades, because I certainly haven't.


Trickle these percentages down to ordinary properties - is it any wonder that the young are still living with their parents at an age when previous generations had long moved out?

From what I can gather, this problem is not confined to the UK, as I've seen mention of Vancouver and New York in similar articles elsewhere.
 
The comedian and TV presenter, Griff Rhys Jones, has sold his townhouse in London to artist Tracy Emin for £15 million. The property, in Fitzrovia, was acquired by Rhys Jones in 1998 for £1.45 million. Has anyone here seen their wages increase by a factor of more ten in the last couple of decades, because I certainly haven't.


Trickle these percentages down to ordinary properties - is it any wonder that the young are still living with their parents at an age when previous generations had long moved out?

From what I can gather, this problem is not confined to the UK, as I've seen mention of Vancouver and New York in similar articles elsewhere.

 

bucky

Ostrich
Out of curiosity, you're not really seeing price increases anywhere near this steep in normal middle class housing in the UK, are you? I'm in one of the "hottest" real estate markets in the US, and prices have gone up maybe a little more than 2x in the last decade or so. It's still enough to price most young people out of ever being able to buy a place.
 
I live in London, UK.
Since I can remember (I am nearly 40 years old) , prices have only been going up, not down. With the exception of a few months in 2008 when a lot of sellers panicked ) prices have been going up.
Even now, while the pandemic is still on, prices have not gone down.
When it comes to affordability, London if probably worse than NYC or San Francisco.
 

Laus Deo

Pigeon
Trickle these percentages down to ordinary properties - is it any wonder that the young are still living with their parents at an age when previous generations had long moved out?

From what I can gather, this problem is not confined to the UK, as I've seen mention of Vancouver and New York in similar articles elsewhere.
Sydney is the example of this in Australia and I believe the statistic is that the average house price doubles every 6-7 years. However these price rises have been fairly consistent across the board (houses away from the centre have even quadrupled in value since the turn of the century) so there hasn’t been an out-and-out revolt.

I don’t think young people in Sydney are completely cutoff from the metropolitan area itself just yet, but certainly it’s nigh on impossible to buy a house in the same neighbourhood you were raised in. A crappy apartment though? Maybe.

When I do see that rates of asset growth have far exceeded real wage growth across the West, I’m reminded of a taxation theory put forward by some commentators, the most prominent of which is Tucker Carlson. Namely, why is it that income (based on labour) is taxed at a higher rate than capital/investments (based on speculation/manipulation) are? There’s something quite warped about taxing effort more than taxing lucky passivity but I guess you can add it to the myriad of things that have been warped over the last 80 years in the West.
 

Hypno

Crow
When I do see that rates of asset growth have far exceeded real wage growth across the West, I’m reminded of a taxation theory put forward by some commentators, the most prominent of which is Tucker Carlson. Namely, why is it that income (based on labour) is taxed at a higher rate than capital/investments (based on speculation/manipulation) are? There’s something quite warped about taxing effort more than taxing lucky passivity but I guess you can add it to the myriad of things that have been warped over the last 80 years in the West.

Capital gains typically are taxed less than income from working, at least in non-Marxist countries, because the capital was already taxed once when earned and, if earned in a corporation, taxed twice. Also, selfishly, governments want capital investment to create jobs and a larger tax base; raising taxes on capital will cause it to be invested elsewhere.

This was less of a problem before the Fed started handing out money and blowing asset bubbles that disproportionately benefit those who already had wealth.

If you were watching, one of the first things Trump did as President was to lower the corporate income tax rate. That resulted in huge employment gains across the economy. Male black employment had never been higher. So something that looked like it would benefit the rich really benefited the working poor. For those of you in Europe, look at what has happened to Ireland in your lifetime - they were a mess until they reduced the corporate income tax to 10%. Now they are flush. The low tax rates attracted capital from other jurisdictions, and it benefited the average guy in Ireland.

Notice that the Davos crowd are trying to impose a minimum corporate income tax so that governments with failed policies are not harmed by companies taking their capital to countries with better policies.

I'm not telling anyone they have to like any of this. I'm just describing the world we live in.
 

Nordwand

Kingfisher
Out of curiosity, you're not really seeing price increases anywhere near this steep in normal middle class housing in the UK, are you? I'm in one of the "hottest" real estate markets in the US, and prices have gone up maybe a little more than 2x in the last decade or so. It's still enough to price most young people out of ever being able to buy a place.
In Hackney, an area of London which is far from the prime W1 postcode example that I quoted earlier, prices increased by more than 900% over a period of 20ish years, from the mid 90's to mid 2010's.

The most horrendous example of London house price inflation that I can think of concerned a house in Holland Park, purchased for a little under £900K in the late 90's, and sold for almost £19 million 15 years later.
 

bucky

Ostrich
In Hackney, an area of London which is far from the prime W1 postcode example that I quoted earlier, prices increased by more than 900% over a period of 20ish years, from the mid 90's to mid 2010's.

The most horrendous example of London house price inflation that I can think of concerned a house in Holland Park, purchased for a little under £900K in the late 90's, and sold for almost £19 million 15 years later.
Is it as bad in the rest of the UK? In the US there are certain areas like San Francisco and NYC where it's just taken as a given that normal middle class people can't even remotely afford to live there, and if they must physically work there they put up with brutal commutes that take hours. I know London is the economic heart of the UK, but I figured there would be other areas where it would be less expensive to live and one could get by, more or less.
 

Nordwand

Kingfisher
Is it as bad in the rest of the UK? In the US there are certain areas like San Francisco and NYC where it's just taken as a given that normal middle class people can't even remotely afford to live there, and if they must physically work there they put up with brutal commutes that take hours. I know London is the economic heart of the UK, but I figured there would be other areas where it would be less expensive to live and one could get by, more or less.
There are huge swathes of the UK that are totally unaffordable to anyone who is just starting out, without any assistance, such as BOMAD, and it has been so for some time. Places like Cambridge run London very close, as do the likes of Bath and Cheltenham, which aren't even London commuter belt territory.
 

Hypno

Crow
Out of curiosity, you're not really seeing price increases anywhere near this steep in normal middle class housing in the UK, are you? I'm in one of the "hottest" real estate markets in the US, and prices have gone up maybe a little more than 2x in the last decade or so. It's still enough to price most young people out of ever being able to buy a place.

This is not 10X, but it gives you an idea of what is going on the U.S.

Boise is basically in middle of nowhere, but its the first nowhere you get to when fleeing Portland or San Fran.
 
Is it as bad in the rest of the UK? In the US there are certain areas like San Francisco and NYC where it's just taken as a given that normal middle class people can't even remotely afford to live there, and if they must physically work there they put up with brutal commutes that take hours. I know London is the economic heart of the UK, but I figured there would be other areas where it would be less expensive to live and one could get by, more or less.

Margaret Thatcher sold off most of Britain's public housing to the tenants (at knock down prices) during the nineteen eighties.

This was arguably the biggest 'vote buying' scam in history.

Then the government stopped building public housing which reduced the supply of affordable homes.

Britain 'deindustrialised' during the nineteen eighties - most of the coal mining and shipbuilding was shut down.

This economically decimated the north of England, Wales and Scotland.

The Scots are still bitter about this which is why they are pushing to leave the UK.

The economy switched to a financial capitalism model with most of the economic activity occurring in London and the south east of England.

Then Tony Blair came to power in 1997 and allowed MASS MIGRATION into the UK from central and eastern Europe.

Also, low interest rates and easy access to credit made it easy for people to get on the 'property ladder' which pushed prices up further.
 
Then Tony Blair came to power in 1997 and allowed MASS MIGRATION into the UK from central and eastern Europe.

Also, low interest rates and easy access to credit made it easy for people to get on the 'property ladder' which pushed prices up further.
Then Gordon Brown sold off the gold reserves, perhaps one of the biggest under reported scandals in British financial history.
Damn Cromwell for letting back in international money lenders
 
Margaret Thatcher sold off most of Britain's public housing to the tenants (at knock down prices) during the nineteen eighties.

This was arguably the biggest 'vote buying' scam in history.

Then the government stopped building public housing which reduced the supply of affordable homes.

Britain 'deindustrialised' during the nineteen eighties - most of the coal mining and shipbuilding was shut down.

This economically decimated the north of England, Wales and Scotland.

The Scots are still bitter about this which is why they are pushing to leave the UK.

The economy switched to a financial capitalism model with most of the economic activity occurring in London and the south east of England.

Then Tony Blair came to power in 1997 and allowed MASS MIGRATION into the UK from central and eastern Europe.

Also, low interest rates and easy access to credit made it easy for people to get on the 'property ladder' which pushed prices up further.

Most of what you wrote is correct. But I would add a few things.
1. The mass immigration had started long BEFORE Tony Blair got elected.
The immigration from central and eastern Europe (between 2004 and 2020) was a fraction of the previous waves of immigration from he Commonwealth in the 1950s, 60s and up until the early 2000s - mainly from Jamaica but also from other , Commonwealth countries of the Caribbean, Africa and South Asia.
1. London became the money laundering capital of the world in the early 2010s.
Big criminals no longer put their ill-gotten gains into Swiss bank accounts -they buy property in the (better )parts of London, UK.
Large swaths of London (particularly in the City of Westminster, in Kensington and Chelsea, Hammersmith and Fulham and other London boroughs) have been both up by suspicious millionaires from Russia, China, the Gulf Arab countries and elsewhere. The properties bought up this way usually don't go back to the rental market. Most of them lay empty for years...contributing to the already huge housing crisis in London.
 
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Capital gains typically are taxed less than income from working, at least in non-Marxist countries, because the capital was already taxed once when earned and, if earned in a corporation, taxed twice. Also, selfishly, governments want capital investment to create jobs and a larger tax base; raising taxes on capital will cause it to be invested elsewhere.

This was less of a problem before the Fed started handing out money and blowing asset bubbles that disproportionately benefit those who already had wealth.

If you were watching, one of the first things Trump did as President was to lower the corporate income tax rate. That resulted in huge employment gains across the economy. Male black employment had never been higher. So something that looked like it would benefit the rich really benefited the working poor. For those of you in Europe, look at what has happened to Ireland in your lifetime - they were a mess until they reduced the corporate income tax to 10%. Now they are flush. The low tax rates attracted capital from other jurisdictions, and it benefited the average guy in Ireland.

Notice that the Davos crowd are trying to impose a minimum corporate income tax so that governments with failed policies are not harmed by companies taking their capital to countries with better policies.

I'm not telling anyone they have to like any of this. I'm just describing the world we live in.

Ireland's low corporate tax rate (12.5%) definitely helped the economy.

The problem with this is the flow foreign money into Ireland pushed up asset (house) prices.

This led to excessive borrowing and pay raise demands.

This (along with the global recession) caused the 'Celtic Tiger' economy to collapse in 2008.

In fairness, the Irish economy recovered a lot quicker than the other P.I.G.S. (Portugal, Ireland, Greece, Spain).

Ireland was the only country in the EU that recorded economic growth in 2020.

17% of the population of Ireland were born outside of Ireland.

Most of these people live on the east coast in the greater Dublin area.

Dublin is now a 'global city' now like London, New York or San Francisco.

Google, Facebook and Apple all have their European headquarters in Ireland.

Try finding an affordable apartment to rent when you are competing with software engineers who work for Google etc.

Good luck trying to buy a house in Dublin when you are competing with foreign capital, hedge funds etc.

What happened in London is now happening in Dublin.

Point this out to the average Irish person and their eyes glaze over or they accuse you of "racism".
 
Ireland's low corporate tax rate (12.5%) definitely helped the economy.

The problem with this is the flow foreign money into Ireland pushed up asset (house) prices.

This led to excessive borrowing and pay raise demands.

This (along with the global recession) caused the 'Celtic Tiger' economy to collapse in 2008.

In fairness, the Irish economy recovered a lot quicker than the other P.I.G.S. (Portugal, Ireland, Greece, Spain).

Ireland was the only country in the EU that recorded economic growth in 2020.

17% of the population of Ireland were born outside of Ireland.

Most of these people live on the east coast in the greater Dublin area.

Dublin is now a 'global city' now like London, New York or San Francisco.

Google, Facebook and Apple all have their European headquarters in Ireland.

Try finding an affordable apartment to rent when you are competing with software engineers who work for Google etc.

Good luck trying to buy a house in Dublin when you are competing with foreign capital, hedge funds etc.

What happened in London is now happening in Dublin.

Point this out to the average Irish person and their eyes glaze over or they accuse you of "racism".
Absolutely.
Dublin has become just like London.
A thriving economy, tons of jobs...but also a massive housing crisis and serious problems with homelessness.
 
Except Ireland is still a member of the EU, and their exchange is an EU exchange (which can be important for listed companies). Sorry London.

Bankers won't be leaving London for Dublin anytime soon - there's no housing for them.

I have a friend who works in finance and he told me that the UK banks investigated this.

They sent experts over and they reported back that there's no way Dublin could absorb an influx of workers and their families.

If the banks go anywhere it will probably be Paris or Frankfurt.
 
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