Tuesday, 17 November 2015

Another Home-Owner-Ist milestone is within grasping distance...

From City AM:

In ten years time only 26 per cent of so-called “generation rent”, those aged between 20 and 39, will own their own homes according to a study by accountants PwC.

In 2013, 38 per cent of those in that age group had bought a house. The amount of 20-39 year olds renting privately by 2025 is expected to have ballooned to 59 per cent, up from 45 per cent in 2013.

Richard Snook, an economist at PwC said:

“The continual advance of house prices, which have for outstripped growth in earnings, is fundamentally changing the way that people live. Changing the outlook for generation rent will require us to build more houses than need just to match population growth in order to make up the past shortfall between housing supply and growth in demand.”

Not much of an economist, is he?

Firstly, there's not much hard evidence to show that building more homes gets prices down (unless you build them in entirely the wrong place, in which case they are not homes, they are just piles of bricks), only blind faith.

Secondly, who does he think will be snapping up those new builds?

Answer: exactly the same 'equity rich' Baby Boomers who are snapping up a disproportionate number of any other homes which are up for sale. At present, the ratio is one BTL purchase to two first time buyers, but that ratio is worsening (or improving, from the Homeys' point of view).

And whatever happens, all those new builds are a net transfer of wealth to large landowners.