How many people reading this truly understand what is happening in the housing market? Who are they listening to? How do they interpret the new residential start figures for 2021 – supposedly exceeding those of the boom years according to some, a notion laughed at by others? Why do some numbers differ by as much as 10,000? Are they all unaffordable as suggested?
Many would argue that housing is a national emergency of pandemic proportions and all but the most blinkered generation warriors know that it’s not a topic confined to the young. It takes around 20 minutes in the company of a few 60- or 70-somethings for the subject to raise its head and only a few more for it to develop into an agitated discussion about how best to help the offspring find a roof. Can the parents make a contribution towards a cash deposit? Or physically split the family home for them? Or hand over the entire house for a well-below-market sum? And what about fairness and equity to all the offspring?
In several cases to my knowledge an adult child, partner and baby have been living rent-free in the parents’ average-sized garage while sharing the communal areas. In some shared homes, parents are retreating to the bedroom in the early evening.
This in various manifestations is the Bank of Mum and Dad. What the parental participants have in common is ownership of a house – a considerable advantage if not as rare as advertised since some seven in 10 of the adult population are homeowners. Some of these will be retired a while, sitting pretty on fabulous pension funds, some will be doing nicely on the old defined benefit pension schemes while more will be on modest fixed incomes possibly with a buffer of small savings carefully nursed to meet sudden major bills or a health crisis.
How did they fare in the bust, those parents who believed they were just loaning the money or acting as loan guarantors?
Many will have been scorched several times over 50 years by recessions, job losses, galloping interest rates and taxation. The 2008 disaster will have hit some hard though they tend not to talk about it.
Yet in the first half of 2021, a staggering 42 per cent of first-time buyers were given money by their parents to help fund a deposit. That’s more than four in 10. They can’t all be scions of the idle rich or even the relatively wealthy.
Damn tired of it all
This is why opinion polls on housing policy should be receiving special attention from political parties. The angry young may stay away from the polls but the parents will show up to vote. The demographic who feel they’ve earned some predictability within fixed incomes and carefully managed savings are as damn tired of it all as their children.
The moral and emotional pressure to give up their savings, their privacy, the peace of their declining years is part of the social tapestry now. They remember how financial institutions exploited the parent-child bond before by advertising the ease of surrendering house equity for cash to help the kids onto the “housing ladder”, an egregious example of emotional blackmail while simultaneously accelerating the cycle of doom created by reckless bank lending and let-‘er-rip housing policy. How did they fare in the bust, those parents who believed they were just loaning the money or acting as loan guarantors?
But they know what is expected of them. They note the occasional eruptions of finger-pointing and suggested ways of pressuring them to “downsize”. The targets will often be widowed – it’s the circle of life – a demographic which may feel a particular moral pressure to give up the family home. So back to the housing market for them, not so flush after the below-market house deal perhaps and single again in a housing culture where singles of any age are regarded as some kind of amorphous, unprotected blob.
Basic requirements for the older demographic: secure, ground floor living (health and mobility will begin to decline at some point); proximity to transport, shops, pharmacy, GP, old friends, a family member ideally; a spare room for visiting offspring/carer.
If housing is indeed a national emergency of Covid proportions, shouldn't we have weekly, televised press briefings of the Covid kind but with housing at the centre?
At this point, someone at the session will suggest an apartment. But everyone seems to be giving out about apartments, someone says. But everyone in France or Spain seems to live happily in them, says someone else. Why are people so negative about apartments here, mutters a third? Because you probably couldn’t afford the one you want after your below-market house deal, says the first.
Fade to confusion and the realisation that even the best-read among us has only a faintest notion of what’s happening.
If housing is indeed a national emergency of Covid proportions, shouldn’t we have weekly, televised press briefings of the Covid kind but with housing at the centre? Shouldn’t they be fronted by senior politicians and civil servants and a CMO-style equivalent for housing with a steely gaze, along with council planners and straight-talking experts to tell us how the housing plan is going, why it’s not going, who or which body is delaying schemes or thwarting them and why. They would have bang-up-to-date case numbers of course, listing the housing applications and how many have been made, how many got the green light and how many were rejected – with clear reasons why.
Enough of the confusion.