I bought my first house in 1989. Bad choice – the guys in the office said prices were overrated and Lawson’s boom and canning of mortgage interest relief was going to artificially inflate prices.
I was young and knew everything, so not only did I buy the house at the top of the market, but I also took out an endowment mortgage, despite my parents warming me up to the fact there’s no point for a single bloke with no dependants that was my youthful self. That’s the advantage of being such a clever cocky young pup, you get to pay for your very own mistakes too 🙂
So when I spin PriceOut’s calculator with my 1989 figures it doesn’t look like things are so different now!
What amazes me as I see the children of colleagues whinge about housing is that they expect of buy a house in their early twenties.
What’s up with that – you may need to switch jobs a couple of times first to find your vocation, and having a house round your neck could seriously hamstring your job choices of several years. Spending patterns are different too – the large debt of student loans doesn’t help new graduates get their personal finance straight as this young whistleblower reveals.
So I feel some of their pain, but it isn’t really all the intergenerational duff legacy it’s being spun out to be – this has happened before. I had to eat a £21k loss ten years later on selling that house – getting on for a 40% loss in numerical terms, more in real terms due to inflation. It happens to other people too – but you don’t normally get people telling you they lost a packet on a house.
Those that made money, of course, bore the pants off you in the pub about how well they did. It’s the same effect that means that mates tell you when they sold shares at a profit but keep schtum about the ones than bombed. Nobody likes to back a loser.
I remember feeling aggrieved and hard done by at the time that it was such a push to buy a house, especially when I was paying 15% mortgage rates for the pleasure, so perhaps this gripe is just part of the human condition. That’s not to say that there aren’t other intergenerational legacies, some of which aren’t good. However, buying a house has always been a git if you’re in your twenties, and can still be out of reach in your early thirties if you’re unlucky with the market cycle.
There are some things to be said for some of PricedOut’s aims. We do have too many people and too few houses in the UK. Fair enough excluding the main residence from capital gains tax, but buy-to-let and second homes too? Why should property be different from any other business capital asset, after all since it is physically impossible to be two places at once there’s only a need for one CGT exemption.