Francis Beckett’s book What Did the Baby Boomers Ever Do For Us? came out in June. It looks at some similar themes from a different angle, accusing the post war generation of benefitting from the post-war welfare state, and then dismantling it.  It’s All Their Fault, by Neil Boorman makes the same case – although as the name suggests, it does so rather more bluntly.

The most recent contribution is Shiv Malik and Ed Howker’s book Jilted Generation. Out last just week, it zooms in on the experience of the under 35s.

A common theme in all these books is that baby boomers have benefitted from rising property prices, while their children have lost out (a point made by Ian Cowie earlier).

I agree with this – up to a point.

Yes, house prices have exploded. Between 1975 and 1995 average house prices in real terms rose just 3.5 percent. But between 1995 and 2009 real house prices shot up by 120 percent. And yes, rising house prices have redistributed money from poor to rich and from young to old. All under-50s together hold less than a fifth (just 18 percent) of the housing wealth in the UK.

But high house have all kinds of insidious, damaging effects. As a result not even the baby boomers can really be said to have benefited. They may have lost out less than other groups, but ultimately everybody loses from high house prices.

Here’s six different ways people lose out:

1) The young suffer

Firstly, and most obviously, young people can’t buy a house and settle down. As a result, young working couples are delaying having children, and end up having less children than they say they would like to.

2) Working home owners suffer

People who do manage to buy a house can then end up spending a fortune servicing their mortgage. At present things don’t seem to be so bad, because of unprecedentedly low interest rates. But as interest rates rise, those who stretched themselves to buy in the boom years may really start to suffer.

3) Older home owners suffer

Not even the baby boomers really gain. By late 2009 a staggering 80% of first time buyers under 30 needed help from their parents. Those with housing wealth are pestered to be the “bank of mum and dad”, feeling pressured to help out – or even guilty if they can’t help their kids get on the housing ladder.

In many cases parents end up with their grown up kids living with them, when they would much rather they moved out. So many young people now live at home it even has a modern acronym to describe it as a lifestyle trend – “KIPPERS” – “Kids In Parents Pockets Eroding Retirement Savings”. More scientifically, the ONS noted that the proportion of young people under 30 with a mortgage fell sharply from 43% in 1997 to 29% in 2009%. The boomers lose out in other ways too, because of the wider effects on our society.

4) Social mobility suffers

If being able to buy a house depends on having well off parents, then wealth or poverty will increasingly flow down families, reducing social mobility. The rich stay rich, and the poor stay poor, which is not very attractive.

5) Society suffers

As Alex Morton pointed out in a brilliant paper two weeks ago, expensive housing pushes people into social housing, and our social housing system then pushes people into dependency, because of the perverse incentives it creates. (The more needy you become, the higher up the queue you jump.) Even controlling for every other possible factor, people in social housing are 20% less likely to be in work than equivalent people who are not in social housing. While Britain as a whole is isn’t a “broken society”, on some of our big housing estates society definitely is broken, breeding crime and other problems that affect us all.

6) Taxpayers suffer – in all kinds of ways

Last but not least, we all suffer as taxpayers. The Government spends £20 billion a year on housing benefit, £15 billion in building, maintaining and subsidising social tenants’ rents, and at least £7 billion in welfare payments, due to higher unemployment rates among social tenants. These costs have shot up in line with rising housing costs.

The number one reason housing costs have risen is the constriction of supply. Our tight planning laws have made it difficult to build new houses – even though polls show people all over the country think we need more.

What is the government going to do about it?  We need more housing. Ministers are beavering away on ways to reform the system. But so far they have been shy about setting out their ultimate goals, and we don’t know how radical they are going to be.

They should shout it from the rooftops: high housing costs have hurt us all, and it’s time to put a stop to them.

Source Article: http://blogs.telegraph.co.uk/news/neilobrien1/100052912/who-gets-hurt-by-high-house-prices-all-of-us/