Can we blame the 55 to 70-year-old Burgess Hill citizens for the
current housing crisis in the town?
Also known as the ‘Baby Boomer Generation’, these Burgess Hill people
were born after the end of the Second World War as the country saw a massive
rise in births as they slowly recovered from the economic hardships experienced
during wartime.
Throughout the 1970’s and 1980’s, they experienced (whilst in
their 20’s, 30’s and 40’s) an unparalleled level of economic growth and
prosperity throughout their working lifetime on the back of improved education,
government subsidies, escalating property prices and technological developments.
They have emerged as a successful and prosperous generation.
Yet some have suggested these Burgess Hill baby boomers
have (and are) making too much money to the detriment of their children, creating
a ‘generational economic imbalance’, where mature people benefit from
house-price growth while their children are forced either to pay massive rents
or pay large mortgages.
Between
2001 and today, average earnings rose by 65%,
but
average Burgess Hill house prices rose by 124.9%.
The issue of housing is particularly acute with the generation
called the Millennials, who are young people born between the mid 1980’s and
the late 1990’s. These 18 to 30 years, moulded by the computer and internet
revolution, are finding as they enter early adult life, very hard to buy a
property, as these ‘greedy’ landlords are buying up all the property to rent
out back to them at exorbitant rents. It’s no wonder these Millennials are lashing
out at buy to let landlords, as they are seen as the greedy, immoral, wicked
people who are cashing in on a social despair.
Like all things in life, we must look to the past, to appreciate
where we are now.
The three biggest influencing factors on the Burgess Hill (and
UK) property market in the latter half of the 20th Century were,
firstly, the mass building of Council Housing in the 1950’s and 60’s. Secondly,
for the Tory’s to sell most of those Council Houses off in the 1980’s and
finally 15% interest rates in the early 1990’s which resulted in many houses being
repossessed. It was these major factors that underpinned the housing crisis we
have today in Burgess Hill.
To start with, in 1995 the USA relaxed its lending rules by rewriting the
Community Reinvestment Act. This Act saw a relaxation on the Bank’s lending
criteria’s as there was pressure on these banks to lend on mortgages in low
wage neighbourhoods, as the viewpoint in the USA was that anyone (even someone on
the minimum wage) any working class person should be able to buy a home. Unsurprisingly, the UK followed suit in the
early 2000’s, as Banks and Building Society’s relaxed their lending criteria
and brought to the market 100% mortgages, even Northern Rock started lending
every man and his dog 125% mortgages.
So when we roll the clock forward to today, and we can observe
those very same footloose banks from the early/mid 2000’s (that lent 125% with a just note from your Mum and a couple of breakfast
cereal tokens), ironically reciting the Bank of England backed hymn-sheet
of responsible-lending. On every first time buyer mortgage application, they are
now looking at every line on the 20-something’s banks statements, asking if
they are spending too much on socialising and holidays. No wonder these Millennials
are afraid to ask for a mortgage (as more often than not after all that – the
answer is negative).
Conversely, you have unregulated Buy to Let mortgages. As long
as you have a 25% deposit, have a pulse, pass a few very basic yardsticks and
have a reasonable job, the banks will literally throw money at you. I mean
Virgin Money is offering 2.99% fixed for 3 years – so cheap!
