housing studies association housing the generations: justice, inequality and the implications of...
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Young people are drowning in debt... 3 Average level of debt of YP has doubled Managing tight budgets YP more likely …. to attribute debt to taking on a first home or tenancyTRANSCRIPT
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Housing Studies Association Housing the Generations: Justice, Inequality and the Implications of
Political Change8-10 April, 2015, University of York
Minding the Housing Wealth Gap Dr Beverley Searle
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All cohorts experience economic recession
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Young people are drowning in debt...
• Average level of debt of YP has doubled 2004-2008
• Managing tight budgets
YP more likely …. to attribute debt to taking on a first home or tenancy
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When you do the sums, history will not repeat itself
RTB + rise in house prices = historically specific
Rising house prices + free tertiary education + generous welfare state = One off bonanza
“the most self-centred, self-seeking, self-interested, self-absorbed, self-indulgent, self-aggrandizing generation in American history”
(Begala, 2000)
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The new rhetoric of generational conflict
• Conflict between workers and pensions a ‘particular anxiety’ (Royal Commission, 1940s).
• From ‘needy’ to ‘greedy’ (Livsey and Price, 2013) • From ‘bed blocking’ to ‘house hording’
‘The Government cannot carry all these risks and costs, but there is much it can do to help people prepare: ... to make it easier to harness the value in people’s homes to support the costs and risks of later years’
‘The Government should help people be better informed about… how best to use their own assets, so that individuals and families can analyse their own situations and make their own informed choices’ (House of Lords, 2013)
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Is there a case for using housing wealth for welfare?
u35 65+Owner-occupier
05
1015202530
Scotland: 1999-2008
% o
f ho
h
16-24 25-34 65-74 75+0
102030405060708090
England 1981-2011
% o
f hoh
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What if the weekly food shop had increased at the same rate as house prices?
Figures sourced from Shelter
£4.36£51.18
£8.47
£5.01£53.18
£10.45
£453.23
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The case against using housing wealth for welfare
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%16-34 35-49 50-64 65-80 80+
% o
f Hou
sing
Wea
lth
Source: English Housing Survey, author's analysis
Housing wealth distribution: England (2011)
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The case against using housing wealth for welfare
Low
est 2 3 4
Hig
hest
Lo
wes
t 2 3 4H
ighe
st
Low
est 2 3 4
Hig
hest
Lo
wes
t 2 3 4H
ighe
st
Low
est 2 3 4
Hig
hest
16-34 35-49 50-64 65-79 80+
0%
4%
8%
12% Wales (2008)Lo
wes
t 2 3 4H
ighe
st
Low
est 2 3 4
Hig
hest
Lo
wes
t 2 3 4H
ighe
st
Low
est 2 3 4
Hig
hest
Lo
wes
t 2 3 4H
ighe
st
16-34 35-49 50-64 65-79 80+
0%
4%
8%
12%
16% Scotland (2008)
Low
est 2 3 4
Hig
hest
Lo
wes
t 2 3 4H
ighe
st
Low
est 2 3 4
Hig
hest
Lo
wes
t 2 3 4H
ighe
st
Low
est 2 3 4
Hig
hest
16-34 35-49 50-64 65-79 80+
0%
4%
8%
12%
16% Northern Ireland (2008)
Low
est 2
0%2 3 4
Hig
hest
20%
Low
est 2
0%2 3 4
Hig
hest
20%
Low
est 2
0%2 3 4
Hig
hest
20%
Low
est 2
0%2 3 4
Hig
hest
20%
Low
est 2
0%2 3 4
Hig
hest
20%
16-34 35-49 50-64 65-79 80+
0%
4%
8%
12%
16% England (2012)
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Is ABW really alleviating intergenerational justice?
“the drive to continuously improve one’s standard of living and ‘keep up with the Jones’ contribute to bring about, if households are not credit constrained, a growing indebtedness to finance consumption in excess of current income”
Barba and Pivetti (2009, p126)
L O A N
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The transformation of housing wealth
• Older people across Europe rarely withdraw housing equity (Doling+Elsinga, 2013)
• In the UK older owners use equity to pay off debts, or housing maintenance (Doling+Overton, 2010; O’Mahony+ Overton, 2014)
• Middle-age owners seem more willing to dip into the kids inheritance (Rowlingson, 2006; Wood et al, 2013; Doling and Ronald, 2010)
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Most people take out additional loan to pay off debt.
Low
est 2
0%2 3 4
High
est 2
0%Lo
wes
t 20%
2 3 4Hi
ghes
t 20%
Low
est 2
0%2 3 4
High
est 2
0%Lo
wes
t 20%
2 3 4Hi
ghes
t 20%
16-34 35-49 50-64 65-79
0.0%
5.0%
10.0%
15.0%
20.0%
Paying off Debt Purchase propertyEducation Business
% o
f res
pons
es
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Equity borrows have half the savings and twice the debt as equity savers.
Source: Searle, 2011
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Housing wealth, welfare and financial security
FCA = bring about financial security – Mission impossible? • Housing welfare = debt welfare• Is downsizing a solution?
Releasing £75k needs equity of £200k (Fox O’Mahoney, 2013)England: threshold for contribution £118,000
33% of older owners will be under the threshold. 28% will be over the threshold without sufficient equity. 39% will be over the threshold with sufficient equity
• Help to Buy or Help to Borrow more?
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Intergenerational Justice – or just plain old inequality?
“To pit people and places with every advantage against those with none and praise the former for their superior fortitude is age-old devious nonsense”
(Diprose, 2015, p51).
Housing WealthWealth Inequality
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It’s good to talk about…
• Neutral terminology • Home not housing • Housing and wellbeing
• Resilience• Structure: accommodating the political will to own• Function: shelter, welfare and financial asset• ‘Bouncing back’ to high house prices prevents entry into home
ownership• ‘Adapting’ to more debt
“how housing gets under the skin”Charlotte Woodhead
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Low cost home ownership – a leg up to nowhere?
“But this will never be mine. I’ll struggle. This will put me in my grave trying to keep a roof over my head. And it will never be mine” (Quote taken from McKee, 2010).
”Whilst the provision of a one-off product (a house) enables the state to ‘wash it’s hands’ of long-term commitment, the assumption on which this is based, that all property matures into a stronger financial asset over time, thus facilitating upward property movement and providing collateral security, is not necessarily accurate for low-income property markets” (Lemanski, 2011, p73).
“in the context of recent rising housing markets, any anticipated ‘move on’ … is unachievable as they [low-cost shared owners] lack sufficient resources to bridge the equity gap between their current investment levels and the values in the open market” (Wallace, 2008, p75).
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Housing has become a financial burden, particularly in so in the case of poorer households who have difficulty meeting utility bills and maintenance costs (Mandič, 2010)
The costs of ownership goes beyond the mortgage, taking on board additional costs of insurance, repair and maintenance: “yet for lower income groups being able to meet these financial outlays is a challenge” (McKee, 2010 p44).
“many new generators of deprivation and insecurity emerging” and many ‘home owners in post-socialist countries experience(ing) material deprivation and hardship to a significant extent” (Mandič, 2010, p223-224).
Low cost home ownership – asset or burden?
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In conclusion
• Through AWB we are encouraged to buy our way into debt and the risks of the financial market system.
• Through resilience we are encouraged to buy into the inevitability of crisis in that market system.
• Through intergenerational justice we are raising our children to move from being the ‘have nots’ to ‘have patience’ (Diprose, 2015)