Millennials need lower UK house prices rather than £10,000

This morning the attention of Mark Carney and the Bank of England will have been grabbed by this from the Halifax Building Society.

On a monthly basis, prices fell by 3.1% in April, following a 1.6% rise in March, reflecting the
volatility in the short-term monthly measure.

Those who watched the ending of the Lord of the Rings on television over the bank holiday weekend may be wondering if this is like when the eye of Sauron spots that the ring of power is about to be thrown into the fires of Mount Doom? More on the Bank of England later as of course it meets today ready for its vote on monetary policy tomorrow although we do not get told until Thursday.

If we step back for some perspective we see this.

House prices in the latest quarter (February-April) were 0.1% lower than in the preceding
three months (November-January), the third consecutive decline on this measure

This means that we have fallen back since the apparent boom last October and November when the quarterly rate of growth reached 2.3%. Now we see that over the past three months it has gone -0.7%,-0.1% and now -0.1%.

Moving to annual comparisons we are told this.

Prices in the last three months to April were 2.2% higher than in the same three months a year earlier, down from the 2.7% annual growth recorded in March.

Again the message is of a lower number.

What have we learnt?

Whilst the monthly number is eye-catching this is an erratic series as going from monthly growth of 1.6% to -3.1% shows. Even the quarterly numbers saw falls last year at this time but then recovered as we mull a seasonal effect. But for all that as we look back we do see a shift from numbers of the order of 5% annual growth to numbers of the order of 2%. Of course that is the inflation target or would be if the UK establishment allowed house prices to be in the inflation index rather than keeping it out of them so it can claim any rise as wealth effects. Personally I see the decline in the rate of house price inflation as a good thing as for example the last three months has seen it much more in line with the growth in UK wages.

What does the Halifax think looking ahead?

They are not particularly optimistic.

“Housing demand has softened in the early months of 2018, with both mortgage approvals and completed home sales
edging down. Housing supply – as measured by the stock of homes for sale and new instructions – is also still very
low. However, the UK labour market is performing strongly with unemployment continuing to fall and wage growth finally picking up. These factors should help to ease pressure on household finances and as a result we expect
annual price growth will remain in our forecast range 0-3% this year.”

In terms of detail we are pointed towards this.

Home sales fell in March. UK home sales dropped by 7.2% between February and March to 92,270 –
the lowest level since May 2016.

And looking further down the chain to this.

Housing market activity softens in March. Bank of England industry-wide figures show that the
number of mortgages approved to finance house purchases – a leading indicator of completed house
sales – fell for the second consecutive month in March to 62,914 – a drop of 1.4%. Approvals in the
three months to March were 1.7% higher than in the preceding three months, further indicating a
subdued residential market.

So the fires of the system are burning gently at best.

The UK establishment responds

Of course so much of the UK economic system is built on rising house prices so we should not be surprised to see the establishment riding to the rescue. Here is the Financial Times on today’s report from the Intergenerational Commission and the emphasis is mine.

After an exhaustive, two-year examination of young Britons’ strained living standards and the elderly’s concerns about health and social care, the commission recommended a £10,000 “citizen’s inheritance” for 25-year-olds to help them buy their first home or reduce their student debt, lower stamp duty for people moving home and billions more spent on health in a report published on Tuesday.

Nobody at this august institutions seems to ever stop and ask the question as to why so much “help” is always needed? The truth is that it is required because house prices are too high. They of course turn a not very Nelsonian blind eye to that reality. Also the bit about creating the money seems rather vague.

The commission said the government could find the money needed to fund the additional public expenditure by introducing new taxes on property and wealth.

Indeed the lack of thought in this bit is frightening especially when we see the role of who said it.

Carolyn Fairbairn, CBI director-general and a member of the commission, said: “The idea that each generation should have a better life than the previous one is central to the pursuit of economic growth. The fact that it has broken down for young people should therefore concern us all.”

No challenging of all about can or should we grow if it means draining valuable resources and sadly no doubt soon we will get more global warming rhetoric from the same source. Then to correct myself on the issue of taxes we do get some detail and it is something that the establishment invariably loves.

The bulk of the additional tax measures came from a proposal for a new property tax, with annual rates of 1.7 per cent of the capital value of a home for any properties worth more than £600,000 and 0.85 per cent on values below that.

What sort of mess is that? You inflate house prices and tell people they are better off. Then you make the mess even worse by taxing many on gains they have not taken! A clear cash flow issue for many who may have a more expensive property but still live in it. This will be especially true for the retired living on a pension.

Oh and £10,000 won’t go far will it? So this is something that will plainly go from bad to worse.

Also some advice to millennials. Should you ever get this £10,000 don’t pay off your student debt as that looks to be something likely to be written off road to nowhere style in the end anyway.


If we start with millennials I do think that times are troubled but the real driving factor affecting them is this.

Those in their late 20s and early 30s were the first generation not to have higher pay on average than people of the same age 15 years earlier, according to the commission.

We are back to wages again which the establishment of course then shouts look over here and moves to house prices. But then it has a problem because its claim that there has been little or no inflation faces this inconvenient reality.

With the prospect of more time spent renting from private landlords, the average millennial spent 25 per cent of their income on housing, compared with roughly 17 per cent for baby boomers when they were younger, a figure that subsequently fell for that generation as their incomes rose sharply in the 1980s and 1990s.

So we have higher prices and payments without having much inflation! It is a scam which the establishment continue with their claim that housing inflation can be measured using imputed rents. Even worse they measure rents badly and may be underestimating the rises by around 1% per annum.

Now we can return to Mark Carney and the Bank of England who no doubt feel like they have heat stroke when they read of house price falls. This is because of the enormous effort they have put into this area of which the latest was the Term Funding Scheme which ended in February.  It started in August 2016 and UK Bank Rate is the same now at the emergency rate of 0.5% but we can measure its impact on mortgage rates. You see according to the Bank the last 3 months before it saw new business at 2.39% twice and then 2.3% whereas now it has gone 1.96%,2.02% and now 2,04%. So an extra Bank Rate cut just for mortgages.

Now if we factor that into house prices would it be churlish to suggest it may have raised them by the £10,000 the Intergenerational Commission wants to gift to millennials?





43 thoughts on “Millennials need lower UK house prices rather than £10,000

  1. The time is getting closer to the Universal Basic Income(or whatever the scheme will be called when it is rolled out) that I have predicited on numerous occasions, now lump sums proposed for millenials paid for from taxes on… price appreciation – you couldn’t make it up, or rather you have to if the current system fails to produce perpetual house price gains, otherwise the whole rotten edifice posing as the UK economy collpases.

    The housing market is now consuming the UK economy, as millenial wages(the traditional first time buyers that historically underpinned the housing market) are falling, they also face the student loan debt problem, meaning higher and higher proportions of their net income are being consumed by either rent or mortgage costs.

    The longer the government delays the inevitable by interfering in the housing market, the greater the bust, but since they are running the country on behalf of the banks and not the general population, do not expect sanity to prevail any time soon, just think the most outrageous, unfair, totally insane options that could ever be devised and you will not be far from what transpires over the years to come.

    • Hi Kevin,

      I’m with you in a citizens income, but it needs to be ran in conjunction with a LVT. Otherwise all the free money from the state, will just be pushed back into property.

      As for the poor widow who lives in her million pounds flat in Chelsea, it can be offset and claimed back from the estate.

      • That’s just the problem Jason, the solutions that come will be used to bail out the overindebted and those unable to but their first properyt(UBI and help to buy -lump sums like those mentioned above), and allow new buyers to load up with fresh unrepayable debt that will require endless subsidies in years to come as the “fix” is there to maintain the profitablity and control of the banks over the post industrial economy.
        LVT is the solution and iterations therein, (together with the reward to those who have not entered into property speculation when the inevitable bail in arrives to offset the subsidy to those that have) but that is precisely why it will not be adopted, also don’t forget the corruption of the political process as the average UK voter wants endless house appreciation, as they think it is the route to independent wealth and not in fact the route to eternal debt slavery.

    • “The housing market is now consuming the UK economy,…”””

      no no no ,

      the BANKS are the economy , and they are vampires who never sleep…


      PS: where’s Buffy when you need her ? ( or Van Helsing for older readers )

  2. Do millennials expect to be able to afford a mortgage whilst still in full-time education?
    Baby boomers couldn’t.
    How many years after leaving full-time education is it realistic to expect to be able to afford a house?
    How can we suck in millions of people, subsidise the buying of property for private rental, not build houses, and expect prices to remain within the reach of people who are not long out of full-time education.
    The idea that it’s baby-boomers’ fault that the young cannot afford homes is a damned lie.

    • “The idea that it’s baby-boomers’ fault that the young cannot afford homes is a damned lie.”

      totally agree on that one but that the nasty narrative thats being pushed these days .

      frankly people forget how hard it was to get on the housing ladder , sure it awlful now , yes I wouldn;t have started from here either

      but to stuff !0K into ,well , what exactly ? the new build housing ?

      follow the money and you’ll see this scheme stinks


      • I paid more than the face value of my mortgage in interest charges – it would have been more but for the early redemption.

    • Quite clearly no one expects to buy a house whilst in education such a comment is hardly fitting to a website where common sense is allowed.

      But its the under 45s who were priced out for not buying in their early 20s. The initial bubble was well under way by 2001 so someone born in 1975 who didn’t buy and was waiting for economic reality is now 42/43. To suggest its just the under 30s is ignorant of fact.

      Then when they waited until 2007/8 when house prices got to the highest comparative to wages in UK history, they could never have predicted what was to come next (QE/ZIRP). Then in 2013 the Tory party, whose chancellor said you can’t build an economy on private sector debt and a housing bubble. Then maliciously Gidiot and the Tory party re-inflated the housing bubble with taxpayers and savers money via HTB and Funding for Lending.

      From 1997-2007 boomers spent like drunken sailors in a brothel but without the sailors money, they voted for Labour as they were giving them free money via house price inflation, when this ended in 2010 they voted elsewhere. Then in 2015 when the Tory party gave them more free money via the reinflated property bubble they voted them in with a majority.

      Are the millions of boomer who took on un-repayable sums of debt in the run up to 2007 not responsible for insane house prices? What about the 2 million landlords who are predominantly from this cohort are they not responsible?

      Or is it just the BoE and LIBLABCON who are wholly responsible?

      • “Quite clearly no one expects to buy a house whilst in education such a comment is hardly fitting to a website where common sense is allowed.”
        When a huge proportion of our young people are not leaving tertiary education until well into their 20’s, and having a gap year, then a “gap job” (whilst they decide what they really want to do), then it is stupidity to think that they’ll be able to afford houses before the age of 30, and it’s idiocy to compare home-ownership of the under-30s now with that of 30 years ago, as most of us had been in full-time work FOR A DECADE prior to buying a home.
        That and the entitlement of millennials leads me to the irony of, “Do millennials expect to be able to afford a mortgage whilst still in full-time education?”
        Unpucker yer arse-cheeks.

        • BTW, few boomers are in the housing market, much of their spending was on their children/grandchildren, and was a symptom of house price rises, not a cause.
          The idea that changing govt. changed policy is ridiculous.
          For one thing, there are not enough boomers to choose a govt. alone.
          For another, there was no alternative policy on offer.
          For a third, you cannot get a decent mortgage to become a landlord at 60+, the b-t-l owners are mostly Gen X.
          For a fourth, the sale of social housing in the 80s left much of the remainder of social housing as dumping grounds, whereby people felt forced to buy in order to escape.
          For a fifth, many people bought when it was seen that if they didn’t then, housing would become unaffordable.
          For a sixth, house repossessions in the 90s reached over 100,000 a year, as people really struggled with mortgage interest rates; the idea that we had it easy is arrant nonsense.

  3. We have democracy in this country yet the electorate continue to vote for those whose policies impoverish them.
    The answer to rising house prices is to put limits on what can be borrowed a 20% deposit and 3 times the highest earner in a households salary
    plus punitive taxation on buy to let that will bring down prices and increase supply.

    • It’s first past the post where one of the ruling OxBridge elite parties needs about 38% of the vote in distorted first versus second place contests to get a majoirty in parliament.

      Democracy it ain’t.

      • I agree with you Dutch but it could be worse we could have the US one Party state with a Presidential election which is no more real than Big Daddy v Giant Haystacks

      • “Democracy it ain’t”. – so true

        and hidden in plain site – its a representative parliamentary ‘mock-cracy
        that’s regimented by the whip system….

        and run for the Banks of course – they are the economy and the “people”

        Governance of the People by the Banks for the Banks


        Ps: must get some more popcorn in – gonna be a good show 😉

      • The problem with proportional representation is that it is even more disproportionate, whereby minor, unpopular, coalition parties can become part of the govt.
        Neither is it the truth that one can agglomerate all the votes cast for coalition parties, and call it rule by majority, as they stand on different manifestos (or there would be no point to them), and in truth, NO-ONE gets what they voted for.
        Furthermore, since people often vote on balance, they may find that the party they voted for sacrifices the policies which swayed them in order to form a govt.
        To call proportional representation fairer, is superficial nonsense.

  4. This grand idea was presented on the Today programme by Lord (Two Brains) Willetts which just goes to show that an ounce of common sense is of more use to the country than a high IQ.

    • I had the misfortune to watch that on Sky news.No mention of the numerous back door bail outs and the fact that houses would be cheaper if they limited immigration and let RBS go to the knackers yard that it deserves.

      Incredible to watch supposedly switched on people talking about how to enable millenials to buy overpriced houses rather than take the route one option and let the prices fall.

      I suspect it is because so many of the oxbridge/banking political elite have skin in the game.

  5. Shaun – As usual your comments are spot on. I have never heard such a load of rubbish as the idea to give 25 year olds £10,000 and expect them to invest wisely! Where would they spend it? – a ‘new’ car, an extended holiday – the choices are endless if you are 25. Economists may also have to increase the level of vice expenditure in GDP if this idea was taken up. Very, very few people have any money at the age of 25 and this generation is no different to my own. My kids are now early thirties and just starting to earn a reasonable wage which is exactly the same age that my finances started to improve.

    It is asset prices that are too high.

    In terms of standard of living I would judge that my kids generation do more, spend more and have as much fun as I did at their age.

    • ‘I have never heard such a load of rubbish as the idea to give 25 year olds £10,000 and expect them to invest wisely! ‘
      ‘It is asset prices that are too high. ‘

      I can think of no worse way to use that £10k than to put a deposit down on a shared ownership one bed flat in Nottingham at the top of the market.

      The political class are clearly trying to find time to offload their buy to lets.

  6. Hello Shaun,

    oh god , the the precious again !

    houses are homes and the Banks will need every penny that the HMG can send their way ….

    still on emergency 0.5% rates? I can now see this dropping to 0% to save the Banks, sorry , economy , again .

    milked the lower incomers for mortgage cash? can’t buy a house ?

    Well as other have posted – give 10K , heck why not 20K , or 30K , its only money after all *

    and that will get inflation going , will it ?


    * cue helicopter money music….

    • Hi Forbin

      Well it won’t get inflation going as our establishment measures it as they have gone to extraordinary efforts to get and then keep house prices out of our official inflation measures. Oh and I did suggest on social media earlier why not £100k or £1 million? As once you start on that sort of madness there will be no stopping it.

  7. Pavlaki rather beat me to it, but my first reaction was that unless 25 year old men have changed remarkably since I was one, this money would be spent on a new passion wagon or a “monster birthday party having it large” in Ibiza. This would of course do wonders for the U.K. car sector and Spanish tourism, but “Two brains “ or rather “not got two brain cells to to rub together” would then create some housing voucher to channel the cash to his property mates. No great surprise that his first political job was as bag carrier to Lawson.
    Then of course, there was the cost – about half a red bus! It would apparently come from a lifetime receipts tax – yes, of course I would admit the small amount I received from my paternal grandparents nearly 40 years ago and not bother to hide the £125k allowance among a wife or kids, but tax planning is for those, who can afford it. Given that the Tories lost quite a few votes last year to older people, who objected to any tax on property to pay for their social care, this would have a similar result and of course, that inherited cash would otherwise go to the young anyway. He clearly does not understand student costs either – as Martin Lewis regularly points out, that is a graduate contribution tax and earning £30k would mean you paid £450pa, so it would take more than one hundred years to pay it off! So, there would be no point whatsoever using it to pay uni costs.

    It is indeed a wororrying time for Carney as even unsecured debt is failing to boost th3 economy and house prices have reached a level unsustainable by income, so this is another wheeze on top of Help to inflate prices. Looks like he will abandon a rate hike and inflation will rise to impoverish us all.

    • Hi David

      I rather suspect they would take the advice of George Best.

      “I spent a lot of money on booze, birds and fast cars. The rest I just squandered. ”

      Oh and in Carney’s case it would mean he has abandoned a rate hike yet again.

  8. ” Deed we are in a muddle” as Stephen said in Hard Times.
    Muddled thinking by muddled politicians.
    We all agree that no action was taken to abate the rise in property prices and I wonder if the time has passed for this to be rectified.
    For feel for these young people but these proposals are ludicrous.
    Before the budget I wrote to Phillip Hammond to suggest that he raised the personal gift allowance with inflation to no avail.
    i know that not all would benefit but it would be a start if grandparents,parents and other members of a family could pass on more money than £3,000 without IHT possilbilites.

    • Hi Midge

      Yes we are. Those in the establishment pushing for even more house price rises are if we switch Dickens novels like the Barnacles family who rum the Circumlocution office in Little Dorrit.

      “The Circumlocution Office was (as everybody knows without being told) the most important Department under Government. No public business of any kind could possibly be done at any time without the acquiescence of the Circumlocution Office. Its finger was in the largest public pie, and in the smallest public tart. It was equally impossible to do the plainest right and to undo the plainest wrong without the express authority of the Circumlocution Office”

  9. Interesting that the number of house sales is down to the level of May 2016 – and what did the BoE do next under cover of the referendum result? Suddenly 15 months after the Sledgehammer we reached peak house prices/activity – and now, prices are in the words of Simon and Garfunkel ‘Slip, sliding away’.

    Perhaps it will be Pete Gabriel for Governor. I am really looking forward to the BoE local agent meeting to update us on the economy

  10. ‘Nobody at this august institutions seems to ever stop and ask the question as to why so much “help” is always needed? The truth is that it is required because house prices are too high. They of course turn a not very Nelsonian blind eye to that reality.’

    Shaun, as ever, love the continuing expose of our ruling elites.

    As I mentioned earlier I watched a Sky News debate on this and none of the three participants mentioned the elephant in the room in that we could just raise rates and crash asset prices.

    Not an option apparently.

  11. I agree with the overall article that a £10,000 ‘gift’ is yet another inflationary input into house prices and will be quickly be swallowed by hpi. However, I would be wary about advising re whether to repay student loans or not. Certainly, if you receive £10,000 and your outstanding loan is £50,000 with some decades left to go then it makes no sense in the vast majority of cases.

    However, if you have the later type of loan of £50,000 say, then if you can repay it off early, then it can make sense. Because, interest rolls up onto the loans making it fairly quickly unrepayable leaving one’s payments as a sort of higher rate tax. However, if you can 1. stop it compounding, 2. repay it fairly quickly, it could save you money.

    You can play around with the figures and see the effect on the repayment profile on this useful site:

    The other thing to note is that the Government changed the loan contract for the later ‘Type 2’ loans such that they retain the right to universally alter the terms such as repayment threshholds and even interest rates. The peace of mind to be gained to clearing a debt hanging over one’s head, with a capricious and changing government prone to use whatever tools it sees fit to feed itself, is not to be underestimated.

    Personally, I think the whole thing is an absolute scandal when the government can raise the debt very much more cheaply on our behalf at near 0% rather than 3% over RPI. But it was the first and most major thing along with cutting capex the Lib Con coalition did to try and cut the groeth to the National Debt in the wake of the financial crisis when there were genuine fears of a run on the £.

    • “The peace of mind to be gained to clearing a debt hanging over one’s head, with a capricious and changing government prone to use whatever tools it sees fit to feed itself, is not to be underestimated. ”

      a HMG thats beholden to the Banks , the Banks are still bust – they are insolvent – a drop in house prices is absolutely terrifying for them

      after all if the Banks crashed – where would our noble and entrusted politicians go after parliament ?

      gotta retire somewhere where’s there’s a good sweet trolley….


  12. Hi Shaun, Iike your prelude to the next loosening of the financial gamut. I great piss-take on Carneys’s laughable decision this week, as you suggest it is rabbits and hat time, and £10K is not enough to get the party going again, especially when you consider:
    1) Brexit fiasco
    2) Trumps Trade War (and other wars)
    3) Money Supply going through the floor
    I listened to the R4 mockumentary story on my commute this mornnig and caught up i=on the FT article and comments this evening. When you read the heavy response and recommended comments section there wasn’t barely a feedback which did not cite LVT and build on the green-belt – if that is the Ft readership then just how can the establishment cook up this garbage and think the public will wear it?

    Anyway my housing product will come to market soon, produced from my UK based robotic factory. I am just considering the pricing policy, £99K or £129K I can’t decide. The robots can make as many as required. 100K, 1M or even 10M new homes. Initially I will only sellto those folk who don’t already have a home. Do you think this is the kind or intervention the Govt would like?

    Paul 🙂

  13. I am far from an inflation nutter but I find it utterly baffling that we are meant to believe in measures of the price level that exclude housing, administered prices (including energy, water, sewerage, public transport, tuition fees, and telecommunications), and “volatiles” like, er, food. It’s more like “the price level except anything genuinely important” or maybe a bit more charitably “the price level for discretionary conspicuous consumption only”.

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