We cannot sustain debt and asset bubbles and make the intergenerational books balance. It’s that simple, the center cannot hold. The evidence is everywhere. See: Millennial housing crisis engulfs Britain:
Analysis conducted as part of a two-year investigation into intergenerational fairness in Britain, chaired by a former Tory minister, found that millennials are being forced into increasingly cramped and expensive rented properties that leave them with a longer commute and little chance of saving for a home. It also finds an increasing proportion of the young living in overcrowded housing….
Millennials, classed as those born between 1981 and 2000, are half as likely to own a home at the age of 30 as baby boomers because of higher prices, low earnings growth and tighter credit rules. In the 1980s it would have taken a typical household in their late 20s around three years to save for an average-sized deposit. It would now take 19 years, the analysis shows.
Almost two-fifths of millennials rent privately at 30, double the rate for Generation X, born between 1966 and 1980, and four times the rate for baby boomers – born after the war until 1965 – at the same age.
Millennials are now spending an average of nearly a quarter of their net income on housing, three times more than the pre-war generation, now aged 70 and over.
Interest and tax rates fell from 1980 to 2016 and levered asset prices went along for the ride in a series of boom/bust cycles as the boomers aged and debt levels skyrocketed worldwide. That magic is now over and the secular payback period is arriving in the form of deflating asset prices, higher savings rates, less consumption, weaker economic growth and higher property and consumption taxes. We cannot have cake and eat it too, never could.
The commission…is expected to conclude that new taxes on property wealth may be the only way to restore fairness and prepare the country to pay the care and support costs of an ageing population.
;
