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The Lucky Generation who Could Buy a Home
This article is an external press release originally published on the Landlord News website, which has now been migrated to the Just Landlords blog.
The young and elderly are accustomed to renting, but for those born in the 1950s, buying a home was fairly simple.
It can be frustrating for members of generation rent to hear about how easy it was to buy a house in the past. But the truth is that apart from a brief period, buying a property has always been difficult.
For those now in their 80s, just half were homeowners or had a mortgage by their 50s; the others rented. People in their 90s at present struggled even more. So despite young people feeling they have it bad, the elderly today were also part of a renting generation.
Before that, it was quite the same. In the 20s and 30s, house building in cities in Britain was undertaken by investors who built for landlords, or by landlords themselves. For most people, wages were so low that they had to rent. Salaries did grow after the Second World War, but at this point there was a shortage of labour, and therefore housing to buy.
Conservative and Labour governments fought to build the most council homes, and individuals built their own houses. But even then, it took people a while to save a deposit, get a mortgage from the building society and plan the building of their property.
In the 70s, there was mortgage rationing and interest rates were in double-digits. Council house building was also slow.
The Lucky Generation who Could Buy a Home
It was the 80s that saw the biggest changes. For those now in their 60s, these were the lucky ones at this time. In 1983, three quarters of those aged 28 owned their own home outright or had a mortgage. By the time they were 30 in 1993, 86% lived in owner-occupied housing. Just one in seven rented into their late 30s.
It was much easier for this generation to buy than it had been for their parents and would become for their children.
Professor of Geography at the University of Oxford, Danny Dorling, explains his experiences with housing: “I was aged 23 when, in the early 90s, I bought my first home in Newcastle upon Tyne with my then girlfriend. Neither of us had a permanent job. I only had a two-year contract. I was a research associate at the university studying housing. My salary was not large and I had almost no savings.
“Because I was studying housing, I decided to ask 16 banks and building societies if they would give us a joint mortgage. All 16 of them interviewed me and many interviewed both of us.
“All of them sucked their teeth or otherwise looked disparagingly at us asking to borrow so much money when we had so little job security and low wages. All of them made it look as if it would be very hard for them to lend us the money and we would have to wait and see.
“And then all but one offered us a mortgage. We bought out first home, a three-bed end-terrace for about £50,000. It was not hard to do.”
Dorling explains how this happened: “Had I not asked 16 lenders if they would lend and discovered that 15 would say yes, I would have been left with the impression that I was very lucky to be granted a mortgage back then; but it was not luck, they had so much money to lend that they were forced to lend it to people who were cohabiting, young and only in temporary employment. The Big Bang of 1986 had forced them to compete with each other and they needed our interest payments.”
Lending rules are now a lot stricter. This is in part due to the assumption that house prices will have to stop rising. They are now so high that they may not increase further. Banks are therefore worried that if they lend irresponsibly, they won’t be able to recover funds through repossession. The Government is also backing the banks through the Help to Buy scheme, meaning that it does not want to be left with insecure debts.
The consequence has been that only a third of people aged 30 today can buy a house. It is not until people are in their 60s that they are in a home owning majority.
Dorling says: “I am the last of the lucky generation. Indeed, I am probably the youngest of that cohort. When I did get a permanent job at the University of Bristol in the late 90s, I was so shocked at the house prices there, in comparison to Newcastle upon Tyne, that I rented and only later bought upon moving back north to Leeds.
“Not buying in Bristol in the 90s was almost certainly the most stupid financial decision of my life. But today having a mortgage at all has become a privilege, so who am I to complain?”1
