House prices and the profession

for sale sign
Share this content

We all know that house prices have got out of control, especially in London. Even so, it was chastening to learn that 40% of young people cannot afford to get on to the property ladder even if they have enough money to pay for the deposit.

While that statistic sounds terrifying, in London the equivalent number was 76% ie three people out of four under the age of 34 are either renting, living with parents or presumably camping somewhere.

In the accountancy sector, we are probably largely protected from the consequences, as the majority of our most valued employees can just about afford to buy a small flat once they have qualified. Even so, many might prefer a large house in a different region (or even country) to the cramped conditions that they would be forced to occupy in the capital or any other major British conurbation.

Support staff will almost certainly be struggling to buy a property, meaning that they are going to be even harder to come by than has been the case to date.

The difficulty in recruiting staff at various levels is the most common complaint whenever groups of accountants get together. There is a major gap at managerial level, caused by trainee recruitment freezes a decade ago as the recession bit, while many of us are finding it tricky to fill vacancies at almost all levels with high-quality employees. One fears that this is only going to get worse over the next few years unless there is a property market slump.

At a different level, many of those in senior positions in the profession are likely to have children who cannot afford to buy their own homes without a significant cash input from the old folks.

Even those who can afford to spare the odd half million may be reluctant to do so, particularly if they have large families. The alternative is to watch the grandchildren being brought up in rented accommodation, properties where they are obliged to share rooms with siblings or, once again, out of range in a location where house prices are at least a little more manageable and our only regular contact comes via Skype.

Where will it all end? Is it possible that, eventually, property prices in London will get to such heights that no young people will be able to invest in their own homes on the basis of a sensible multiple of salary? That is beginning to seem increasingly likely. Another equally terrifying prospect is that interest rates will take a hike following a no-deal exit from Europe, leaving even the relatively well-to-do displaced.

In theory, Philip Hammond might wave his magic wand at the end of the month and come up with a perfect solution in his Budget speech. However, as a fully signed-up accountant, I don't believe in magic, while Mr Hammond will probably have even more significant economic problems to resolve in his final visit to the dispatch box before the fireworks that he clearly anticipates commencing next March.

About Philip Fisher


Please login or register to join the discussion.

10th Oct 2018 13:30

No politician wants to be seen to actively cause property price decreases for obvious reasons. It's that simple.

Thanks (2)
11th Oct 2018 12:42

Genuine question: Why is the concept of a young person living in rented accommodation so horrifying?

It seems to me like ownership is seen (by some people at least) as an irrevocable human right and that it is therefore horrendous to consider that somebody might spend some part of their lives financially incapable of claiming this sacred entitlement.

OK I accept there is the ongoing expenditure of renting compared with the long-term investment of ownership, but how bad is that really? Is it just a cultural sense of entitlement or is there more depth to this issue than I'm aware of?

I'm genuinely curious about this as I currently live in rented accommodation and certainly on my own I likely can't afford to purchase a home of equivalent size and quality to the one I currently inhabit as a tenant, but I don't feel in any way hard done by as a result of this, I just accept that that's the economic reality of the present times and so I make the best of what I've got. For what it's worth I am within the age group that this article concerns itself with.

Grateful for any enlightening responses, I'm well aware there's probably a whole host of related issues that I lack knowledge of in this regard.

Thanks (1)
to Ben Lauritson
11th Oct 2018 13:33

It's not horrifying. The answer again is that it's all political (i.e. the opposition will always complain something is wrong with our housing system by pointing to unaffordable purchase prices (and the consequential supposed awfulness of people having to rent etc.) and the Government will never do anything that actively causes price decreases).

I remember people continuously saying in the period from 1998-2005 that house prices were far too high (and would fall/crash), but they continuously went up massively in that period (especially in the end boom bit 2005-2007).

Thanks (3)
to Justin Bryant
11th Oct 2018 15:48

Thanks Justin, that makes sense.

Thanks (0)
11th Oct 2018 17:36

Expensive, yes, out of control in London, possibly, but not out of control across the whole UK.

Edinburgh is not the cheapest UK market by any stretch, and yes the one/two bedroom flats have gone up in price and outpaced earnings, but there are still starter flats at the £130-£150k mark which ought not to be impossible for those who say end up with a reasonable university degree, certainly not if a couple.

There has been no time when everyone could afford to buy their own home that I can recall, back in the 1980s, when I bought my first property ,a large proportion of people my age did not buy, but there was still then a decent stock of council housing left to rent.

My son is 26, he left university at 22, he ought to have saved his first house deposit by sometime next year (I want his room) and will likely buy something in Edinburgh next year (If Brexit does not scare him abroad) , that will be with no support from us (I still have his sister who has returned to university to support) but with money he has saved re likely deposit/furnishing/legals etc

Here is a two bed across the park from our house, decent enough North Edinburgh area, o/o £140,000. On say £30,000 a year post university not that out of reach, for a couple each on £25,000 again likely affordable.

I do accept property is more expensive, and building more would not be a bad idea, but the sob story of never being able to afford I keep hearing it is a tad overdone (except re London and SE etc).

Thanks (2)