The general cost of living has gone up, unemployment has only just come down after the massive fallout of 2008 – and many young people coming out of university still remain unemployed – while school and university fees are higher than ever, nearing American standards of unaffordability.
All this as defined benefit pension schemes are singing their swansong and markets seem to be ending a prolonged upswing and entering a period of volatility.
I was recently reading an article about how my generation – I’m pretty sure this spans from about 20 years old to 40 years old now – is failing to launch, failing to grow up, or at least failing to feel grown up.
It’s easy to write this kind of line off as self-indulgent drivel. After all, the previous generations put in the hard work to get where they are.
So why can’t we? Here’s the real reason: housing.
The cost of buying a house has skyrocketed in the last 12 months. The average house price in the UK reached £250,000 in December (in the capital it’s even higher).
Prices soared 5.5 per cent across the UK in 2013 and spiked a daunting 12.3 per cent in London.
Of course, there are schemes out there to help the young professional out when it comes to a deposit, but in reality the Help to Buy scheme is just adding fuel to the fire, pushing property prices to unrealistic levels.
On the one side, getting on the property ladder is harder and harder for cash-strapped young folk.
But what of people who already own homes? The other side of the fence is always greener, but what happens if a feared housing bubble comes to pass? Investors with a lot riding on the value of their home could be faced with a painful reality should prices slide. Record low interest rates aren’t helping the situation either.
Eventually, interest rates will rise. We’ve been there before – in 2007 – and investors will well remember the sting of getting caught out by the property collapse.
The question is, are we there again? In the latest issue of FE Investazine, Steve McDowell explores the probability of a housing bubble, and whether you really need to worry about it.
For more on the threat of a housing bubble, download the latest edition of FE Investazine.
