Town Mouse

Driving down the Banbury Road in Oxford, I listened to one of Granny Mouse’s rants against the young people.

‘Look at them all, drinking coffees and eating croissants. No wonder they can’t afford to buy a flat.’

Granny Mouse (my mother, Liz Hodgkinson, who writes on page 13) is a baby boomer. In her mind, a life of austerity and hard work, rather than luck, has enabled her to build what she calls her ‘property empire’ – a bedsit in Worthing and an ex-council flat in Shepherd’s Bush. The young people, thanks to their sybaritic tastes and self-indulgence, she reckons, will be condemned to a life of renting, unless they are lucky enough to have parents who die young. And that is less and less likely: the health industry makes millions out of keeping oldies alive for ever.

Well, I thought about this equation, and – sorry, Mum – it seemed flawed to me. You would surely have to forgo an awful lot of coffees to save up enough to buy a house. So I decided to do the maths.

When Granny Mouse bought her first property in 1968, the average property price in the UK was £4,000 and the average wage was around £1,500. You could buy a house for less than three times one person’s income.

Today, the average property price in the UK is £230,000 and the average wage is around £29,000. So a house costs eight times one person’s income. (In London, a three-bedroom house costs a million pounds – 34 times the average income.) I calculate you’d have to save around £150,000, or 50,000 cups of expensive coffee, to get to where Granny Mouse was in 1968. If you bought, say, two cups of coffee a day, it would take you 25,000 days, or 68 years, of coffee denial to save a deposit; by which time, of course, it would be too late.

It’s a little difficult not to conclude that things simply are much more difficult for the young mice and that, however many coffees and croissants they deny themselves, they will never ever be able to buy a house.

My own little mice will be venturing out into the world over the next few years, and the prospects for owning look grim indeed – unless Mrs Mouse and I give them our house and go off to live on a canal boat, which is in fact what some people do. Or Granny Mouse dies, which seems unlikely, as she is fit as a fiddle.

So the young ones will have to rent their homes. Is this such a bad thing? It’s only recently that we’ve all been encouraged to become mini-capitalists and own our own homes. In previous centuries, home ownership was not common. But, in both the 18th and the 19th centuries, rents were far lower.

Dr Johnson’s house in Gough Square, just off Fleet Street, where he lived for eight years with a gaggle of squabbling dependants and wrote his dictionary, is a four-storey townhouse. He rented it for £30 a year – £5,500 in modern terms. Today, a similar house in Fleet Street would cost 20 times that to rent.

Then there is Thomas Carlyle’s house in Chelsea. The great historian and his wife, Jane, who was a much better writer than he was if her letters are anything to go by, rented the five-storey townhouse for £35 a year. That was in the late-19th century. In modern terms, that would be only around £6,000 a year. Today, a similar property would cost more like £120,000 a year to rent – affordable to a morally dubious hedge-fund guy, not a bookish historian.

For £6,000 a year, you could barely afford a two-bedroom house in Birmingham. If that makes me sound snooty about Birmingham, I’m really not. I’m just making the point that property prices, whether you’re renting or buying, have far outstripped wages. This means that the property-owners are getting richer and richer while the wage-earners are getting poorer and poorer. In the battle between labour and capital, capital is most definitely winning.

The prospects do indeed look extremely grim for the next generation. And contradictory to Granny Mouse’s views, the figures show that they are not even particularly self-indulgent: they are drinking far less booze than 50-somethings like me.

The only real hope is a rejection of the consumer culture. A movement calling itself Financial Independence, Retire Early (FIRE) claims that, through its anti-consumerist techniques, young people can save money and become little capitalists – but only by cycling everywhere and avoiding avocados.

That sounds unnervingly like my mother’s financial advice. It takes an awful lot of avocados to buy a house, Granny Mouse.