There are many good things about social media, but I do get fed up with some of the narratives thrown around that, in my opinion, casually have an agenda. One topic that often gathers some traction is that of the property market. Most of us discuss the ludicrous price of buying a home at some time, some make much of their skill to invest in property, which is often rather more to do with luck than skill. However I have become very tired of the media holding out examples of some young people who got onto the property ladder and in so doing imply that others only have themselves to blame for their inability to do so.
DISTILLING THE TRUTH
I came across a couple of examples in the last few days. One involved a 28-year old whose father bought him a bottle of 18-year old Macallan whisky on the day of his birth and then every birthday thereafter. The headline suggested that this enabled Matthew Robinson to buy his first home. The virtues of foresight by his father and personal resistance of temptation netting the result of £40,000 worth of whisky. It’s a lovely idea and nothing wrong with it at all as a gift. I have some questions though.
IN GOOD SPIRITS
Firstly, the whisky has not actually been sold yet and no home has been purchased. This deposit was not actually the hard work of Matthew but of his father. The only thing Matthew has done is follow his fathers instructions not to consume it. I wonder how it was stored, I suspect that the 28 bottles have not followed Matthew away to University or any other place he may have lived, they probably remained at his parents home (I am guessing). As a gift it’s a lovely one, as an investment…. Well, there are obvious risks – which no proper investment portfolio would have – concentrated risk and the past, current and future risk of total wipe out. I could literally destroy a portfolio of whisky in minutes. I could not do the same for any investment portfolio.
ROOM WITH A VIEW – TUNNEL VISION VIA BOX
Then there was the case of Jessica Leung who at 29 managed to buy a property worth £450,000 in Bristol, right opposite IBK Brunel’s the SS Great Britain. This, the headlines suggest was done by moving home to save rent and cancelling her gym membership. It turns out that Jessica was able to put down a £90,000 deposit, pay stamp duty and raise a mortgage of £360,000 on her own salary. It turns out that 30% of the deposit was from her father (£27,000) and “family savings” of £53,000 together with her own £10,000 make £90,000. In fact, Jessica had saved £10,000 not really £90,000. An engineering of “I saved the deposit” feat that Mr Brunel might marvel at. Given that she would likely require an income of £90,000 to borrow £360,000 then to be blunt she might have saved rather more.
Do not misunderstand me. I am not berating Matthew or Jessica or indeed their parents. To my mind these stories have rather more to do with making other young people feel inadequate and relieving the sense of guilt (we did absolutely nothing to benefit from property price rises) that the rest of us have from time to time, when we recognise how hard it is. The truth is that the parents were instrumental in raising the deposits in both instances. These sorts of mixed messages are rife – a few months ago young people were chastised for buying lunch at Pret, now they are being told to do so in order to keep it open. The messages are all to do with supporting those in power who clearly have a lot vested in maintaining the property-owning class precisely as it is.
Rather obviously I work with clients to help them become financially independent and many parents want to help their children as these did. However, pretending that because some can that it is just a matter of personal disciplined saving by the young adult is utter twaddle. I expect nothing to change.
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