In fact; it is the young people who are struggling the most (not only in terms of housing: also and above all in terms of the stability of their professional life) but it is the civil servants who are the most on the street ...
When accommodation becomes a luxury
The economic situation experienced by young people today in France is no longer comparable to that experienced by the generations who entered working life during the Trente Glorieuses. Should we only see here an injustice of history? Excerpts from the “disinherited generations” by Mickaël Mangot (2/2).
The different generations have not been equal either in terms of housing: since the mid-1970s, the household effort rate (i.e. the share of disposable income allocated to housing expenses) has not has stopped increasing. In 35 years, for households paying financial charges, that is to say the only tenants and owners on credit, the rate of effort has doubled, whatever the age group. The increase was gradual, generation after generation, with two periods of acceleration:
* the early 1980s with massive home ownership, following the implementation of special devices (home ownership loan, APL) in the late 1970s;
* the 2000s with soaring property prices.
This development has all the more penalized households as they are young since the proportion of those paying financial charges for housing decreases with increasing age [1]. In this context, the effort rate of the entire population aged under 30 has been multiplied by 1,9 in the last 30 years (by 1,7 taking into account various and varied aids), but only by 1,3 for the 50 years or more. In the mid-2000s, a household aged 25 to 29 devoted an average of 21% of its resources to housing. Thirty years earlier, this proportion was only 11% [2].
However, the rise in the real estate effort rate is not only due to the rise in property prices and rents, even if this explains a large part of it. We have also observed for thirty-five years a trend improvement in the quality of housing (in terms of sanitation facilities for example) and a constant increase in the area available per individual, a phenomenon valid for all age groups but the more pronounced the older the households.
Source: CGDD, Housing surveys 1973 to 2006, Insee, 2007.
Due to the increase in property prices faster than that of income, households find themselves in a weakened financial position when they decide to acquire a property. Between 1965 and the 2008 real estate crisis, there was a 30% drop in the real estate purchasing power of households, as calculated by the economist Jacques Friggit [3], specialist in the French real estate market. The household purchasing power indicator here reflects the quantity of old housing that a household can buy, for a given effort rate, a household that finances the purchase for a quarter by the resale of a housing, for a quarter by achieving financial savings and half by borrowing over 15 years at fixed rates and monthly payments.
Another indicator, also calculated by Jacques Friggit, says the same thing: in 35 years, the duration of borrowing necessary to finance the same good with the same rate of initial effort and the same personal contribution (10% of the good) has simply doubled, despite the downward trend in interest rates.
This increase in real estate prices over the generations is reflected in property rates. The rate of homeowners at different stages of life has increased continuously from the cohorts born at the end of the 1940th century to those born in the 1950s and 4s, but has since displayed a much less clear trend [XNUMX].
The consequences of very high housing prices in relation to income are manifold. First of all, the households themselves, with a higher effort rate, see their purchasing power (excluding housing) decrease and tend to experience a feeling of social downgrading. Similarly, their satisfaction with housing decreases as the percentage of income allocated to this same housing increases [5]: undoubtedly the unpleasant impression of paying dearly for something that should not be…
Beyond the level and quality of life, housing prices have more indirect influences, for example on the labor market. They influence the labor supply by limiting the mobility of tenant households since the regulation of rents, indexed to consumer prices, only applies to current leases. In times of sharp rise in rents, households wishing to move to be closer to an employer are subject to a negative incentive to change their accommodation.
We find the same effect, multiplied, among owner households for which the transfer costs will be all the more important as the real estate will be expensive. Finally, high housing prices, by compressing purchasing power, make wage moderation policies that may be necessary to restore the cost competitiveness of the economy or of certain sectors subject to strong international competition difficult.
[1]. The higher the age, the more the proportion within the population of tenant and owner households still paying credit decreases.
[2] The weight of housing expenditure in the household budget: a historical and generational approach to the effort rate, General Council for Sustainable Development, 2007.
[3] Jacques Friggit, Long-term housing prices, General Council for Sustainable Development, 2010.
[4] See The weight of housing expenditure in the household budget: a historical and generational approach to the effort rate
[5] 1. See the report by Régis Bigot and Sandra Hoibian: "The difficulties of the French vis-à-vis housing" in the Crédoc research notebooks, December 2009.
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Extract from The deprived generations: Debt, retirement, housing, youth unemployment… how to repair the great injustice, Eyrolles (February 16, 2012)
Source: http://www.atlantico.fr/decryptage/jeun ... 10059.html
The book: http://www.amazon.fr/Les-g%C3%A9n%C3%A9 ... g=a0660-21
