Are the middle classes about to turn into renters?
As the old saying goes, “socialists soon run out of other people’s money”, and whilst that is very much up for debate depending on your political tastes, it’s probably worth admitting that the government can’t afford to pay the wages of half of the country forever.
That’s a stark reality, and whilst we’re still very much in the early stages of this virus and pandemic it’s starting to become gradually clearer exactly who is likely to pay the price for unprecedented economic disruption whilst governments scramble to balance the best possible way to consider public safety whilst protecting their economies.
A younger and more radical me may well have relished the opportunity for a reorganisation of society in the midst of global uncertainty but Millennial, early thirties, young family me would absolutely appreciate some stability at least for a short while.
I imagine it’s a similar feeling for investors who have been riding one of the strongest ‘bear’ markets and strongest property markets for decades only to be dropped into this crisis.
If you’re reading this article then the assumption is, of course, that you’re an existing or prospective property investor and if that’s the case then you can happily breathe a sigh of relief as I provide my view on the likely long term reorganisation that is potentially coming.
It’s one that many may not have even thought of, but first appeared in an article for The New Yorker, written by Eliza Griswold, discussing the impact on the American Middle Class.
Differences
It must be said that there are sizeable and noticeable differences between what we may call the ‘classes’ on either side of The Atlantic, but there are many similarities that are especially applicable in the economy of today.
Whilst it is absolutely true that the working class of Britain have been disproportionately affected by this virus in how it is affecting their health, one thing that is likely to come off the back of this situation is a significant and sizeable shift in opinion of how these people are considered in the modern economy.
Often underpaid, underappreciated and kicked around by the mainstream British press many are now starting to realise that without lorry drivers, taxi drivers, nurses, train attendants and cleaners, the entire economy would have come to a shrieking and complete stop.
The ‘clap for our carers’ weekly celebration each Thursday initially started as a round of applause for NHS staff and medical staff across the country who were looking after and attending to the sick. This quickly became a shift across to ‘key workers’, those keeping the country going.
It’s really hard to imagine any government for the next twenty years realistically getting away with reducing their rights at work, their pay or their status after things return to normality.
In almost direct opposition to that are people like myself; middle class and comfortable people who are able to work from home from a laptop on the dining room table and still draw a full time salary.
Middle Class Renters
But what on earth does it have to do with property? I hear you quite reasonably ask.
In the article referenced above, it’s noted that “In the last four weeks, as large sections of the global economy have shut down, more than thirty-three million Americans have filed for unemployment. People with jobs that aren’t deemed essential, or that render telework impossible, are suddenly without work, and, in many cases, savings.”
But these aren’t poor or working class Americans, or Brits, that are struggling, and in fact aren’t set to lose out the worst, it’s the middle classes of both sides of the pond that are being struck by the cruel irony of being comfortable enough to not be needed as essential workers.
That aspiration has been cut at the knees, and these people that were either in the early stages of property ownership or seeking to get there are going to have to, understandably, reconsider their position.
The point for those in property investment is that far from being in a purposeful position to profit from a crisis, they will be in a position of providing an entirely necessary but drastically undersupplied service to those who are having to readjust their lives: housing.
We’ve come to think of Millennials as the perennial ‘generation rent’, and far from it being a certainty, there may be a very fast, very noticeable shift of middle-class formerly comfortable people joining generation rent for the foreseeable future.
