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Was The Millennial Property Ownership Dream killed by QE?

houses overlooking Hampstead Heath pond in London

The terms “quantitative easing”, “unfriending” and “Glam-ma” all have one thing in common: they have been added to the dictionary in the last decade.

However, of all of those terms, there is only one that has been pulling the strings of fortune for some, and it’s the 30-somethings that are suffering for it. Ten years ago, the Bank of England triggered QE – better known as quantitative easing. They did this as part of a plan to rescue us from the depths of a financial crisis. Unfortunately, it triggered a different type of financial crisis for millennials.

 

So, What Is QE?

The Bank of England created digital currency to buy assets like government bonds. This isn’t anything new, as other banks did the same. Doing this meant these banks had more funds than others, and by encouraging an increase in government bonds, they upped the demand and the rate of return fell. Doing this should lead to a system-wide trigger of lower interest rates, meaning that the banks have more funds to lend at much lower prices.

£435bn was funnelled into QE, which – at the time – was experimental and unconventional of the bank to do in a time of crisis.

 


Did QE Help Working People?

Well, we’re ten years in and the effects of quantitative easing are still going, and we are waiting for results. There are still estimates that low-interest rates and QE mean that household incomes are £9,000 higher than they would have been by 2018. Some people say that younger people benefit the most as they were more likely to be working and have a wage to rely on.

Older savers wouldn’t see a massive return for their cash. When you consider inflation, the £1 of old would only be worth 87p today.

 

Did QE Boost House Prices?

The most significant impact of QE has been on wealth, with the value of assets and pensions being affected, too. Money that was received for bonds was often pushed into other investments, which bulked the value of a property and putting more money in the pockets of those at the top.

Cheap loans also gave the housing market a boost, with those the upshot being that property prices have risen nearly 50%. So, buying a property has become harder. Someone in their 30s today is far less likely to buy a house in the same way their grandparents could.

House prices are also modest compared to the boost to shares, though the FTSE 100 index has doubled in value over ten years. Those who have benefited the most would be investors, who are generally not part of the millennial generation.

 

Are Millennials Snowflakes or Victims?

QE may have saved us from a massive drop in prosperity after the crash, but the prosperity hasn’t been equally shared, with the older generations often dismissing the woes of millennials as them being snowflakes. However, wealth is mostly unfairly shared. Adding to this, politicians have added austerity, which was supposed to stop debt rising but instead has made general living much harder.

Those who don’t remember the financial crisis are the ones dealing with the QE fallout.