Où sont les Snowflakes d'antan?
Hipsters take heart: you have a historical precedent. Precarious working conditions existed in 18th Century Britain. Families in Bath and industrial cities like Manchester survived by chaining together multiple 'gigs' to form £60 (or 1200 shillings) per year.
Rent at the time was 2 shillings a week (£5.2 per year): a very affordable 8-10% of earnings, by current standards.
Kids, don't be like me and generalise numbers from wide swathes of history, or across different regions and property types, as if historical prices did not change over time and distance. Modernity did not invent volatility. That's the warning done. Let's keep doing just that.
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| "This, or avocado toast." |
Even more hazardous is assuming modern trends applied in the past. But for some fun, let's assume UK (2014-15) gross rental yields ranging between 4.5% and 5.08% was also the case 300 years ago (it was much higher just 20 years ago). This would imply house prices in industrial towns - if you were aristocratic or parsonical enough to own property - around £115. Again, a very affordable 1.91 times earnings.
These derived prices (very) roughly coincide with colonial sales records not too far into the future. e.g. 4.5 acres in 1863 Prahran, modern-day Melbourne, for £137.
Before we gleefully inform millenial 'snowflakes' they're not even special when it comes to job insecurity, let's consider the possible impact of ever-more flexible working conditions on the value of our homes.
If a majority 'gig' workforce can only be sustained by property prices at median multiples (median house price/median household income) of 1.91, with a declining permanent workforce removing support for higher median multiples, how much would current metropolitan house prices have to change?
| City | Currency | Median Multiple | 2016 Median House Price | Median Multiple 1.91 House Price | Difference |
|---|---|---|---|---|---|
| Bath | GBP | 6.2 | 255,000 | 78,556 | -69% |
| Manchester | GBP | 4.5 | 145,000 | 61,544 | -58% |
| Adelaide | AUD | 6.6 | 435,000 | 125,886 | -71% |
| Melbourne | AUD | 9.5 | 740,000 | 148,779 | -80% |
| Singapore | SGD | 4.8 | 412,000 | 163,942 | -60% |
| Tokyo-Yokohama | JPY | 4.7 | 31,620,000 | 12,849,830 | -59% |
The impermanence implied by the 'snows of yester-year' may apply to labour conditions. The gig economy of the 1700s gave out to permanent labour spurred by industrial production, and sustained through industrial war. But if another income-boosting revolution is not on the horizon, the melting may be performed by asset prices.
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