Successive episodes of economic dislocation, following the financial crash of 2008 and now the 2020 pandemic, have increased the feelings of economic insecurity, especially for the generation in the younger working age groups.

In Ireland, especially in the cities, this group feels squeezed out of the housing market too - in parts of Dublin, a couple both earning decent salaries would be doing well to afford a mortgage without help from parents.

In the central areas and the inner suburbs, rents are over €2,000 per month for quite modest accommodation.

To buy costs €500,000 and upwards for a family-sized apartment and many couples have given up trying to assemble a deposit.

Intergenerational equity

The Institute for Fiscal Studies (IFS) in London has just released a report which looks at intergenerational equity in the UK.

The authors conclude that people born between 1980 and 2000 have got a raw deal under various headings and one imagines that their Irish contemporaries must share the feeling.

An utterly dysfunctional housing policy has seen younger people with decent qualifications and jobs abandon the ambition to buy a home and their parents’ generation has bequeathed them the climate crisis to navigate as well.

Unless your parents own residential property, you will likely be unable to acquire a home

Inheritances have become an important component of expected lifetime income for the more fortunate among the younger generation.

Unless your parents own residential property, you will likely be unable to acquire a home and will be a renter for the long term.

There are other factors at work which will impact on intergenerational life chances.

It pays to have the right parents and to have fewer siblings.

Luck

To further enhance the feeling that luck is more important than personal effort, real incomes have been static for many in recent decades.

An increasing proportion of younger people do not enjoy earned incomes superior to their parents’ generation.

The big component, especially in the larger cities of the developed world, has been the extraordinary escalation in residential property prices.

In Ireland, this has been most noticeable in Dublin, but is also a factor in the provincial cities.

The typical younger couple, never mind the single buyer, has been priced out of the market, or priced out of the city altogether, into the drudgery of long-distance commuting.

Inheritance tax

The portion of people in their 30s who are homeowners in Ireland has been falling steadily for 40 years and there is no sign of this trend reversing.

The good news is that mum and dad are not going to live forever and if they own a home (better still if they have fallen out and acquired two), they will hopefully pass property on and you need to save only to meet the bill for inheritance tax.

The IFS authors make the point that, on the British data, those whose parents belong to the top 20% of the income distribution can expect inheritance to uplift their lifetime income by as much as 30%, while those with parents from the bottom quintile will see a gain of just 5%.

There is no comparable data for Ireland, but it is a fair guess that inheritance is becoming a more important factor here too, driven by the accidental accumulation of household wealth in the form of inflated prices for urban residential property.

One consequence is a perception that life is a bit of a lottery

One consequence is a perception that life is a bit of a lottery, with outcomes determined by good luck. There is also a disappointment factor in store even for those who are lucky.

The house your parents pass along may be worth, allegedly, some enormous amount of money, but will turn out to be the rather modest one you grew up in.

The ‘value’ of homes in the big cities of the developed world is not a reflection of luxury, it is the outcome of restrictive planning and nimbyism, supported by politicians of both left and right.

An extra irritation just beginning to manifest itself is that if you are, say, 40 years of age, your parents may not be checking out anytime soon.

They used to marry younger in their day and life expectancy has improved steadily. You might not be inheriting that tax liability until you are a lot closer to the checkout yourself.

Perceptions

Perceptions of intergenerational unfairness have political consequences and these will be exacerbated by the impact of the pandemic.

Job losses have been skewed against the younger age groups and have reinforced the feeling that the system is unresponsive.

There should be a serious attempt to make housing affordable, especially in Dublin, but the political class seem incapable of facing the music on planning and housing supply.

A recent scheme in Donnybrook was opposed by politicians of all parties on the hysterical grounds that the proposed residential densities would ‘turn Dublin into Manhattan’. The next election could be 'The Revenge of the Millennials'.