The Cost of Life - How Will it Look in the Future?

The cost of living has been a concern for everyone in society who is within the average median wage bracket. As real wages have failed to grow for the last 18 years against the pressures of monetary policy induced inflation it means that the true cost of things in relation to what you have to afford them is drastically increasing. We can all feel the extra expenses of our rents, mortgages, car payments, material goods and even at the local grocery shop for a pint of milk, yet the question has to be asked . . . Will this growing disparity of the purchasing power of wages continue to fall moving into the future, and how will the cost of living morph in this time? Will the costs we encounter become more intuitive to us, or will they further extend from our reach? In this brief post i will explore two examples of where the highest living costs we face in the modern world may dissolve into obscurity in the future, and where costs are no longer a concern for everyday essentials.

Housing Costs

The first example that i will examine is the average housing costs for a citizen in the United Kingdom. As one of the most expensive assets a person can acquire in their lifetime it is of priority to everyone in the world to own or at least rent a home. We can spend our entire lives working to afford a dream home or plan our very careers on the assumption of the type of assets that we want to own in the future. Owning a home is encouraged by the Government and society in general as it implies that you are an effective working citizen, and have a real stake in the economy of which we all live that provide you sustainable warmth, comfort and protection. Yet society forgets to tell you that the expense of owning a home is becoming increasingly astronomical in relation to the money that people receive for their labor. Along with increasing borrowing costs of owning as well this can bring the average housing costs for a citizen up to £221,000, which is again even harder to pay for as a young person who has student loans, bad credit as a result and no savings to afford a deposit on the property.

So what exists to ease this type of economic pressure facing homeowners in the 21st century? House prices can't continue to inflate in this manner - going back to 1960 where average house costs were £3600 and average annual wage was £960, meaning earnings to house price was 1:4, whereas no it is 1:10 and mostly more. Well luckily as can be examined historically technology creates great efficiencies for the economy and it's citizens as progressions are made translating to higher quantity of quality at a lessening cost. This quality inflation offset by price deflation is known as Moores Law, and is set to potentially disrupt the housing market very soon using 3-D printing technologies. This previously theoretical idea of printing houses has now been materialized in Russia where a company built an entire house on site in less than 24 hours. Mobile 3-d printers capable of constructing with a multitude of materials can be used to construct the entirety of a house including windows, doors, walls, partitions and roofs using a plethora of materials including wood, glass and metal. This is a creative solution to housing crises in many countries and can be used to provide the supply of homes for the increasing demand of people looking for inexpensive living quarters. As homes can be created centrally on site in their entirety, this cuts out many stages of the manufacturing process required for building homes. This can reduce the inefficiencies of construction and also increase the value chain of the business models too, all while providing consumers with low housing prices due to the lower margins required for profits.

Energy Consumption

Another cost that has a bright future is that of energy. As it currently stands alternative and renewable energy is either more expensive or just as expensive as creating energy using coal or fossil fuels, making it usually the second choice of homeowners and businesses alike as their source for electricity. However due to an incredible scaling in the technologies potential and an ever increasing costs of finding, extracting and producing energy using traditional fuels there is a high chance that renewable energy will become the more financially feasible option in the future. Not only is renewable energy contributing the most to added power capacity but it is set to experience also the largest growth in heating generation too. These overall market developments and a combination of high private and public investment in renewable energy infrastructure development will contribute to excessively lower prices in the energy market.

Contrary to belief, using renewable energy is not determined so that we can produce less energy and do more with it, it is actually to produce more energy at a higher efficiency rate. Due to increasing demand for computing power, data storage, electricity grid development and more it is ever more essential that in this digitizing world we work to develop not only more energy, but more sustainable ways of producing it. As demand for energy is only going to increase in the future there will inevitably be a necessity to use renewable's to do so, as any other method incorporated to develop higher power capacities would be detrimental to our environment. Solar costs have already dropped 75% since the 1998, making it now cheaper without subsidies than coal and nuclear power generation though there are still some inadequacies that are to be addressed of the technology. However the actual costs of producing power in this way might one day be so low due to the efficiencies achieved at being able to fully utilize the photo voltaic power of the sun that it may be virtually free to use, as an abundance of technology, essentials and housing make the costs of life that much more insignificant.

These two ideas may seem rather far fetched but they are happening now and will be completely operation within a decade. Just imagine if you were told in 1918 that in 2018 we could talk to people countries away from us on a handheld device, have indoor heating and free healthcare, use computers to solve problems of the future and be able to play games in a virtual reality. You'd think it was mad, but as technology has proven it's own development translates into our quality of life and abundance of well being and this will continue to be so even more into the future. It won't by any means be a Utopian paradise yet it will allow us to focus on the things that truly matter in life, without having to stress ourselves over how we are going to afford it all.

Check out my last post about the End of Ownership in the 21st Century and let me know what you think living costs will be like in the future!

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