You don’t often see national newspapers celebrating a drop in house prices, despite the fact that they rose twice as fast as average incomes in the past decade. It’s much like the coverage of any strike that might affect a journalist’s holidays plans.
Most journalists and commentators are wealthy middle class home owners, so they are heavily invested in maintaining this trend of above-income-inflation house price rises. There are two main reasons for this trend: first, house building supply never came close to meeting demand; second, cheap credit created a bubble that massively over-inflated the value of homes.
Here in London, households with incomes up to an incredible £74,000 are soon to become eligible for “affordable housing”, which you can buy up bit by bit. Us paupers on a mere £74k are no longer able to buy a home otherwise.
In the past year this trend has very slightly eased, with falling demand matching a slight recovery of housing building numbers after the recession kicked them off a cliff. That’s Labour’s reaction to the recession – not a Green fiscal stimulus, but at least not cuts followed by a depression. Still, this slight reversal doesn’t please Geoffrey Dicks, chief economist of Novus Capital Markets, who warned in The Times that recent trends are “exacerbating an emerging supply-demand imbalance”. Cripes!
But just before you got too upset, Dicks evokes Tiny Tim to cheer on the possible return of above-income-inflation house price rises. God bless us, every one! Perhaps after being adopted by Scrooge, Tim would have reason to cheer on the rise of grossly unfair home ownership.
[...] This post was mentioned on Twitter by GreenFeed, Tom Chance. Tom Chance said: Funny how journalists & commentators almost always celebrate the return of above-income-inflation house price rises! http://bit.ly/6vIfpe [...]
I wonder how long before it hits a ‘tipping point’ and that there are more votes to be had by stabalising or reducing house prices than there are by increasing them..?
The trouble is is within any industry the more senior managers tend to be older (unsurprisingly). This means that they are more likely to have got on the property ladder before prices trippled. In journalism this manifests itself as a complete focus on house price growth being good. While I can detect a sense of youth discontent about house prices the focus seems to be directed at finding an increasingly desperate ways to get on to the property ladder. People don’t seem to realise that government policy bears a significant level of responsibility for the problem and there seems to be a ‘missing movement’ that could tap into this frustration. For example, I’ve not seen any political party whose highlighted a comittment to stabalising house prices at around 5 times an average persons salary.
This lack of consideration leaves the disenfranchised 20 to 30 somethings in a bit of a quandry? In the absence of representation on a political scale what do you do?
1) Continue to rent in private accomodation – Historically buying property was seen to be a way of putting a bit a way for your old age; after you finished paying off your mortgage you shelter is effectively ‘free’ and so you can focus on paying for other things. Relying on rented accomodation would mean forgoing this goal.
2) Save up and buy a house at current prices – Perhaps a slightly better option than the one above but it still changes the lifetime earning profile of a family. If you don’t get onto the ladder until your mid thirties and never finish paying the mortgage off then your ability to save for a pension is severely circumscribed.
3) Emigrate abroad. Apparently you can buy a nice detached house in California for about $80,000. They have better weather too. Still seems pretty drastic though!
Any other ideas?
Rent from the Council. Oh, yes, that’s not an option any more is it?
Council housing was originally intended to offer safety for tennants from the whims of private landlords. Building council houses was not soley intended to house the pooer.
Housing associations should offer an alternative and I have friends who have lived in housing assocs for over a decade, quite securely and without unfair price hikes.
I prefer the idea of co-operative housing. CDS have a great working model called Mutual Home Ownership, where the society builds the homes and members gradually buy up equity to service the corporate mortgage according to their income, then cash out when they leave. Have a look –
It would be fab if the Government and our Mayor decided to just make a big switch to that sort of model. Failing that, yes I agree – more council housing and more intermediate housing. The idea that over half of all new housing will be straightforward private housing is nuts.
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