OpinionFeb 10 2014

Homes for youngsters

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Economic forecasting is a bit like seeking your fortune in a crystal ball. The only slight difference is that one pretends to be using complex mathematics while the other claims to have a direct line from the other world.

Economic forecasters like picking the low-hanging fruit in the macroeconomic farmlands and none comes lower than housing. The mantra over the last few weeks is the so-called bubble building up in the London housing market.

Of course, a bubble may well build up in London and the Home counties markets, but at this time there is no such fear.

The top end of the London market, mainly Belgravia and the Surrey mansion band, are dominated by the multimillionaires and oligarchs, buying trophy homes as alternative investments and as warrens to escape to when the political pressures get to them in their home countries.

The next tier down, Kensington and Chelsea and Westminster, is dominated by the big bonus City bankers and hedge fund managers, two markets that are not dependent on mortgage lenders.

The young professionals’ markets, developments such as Battersea, are attractive to the wealthy from China, Singapore, Hong Kong and India, mainly buying off-plan and securing these properties as holiday homes with some rental income.

For the mass affluent, the renters, Generation X, there is everything to play for; these are people who are compelled to pay huge rents to the baby-boomer generation – their grandparents’ generation who are dominating the buy-to-let market. The problem is not on supply at the top end nor people overstretching by taking on too much debt.

It is in the young professional sector, where the demand is there but not the supply of reasonably priced homes.

What is needed are tougher restrictions on overseas buyers, who are crowding out young men and women, many of them Londoners, who are unable to buy a home in their capital city.

Then again, this may be going against the grain of promoting London as a global city which appeals to the wealthy from the four corners of the world. Instead of the hysteria about housing bubbles, usually from people who already own their own homes, it will be best if we worked out ways of empowering young people if for no other reason than to reduce inter-generational social tension.