We Brits have a long-standing love affair with home ownership. While most continental Europeans are happy to rent their homes, the UK and US have made buying a house the dream. English must be the only language in the world where ‘home’ and ‘property’ are synonyms.
In our drive to make home ownership so desirable we are making it increasingly unattainable. But rather than allow any correction in the housing market, the government is doing all it can to push prices even higher, as evidenced by figures published this morning by the Royal Institute of Chartered Surveyors (Rics).
The Help to Buy scheme, which is largely responsible for continued growth, has been widely heralded as a success. Educated and otherwise intelligent friends of mine are so drunk on the possibilities of getting a foot on the housing ladder they will accept having to commute from Shrewsbury to London to do it.
Even then they herald it as the perfect stepping stone to get them on their way, without looking at the bigger picture and seeing what the scheme (and their desperation) is doing to an already over-inflated marketplace.
The fact prices are going up is already moving lower earners further out into the estate agents’ latest ‘up and coming’ area. Each of these areas in turn has further to up and come.
These lower earners include teachers, nurses and police. In other words, the public servants on whom those lucky enough to be able to afford exorbitant house prices would probably like reasonably nearby.
Aside from these sociological factors, my main problem is that – to a homeowner – house price increases do not represent real money anyway.
I own a home in a pleasant enough, reasonably central area of London. An identical property just round the corner from mine went on the market last month for two and a half times what I paid for my house less than five years ago. I was excited at first.
OK, maybe my excitement was outweighed by my smugness, whatever, seeing the valuation appealed to my already over-inflated sense of self importance.
But then I realised that, however much my house is worth is largely immaterial. If I ever do sell it, unless I move into a tent in the local park, any house I want to move to will cost even more. I will be forced to move outside of the M25 myself to realise any gains.
Rather than lining the pockets of homeowners in any real sense, the chief upshot of spiraling house prices is to prevent the best part of an entire generation from realistically ever owning their own house without having to make huge compromises first.
Friends of mine with good jobs and strong career prospects are having to move ever further out into suburbia and beyond because prices are ridiculously out of reach and getting further away. I know of more than one person who has tried saving a significant chunk of their monthly income for a deposit, only to see prices accelerate faster than they can save.
The creation of more ‘affordable housing’ is often touted as a solution, indeed that’s what Rics used its own survey results to push.
By specifying that any new houses need to be affordable, we avoid challenging the accepted reality that the overwhelming majority of existing housing is not.But to me, the very phrase is symptomatic of the problem with how we view the housing market. By specifying that any new houses need to be affordable, we avoid challenging the accepted reality that the overwhelming majority of existing housing is not.
In just about every other sphere there is a mass market, affordable product available, and a luxury product for which consumers are happy to pay a premium. All housing now comes with the premium, but not necessarily the luxury.
It is hard enough for young people today, with student loans to pay off and limited employment prospects.
Received wisdom suggests the government is encouraging house price inflation to appeal to the vanity of homeowners, which I’m sure is an astute tactic. Focus groups must have told them thathow well it plays with homeowners outweighs how badly it plays with those striving to get on the property ladder, the growing numbers of 20- and 30-somethings for whom buying a house is a distant pipe dream.
This would be easier to justify if those homeowners were actually benefiting. But speaking as one myself, these prices just mean my friends are being forced to live further away, I cannot afford to move up the ladder, and am likely to leave my kids with an artificially grotesque inheritance tax bill when I die.
House prices might make homeowners feel good, but the benefit they really confer is grossly outweighed by the imbalances they cause to large sections society. I am a homeowner, and it may sound counterintuitive, but I would be happier if my house was less valuable.
