Reports today talk of a housing market 'slump' of 20%, with house prices falling by up to £15,000. Is this actually what is happening? Or is the market, at last belatedly correcting itself after what has been a near 18 year hyperinflated market place. Are house prices going to fall to the point where they actually reflect their real value? I.E structures of brick and mortar as opposed to pieces of financial equity?
An example: in 1993 we bought a house in SE4. Two up -two down terrace house of the sort that would be called a "workingman's cottage". We paid £63,000, about 2 K more than the then market price but the sellers were a bit 'hard arsed' and we had fallen in love with the place. Today the same house is valued at £290,000, The same house with hardly a thing done to it other than a revamped kitchen. Ridiculous.
Governments need to break the link and change the culture regarding houses in this country. Over the past thirty years we have been educated to believe that a house, far from being a place where we live, is actually a piece of financial "Equity". Rather than a family home a house (or apartment, or whatever) is now a vital part of your pension portfolio. Indeed, we are in the financial recession we are in precisely because of bad borrowing and speculation on mortgages and property buying. The other side of the coin is that the idea of renting a property carries a bit of a stigma. Yet once upon a time, in 1871 to be exact, 97% of property was rented. Even quite wealthy people rented their houses. This is still the most common way of getting housing right across Europe, north America, Renting.
More and more people are being locked out of the housing market. Perhaps this isn't important right now, but; thirty years time? Where are the nurses, teachers, nursery carers, street cleaners, garbage collectors, etc, etc. going to live?
I predict that within the next twenty years shanty towns will start to appear around London, built to house the poor workers who service London and the middle class Londoners.
One way that the culture of houses as profitable piggy banks might be broken is if a future government were to actively encourage a situation where 50 % of all new homes were built for rent. This would almost certainly ruin the housing 'market'. It will never happen of course since no government ever elected to govern the UK will ever have the balls to challenge the city and other vested interests in this way.
Comments