|
A copy of this commentary in PDF format is available
here...
A copy of a graphical presentation of the context and fact in PDF format is
here...
A copy of the associated notes and observations in PDF format is
here...
UK Cost of Housing
A commentary on the current (2017/2019) media and campaigning discussion
As the health, life expectancy,
wealth and real well being of the UK population have increased
relentlessly over the last 200 years, so the recent clamour by some
campaigning causes has grown ever more shrill.
Whilst
most of the campaigning to continuously improve people’s lives
throughout the world was and is justified, sadly, in common with the
current instant judgement “sound bite” approach to
discussion of important matters, many campaigns now “make a
drama out of a crisis” and they clearly put their
moral judgement, ladled with liberal doses of self-righteous
indignation, ahead of balanced facts and consequent reasonable
action.
One
such is the naïve and unrealistic campaigning about the cost of
UK housing in the last decade, in contrast to the previous
half-century or so.
Whilst
it cannot be denied that the primitive statistical measure of the
ratio of average house prices and incomes, set in people’s
minds from the very early post Second World War decades, has
dramatically changed, it does not automatically follow that owning
one’s own home is impossible at the end of the second decade of
the 21st century. Nor does it follow that “positive”
and extreme action should automatically be taken to counteract that
change in balance.
Usually
it tends to be the case that “all actions have an equal and
opposite reaction” and therefore the unintended consequence of
naïve over zealous action, may (in fact is quite likely to)
result in very undesirable counteraction.
Such
can already be seen in the sustained “over”-inflation of
house prices, helped by the reduction in interest rates following the
2008 global economic crisis. The latter itself caused by laxity of
government controls, and consequent mass, unrealistic and greedy
speculation allied to underlying unrealistic expectations of a
wealthier populace. In the UK many joined the clamour to be a
“millionaire by this time next year”!
“Boom
and bust” and the willingness of many to be swept away by such
unrealistic expectations is far from new. This has been consistent in
the UK housing market from the 1970’s, as we have grown
wealthier.
Before
the First World War, just 100 years ago, only 10% of people owned and
occupied their own home (and fewer still in Victorian times and
before). In addition, almost no social housing existed at all, and
thus the remainder of the population lived in privately rented
accommodation, much overcrowded and in extremely poor condition. “The
past (truly) is a foreign country”.
Later,
before the Second World War, home ownership was still only
realistically available to a minority of people, with some 30% of
people owning and occupying their own “homes fit for
heroes”.
Only after the Second World War has
UK owner-occupation increased significantly, peaking at 69 to 70
percent just before the 2008 economic crisis.
Claims
that all generations before the current prospective home-owning
generation had to pay a substantially lower percentage (7%!) of their
annual income to fund a home (be it owner occupied or rented), are
entirely without factual foundation.
Throughout
the Victorian era, and before, people consistently paid 15 to 20
percent of their income in rent. Note in contrast, for most in
society, food consumed between 30% and 50% of income, now between 10%
and 16%!
Even
in the early decades after the Second World War, when substantially
more people were able to buy their own home, people were on average
paying 25 to 30 percent of their income for that home in mortgage
repayments.
From
the 1970’s the market for house prices and interest rates (and
consequently mortgage repayments) has been much more volatile. For
two decades the housing share of income was on average 40% to 45%;
though sometimes for short periods of a few months to a year, it was
dramatically higher, rising to 60% to 70% share of income. This was
at it’s worst in the early 1990’s, after which the crash
in house prices caused a soaring rate of repossessions and consequent
debt; dubbed “negative equity”. After the rise to 45%
during the early years of this century, it has returned to 33%
following the 2008 crisis and subsequent reduction in interest rates.
It is a basic fact that for the
substantial majority of the population, throughout history, growing
up, leaving the parental home and starting their own home is
financially and emotionally challenging. It always has been
and most people “just about manage” as they
always have.
To
propose certain extreme action in favour of a current generation, who
unquestionably face several challenges not faced in the same way by
some previous potential homeowners, is unrealistic and liable
to further twist economic trends in ways not intended.
In
contrast to all such campaigns conceived on the naïve and moral
high ground, the actual prosaic facts, be they economic, financial,
mathematical, chemical or physical, by all measures, show that we are
healthier, wealthier and long lived than ever in human
history.
No matter the naysayers and
hand-ringers clamour that the sky is falling, that we are all dying
(even prematurely), we still remain healthier, wealthier and long
lived than we poor everyday folk have EVER been.
And yet the wealthier and healthier
we have become the more miserable, niggardly, gloomy and doom laden
many have become; it seems not also wiser!
Perhaps those same doom merchants
would do as well to live the lives of the majority of the world’s
population, or the lives of their parents or grand parents, to put
modern life in real perspective.
This
is no call for complacency or rampant, unbridled rental exploitation.
There remain many, many issues to tackle, including slack, lazy
government and rich individual and corporate greed, plus every day
ignorance and complacency.
Rather
it is a call for reason, balance and fact based argument,
before dubious hysterical, zealous and knee jerk judgement.
And
above all a call for firm, continuing governmental support for the
REAL sustained improvements that have been wrought, so far, in
people’s lives in the last 100 years.
Rather
than the modern penchant to ban or subsidise everything in a panicked
sop to a minority of vitriolic dreamers, government, entirely paid
for by the taxpayer (“there is no such thing as public money
– there is only taxpayers’ money”), should
honestly and forthrightly live up to the broad social contract; to
keep the nation safe, prevent excess of greed and set and impose
the legal limits to balance economy and environment for everyone’s
benefit, but with a light touch.
|
