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Driving Down Property Prices Will Never Be A Vote Winner

Driving Down Property Prices Will Never Be A Vote Winner

Whilst driving to catch a train yesterday afternoon, I caught part of Radio 4’s Money Box Live programme on house prices and specifically why are they unaffordable for so many people. The discussion was very interesting and informative. Why don't house prices fall if they are unaffordable for many people? Average prices are now over six times an average salary, making it difficult for young buyers to save a high enough deposit to get onto the housing ladder yet despite this apparent unaffordability, house prices do not fall.

 

In fact this is not altogether true. In some areas of Scotland and the North East of England house prices have fallen over the past year. The programme questioned some common assumptions. What effects are crippling student loans having upon young people and their ability to save? Has it now become a moral obligation for the older generations to pass on their accrued property wealth? Is it a lack of supply with not enough houses being built in the UK that increases prices or the availability of cheap mortgages? To what extent are the younger generation actually willing to forego modern luxuries to save for their own property? If we do think that younger people prefer to spend their earnings as opposed to save, why are we attacking the buy to let market with such vigour?

By coincidence, less than 24 hours later, the RICS issued their latest survey on trends in the market. It indicates that house prices are likely to fall over the next 3 months for the first time since 2009 with East Anglia and London being the most affected. However this dip is expected to be short-lived with prices in Scotland, Wales, Northern Ireland, the Midlands and the North expected to rise.
So, the underlying trend towards ever more expensive houses which are still somehow affordable to someone continues. The real concern must be the absence of alternatives with, now, both public sector and private rented housing under attack and the continued reluctance of anyone to agree to new houses being built near them continuing to prevent any solutions being found. Today, the inhabitants of Wool, a village in Dorset, are objecting to the proposal to build 1000 new homes on the predictable grounds that it will “double the size of the village” and will “put pressure on infrastructure including schools and transport”.  

 

The Money Box Live conclusion was that there are solutions but they involve increasing interest rates, actively driving house prices down and building homes for rent and that no politician has ever found these to be a vote winner.