Schadenfreude i/ˈʃɑːdənfrɔɪdə/ (German: [ˈʃaːdənˌfʁɔʏdə]) : pleasure derived from the misfortunes of others.

Oooh mansion tax! Labour have recently said that they support a 1% levy on property over £2 million – the so-called mansion tax that the Lib Dems pretend to like (how very liberal of them). There could even be a vote soon on this issue in the Commons (which wouldn’t actually achieve much, even if it passed, by the way).

This is basically an entire policy based on schadenfreude. I am amazed how long it has taken to get to this politics-of-envy point, to be honest, but I suppose this is down to the fact that most people on mortgages actually are doing just fine thankyouverymuch.

Before I start, I would like to point out that I am more prone to this envy than most, as I spend my working days as a surveyor waddling around the houses of the super rich and I don’t even own a property at all.

The principle of the tax is based around two starting points: a) lots of people are really rich, especially foreign people, and they are buying all ‘our’ houses in London and now elsewhere, and b) young middle class families can no longer easily afford to buy houses in London, even if they cut back on Ocado deliveries and pay their nanny less (“can I just pay you directly in Zloty?”).

Squaring the circle by Ed Milibrain, we get to c) let’s hammer the rich foreigners! Wouldn’t it be great fun if squillionaires buying these ‘mansions’ (tiny, badly built over-priced rabbit hutches) in central London suddenly had to pay hundreds in thousands in tax? Hehe! That’d be brilliant. And it would also solve b) as well (I am being SARCASTIC on “b)” Nick Clegg, keep up).

Now, I have long suspected that flogging off all our central London property for insane amounts of money to gullible foreigners has been part of a really terribly clever sting. This sting involves us hoovering in billions from abroad selling this stuff off and then, once we have hoovered in these billions, turn around and tell them it’s all going to incur loads of taxes etc etc we were just joking before on the whole ‘safety deposit box’ thing – and now it looks as though Labour have given the game away too soon, and the plan has been ruined before we have extracted all the petro-dollars we could have done.

However, what is clear is that this tax will do nothing to alleviate our housing shortage in the short term – in fact, foreign money coming into the market is the only thing propping up the market at all at the moment, if we choke that off then the housing market could well have to face up to reality – and do people really want to do that, right now? Really?

The schadenfreude could be great in the short term, I agree, and a really good national mood-lifter – but then we might suddenly realize that – whoops! – they have lowered the tax to include houses worth £1 million, and now £500k, and now all houses… wasn’t income tax meant to just be a temporary tax on the really rich, originally? I guess this is my main objection – ignoring practicalities etc.

So what do we do instead? Something must be done, after al! I know that under the law of un-intended consequences, every single intervention in the housing market at any level by government recently has, without exception, made the housing market worse. But something MUST BE DONE!

Well, how about imposing Capital Gains Tax on a main residence, and abolish inheritance tax? Thus instantly stabilizing the housing market, removing the possibility of all future un-sustainable housing booms and creating a balanced, sustainable economy, with incentive to put money into productive areas of the economy, rather than sinking all available funds into stagnant, depreciating bricks and mortar assets. 

Wait…did I just solve the entire housing AND financial crisis?

I believe I did.

You’re welcome, Britain.

Nie moj cyrk, nie moje malp

Okay, just a quick one! Honest. By the way, the title refers to a recent Polish idiom I heard recently, meaning ‘not my problem’ – it literally translates as ‘not my circus, not my monkey.” It has almost no bearing at all on anything, but I thought it was awesome.

So: house price indices!

 There is a lot of confusion around house price indices – so I will do my best to add to that confusion by writing this blog based on absolutely no background research whatsoever, save for a lecture I had a few years ago, and my recent perceptions of actual, like, reality.

I read this morning in a newspaper that house prices have gone up, and also down (separate newspaper) and have also possibly stayed the same (third newspaper from last week).

So why the difference? Well, I don’t really care to be honest – they are weighted differently, have different sample sizes etc etc blah blah blah.

HOWEVER house prices have, on average (important) gone down A LOT. And I know this because a) I know everything and am always right, just ask my spaniel (but not my wife, she disagrees on this point) and b) I am an RICS Registered Property Valuer, so I can legally tell you what your house is worth, despite the fact that I can barely even remember my lectures and accidentally burnt a lot of my lecture notes.

Firstly, forget the fact that people completely forget about inflation when discussing house prices, so even my spaniel can see that house prices have dropped by a third in real terms (no one mentions this in the media, ever). I recently tried to introduce the concept of inflation to a middle aged Chartered Surveyor I know who is very knowledgeable about property and construction, probably more so than anyone I know, in fact, as he is one of the few people in Britain who is both a Chartered Architect and a Chartered Surveyor. I won’t name him here to preserve his anonymity, so without expressly divulging his identity, let’s for the sake of this blog post just refer to him as ‘my father’: half way through my explanation of exactly what inflation was, he accused me of inventing "voodoo economics". But I digress. 

Back to my point, the important difference is this: the average price of a property nationwide is different from the average price of a property bought and sold.

Example: if you have 10 houses, 8 worth £100k and 2 worth £1 million, then the average house price is £280k. This in itself is meaningless, as there are no houses worth £280k AT ALL in this scenario, but then it is a sort of useful benchmark.

House prices are dictated at the margins, and average prices based on transactions – so if every house was bought and sold then we could base our average on the £280k figure, as an average of all the transactions that have taken place.

But, if the lower end of the market is stagnant (which it is), and the only houses being bought and sold are top end, eg the only housing transaction in this scenario is one of the million pound house being sold, what is the average house price, based on transactions, according to the indices? (Keep up Nick Clegg). It has gone up (a lot in this instance), despite no movement elsewhere. Now imagine the other houses are falling in value in reality, and the figures are even more screwed.

This is an extreme example, but as a microcosm is what is currently going on – house prices are falling, apart from a minority in London, but this is rarely reflected in the figures.

But then again, I rent, so it’s not really my circus, or my monkey.