I actually find the whole PRISM surveillance thing quite
comforting, as it is nice to know that someone reads this blog, even if they
are a bored CIA operative. Anyway, hello bored CIA operative! Is it fun reading
bad jokes about how we’re all being spied on?
But I digress. I am on the verge of stopping writing
anything, I have to admit, partly because it has only really just properly
occurred to me that there is no longer any point on offering analysis or views
on the housing market. Like pretty much
the rest of the (world?) economy now, there is no rational analysis possible.
All you can really do is try and predict what the executive is going to do
next. How this differs from the planned economy of Soviet Russia, I’m not sure
(other than the milder weather and lack of large-scale building). You cannot
balance demand/supply, wage growth, mortgage finance etc, put them in a model
and say “house prices next year will be X” as it doesn’t hold any relation to
any of these: it is down to what bat-shit crazy schemes the government will put
in place, what heights of insanity our fiat-currency driven debt –fuelled
death-spiral will reach, and how successful Carney is going to be in getting
the Bank of England back on track to its original New Labour purpose, which is
creating a massive housing bubble before the next election.
As a renter, I must admit it is hard to know what to do. Our
economy is splitting into a classic rentier/worker stratification, comrades.
There was a great example of the “winners” in the house I surveyed two weeks
ago, the vendors then asked us to survey the new house they were buying. He was
a brickie, she was a primary school teacher who had stopped working recently,
at 50. They bought their east end terrace house for, I would think, £50-60k a
few decades ago. They sold it last month for £2 million. They then bought a new
rather palatial house (in Hove) for a million, and had a million left over in
cash, tax free, and are both taking up golf.
Or another example: I met a couple in their 50s, both
professionals, who are letting out their house that they bought – again, a few
decades ago – and spend their time sailing their yacht, having no need to work
anymore. The rent pays their living costs, they put money aside for the future
and their mortgage is slowly being paid off – the property will then transmute
into their pension. They let out their
house to a couple in their 20s, who, again both professionals, cannot afford to
buy a house of their own, even though they both work full time in good graduate
jobs, and because rents are so high, they cannot afford to put anything away
for the future, or think about pensions etc .
I have no interest in concepts of fairness. I really could
not care less about whether something is “fair” or not, and I personally think
that the word should only be allowed in debates in playgrounds: but is this efficient? Is this really the most
efficient way to run an economy? Really?
If wage growth is declining rapidly and house prices are
going up, does that indicate a healthy economic system that will grow steadily
over the coming years, providing gains for all? Or is that a sign that things
are going wrong somewhere, and QE and 0.5% base rates are creating massive
imbalances that are building up and which will at some point have to burst over
the masses, like a…thing? (I can’t think of an analogy that won’t make the CIA operative
feel queasy, and it’s still early in the US.)
So back to the being a renter conundrum: do we buy, given
that Osborne is about to stoke up the property market by a good 30%? To quote
Chuck Prince, former banker, whilst the music is playing, should we not be
dancing? Or do you look at things sensibly and say: this is totally fucking
mental, why would we borrow £400,000 from a bank to buy something which is
potentially going to be worth half that in a few years, even if it goes up in
value in the short term? What will
happen to house prices when the 80% of the over 50s who plan on selling to fund
their retirement dump their houses on the market in the next five years? What
will government do to stoke up prices then – negative rates? £1 trillion of QE?
So two weeks ago we bought a yacht. Fuck it.
