It’s that time of the year when bankers are starting to tuck
into their mulled cocaine, and we feel the need to pause, and gently reflect
back on another totally f****d up year in the British property market.
No one working in property likes Christmas, as it’s a
deadline rather than a religious festival, so my mood always dips a bit. But
anyway, back on topic: first, the wider context: the world is a f****g
disaster. Fear and uncertainty dominate public discourse. The only way things
could be worse would be if the BBC’s fantasy candidate and arch IHT-avoider Hilary
Benn became Labour leader (I’m not saying we shouldn’t bomb Syria, but starting
two disastrous wars and then saying it's ok to launch a third one: are we
setting a bit of a bad precedent for Germany...?).
The f****d-up-ness of the world is micro-cosmically reflected
in the British property market, as in all spheres of modern life.
Take the latest budget statement – now, I applaud the assault
on residential landlords from the point of view of Generation Rent, but solely
on the grounds of schadenfreude. Having
destroyed all decent chance of pension provision and encouraged retirement
funds to be trammeled almost entirely into property, he is now hammering the
people that did just as they were incentivised to do.
The cornerstone of Conservative democracy has always been
that all property owners are treated equally, but the financial system has so
screwed things that even the Tories are now bowing to an impending disaster
that even they can see is coming, and are differentiating for the first time in our history, before a total
nutter does something more insane. Which they probably will anyway, as it’s too
late now.
We model our country as a property owning democracy, but we now have the fourth lowest property ownership rate of the twenty-eight countries
in the EU*.
Is this down to a shortage of land? Hell no. The UK’s 60
million acres consist of 41 million acres of agricultural land, 15 million
acres of natural wastage (forests, rivers, mountains etc) and only 4 million
acres of urban plot, which most of us are crammed into. We have lots of space.
The single most important fact underpinning unaffordable house
prices is the very low interest banks charge on mortgage credit (and I feel
quite vindicated that people are accepting now that snake-oil salesman Carney has
never ever had any interest in ever raising the Bank base rate) and as house prices
are a leveraged bet on interest rates, a 0.5% rate will lead to extraordinarily
high prices for as long as rates stay that low, until disaster hits.
Rooms-to-people ratios are actually at historic lows. The
housing crisis is a financial problem.
It’s a problem that’s getting worse, and as predicted, this inequality will
produce more and more demagogues such as a Trump in the US, and, though less
directly related to property but along the same lines, le Pen in France. 2017
is going to be great with those two in charge.
Property is merely our own particular manifestation of the
financial inequality, built on fractional reserve banking, that is consuming
the west, and we will have our own demagogue in time.
Anyway: Happy Christmas!
*recently released Eurostat figures – it’s also good to have
an asterisk here that isn’t in a swear word
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