Star comment: On road to nowhere in home buying
When property prices begin to rise, many rub their hands in glee.
When property prices begin to rise, many rub their hands in glee.
But a new report today has revealed the shocking extent of property poverty in Shropshire. The facts are easy to understand.
During the past ten years, the county’s property prices have doubled. But at the same time, wages have risen by just 25 per cent.
That means there is now an unbridgeable gap between the cost of a buying a house and the mortgage that would-be buyers can afford.
The implication of the property trap is simple: those who have not yet bought a house are unlikely to be able to afford to. In some cases, the dream of buying a house will never be realised.
Affordable housing has long been on the agenda for Shropshire’s policy makers. In areas like south Shropshire, for instance, where prices are inflated because of the influx of retirees and second home owners, the former district council worked hard to create pockets of affordable houses with the help of local housing associations.
But more needs to be done. Rising property prices are good news for the people who already own their own home. The extra collateral that home owners accrue can be borrowed against, when people know that they’ll be able to pay it back.
That money can be reinvested in the local economy, providing a boost for building firms, car dealerships or others who are the recipients of such windfalls. But for those who cannot afford to buy, it is the road to nowhere.
Future generations are hardest hit. Families who have lived for years in rural parts of the county find that they can no longer afford to do so.
Twenty-something adults and students newly graduated find they have to leave the county and settle in Birmingham, Manchester or other conurbations, where suburban property prices are lower.
The credit crunch of 2008 means there is little prospect of the situation improving. Our economy remains locked in a vicious circle, with property prices stagnant and wages refusing to budge.
Those not yet on the property ladder have little hope of getting on it in coming years.
Comments for: "Star comment: On road to nowhere in home buying"
Peter
Not sure that property prices are necessarily cheaper than Shropshire in places such as Manchester and Birmingham, unless you want to live in the dodgiest parts of the cities.
Of course property prices in leafy South Shropshire are high, and there is a marked reluctance amongst residents to allow for affordable housing or (God forbid!) social housing in such areas, but there are areas of Shropshire where perfectly good housing is available at prices which are reasonable by national standards at least, though I acknowledge these are still out of the reach of many.
Salaries are not increasing for most, and are typically decreasing in real terms thanks to the action of inflation. That doesn't apply to everyone of course - senior execs and the very wealthy have seen their incomes soar over the past couple of decades, despite no corresponding growth in their companies. Perhaps we need to look at that?
By far the biggest increase on the demand side of the equation has been caused by the loss of so much social housing in the great sell-off of the '80s. Council house stock was sold off and never replaced - this led to an increase in demand for ownership and has also led to soaring rents in the private sector.
Whenever I see rental costs for even modest properties I'm horrified - they're often much higher than typical mortgage payments.
I think there are a number of policies we should be following:
Firstly - stop giving extra money to banks to lend - they've shown that they simply cannot be trusted to lend it to people, making every excuse not to. Instead let's move back to a 'mutual' model - like the old Building Societies, or possibly exend the involvement of Credit Unions into providing such credit. Perhaps we could do more to help with deposits too?
Secondly - stop the constant moves to reduce salary and move towards a minimum wage economy - whilst there is a social and general well-being benefit to the individual in any work, it shouldn't be forgotten that minimum wage jobs are often subsidised by the taxpayer - we shouldn't be subsidising private profit in such a way. Wages don't 'refuse to budge' on their own - they stay low because of greed.
Thirdly, make more use of 'brownfield' sites for housing, but at the same time offer more resistance to the sort of 'nimby' culture that stops necessary housing from being built.
Finally, invest in social housing - given that large amounts of public money go in housing benefit to keep private rents high, which is an inefficient use of such expenditure, surely it would be cheaper in the long-term to provide decent social housing at a more affordable (and thus less likely to need to be subsidised) rent.
Wenlock Un
Peter,
Totally agree with your final point, benefit payments are funding much of our private housing stock that is tied up from buy-to-let exploitation of the late eighties/early 90's property boom and the Council house sell-off since.
Rather than build, the simple answer would be for the Govt. to issue compulsory purchase orders on second properties that are rented with funding from Housing Benefit for say, 3years. That would reduce second home/buy-to-let demand and quickly release housing stock onto the market at reduced prices.
David
And yet, try getting planning permission to build a house!
The population is growing and yet housebuilding is at record lows. NIMBYs and the council's planners prevent new housebuilding, even when it's someone from the county just wanting to build one modest house.
We do need more housebuilding. The only alternative is to decrease the population.
Katherine de Gama
Yes, norriblt for young people, especially as there is so little cecurity in the rental market.
Devilschair
David the housing market has been warped and mangled since Migraine Thatchers 'right to buy' - a grand idea if the councils had been allowed to build more houses from the RTB income - but they (for petty spiteful reasons) were not. Since then its not been sorted out, its political element was hidden by an unexpected boom..
The Blair period could have but it rode on the back of the boom - which was the same as all booms when political parties show they're most stupid faces - remember 'end of history' codswallop talked about by cod-political theorists who dug the first hole in the 80s which we're still digging now. As-if share or house prices would only ever get better - quite fake - and in the distant past noticed as 'snake oil' merchants'.
The balance is out - messing up on sector of society is not good for the long term - ok Capitalism is messed up - it only works when you ARE the winners, Smiths balancing systems are not working because of a manaement failure at a political level - dogmatic junk (about privatising everything wont work (there wa a brief eye-opening over the Olympics but alas its closed again now. We need to look for that balance in this new world - punishing workers for the greed of bankers is a short term thing and persists the problem - learn from history don't repeat it.
Katherine de Gama
Correction to my comment - my autocorrect seems to have gone wild. I meant to say that for young people and those who have missed the property booms renting is the road to nowhere. There is so little securiry for tenants in this country. We have Thatcher to thank for that. There needs to be far more legal protection.