I though something a little different might make a change & be in order?
The question is, are we as a nation so addicted to the mirage of 'wealth' coming from our residential housing price inflation that we are incapable
of (or will simply refuse to) change anything about it and will just stand by and watch the actual productive elements of our economy wither whilst
'we' indulge in this madness and suffer the booms and busts of a housing market gone crazy?
Statistics released by the Office for National Statistics
, in December 2003, valued Great Britain at £5
But approx 55% (£2.7 trillion) of this 'value', is in our residential homes!
Manufacturing was valued at only £200 billions!
Which btw was precisely the same value it was in 1998
(clearly when adjusted for inflation, this means there has been a further contraction in our manufacturing).
To put this grotesque and massive over-valuation of residential property into perspective, commercial buildings and public buildings, were
collectively worth just £565 billions.
Cue an additional reality check.......this is almost the same total value as for our roads, pipelines and railways at £537 billions.
The value of residential homes has more than doubled in the past 15 years.
From 1999 the average house value was circa £90,000.
Today it is put at £175,000.
Quite obviously, neither our income nor our GDP have expanded at anything remotely approaching the same or a similar rate."
Evidently and most worryingly much of Britain's 'economic activity' and 'value' is vested in our collective residential real estate.
The above article tries to look at what passes for the asset side of the national balance sheet - figures are up to the end of 2003, so it can only be
worse by now as the trends clearly illustrate.
This post-1960's British obsession with residential bricks and mortar - to the practical on-going disregard & almost willful exclusion of almost all
other economic activity - is, IMO, little short of insane and utterly suicidal.
"In modern Britain, it seems, putting up the rent is somehow regarded as economic growth."
'We' here in the UK are being raised into a world where the values of the upper and middle class (that's the real
and actual secure property
owning upper & middle classes, not the 'one month's pay-check away from destitution'
working class with a huge mortgage on a shoe-box down
in some cr@ppy suburb/res estate) and their accompanying 'services & property is all' psyche has apparently permeated everywhere.
The current housing bubble can't go on forever (they never do) and I fear 'the correction' for this particular unearned bloat, when it comes (as
they always do eventually) will make the late 1980's - early 1990s crash look like a mere hiccup.
The answer is not magic.
The problem is few wish to hear it because it robs them of their illusion of great wealth.
'The answer' is to be found in seeking price stability and coming away from the rather childish delusion that high and rocketing house prices are,
of themselves, 'good'.
(and given that we all need somewhere to live what are we supposed to do to cash in, sell up and go and live in a hole in the ground?
It's all just relative so you either sell and buy something that requires all that cash and more or you trade-down and find that - unless you lived
in a huge mansion - even trading down doesn't generate that
much spending cash)
It has always struck me as incredible that inflation is supposedly reviled so deeply here - except when it comes to housing prices.
The tory party are especially useless in this (being little better these days that a party of petit-bourgeois narrow-minded estate agents with
delusions of grandeur).
They are completely ideologically blinded to the idea of social housing (unlike their more patrician 1950's tory fore-bearers).
They have no answers here and offer nothing but more of the same, booms and busts, winners and losers which are afterall just part of what they crave
ideologically anyway, ultimately.
Labour have, so far, despite a moderate increasing of activity and funding for social housing, refused to strike out of these 1960's - 1990's
patterns with anything like the required vigor.
But in the end a large expansion in publicly funded social housing for rent is a must (it is, quite clearly, never going to come from the private
sector in large enough amounts, as can already be seen right now).
Along with this expansion of the renting sector we need European style capital gains taxes to moderate and in time snuff out the inclination towards
this crazy house inflation that is seeing fewer and fewer young people here able to afford their own home.