Keys Are For Keeps

The media suggest there are people in a lather again about property prices, building and all the rest.  It is not surprising that there seem to be problems. 

This below is based on a comment put on a blog today.

Over a number of decades we have awarded ourselves much greater amounts of living space per head, believing that the costs will be met essentially by future real economic growth. 

We have changed our social arrangements for personal partnerships in favour of forms of individualism that add to housing demand.

We have gone for rapid population growth unevenly distributed.  The money transactions resulting may give apparent growth but does not guarantee increased real wealth per head. 

We have created financial means to allow multiple personal property ownership well beyond actual living requirements.  This has led to under occupation in a number of areas. 

We have channelled vast credit facilities into the housing market to boost prices and activity.  Mortgages have changed from being a long term requirement to forms of credit used for short term gaming the market. "Trading up" is an example.

We have assumed that building houses is necessarily investment when much of it amounts to consumption.  Also, the figures for housing rarely if ever allow for maintenance, repair and other related costs.

We have allowed large building firms, many of which have complex tax avoiding structures and aim for maximising returns, to enjoy hidden subsidies and support.

We have not taken into account the demographics which has led to a property rich number of the old growing richer at the expense of the young generation, many of whom either cannot afford or struggle to meet housing costs.  At the same time the aged, including those in social housing have benefits paid for by taxing the young in work.

We have allowed the social housing sector to become discriminatory.  In particular this arises from allowing present  residents and family members to enjoy quasi-ownership rights.  Again these are heavily subsidised in many cases.

We have made promises arising from the above to all and sundry that cannot possibly be fulfilled.  Also, for property owning on mortgages these are now largely securitised and used to fund speculation in financial products. 

We have in the rental sector changed Housing Associations to  become financial operators as opposed to housing providers.  The private market is now largely speculative as opposed to being providers.     

Then we wonder why things are going wrong, notably the economy, social relationships, family life, the benefit system, taxation policies and any sense of community or purpose in saving or taking personal financial responsibility.