Tuesday 24 June 2014

Life Is Becoming Complicated

Housing and property are among the main areas of concern and interest currently in politics, economics and numbers of people in all the age groups.  In the UK we are interested in our own issues and take less notice of those elsewhere.

The USA also has its problems and this article in Sober Look suggests it is not just the mortgage, sub-prime etc. private houses for sale that is the difficult issue.  This was yesterday.  Today it is the gathering problems in the rental sector.

Back in the UK a leading player in property sales, Zoopla, say that the talk of a housing "bubble" is misleading and that high prices are here to stay and could well go higher.  It cites demand and supply.

In general economic terms this means that while we are supposed to be having low inflation according to some indexes with low interest rates to match, major inflation in the property market has occurred with more to come.

Accordingly, in some western countries the cost of living is a major political issue.  If that embodies housing and connected costs this is where reality meets all the political fanciful talk aimed at winning votes, or at least not losing them.

In our present democracies housing became a major issue in keeping with the extensions to the franchises as people were promised the benefits of growing wealth and basic standards.  These have improved a great deal over time.

So for much of the 20th Century one way or another there was a strong political drive to promote and fund not just a lot more housing but much higher standards.  In the West what happened was that multiple housing became more common at the same time as individualism became a norm in lifestyle.

This needed high levels of taxation along with extensive redistribution of income.  But as the rich became less taxable avoiding it as much as possible and the richer fed on the property booms the costs became transmitted down the income levels.

As a result states became more and more dependent on the money, government and private to come up with the finance for the schemes, largely via debt induced inflation.  The money men soon had a stranglehold on policy making which will be difficult to shake off.

Given other factors in play bearing on property and the demand for it, there has to be some radical changes in some sectors of the market.  These will soon be transmitted with variable and unpredictable effects across the market as a whole.

This is not going to turn out well.  The belief that we can all profit either financially or by higher standards, promoted by both politics and finance for so long is so entrenched is untenable.  The changes entailed could be painful and difficult.

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