Since the mid 1990s the UK housing market has suffered rampant price inflation. It is now at a stagnant high, the reduction in prices a lack of demand should trigger perfectly counterbalanced by a chronic lack of supply. The price correction that should have happened, hasn’t. Instead, crazy policies like parents using their pension funds to guarantee their child’s mortgage borrowing are floated. Business as usual is deeply disturbing.
So, what can we do to return house prices to sensible levels – the level any sane child would expect them to be at?
Step 1 – Ban second (and third, and fourth) homes
While there’s a shortage of first homes, why do we tolerate second home ownership? Does anyone really need two homes? Or three? Until there are enough first homes to go round, ban further homes. And of course, bring the empty homes back into use.
Step 2 – Redesign the UK housing system
The free market in housing clearly doesn’t work for everyone, or even the majority. All markets are contrived, ostensibly for the benefit of the majority. Where that isn’t the case, the system as it is currently designed has failed. So re-design the system. A sensible process would look at available supply, and demand, and assess both sides of the equation, and how they can be influenced. Design and implement a multi-decade migration strategy to a new, fairer model, so that people who made earlier reasonable investment choices aren’t penalised, while meeting the needs of future generations.
Step 3 – Change the culture
Many European countries do not regard bricks and mortar as a ‘must have’ investment, and have systems that support long term stable rentals. The UK should do the same, and move away from the ‘Assured Shorthold Tenancy’ as the dominant model for lettings. Let tenants decorate their homes, have a say in renovations, and give them stability, both financial and physical.
Step 4 – Stop the Media selling rising prices as a ‘good thing’.