Monday, 12 May 2008

At last, some good sense over house price rises

Well, I can't help myself this morning: I have to say 'well done BBC News' for bringing us the news that more people would like to see house prices fall than rise. According to pollsters ICM only 22 per cent of people want to see house prices rise further, the remainder want them to stabilise or fall.

In the months since the media began to use the 'credit crunch' phrase, coverage has focused on the impact rising prices and interest rates will have on car drivers and home-owners across Middle England.

The stories of the thousands of families for who rapidly-increasing fuel, food and housing costs are forcing them to choose between them as they are pushed into real poverty, are less often told.

The 'crisis' has been described as one of lower-profits for second home owners, falling share portfolio values and the rising cost of foreign holidays as the value of the pound plummets. Where its impacts on the poor have been mentioned, it's in the developing world and, as usual, tells an all too familiar story of starvation and riots in the face of food shortages.

But we're hardly hearing about the quiet majority, those who are barely able to keep themselves warm in winter (a plight soon forgotten by the media when the sun comes out), or those who are having to scour supermarkets for bargains just to make sure there is food on the tables.

Why? It's not because the media don't consider them important (they need to sell newspapers and advertising space, after all). Maybe it's actually because reporting the reality that a boom and bust economy is so much worse, for so many people, than an alternative based on economic stability and social justice, is just too threatening to the handful of businesses and institutions that control so may of the public voices we hear.

We are repeatedly told that our interests are fundamentally the same as those of the corporations and the world's wealthiest few individuals: economic growth at all costs. But it's just illogical to suggest that we could break one of the most fundamental laws of physics and create something from nothing - let alone that we could keep on doing it forever.

Unless, of course, we cheat, and discount the value of all the natural resources buried beneath our feet, and pretend that the damage done by, say toxic pollution, wars over scarce water resources, and slavery, is impossible to measure in terms of financial cost. And the social impacts of permanent price inflation, too, of course. And so that's exactly what the economists and the governments and media they advise have done.

Which brings me back to house prices. Exactly the same economic logic lies beneath the media's obsession with rising house prices, property speculation programmes and the over-consumption of the goods and services they advertise.

A great swathe of people across the country (but by no means evenly spread out across the regions) have made more money from increased property prices over the last decade or so than they have from work, and paid more tax in stamp duty than income tax.

This is plainly a perversion of the reality that most people's lives are completely dominated by the work they do, and the time they spend doing it, and that income tax is the single most important tool for creating a fairer society by making the better-off pay their way in the treasury's armoury.

But as house prices rise, it becomes harder every day for those who don't currently own their own home to ever do so. The problem is especially severe in areas where house prices have risen fastest, like Brighton and Hove, and it means the gap between the haves and have-nots is yawning ever-wider. The benefits are mainly enjoyed by the banks and money-lenders, the biggest five of which made £40 billion profit in 2006, the last year before the 'crunch' started to take hold. Owning your home isn't like owning a second car - you just can't realistically sell it unless you buy another, and if prices have risen everywhere it's only by 'moving up' the property ladder that you can enjoy any of the boons of boom.

On the other hand, when prices fall, that is no longer possible, so demand drops and prices fall further, with the most expensive homes falling in value fastest. Those who have gambled most heavily, and financed their homes and social mobility on debt, fall first. Most of them end up living in a slightly smaller house - or having to actually work for a living rather than simply speculate and gamble, but the media is full of their stories.

But its those for who doubling mortgage payments mean repossession and homelessness (almost 40,000 families in the first quarter of this year, according to official figures), and those in social housing (whose landlords, mainly housing associations, as more council housing stocks are effectively privatised, are being denied access to credit just like everyone else) who are bearing the biggest brunt of the credit crunch.

Reporting that more people recognise their interests are best served by stable house prices than rising ones is real progress towards changing the way we think about the economy - and that of course is a fundamental first step to delivering real change.

Nationally, and internationally, we need to move away from the economic language and logic of the 20th Century, towards a true-cost economics, a way of making tax and spending decisions based on their true social and environmental costs. Locally, we need an urgent summit between social housing providers, politicians, homelessness charities and tenants' groups to work out how to keep a roof over everyone's head during the inevitable economic 'bust' we ae now witnessing. What about it Mary Mears?

1 comment:

  1. And the TV is full of programes with people owning two homes, either in the coutry and city, or even worse in carbon terms, one abroad.

    Locals cant compete and move out of desirable areas, local shops die off as they arent used all year round. What a world we live in, but it is possible to make it a better one.