The truth is:
Rank capitalism, as we have come to know it, does not work for a majority of us especially when it comes to house ownership.
Whilst I haven’t exactly been a fully committed socialist over recent decades I can see the difficulties in the existing capitalist model, especially in the way it has fuelled large house-price increases over the past 50 or more years.
Basically, those who already own houses themselves naturally hope for prices to keep increasing. Above inflation price-increases are preferred by such owners and anything more is very much applauded whereas price falls are most unwelcome for them. Not unreasonable logic one might think, on first gaze.
For first time buyers however, price falls are desperately hoped for especially nowadays, as being a possible way to enable these people to somehow afford to buy whilst many still find it absolutely impossible to even contemplate doing so.
For these people the only alternative to living in a house of their own once they become adults is to rent, especially when they have family responsibilities to consider as being their top priority.
This alternative involves paying what are already high rents compared with average earnings, and these rents keep on increasing year on year.
Renting therefore impacts on such peoples’ ability to save to eventually buy their own home and in quite a few cases, renders it completely impossible for them to do so.
Banks are, it must be seen, complicit in seeing that house prices stay high, especially as it allows them to lend more money whilst having the security of loans secured on property by way of a mortgage.
The bulk of many bank and building society net profits understandably comes from earning interest on mortgage loans.
The problem is, none this helps would-be buyers!
Yet by not helping these buyers, the banks and everyone else in the business of supporting the economy, including dare I say estate agents themselves, are actually loosing out by not selling to the buyers out there at sufficiently affordable prices to allow sufficient sales to take place.
A more uniformly priced housing market is urgently needed and a return to true affordability and availability has been needed for decades. If only one of our political parties would wake up to this fundamental need by including a workable strategy in their manifesto, change for the better could soon start to be introduced into the existing housing markets.
The recent labour proposal to replace Council Tax with a property value tax would not only add further taxation to an already highly taxed part of our economy but would also do nothing to deal with the market inefficiencies to which I am referring.
Taxing specific markets is not the correct way to reform and improve their function. This was historically shown not to work in the 70’s when the Labour government brought in Development Land Tax. Instead it is time new policies were crafted to fully address the specific problem of increasingly unaffordable house prices. I would have thought Labour, of all parties, would have understood this by now.
The only way to restore price affordability and availability in the housing markets up and down England and Wales would be to make these markets perform more efficiently and more transparently.
If true and fair market prices were established, without such high borrowing requirements, more people could step onto the housing market and they would generate many new transactions as they began to do so.
These new people would, of course, be utilising the housing they have just purchased, whereas currently there are far too many houses bought simply for capital gain and some are even left empty in the process!!
Restoring the prospect of owner-occupation as a feasible option for average families once again, would appear to be an essential policy to adopt for any prospective new government.
If you want to read about how a change to having efficient property agents could be put into practice, please Google ‘The Hendry Solution’, or go to the following link:
The Hendry Solution: Full details of our proposals for properly reforming all housing markets in England and Wales.
Peter Hendry – author of The Hendry Solution