Soaring house prices, a frenzied housing market, unaffordable rents and massive overcrowding. Welcome to ConDem Britain 2014, where only the wealthy can get a decent roof over their heads while those in genuine need can only stand and watch.
The average asking price on the Rightmove property website jumped by £8,103 in January and a typical property is now costing £252,000. But that’s a national average. Live in London and you can expect to pay around £500,000 to get on to the bottom of the “housing ladder”.
House prices soared by over 11% in the capital last year and the pace of increase is continuing. Bubble-like conditions are making first-time buyers stretch themselves too far, says the Money Advice Service. It researched 1,000 first-timers who had bought over the past two years, and found that one in five wished they had bought somewhere cheaper.
More than half admitted that the running cost of their first home was also more than expected, prompting the service to warn buyers: "You can afford your mortgage, but can you afford your home?" Affordability is most stretched in London and the south-east. One estate agent said that over the past year, the average property it sold in London went up by 18.4% to £448,800, a rise of £69,784 over the year, double the average salary of a Londoner.
Private renting is the only option as local councils and housing associations have few properties available for households without children. But it’s not a cheap alternative to a mortgage. Official figures show that average weekly rents are more than 50% of average local wages in more than half of London’s boroughs.
In Kensington and Chelsea, average weekly rents were a staggering 73% of local wages, and 71% per cent in Westminster. Even in poorer areas like Hackney and Southwark, the ratio was still over 50%. No wonder reports are growing of young people actually moving back in with their parents to save on housing costs.
Adding to the pressure in London are cash-rich buyers from the Middle East, Russia and other areas who can plonk down ill-gotten gains at the estate agents. They are completely indifferent to the prices being paid.
Labour leader Ed Miliband’s call to make these homes available to London residents first is no solution. Firstly, they are out of the reach of most people who are not already home owners. Secondly, it would be a nightmare to enforce. Building more new towns is just another way of saying London is a rich man’s playground and that’s how it’s going to stay.
For a long post-war period, local authorities built millions of homes for rent, enabling most new households to find somewhere to live. Rents in the private sector were controlled. Since the early 1980s, a housing market driven primarily by the obsession with owner-occupation has replaced state intervention.
It coincided with the deregulation of the financial system that provided anyone who wanted it with endless amounts of credit. Not enough money to pay your mortgage? Don’t worry, just borrow five, six or seven times your annual income.
In the ten years to 2007, real average house prices doubled while disposable income only rose by 15% in the same period. In London, prices soared by over 350% over the first decade of the Blair government. It couldn’t last and it didn’t. Come the 2008 meltdown, mortgages dried up while the house price bubble was maintained by a shortage of supply.
In the 19th century, Frederick Engels wrote about the “so-called housing shortage, which plays such a great role in the press nowadays” and asked rhetorically:
How is the housing question to be solved then? In present-day society just as any other social question is solved: by the gradual economic adjustment of supply and demand, a solution which ever reproduces the question itself anew and therefore is no solution.
Capitalism actually recreates shortages in housing and other areas over and over again because that’s the way it works. A system that feeds on human misery is immoral and unacceptable.