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.
Paul Feldman
Communications editor
