Some modern myths are so stubborn they never seem to die, no matter just how crazy they are.
Take the idea that the UK will one day be a country where everyone will own their own home. Even now, as we claw our way back from a recession caused (at least in part) because of this preoccupation with home ownership, it remains the accepted orthodoxy. And one that the Government has swallowed completely.
Today’s speech by the new Housing Minister, Grant Shapps MP, was just another ritual offering at the altar of home ownership.
Like every other Housing Minister, he talked about a pledge to help Britons on to the housing ladder. The reality is that the Government are now just pushing people into home ownership because an alternative would be the harder path.
Of course, people want to believe it. Property owning has always been viewed as a ‘safe bet’ to realising financial security. It is not surprising that the aspirant working class rushed to buy their council houses when Margaret Thatcher instituted right-to-buy in the 80s.
But the facts point in the other direction:
- House prices are still beyond the reach of most people. Across the UK, house prices ballooned by 121% over the last decade. Although 1.4 million people want to buy their own home, 75 per cent cannot afford a mortgage with an 80 per cent loan-to-value.
- We are not building enough houses. Back in 2004, the Government was given the unenviable news that 120,000 new houses would be needed each year by economist Kate Barker. We currently face a shortfall of 150,000 homes built.
- People need mortgages but there aren’t many available unless you have an average of £30,000 for a deposit. Even then a rise in interest rates could spell disaster when it comes to keeping up with mortgage payments.
For too long the Government has shouted from the rooftops about home ownership with a preacher’s fervour, ignoring the need for a more balanced housing market.
More people are turning to renting and are re-thinking whether it’s worth rushing to own their own home.
Perhaps it’s time that we faced facts and realised that people paying inflated house prices entirely with loans was never the greatest idea.
Maybe it’s time for the Government to have a rethink?