Why A House Price Crash Would Be A 'Good' Thing

Readers of the Daily Express are treated to regular front pages on the fact that there's only one way house prices can go and it is upwards, and that is always news to be celebrated. Hooray!

Readers of the Daily Express are treated to regular front pages on the fact that there's only one way house prices can go and it is upwards, and that is always news to be celebrated. Hooray!

Yet it's not just the knee-jerk tabloids that consistently pursue this view. The mainstream quality media is often as guilty of doing little more than writing up the latest press release from organisations, usually with a vested interest in talking the market up. Consistently, the line from all sections of the media is that a rise in the price of houses is a 'good' thing and a fall is a 'bad' thing.

But there are many of us out there who couldn't disagree more and think a downturn would be a very good thing indeed: the ever-diminishing group of first-time buyers (FTBs).

Firstly, I should get my own personal circumstances out of the way. I'm a renter in my thirties who whom has been hoping since 2004 that the mad boom in house prices would subside and be followed by a bust, so my husband and I could make that leap on to the bottom rung of the housing ladder without indebting ourselves for years to come to a ridiculous level. But I don't want prices to drop for purely(!) selfish reasons. The ramifications for society as whole are pernicious and not often understood.

Halifax released data earlier this year which showed house prices rose by 91% from 2000, but the average salary increased only by 40%. Ouch.

The thing that bothers me is that people don't seem to understand what this kind of house price inflation means for the future. It reduces the standard of living of people because they have to find more to pay for a home. Instead of being able to buy other goods and services money is diverted into mortgage payments which dents demand in the wider economy. Businesses and people of the future and the country as a whole will be poorer for it.

In his book The Pinch: How the babyboomers took their children's future - and why they should give it back David Willetts analyses the massive generational shift in wealth from young to old in recent years, driven largely by the boom in house prices (well it's the price of land really) and compares is to former times "It would not matter so much if this was a repeat of the usual pattern with the younger generation always owning less; but the younger generation have much worse prospects of building up their property in the same way. This is the real injustice."

There are so many issues that need to be addressed yet nobody in government seems to be listening - from buy-to-let to a perverse tax system in urgent need of reform, some of the worst tenants' rights in Europe, a million empty residential properties in the country, planning laws etc etc.

And yet I find myself as a childless married woman approaching her 34th birthday, hearing a vague ticking in the background and finding the nesting instinct hard to ignore. My patience is wearing thin. My husband and I could move from our rented two bed flat to a rented three bed house but I don't think I could take the opprobrium from family and friends and the look of pity in their eyes. The peculiarly British conceit pushed by governments in the last 30 years of all flavours that owning means success and renting means failure is impossible to argue with. It seems we have no choice, the next step must be to buy.

In some ways I'm one of the lucky ones as I avoided having to pay university tuition fees by a year, and although it will be a stretch hopefully we might get a mortgage in a year or two. A recent survey by the National Centre for Social Research showed that many young people are giving up on the dream of home ownership entirely as an unobtainable goal.

It's not that I don't want to buy my own home but I just don't want to pay, by historical standards, a vastly inflated price for it, but I feel I'll be left with little choice. I've waited long enough for prices to fall to the kind of levels they used to be in the late 90s but even I may have to capitulate soon... if I can.

Let them fall, let them fall.


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