Inflation is a funny thing. Imagine headlines “Families cheer as bread prices soar” or “Holidaymakers high-five as deck-chair costs double”. Not really plausible, is it? Yet that is standard fare on the front pages of many newspapers and news websites whenever we have a story about rising house prices.
As ever in some corners of the press, rising housing prices are seen as the sign of a healthy housing market or a wider recovery.
I beg to differ. Homes are too expensive in this country and they have become more expensive relative to incomes over many decades. House price rises lock out would-be buyers and they are accompanied by rising rents for that growing army of people who have no choice but to rent privately. Rising land costs – which is what house price inflation really is – affects social housing providers too.
And yes, I get the point that homes, unlike bread or deckchairs, are long-lasting assets rather than simply consumption goods – hence the perception that a home is an investment. But that’s the problem too. It’s why we have endured the latest roller-coaster of boom and bust, with the consequent era of austerity which – with bitter irony – hits hardest on those for whom gambling on house prices was never an option anyway. It’s why the seeds of the next boom-bust cycle are already being sown.
The truth is that we leave far too much commentary on the housing market to commercial interests without acknowledging their bias. Lenders, surveyors and estate agents all produce reports which present the housing market in a certain way which suits the needs of that industry. Words such as ‘recovery’, ‘healthy’ and ‘hope’ pepper press releases about house price inflation. Newspapers too have their advertising budgets to meet and glossy property supplements to shift, creating a ready-made army of house price cheerleaders.
A reasoned debate about housing market recovery would aim for price stability, allowing incomes to catch up with housing costs. Stable house prices would promote housing production across all tenures, decoupled from land speculation. And a set of new headlines: “Improving housing affordability cheered by relieved families”.