Quote:
Originally Posted by Chris
There's no reason why you would want the value of your home to fall. You've been told it's an investment your entire adult life and you, and many tens of thousands of others, have planned your finances and maybe your retirement on that basis.
This however is the very nature of the problem. A family home is supposed to be a place to bring up a family, not a way of beating an unpredictable stock market or low bank savings rates. To turn family homes into a store of value it has been necessary to do to them exactly what you have to do to any commodity whose value you wish to increase - restrict supply.
The equation really is this simple. If there are enough nice homes for people to buy and live in, then the housing crisis will end, and young people will be able to move out of their parents' homes and buy their own place before they've passed their 30th birthday saving a fortune for a deposit.
Also, however, if there are enough such homes, the relative scarcity of your home will decrease and its value will stop going up faster than inflation. It may stop going up altogether. It may even fall.
So the question is, which is more important to you ... your own home value or the housing prospects of a generation of young adults who can't presently afford to buy at all? That's the issue that the political parties we vote for wrestle with, and for the last 30 years none of them, when in power, has taken any steps that would increase supply sufficiently, because it would have a notable economic effect on that part of the population that votes in the greatest numbers. In the study of demographics, that part of the population is commonly identified as the baby boomer generation.
@Seph, if you want to get faux offended by the term 'baby boomer', try writing to all the university geography departments that use it routinely in their population studies, see how far you get.  |
Well it is true that my house is an investment, after all we paid for it with a mortgage and have spent money on it too.
BUT it is primarily a home so it's less critical to me if the value drops.
It does seem though that the long term solution isn't to simply build more stock in desirable areas and the very reasons they are desirable can be that it isn't overcrowded. What do we do with the less desirable areas? To they simply remain sink estates, "controlled" by those with "muscle" or do we try to bring those areas up? With the increase in remote working forced by CV19 and increased capacity in communication the absence of local employment is less of an issue. And if enough "money" moves in can it have a reversing effect of it leaving? Can that "money" help build up local businesses so that they have more money and so forth? Yes it is easier to pull down than up, a few "malcontents" can cause the "money" to leave.
So rather than simply building new stock, why not repair/refurbish etc existing, empty stock, or even rebuild in those areas? But do it in a way that will support the existing community, new GP surgeries, shopping, transport etc. Make those places desirable, lift those places and their communities up.
But with the topic on here, if eventually we are going to see changes in demographics, if birthrate has dropped and remains lower eventually do we see a decrease in population with also changes the supply/demand equation?
Another issue isn't simply with starter homes but the huge difference in price between smaller and larger. If the gaps are too big to allow people to move up, they then invest (extend) where they are and not release the smaller properties. And then once "the family" has the bigger property even when the children have flown the nest the family home is kept for family gatherings. My mum lives on her own in the family home, it's central to the rest of us and a place where all 3 of her children's families can come at the same time with all the grandchildren.