House prices are down 1% from April 2007 according to a BBC story. That doesn't sound like a lot to me. The fact that house prices have been rising for four of the last five years is buried in the story. So now instead of being 10% above last year, they are now 1% below last year. But the graph looks much more dramatic.
It does say something that the BBC, on the whole known for balanced reporting, is using language like "sixth monthly decline in a row" and "steep decline". This is after property prices have RISEN 45% in the last 5 years.
So we are talking ourselves into a significant drop in house prices. The question really is - who is going to be really hurt? Anyone who has bought recently and not benefited from the rises. Anyone who remortgaged and spent the cash and now is sitting on a possible deficit. First time buyers because cheap and easy 100% mortgages have disappeared in the UK.
Well, first time buyers are going to be hit, but previously they were being squeezed out because prices were much too high a multiple of their earnings. Now they need a decent deposit to get a mortgage. Well, that doesn't seem unreasonable to me.
There is definitely a market opportunity here for housing that is affordable, and properly targetted at the people who are having difficulty getting on the housing ladder. Perhaps a mixture of owners and renters in professionally mainted properties with proper ongoing funding for maintenance. More commonhold properties would be a good idea. Why haven't we seen more of this in the UK. Well one important reason is that it eliminates ground rent as a source of income for developers and other sources of income from premiums for extending leases, etc. Perhaps a tax break to help encourage this important and cost effective type of housing?
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