For months now, my life has been filled with estate agents. Lucky me. Actually, although none of my best friends are estate agents, don’t let’s fall for the lazy stereotype: there are good and bad practitioners – it doesn’t take long to spot which is which.
Talk to them and you will hear a consistent refrain, experience the same bewilderment, taste a little fear.
They are struggling to make sense of what is going on in the “market”, insisting the media is always three to six months behind what’s going on in real life: that the true picture is potentially worse than the 2007 crash.
Three caveats: these agents are in West London, an area hit particularly hard by Brexit-induced uncertainty (lots of nervous French people) and not necessarily reflective of the nation; secondly, that to even discuss a downward trend is tantamount to inducing it; thirdly, for many, a significant correction is a good thing – taking some warmth out of a prohibitively overheated scenario.
That said, here are some recent headlines: “The £29bn collapse – house prices fall in every part of Britain (except Wales)”; “House sales have fallen by nearly a third in some parts of UK”; “Britain is on the brink of the worst house price collapse since 1990s: experts predict property costs could plunge by FORTY PER CENT” (the Mail on Sunday, this weekend);
From London’s gentrified Hackney, to the North-East’s Hull, a “correction” is now tangible – and, many would argue, welcome, given how close prices are to all-time highs.
Just last month the Resolution Foundation think-tank estimated that those lucky enough to have bought in the 1990s and early 2000s benefited from a staggering £2.3trn windfall, not from buying and selling or paying off mortgages, but merely sitting pretty.
A “correction” is now tangible – and, many would argue, welcome For every lucky baby boomer, there is a despondent young person, despairing of getting on to the ladder.
To be fair to the Government, the introduction of staggered stamp duty taxes and measures such as Help To Buy were intended to aid first-time buyers, who have become ever more reliant on the bank of mum and dad, particularly given the new burden of student debts.
Bank of mum and dad
But the net effect of the long-term fall in real incomes (wage rises versus inflation) is now beginning to bite mum and dad too, despite historically low interest rates.
Plus, there’s that lack of confidence in our post-Brexit future. The corollary to low mortgage rates is historically low rates of personal savings and rising credit card debt. Any return to the negative equity nightmare of the early nineties would leave a scary number of households’ finances in an extremely precarious state. I hate that housing is regarded as “a market”.
For every buyer looking to be a developer or landlord there are so many more simply seeking a home of their own. A correction may help first-time buyers, yes, but what of the many other home-owners that have rightly or wrongly, become reliant on inexorably rising house values? In real life, we should be careful about what we wish for.
Stefano Hatfield (iNews)