A union of first time buyers?
As house prices continue to rise across the country many young people are finding themselves priced out of the housing market. The average age of the first time buyer is now 34 and the ratio of house price to salary has increased dramatically in the last decade. This figure is higher in geographic hotspots like the South-East of England. Despite recurrent predictions of a crash there appears to be no obvious end to this trend. I wonder what would happen it first time buyers got together to try and precipitate a dip?
The causes of the recent rise in house prices are multiple and complex. On the one hand it is simply about supply and demand. The number of people seeking houses in certain parts of the UK is greater than the number of houses available. The population of the South-East, for example, continues to grow through immigration, the higher incidence of divorce puts more people on the market and large disposable incomes increase the demand for second homes and buy-to-let properties.
This problem is compounded by the government’s apparent reluctance to build new properties or to allow private construction. The housing market is characterised by a strong degree of nimbyism – people oppose new buildings in the vicinity of their precious castle – especially, if they might be housing those at the lower end of the social scale. Despite recent announcements of future eco-towns, demand still vastly outstrips supply.
Meanwhile those inside the precious circle of property-ownership rub their hands as prices increase. The most fortunate with a bit of slack on their repayments re-mortgage to secure the credit and debt that drives our economy – investing wisely in fast cars and foreign holidays. As a consequence, any dip in house price growth threatens economic meltdown. Kings and queens in their castles glance nervously at tabloid reports of potential shocks to the system – the Daily Mail’s shock-horror, stock page-fillers.
Those outside the golden circle, and unable to secure a place in the dwindling rump of social housing, must depend on privately rented properties, whose rents must rise to keep pace with mortgage costs. Generally speaking these rented houses are the second homes of the already bricked-and-mortared – monthly rent payments, paying off their mortgages, widen the disparities between those in and out. Those renting pray for a crash, while those with property live in fear of it – this has become a new divide around which the country is aligned.
As a member of the renting class with a view to buying a place I wonder what might be achieved by some form of class action? If all first-time buyers got together and agreed to abstain from buying for three months, would it be enough to bring the prices down? I am no economist and don’t know what percentage of the market we represent. As a social scientist I could predict that this is not a natural coalition, and it would take a lot of solidarity to resist the temptation to split as prices fell. What do you think?
Good Article!