An Englishman’s home may be his castle, but let’s face it, we are making a pretty poor fist of housing in general in the UK. We pay too much for it, it makes us miserable, and apparently there aren’t any design and construction standards for housing in the UK after the demise of the Parker Morris Standards in the 1960s and 1970s.
In Germany familes seem to be happy to occupy flats until well into middle age, whereupon richer people often have acquired the cash to buy an Einfamilienhaus with a modest mortgage.
In Britain we flog ourselves to buy a house with a highly leveraged mortgage, it seems ideally in our twenties. Which is a barmy way to carry on in the modern world, if you sit down and think about it. It was all very well when you could expect to start a job with a company in your early twenties and stay there until you get to your retirement party at 65, collect the carriage clock and sail into the sunset. You would have paid off your mortgage in your 50s, 25 years after taking it out, and would be sitting pretty.
Life ain’t like that any more. Instead of the 2.5*single salary income multiple, it seems we are buying at 5* income multiples, and in order to do that we seem to be opting out of nasty little wrinkle of a mortgage which is that you are meant to be paying some of the capital off. It’s hard to see how this is any better than renting, with the added liability that you are responsible for a whole heap of downsides that a landlord would have to pick up. In the end, after 25 years you still don’t own the house if you don’t pay down the capital, or intelligently invest the money elsewhere.
Part of the problem is that we don’t really like living in flats. As a single man, I was living in a terraced house with a mortgage, where in some ways a town centre rented flat would have suited me better. Not only that, but I wouldn’t have lost a shed-load of money on it too. Okay, so I did get to learn how to plumb in a thermostatic shower, install a washing machine and replace the guttering. But the tiny garden was always a right pain for me. Basically because stuff tended to grow in it which I had to hack back every so often. Oh, and I learned the mistake of planting leylandii. Don’t. ever. do. that. If you do, keep the buggers trimmed back. Don’t hack ’em back after 8 years of running riot. They don’t grow on old wood – you might as well go for the firewood option from the off.
The problem is that your twenties isn’t really the time for picking up long-term commitments. Obviously if you’ve settled down and aim to have kids by then, this may be different for you, though you still have the problem of the increasing transience of employment to contend with. This Torygraph article says that UK homeowners will increasingly be in their 40s plus. I’m not so sure that is such a dreadful thing – it matches the age profile of German homeowners, for instance. About 50% of Germans aged 45+ are homeowners compared to 28% of 18-45 year old Germans (source).
Europeans seem more at ease with the whole renting and apartment living scenario than we are. They have the physical infrastructure for it too – in my twenties the choice was either renting houses with a bunch of mates, or renting bedsits in houses that sleazy landlords had subdivided. Our house builders are busy building rabbit hutches on postage stamp plots of land. I was amazed when looking for a house to check out a new house that was described as detached. Yes, technically it was, there was all of about six inches separating it from the house next door!
A buddy of mine had a 1980s house in Felixstowe, it was big enough, he had enough garden. And a stylish spiral staircase. I was sitting down having a coffee when all of a sudden there was a thundering noise and the house shook. Apparently the staircase on the house next door was bolted through the thin wall to his. So we had a couple of tuned resonant structures designed to make his house shake when the neighbour went up their staircase to go to the bog!
So the question is, why do we make such a pig’s ear of housing? It’s not enough to do the Daily Mail routine of blaming too many people. Some of the Low Countries are just as bad but they don’t spend so much on it. Our housing is peculiarly crap, it’s peculiarly expensive, and it’s peculiarly low-rise high-density junk if it’s built after the 1970s. For something that seems to consume such an outrageous proportion of our national wealth and worry, we don’t seem to be making a particularly good job of it.
Something really bad seems to have happened since the 1980s. It would be easy to blame Mrs Thatcher and her purchase of council house tenants’ votes via the infernal right to buy scheme. This broke down the divide between those who aspired to own, and those who didn’t have the means. Some of the latter got a free gift of housing equity. Non owners used to have an alternative which had many of the attractions of owning without the financial costs in council housing, where now they don’t. Around the same time the rent acts were changed in favour of landlords. All of this made home ownership more attractive in the UK than the alternatives, which presumably pumped up demand, and this presumably pushed up prices until the supply/demand curves equalised at a higher income multiple than before.
That increase in price was another free gift made to all exisiting homeowners by raising the price of their property relative to their income, hence the British belief that house prices only go up over the long term, though the early 1990s challenged that assumption for nearly a decade for dimwits like me that bought in 1989. Unlike this time, that peak was of relatively short duration, amplifed by the Lawson boom and the ending of MIRAS and the end of tax relief for multiple owners, so not too many people were suckered into that rally. This time, as they say, it’s different, and whenever it really is different, it’s never in a good way….