Even The Guardian refers to a “UK house price slump” and the more sensationalist tabloids use far more scary language.
But in what possible world can house price inflation continuing to grow well ahead of wage inflation be considered a good thing?
Perhaps it does in the head of a baby boomer, who had the opportunity to buy a scarce resource back in the day and who thinks the subsequent growth is down to something clever they did?
But you really need to have no consideration for subsequent generations to think this is a good thing.
An incredible situation
We now have a property market which does not operate without the wholesale involvement of the Bank of Mum and Dad.
One in four of all property transactions was supported by parents in 2017 – and that is no longer restricted to first-time buyers, who were supported in 59% of cases.
It is a market in which the rate of home ownership among the young is in free fall.
In the past thirty years the proportion of households headed by a 25- to 34-year-old who owns their own home has fallen by half. Incredible.
This is a market in which young people are paying significantly more of their take home pay on rent than any previous generation.
And they are rewarded by the insecurity of the private rented sector with short term tenancies and smaller and smaller properties.
House price inflation target
Now I am not advocating, as some do, a massive downward correction in UK house prices, that would cause too much damage across the economy.
But I do think that a period of stable house price inflation at or a little below the rate of wage inflation would be a very good thing indeed.
In this, I find myself on the same side as the Institute for Public Policy Research (IPPR) think tank, which recently called for the Bank of England to be given a house price inflation target alongside its consumer inflation target.
It argued the bank should be challenged to use the macroeconomic tools at their disposal to freeze house prices for an initial five years.
Simultaneously, says the IPPR, the government should use all the tools at its disposal to increase housing supply and restrict overseas purchases of residential property.
We are the problem
However the real problem is frankly, ourselves, and our not unreasonable wish to maintain the status quo, at least in the short term.
Anyone who owns a property wants to see it increase in value.
And the way that can be made to happen is by ensuring a restricted supply, so that demand and supply equilibrium cannot be reached.
We oppose new housing developments near us, we elect governments which restrict the ability of local authorities to build. All this adds to the pressure to view housing as an investment.
But in doing so, we are actually helping make a “property-owning democracy” – a slogan which dates back to the 1923 General Election – go further and further away.
A personal story to illustrate the reality. I first came to London in 1978. A pint of beer in a North London pub cost 50p. I remember the day I handed over a pound note for two pints and got no change.
Within a year of starting work I was buying a one bedroom flat in North London, for £21,500. That flat would now sell for £375,000. Beer in the same North London pub is now £4.50 a pint.
Beer up nine times. Housing up seventeen times. What have we done?
