One British household in every 10 now has total assets exceeding £1m, according to a new book based on work by researchers at the London School of Economics.Hurrah! More people are getting richer. A good thing. Right?
No. Apparently wrong:
Hill – who previously headed Whitehall's National Equality Panel – points out this is real money, and a little bit of it will be used to secure an extra social advantage for the offspring of the tenth who now are so wealthy. It will pay for that master's degree, or the deposit on their "starter" home.Families working to support themselves and their children through life. *shudder* How awful…
That will have the effect of reducing social mobility because educational attainment will begin to depend more on having parents who can pay, and being able to take that good job in London will depend on having parents who can help you buy a place to live should you wish to stay in the job for long.Shocking! All ‘help’ should flow from the state, clearly, once it’s taken the money from everyone in taxes!
So why are house prices so high? It is not, as often suggested, because we have too few homes. Prices are high because a few have so much more money to spend than before. They buy a big house for a small family, or more than one home, and reduce what is available for everyone else.How dare people buy a house that’s too large for their needs (according to Danny, who clearly knows just what everyone needs)!
And why do you think parents are so frightened about their children's futures? It is not because our schools are poor.Oh? Really? That's not what they themselves often say. But you clearly know better...
We've never had so many well-qualified and committed teachers working per child, and we have never had so many university places available per child.And we’ve never had such poor exam results and so many children leaving school unable to read and write…
And why are so many young people unemployed? Our overall wage and salary bill has never been higher. It is not that we don't have enough money to employ them. If fewer people were allowed to hoard so much wealth, and those at the top were paid a little less than they currently are, it is not hard to calculate that everyone aged under 25 without a job could have one, full-time paid at the living wage.Oh, Danny, I think I know just what sort of system you are describing.
So, what is to be done? Rising inflation will eat away at the wealth of the rich. Housing bubbles all burst, eventually, it is just that no one knows when the London crash will begin, but one day someone will calculate the cost of a square foot of land in Kensington and work out that even if it were tiled in gold it would not be worth this much. Then they will buy some gold instead of that apartment, and theirs will be the very first decision of many that will bring us a little nearer together again.Unlikely. As Mark Wadsworth points out, the 'danger' is rather an exaggeration.
"So why are house prices so high?"
ReplyDeleteNo, Danny, it isn't because a small percentage of the well-off can afford a nice house, it's because the worst, most dilapidated slum can guarantee to get £70 per room courtesy of the government.
So try finding cheap accommodation on your own dime - not a chance. Then house prices are pushed up (from the bottom) as landlords on their 'buy-to-let-guaranteed-by-government-mortgages' can outbid everyone else. The knock-on effect drives everyones dream home price upwards.
I wonder whether a PhD is worth more than toilet paper nowadays since they seem to be handing them out to the factually challenged willy-nilly.
Joolz, MW has some rather oddball ideas on the subject (IMO), but property prices are way, way out of whack.
ReplyDeleteUntil fairly recently, house prices have been 2 - 3.5 times annual income, and to make buy to let pay, it needs to be priced at 10 times annual rental income.
The only thing that is propping all this up is all time low interest rates. the average has always been in the 8 - 10% range, way, way higher than present, and interest rates are set to rise. See the Japs, and rising bond yield rates world wide.
It's my opinion that the last paragraph regarding property/gold prices are not that far of the mark. Hey, I may be wrong, but I doubt it, and time will tell.
A couple of right crackers there Julia. In Guardianistan, folk aren't allowed to keep and enjoy the money they've worked for, it seems.
ReplyDeleteI hate people like that with a passion. Why can't they turn their envy around and look at the well off for inspiration?
If I remember rightly it was a lefty regime that destroyed the best engine of social mobility that this country has ever seen, i. e. the grammar school +assisted university education system. On the grounds it was "elitist" or something. So now only rich people can afford good education for their kids. Be careful what you wish for.
ReplyDeleteI wonder if Mr D has ascertained how MANY houses over £1M are owened by his social thinking comrades in Parliament or politics. The multi-millionaire 'man of the people' - "I will be whichever social class you want me to be as long as you give me a load of dosh" - Tony Blair has quite a few, though he probably needs at least one to store all the unsold copies if his autobiography.
ReplyDeleteHouse prices are high because people are willing to pay a certain price to live in a certain area or to make money by renting them out. Surely his professorship and head of CASE allows him to understand economics. If every house in the country, whether Westminster or Walsall, all cost the same, then His Professorship would no doubt be whinging that his own property should be worth more. Massive unemployment in this country is caused by 4 things: the politically motivated decimation of any form of industry in this country; the technological advances which allow machines and computers to do jobs which were once done manually; the rising birthrate and mass immigration programmes (again, politically motivated) making too many people for the jobs available; and finally, the lack of interest in honest work shown by several thousands of social parasites, causing even more immigrants who are willing to be bus drivers, fast food burger-flippers, call centre operators, or car valeters. It may not be 'cool' to work in the service industries, but so many years of misrule by successive governments have left this country with nothing else. I wonder if Mr D's qualifications include a study of history?
Penseivat
“The Politics of Envy.” A phrase that I coined at least two decades ago, and one which was invariably met with looks of disdain, scorn, incomprehension, pity, outright derision or a combination of any or all of them. Nice to see it is establishing itself so securely amongst the thinkers of this country.
ReplyDeleteReminds me of one time when walking down a street with a few left-wing friends; a Rolls Royce glided by, for my friends to explode in apoplectic fury, ranting about how the guy (funny how they always assume the driver is male) has no social conscience, blah, blah, blah… I merely asked who had the more social conscience – a person who bought a car that kept 80 men employed for a week, or one that kept 1 man employed for 4 hours. Naturally, they went for the former. I held my hands up and confessed to being the latter; my Mini took four man-hours to make; the Roller took 80 man-weeks.
“Oh. Never thought of it that way before,” was the universal response. While I like to think it made them rethink their views, it saddens me to acknowledge that it probably did not.
Except "House prices are high because people are willing to pay a certain price to live in a certain area or to make money by renting them out" isn't the case is it?
ReplyDeleteAffordability has pushed up house prices. By this I mean if you or I have £550 to spend every month on a mortgage, I can borrow £100k over 25 years @4.5%. (£556 per month payment) Now if interest payment go up to the mean of say 8%, my monthly payments go to £772.
Now as I said earlier, I can only afford £550 a month, so a house will have to drop to £70k for me to afford it. (£540 per month payment)
There was this article recently too, is it a threat? ;)
ReplyDeleteI guess that makes me one of the 90%...
ReplyDelete"I wonder whether a PhD is worth more than toilet paper nowadays..."
ReplyDeleteThey should start printing them with little perforations...
"...but property prices are way, way out of whack."
Yup, in some areas, that's certainly the case. As Penseivat points out, it's mostly because 'people are willing to pay a certain price to live in a certain area'.
In the areas where they're not willing to pay, houses can be had very cheaply.
Yet, try to address this, and the Guardianistas fret about 'gentrification'!
" I merely asked who had the more social conscience – a person who bought a car that kept 80 men employed for a week, or one that kept 1 man employed for 4 hours. Naturally, they went for the former. I held my hands up and confessed to being the latter; my Mini took four man-hours to make; the Roller took 80 man-weeks. "
Heh!
As someone wise once said, 'you can't multiply wealth by dividing it!'
ReplyDelete"Then they will buy some gold instead of that apartment,...." and the price of gold will go up, putting that particular hedge against inflation out of the reach of more people.
ReplyDeletePi**ock.
Gold always has had the reputation of "The metal of Kings", it was used for high value exchange for things like a ships cargo or a house. That said, those who are let's call them "Fiscally challenged" can still buy 2nd hand wedding rings for little more than scrap, as don't know about you, but I don't know any women who'd like someone elses wedding ring?
ReplyDeleteSilver, "Means of exchange for the common man" is what, 50p a gram?
Silver rings/chains/bracelets are cheap enough for anyone to afford. Instead of buying an 8th of blow (they always seem to have enough money for that shit) buy an Oz of silver.