By: Tim Worstall
Date: 26 August 2014
As Herb Stein said, if something cannot go on forever then it won’t
It’s the Daily Mail that brings us the news that property prices have been rising by 8.6% a year for many decades now. This is of course a nominal number, not a post-inflation one, but projecting it outwards we see that there’s going to be something of a problem in the future:
Children born today looking to buy their first home in 2048 will be required to pay a staggering £3.4million, according to new research.
The remarkable figure was revealed in a study showing how decades of property value rises will affect a baby born today should the price increases continue on their currently trajectory.
The study was based on average annual increases of 8.6 per cent a year since 1954 and then uses this to pinpoint a cost for those buying their first home at the average age of 35.Obviously, unless there’s rather more inflation than we currently think is going to happen, that’s not going to happen. Herb Stein will be right, something will happen to make this not happen.
But what will happen is the interesting bit. We hope that the solution will be a change in the way we plan housing in this country. For it’s worth noting that this house price inflation really only started as the effects of the 1947 Town and Country Planning Act started to bite. In effect the government said that no one should build houses where people would like to go and live.
No, really, the 1930s were a time of an almost laissez faire attitude to who could build what where. And where people wanted to be able to buy should not be a surprise, they wanted to live in the countryside surrounding the towns and cities. That’s how towns and cities had grown in England for centuries. We ended up with those ribbon developments across the South East, suburban semis along the major roads, little estates added to villages and towns within reasonable distance of London.
That’s what people actually wanted, something we can see from the way people flocked to purchase these speculatively built homes. So what did the government do? Banned building what people actually wanted to live in. For of course we can’t let the ghastly proles actually enjoy their lives, can we?
The solution to housing becoming too expensive is of course to reverse course on what it is that makes housing so expensive. Allow people to build houses where people actually want to live: in short abolish the Town and Country Planning Acts.
We’ll get there, of course we will, for Stein was and is right. The only question is how long will the Nimby’s be able to frustrate the desires of their fellow citizens?
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