Opinion – The cult of home ownership is dangerous and damaging – Adam Posen – FT.com – Best Blogs Series

This was originally posted in July 2013.

With the UK about to go to a national election it seemed to be timely to revisit the ‘cult of home ownership’. It’s important to remember that the UK’s economic growth was kick-started on the back of government guarantees to first time home-buyers.

Over the last for years, on this blog, John Gelmini and myself have been consistently critical of David Cameron’s government’s absence of cohesive strategy. Without strategy surely the pieces will come crashing down?

Thoughts?

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This is an excellent, MUST READ article by Adam Posen, president of the Peterson Institute for International Economics and is published in the FT.

via The cult of home ownership is dangerous and damaging – FT.com

The article highlights the risks at both the individual and national level of the home ownership cult, especially in the US and the UK.

These days, home ownership favors the wealthy and inherited wealth. The article cites latest research in the US that home ownership impacts mobility and aggravates unemployment. The financial crisis started in the US in 2008, and was triggered by sub-prime mortgages supporting home loans to the less advantaged. Now, once again, the big US banks are booming, and both the US and the UK governments are propping up the housing market.

Surely, the UK Government should be subsidizing language training rather than mortgage finance, and encouraging more people to go overseas to the likes of Germany where jobs are more plentiful?

Any thoughts?

One response

  1. I wonder whether Adam Posen would be happy living in a council house or a development corporation house of the type built for Blitz victims for ex East End slum dwellers made homeless by the Luftwaffe and transplanted into Haverhill,Harlow and Basildon in Essex and Stevenage in Hertfordshire where I live.

    Somehow I doubt it because many of the decendants of those original East Enders have transformed some of the most beautiful areas of countryside into slums every bit as bad as the ones their ancestors and relatives came from.

    Dr Alf and I are in accord about the need for investment in language skills training,getting firms export ready and directors “match fit ” for expansion whilst using the tax system to promote inward investment and export led growth.

    However the distortions caused by the UK housing market are brought about by high house prices brought about by lack of house building.

    This in turn stems from an unwillingness by mortgage lenders and insurers to consider systems building and the lack of productivity of British workers which induces UK employers to keep on hiring people from abroad.

    Many of our workers are in real terms unemployable thanks to trendy teaching methods ,poor attitudes and a lack of self discipline and personal rigour.

    We now have 71 million people living in the country of whom some 7 million are illegal immigrants(evidenced by notes and coins in circulation,school registrations in mid term of undocumented children by undocumented parents and the amount of food consumed which exceeds what the official population of 64.5 million could possibly eat).

    The housing shortage (both rented and privately owned) is nearly 12 million houses and at 100,000 houses a year we have both actual and hidden homelessness.

    IKEA and Hof House could build perfectly sound,sustainable private dwellings and Housing Benefit recipients,prisoners and the long term unemployed could be placed in hostels and converted shipping containers on brownfield sites and underground in estates on greenfield land utilising Japanese style sunpipes to beam in sunlight.

    Billions would be saved on the Housing Benefits bill and on council tax benefit plus of course the unnecessary local authority staff employed to police these benefits.In this way the Green Belt could be protected and the sight of slums in what were once attractive rural areas could be eliminated.
    Immigration other than for those with a lot of inward investment and jobs to create or those with special skills should be stopped as should overseas aid and the Barnett Formula.

    Money saved by these measures would save £50 billion gbp a year but the Scots,the Welsh and the Northern Irish would have to solve their problems without the help of the English taxpayer.
    British workers should be made to up their productivity,first by reducing annual holiday entitlement and secondly for long term benefit recipients compulsory workfare.

    Adult Social Care recipients should be aggressively re-enabled with deliberate “incapacity benefits and” dole bludgers” as the Australians call them removed from entitlement.

    Adult Social Care recipients without relatives should be removed to India which has the capacity to care for them at a fraction of the cost or treated here using care robots as happens in Japan.

    The reintroduction of National Service on top of the rise of the school leaving age to 18 would solve the Armed Forces recruitment problem and the problem of the 1.25 million NEETS.

    Home ownership could still be a cult as Adam Posen puts it but it would be made more affordable not by irresponsible lending but by building methods that used 3D printing and modern manufacturing methods rather than conventional construction which uses tradesmen who are retiring,dying off and becoming like the dinosaurs of old,extinct.

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