Reader's Letter Of The Day

From today's Evening Standard:

Jenny Thomas [Letters, February 15] claims that London tenants have "unrealistic expectations" and that owning their home home is not "their entitlement".

For most of the 20the century, the UK has a bundle of policies which kept house prices down while squeezing out private landlords. The inevitable result was precisely as intended - a massive increase in the number of owner-occupiers.

And yes, people did see this as "their entitlement" - it is precisely this entitlement that recent governments have snatched away.

Mark Wadsworth, Young People's Party.

I'd mark myself down for using the same word ("precisely") twice, but apart from that, it came out OK.

UK house prices are now about seven times earnings

Shaun Richards at Mindful Money has looked at Halifax' recent statistic that house prices are 5.02 time earnings...

Putting it another way using median earnings for everyone the ratio of earnings to house prices is now 6.9.

Well worth a read.

I left a comment as follows:

There is another reason for going with your 6.9 figure and that is because you have to compare like with like.

Halifax' £186,000 house price is not the average (that's about £260,000 according to the ONS) it appears to be the median.

So you can compare median house price with median wages = 6.9

Or you can compare average house price with average wages = 7.4

Outbreak of common sense…

… in London:

Half of Londoners want house prices to fall, an exclusive poll for the Standard reveals today. The startling find marks a historic about-turn in views on the soaring property market, say experts.

With the cost of buying a home rocketing out of the reach of ever more Londoners, almost a third of adults in the capital want property prices to go down “a lot”. A further 18 per cent favour them decreasing “a little”, the YouGov poll found, while just one in six people hopes prices carry on rising. The findings came as the Bank of England unveiled new measures to prevent an explosion of potentially dangerous mortgage debt that could stoke prices even higher.

Tanya Abraham of pollsters YouGov said: “While much has been made of the benefits of a house price boom, many Londoners don’t believe it’s a positive thing. Recently it seems thoughts have turned to the downside — namely, rising values locking many people out of buying a property.”

Home owners are now in a minority in London, with thousands of young “generation rent” workers feeling excluded from the property ladder by ever-rising prices. Those who have bought homes for the first time often find it impossible to move up to the next rung and would like to see prices falling. Younger adults aged 25 to 39, many of whom may be first-time buyers, appear most concerned about startling hikes of around 20 per cent a year in London, with 56 per cent of this group now wanting property prices to fall…

Paula Higgins, chief executive of the HomeOwners Alliance lobby group said: “There has been a fundamental, historic shift in attitudes that I don’t think the Government is aware of yet. People who own properties may have made money out of them but they now realise their children and grandchildren won’t have the same opportunities unless the Government stops this boom and bust property cycle.”

Until the 1980s the UK government had a raft of policies which prevented the worst excesses of the finance-land price boom bust cycle; it was made up of rent controls, mortgage multiple restrictions, social housing, high taxation of rental income, and bringing up the rear, Schedule A tax on owner-occupiers and Domestic Rates, all of which is moving vaguely towards a Land Value Tax system.

Reader's Letter Of The Day

From The Evening Standard (20 May 2014, page 40):

It's disappointing that so many newspapers have allowed the Governor of the Bank of England to get away with blaming the UK house price bubble on lack of new supply and holding up his home country Canada as a counter-example.

Yes, per capita, Canada is building three times as many new homes as the UK, but they are suffering a house price bubble every bit as bad as ours - one which he presided over until his move to the UK.

Mark Wadsworth, Young People's Party.

"Quick! Pour more accelerant on the fire!"

Via Ennui at HPC.

It must be clear to everybody that the Conservatives' re-election hopes are largely pinned on stoking a nice house price bubble before 2015 to create the "feel good factor" which has been key to winning more or less every UK General Election for the past few decades.

But oh no, what's this?

The August data from Land Registry's House Price Index shows an annual price increase of 1.3% which takes the average property value in England and Wales to £164,654. The monthly change from July to August shows an increase of 0.1%...

The region in England and Wales which experienced the greatest increase in its average property value over the last 12 months is London with a movement of 7.1% and the North West experienced the greatest monthly rise with a movement of 1.3%. The region with the greatest annual price fall is the North East with a decrease of 2.2%. Wales saw the most significant monthly price fall with a decrease of 2.1%.

So their votes might be looking pretty safe in London/South East for the time being, but it's ebbing away elsewhere.

But fear not, help is at hand:

Polling since Mr Miliband’s speech last Tuesday suggests that his policies are popular with voters, who have seen their energy bills rise sharply, while average wages have stalled. Mr Cameron believes that too many young professionals are being priced out of the property market because they cannot raise enough money for a deposit.

The Help to Buy mortgage guarantee scheme will be brought forward from January 2014 to next week.

Under the three-year scheme, the Government will provide up to £12 billion of “guarantees” to encourage mortgage lenders to offer more loans worth 95 per cent of the price of a property. The government guarantees are needed to reassure banks and building societies because of the risk that mortgage holders with such high loan-to-value deals will default.

The scheme is expected to enable banks to release £130 billion of loans for buyers of properties worth up to £600,000 who could not raise a larger mortgage deposit on their own. A smaller government loan scheme for people buying newly built properties began in April.

To cut a long story, the very same people can't afford to scrape together a decent deposit on an over-priced house are being expected to be able to repay a mortgage on a house where the price has been pumped up by yet another fifteen per cent or so?

"Clegg and Alexander reject Cable's warning over Help to Buy"

From The Guardian:

Nick Clegg and Danny Alexander have dismissed a call by their Liberal Democrat colleague Vince Cable to restrict the second phase of the government's Help to Buy mortgage scheme to areas of the country with depressed property prices.

In a sign of tensions over the economic policy at senior levels of the party, Clegg and his close ally Alexander rejected Cable's warnings that Britain was facing a dangerous housing bubble.

Does not compute.

The justification for Help To Buy was that houses are too expensive and so first time buyers have to be "helped". The very existence of the scheme is the government's tacit admission that house prices are in a bubble.

If prices were "affordable" by whatever measure, then there'd be no need for such schemes. So Cable's idea about restricting it to "areas of the country with depressed property prices" is even more stupid than Clegg and Alexander's state of denial - because people don't need help to buy a cheap house.

The only way that any of this makes sense is if "Help To Buy" is in fact "Help To Sell", then it makes perfect sense from the point of view of a Home-Owner-Ist government trying to win a general election from a majority Home-Owner-Ist electorate.

H/t Alan at HPC.

UK government poll ratings vs annual house price inflation

From The Evening Standard:

This is (partly) why the UK government, of whichever party, is so keen to pump up house price inflation - because it gets them re-elected.

The main reason is that most MPs own multiple homes and/or are buy-to-let landlords, and higher house prices are good for banks, who have got enough politicians in their pockets to be able to effectively run the country.

Just sayin'.

Ah diddums, boo hoo, etc.

From The Telegraph:

Thousands of pensioners and high-net-worth investors are at risk of losing a vital income stream under a rescue being prepared for the stricken Co-operative Bank.

The supermarkets-to-funerals mutual is preparing an emergency rescue plan for its financial subsidiary that is expected to include losses for holders of the bank’s junior debt, including £310m of permanent interest bearing shares (PIBS) issued by Britannia Building Society before it was taken over by the Co-op, and £60m of preference shares.

Of the £370m of bonds, which pay annual interest of between 5.55pc and 13pc, some £30m is held by members of the public. Any rescue would almost certainly see the coupon cut or cancelled, costing retail investors about £3m a year.

When you 'invested' in something as obscure as PIBS, it must have been obvious that the high returns were not guaranteed and largely a reflection of the higher risk attached to them, i.e. the risk that you wouldn't get your money back. I don't see why certain people should be insulated against this basic rule. The Co-op Bank appears to have screwed up and somebody somewhere has to pay the price (bear the risk), in a free market system the people who agreed - in exchange for a nominally high yield - to take the risk should pay it, end of, regardless of their age.

And how much are we talking about anyway? £3 million a year?

And how much is the government and the banking system trying to screw out of the next generation of purchasers via the Help To Sell scheme?

Using their figures, the price of an average £160,000 will be bumped up to £200,000, so each new purchaser/couple is taking on an extra £40,000 of debt, which will cost him or her/them another £80,000 in mortgage repayments over the next twenty-five years, that's a real cash cost of £3,200 a year.

Whatever the maths of this is, the overall transfer from first-time buyers and future taxpayers (which is by and large the same group of people) to bankers and current landowners will be approximately double the promised total guarantee volume of £130 billion plus twenty-five years' interest thereon = £260 billion.

Divide that by ten million people under 40 who don't yet own a home and the total cost to each and every one of us over our working lives is something £26,000 each.

Thanks a lot, Georgon Osbrown!

QE & FLS: Rubbing our noses in it

From City AM:

Under QE the Bank prints money to buy government debt, to push down interest rates. This is meant to stimulate the economy, but it also drives up inflation. In addition, QE has been criticised as it reduces the value of the annuity retirees can buy with their pension pots, attracting the ire of the older generation.(1)

Weale yesterday defended the policy, arguing that young people have been particularly badly hit by the downturn(2) and so need support from the central bank.(3) In particular he noted that almost 10 per cent of young men have been unemployed for more than six months, compared with just over three per cent for men aged 31 to 64.

As a result he feels hitting the old with QE has been justified because it helps the young.(4)

1) The first paragraph is a fair summary, apart from the bit about QE being intended to "stimulate the economy", there is absolutely no reason to assume that it will achieve anything of the sort, like just about everything else the UK government has been doing for the last five years, it's about propping up banks and house prices.

2) Yes, just about everything the government is doing - propping up rents and house prices, taking away benefits, hiking tuition fees, increasing taxes on labour which destroys jobs and makes it disproportionately harder to get a job in the first place, massive deficit spending etc - is designed to fob off as much of the burden onto the young and future generations, so the end result is hardly surprising.

3) The central bank is part of the government, if it wanted to "support" the young , it would be doing pretty much the opposite of what it is actually doing (see long list in 2).

4) Woah! False choice there! This is not a question of sharing a dwindling cake between the under-40s and the over-65s, what's happening here is that the usual suspects are f-ing over both groups simultaneously, the only winners here are the bankers, insurance companies and landowners.

Just to illustrate the point, also from City AM:

MORTGAGE lending climbed to an 11-month high in October, according to data out yesterday, as the Funding for Lending Scheme (FLS) entered its third full month of activity...

Mark Harris, boss of SPF Private Clients, a mortgage broker, said he expected the mortgage market to ease further and further over the coming year. "This bodes well for next year – as lenders saturate the low loan-to-value (LTV) market with a plethora of rock-bottom rates, they will be forced to turn to the higher LTV bracket," he predicted.

The FLS is out of the same stable as QE, it's about reducing interest rates for the benefit of the already wealthy and the Baby Boomers. Apart from the fact that easy credit and high house prices are what got us into this mess in the first place, the only people to benefit from FLS are people who are selling land (because they can sell them for higher prices) and people with a lot of equity who can double on their mortgages and expand their BTL empires.

Reader's Letter Of The Day

From the FT:

Sir, I agree with Charles Fairhurst that higher taxes on private sector landlords will drive many of them out of the property market (Letters, September 26). If that creates a declining market, it will have the hugely beneficial effect of enabling many of those now paying extortionate rents to buy their own homes.

Nigel Wilkins, London SW7.

This is not idle theory of course.

Two main reasons why owner-occupation rates in the UK increased so rapidly between 1945 and the 1970s (something we are proud of) was strict rent controls and high taxation of rental income; it just wasn't worth it being a landlord.

The other reasons for low and stable house prices and rising levels of owner-occupation were: mortgage rationing (high deposits were required and very low income multiples); lots of new construction; Domestic Rates and Schedule A (which between them acted like Land Value Tax) and the downward pressure exerted on rents by social housing (at its peak, about thirty per cent of households were in low-rent social housing).

Unfortunately, owner-occupation mutated into Home-Owner-Ism in the early 1970s once owner-occupation rates climbed over 50%. There were then more votes in abandoning rent controls; reducing taxes on rental income; NIMBYism; abolishing Domestic Rates and Schedule A; and selling off social housing.

People who have learned nothing

Allister Heath in the Home-Owner-Ist propaganda sheet City AM points out that hyper-low interest rates are nowhere near as popular - or as beneficial - as the politicians always make out. In truth, they are kept low to prop up banks/bankers and house prices (as well as share prices), so this is just the usual transfer of wealth to the usual suspects.

On balance, polls show that more people prefer higher, rather than lower, rates. One reason for this is that more mortgages are being paid off than taken up. In fact, 47 per cent of homeowners already own their property outright, according to research from Hometrack. If current trends continue, by 2014/15 there will be more outright owners than those with a mortgage.

But he falls at the final hurdle:

The majority of these outright owners will be net savers, and hence will see themselves as losers from low rates (of course, cheap money tends to inflate house prices, boosting all homeowners’ wealth, but those without a mortgage often don’t see it that way).

How does transferring wealth from savers to land speculators boost wealth? It does no such thing; it discourages saving, misallocates capital and impoverishes the next generation of home buyers, that's all. Haven't the last few years taught us, yet again, that land price bubbles are not 'wealth', they are Fool's Gold?

Party Political Broadcast on behalf of the YPP

Jeff Randall has done our work for us, thanks to Peter Smith for the links. Each part is about twelve minutes long.

Primarily he's railing against public sector spending and deficits. The way in which the housing market has been used as a massive wealth-transfer programme from young to old (not to mention from the productive economy to the bankers) is covered in the second part.

Good comment at The Telegraph

By Dreadnought On The Slipway, our only quibbles are that he doesn't go far enough:

There is a lot of rent seeking in the UK. This is only natural and very understandable in a society where the population is aging and retiring people seek to live off the accumulated assets of their lifetimes. One might say that it is a good and positive thing that large numbers of people have saved enough to have an income in retirement and indeed it might be good, if it were wholly true.

But the fact is that the large numbers of rentiers now retiring from paid work and
hoping to live off their rents have been the most fortunate recipients of inflationary benefits [and transfers of wealth via the tax system] who have ever lived. Their inflationary gains over the years have been simply an accident of demographic, social and financial history. From the point of view of effort expended they are completely undeserving of their fortunate position.

Looked at from the point of view of a thinking, forced renter, and there are many, the situation is completely unacceptable. These people, who are mostly of working age, rightly perceive a future where they will work to pay for the retirement of the current generation without any chance ever to enjoy their good fortune. They feel that they will never be able to buy houses because prices are too high, because deposits are too high and because the high rents they pay prevent them saving a deposit anyway.

They see a direct connection between their work and the idleness of others. They have also noticed a further malign historical conjunction. They have to pay student fees that the previous generation did not pay just at the same time as the previous generation needs funds so that they can be looked after in old age.

If this situation is not remedied it will have incendiary social consequences. But what can be done?

To diffuse this worsening problem we need more homes and we need more jobs. This can only be done by shifting capital from unproductive sectors to productive ones. If rent seeking is to be made less attractive there is only one simple way to do this and that is to tax rents at a higher level than at present [an even better solution is to tax the rental value of all land, whether owner-occupied, tenanted or vacant/second home]. The resulting revenue should be put to work building homes for use by workers and building and renewing only infrastructure that makes the economy more competitive[and cutting taxes on work, profits and output].

There will be the usual howls from the self-interested that this tax will not produce revenue, that it will have unintended consequences, and that it will not benefit the people it is intended to. In any taxing decision there are risks. I think that if rents are taxed more some property owners will sell. This will increase housing supply for sale and reduce prices. If more houses are built this will provide
jobs, satisfy demand for houses and reduce rents and prices. If infrastructure is improved it means more jobs and the economy will be more competitive.

The capital locked up in property is simply being hoarded [actually there is no capital locked up in 'land', what happens is that income and profits are diverted from the productive economy to the unproductive sector, i.e. land owners]. We have to liberate it and use it for production and growth. It will be painful as the deadwood is culled out of the economy.

"The Great Myth of Urban Britain"

From Mark Easton's blog at the BBC:

What proportion of Britain do you reckon is built on? By that I mean covered by buildings, roads, car parks, railways, paths and so on - what people might call "concreted over". Go on - have a guess...

The 80% of us who live in towns and cities spend an inordinate amount of time staring at tarmac and brick. On most urban roads, one can be tricked into thinking that the ribbon of grey we see reflects the land use for miles around. But when you look out of a plane window as you buckle-up ahead of landing at a UK airport, the revelation is how green the country appears.

So what is the answer to my question - have you got a figure in your head?

Until recently, conflicting definitions have made the calculation tricky but fortunately, a huge piece of mapping work was completed last summer - the UK National Ecosystem Assessment (NEA) (pdf). Five hundred experts analysed vast quantities of data and produced what they claim is the first coherent body of evidence about the state of Britain's natural environment.

Having looked at all the information, they calculated that "6.8% of the UK's land area is now classified as urban" (a definition that includes rural development and roads, by the way). The urban landscape accounts for 10.6% of England, 1.9% of Scotland, 3.6% of Northern Ireland and 4.1% of Wales.

Put another way, that means almost 93% of the UK is not urban. But even that isn't the end of the story because urban is not the same as built. In urban England, for example, the researchers found that just over half the land (54%) in our towns and cities is greenspace - parks, allotments, sports pitches and so on.

Furthermore, domestic gardens account for another 18% of urban land use; rivers, canals, lakes and reservoirs an additional 6.6%. In England, "78.6% of urban areas is designated as natural rather than built". Since urban only covers a tenth of the country, this means that the proportion of England's landscape which is built on is...

Click and highlight to reveal: 2.27%.

House prices and immigration

When you complain that the Home-Owner-Ists deliberately pushed up house prices in the UK over the last ten or twenty years, their favourite excuse is that it was purely down to large scale immigration under New Labour and they deny that it is down to their deliberate attempts to restrict supply, i.e. NIMBYism.

Now, there is plenty of evidence to say that recent immigrants are given priority in the allocation of social housing, but let's stick to the central issue: the purchase price of houses.

We know that most countries* had a house price bubble over the last ten or twenty years, same as the UK, and a different ostensible reason is given each time, for example:

1. Ireland. The narrative is that interest rates fell after they joined the Euro, fuelling a speculative credit bubble, most of which went into land. It is noteworthy that in the boom years, the Republic of Ireland, with a population of 4.5 million, completed 75,000 new homes a year.

2. Spain. The narrative is that they had a bubble after they joined the Euro (same as for Ireland), and that this was exacerbated by Germans pouring in their untaxed money from supposedly secret accounts. Spain, with a population of 47 million completed 400,000 new homes a year during the boom.

3. Norway, where "property prices have tripled since the mid-1990s, up nearly 30% since the Great Recession as the oil-rich nation rode the coattails of the commodities bubble and has benefitted from the same “flight to safety” capital flows that have benefitted (and inflated bubbles in) other Nordic countries."

4. The USA, where the house price bubble is traditionally blamed on political interference, i.e. Clinton and Bush after him encouraged banks to advance mortgages to low income households, where house prices doubled since the mid-1990s. It is believed that there was also a construction boom, but on a national level, this is not actually true. Nationwide, with a population of 294 million, housing completions have been around 1.5 million a year since 1968, which per capita is not much more than in the UK (population 62 million, 200,000 - 250,000 new completions per year until the credit crunch). There are states with strict zoning laws with little new construction (which had the biggest house price increases) and states with liberal planning laws (which had the smallest house price increases).

5. Canada's economy is pretty similar to that of the USA, but there were no efforts to increase the level of home ownership (such as encouraging lending to low income families) and their system of banking regulation is much better than in most countries. Interestingly, the level of owner-occupation has now outstripped that of the USA. Prices there more than doubled over the last twenty-five years.

6. And so on and so on, there is always an excuse, the Home-Owner-Ists are always ready to blame specific local factors: Canada and Australia shared in the commodities and raw materials price booms, the same as Norway; in China they are building like topsy, they are building whole ghost cities but most homes are bought as 'investments' and stand empty; in the Eastern European countries, prices boomed after they joined the EU in 2004.

7. For example, prices in Poland went up by a third in the first few years after joining. Interestingly, while the English like to blame high house prices on immigrants from e.g. Poland, their excuse is the equal and opposite: "Joining the EU prompted purchases by foreigners, who are however limited to one dwelling each, and encouraged remittances by Poles working abroad. As the money flowed in, the Zloty gradually moved up against major currencies, encouraged also by lower inflation..."

8. The fact that other countries had construction booms and still had bubbles (Ireland: 2 new homes per 100 people; Spain: 1 new home; USA: 0.5; against UK: 0.3) seems to exonerate the NIMBYs slightly (as malevolent as their motives are); the fact that so many countries had house price booms seems to rule out immigration as a factor - if people were emigrating from e.g. India to the UK, then wouldn't house prices be falling in India? Nope. But they then have a similar excuse to Spain/German hot money: "The Indian Property Market is purported to be in bubble territory since March 2005, when the current UPA government decided to open FDI in Real Estate. This "FDI" rules ensured that Indian money stacked in Switzerland and other tax havens can be brought back to invest in high yielding Indian property market, away from low-yielding dollar assets."

This is not to deny that inwards immigration to the UK must have had some impact - if we hadn't had this, maybe house prices would "only" have doubled in ten years instead of trebling. And while New Labour's immigration policies were questionable for many other reasons, it is also true that most immigrants did come here in good faith and found a job (their unemployment is lower than for British born people of the same age) and most are not in social housing, so as individuals they are not to blame (and are welcome to join YPP!).

10. So... once you rule out all the equal and opposite excuses (it's funny how these special local factors all seem to push prices up - nowhere are there special local factors keeping a lid on prices*), what you are left with is the same basic reason everywhere: the easiest way for banks to make money is to expand mortgage lending; they make twice as much profit if they can get house prices to double, enabling them to siphon off rental income; politicians like house price bubbles because it creates the illusion of wealth and gets them re-elected; existing owner-occupiers like it because it makes them feel rich etc, it is a vicious circle.

NB: bankers are in fact indifferent whether there's new construction or not. If the NIMBYs prevail, then they can lend more on the rising price of existing houses; if there's a lot of new construction, they can lend the money to "property developers" instead.

11. And there's something else which is the same everywhere: it's the same people who end up paying for all this; that's the next generation, assuming they're "lucky" enough to get a job. Residual unemployment is racked up each recession, and never returns to its old pre-recession level. Back in the 1970s it was headline news when unemployment in the UK hit half a million and then a million. Nowadays it'll be headline news when it hits three million. And The Daily Mail will continue to blame this on the 'welfare culture' while simultaneously saying hooray to house price inflation (and boo to immigration).

* The only noteable exceptions are Germany and Switzerland, but this is probably down to the fact that their houses were so stupendously expensive to start off with - even back in 1990, pre-unification, the average house in Germany cost seven times the average household's income at a time when the average ratio in the UK was three or lower.

Good work by the Pensioners' Party

Exhibit One, from The Guardian:

The pain that quantitative easing has caused pensioners and savers should be offset by government compensation, a report by MPs has said. The Treasury select committee recommends that the Bank of England provide an estimate of "the overall benefit and loss" to those groups as a result of the money-printing operation

"Loose monetary policy, achieved through quantitative easing and low interest rates, has redistributional effects, particularly penalising savers, those with 'draw-down pensions', and those retiring now," it said in its report on the budget. "The Bank of England has argued that some of those effects may be mitigated by the increase in asset prices stimulated by quantitative easing. While the aggregate of savers and pensioners may have received some benefit from higher asset prices, there will be many individuals who will not have benefited."

Ultimately of course, the purpose of QE was propping up and bailing out banks. To achieve that, the government had to push down interest rates. All QE boils down to is the government replacing long-term borrowing at higher interest rates with short-term borrowing at lower interest rates; so superficially the taxpayer makes a saving, but the commercial banks were allowed to bank a large part of these savings up front. This has the added bonus, from the banks' point of view, that low interest rates push up house prices, and if house prices are high, banks can trick people into borrowing ever larger amounts of money.

Presented like this, it doesn't sound too attractive, but the banks have harnessed the forces of Home-Owner-Ism. High house prices make us all poorer in the long run (and the banks correspondingly richer), but a large part of the electorate love the idea of high house prices because it makes them feel richer. Who are these people?Chart from the Intergenerational Foundation

Yup, it's the the Baby Boomers born since 1945. The people actually old enough to have fought in World War II don't own that much housing (bearing in mind they have next to no mortgage debt and the figures above show net housing equity after deducting mortgage debt); the Boomers couldn't give a shit about their children taking on crippling mortgages and aren't too fussed about how little their parents have to live on either - they are rubbing their hands in glee at all their lovely inheritance.

So fair enough, the pensioners have been done over, but at least they are organised enough to ask for handouts. But what are the chances of the Treasury select committee pointing out that people aged 40 and under are being done over as well, working out what they've lost in terms of interest on whatever deposits they have saved up, and more to the point, all the extra money they will have to pay out to be able to buy a house at today's inflated prices? And what are the chances of the Planning select committee (if there were such a thing) pointing out that NIMBYism has also driven up the price of housing?
----------------------------------
Exhibit Two, a sob story from The Daily Mail:

Walter Harper has lived in his beloved home for two decades — but last July he was forced to put it on the market.
He shared the Luton bungalow with his wife and, after she passed away, his partner, and has watched his grandchildren play there. But he is being forced to move because he owes £110,000 on an interest-only mortgage that he can’t afford to repay. Instead of spending his last days in the house he loves, he will be forced to rent elsewhere.

Mr Harper, 69, first put his house on the market for £230,000. He has dropped the asking price by £20,000 and even if he gets this, he will still lose half of the money paying off the bank. These are savings he desperately needs, as rent is going to cost him almost £9,000 a year.

If he bought two decades ago, at the age of 49, the house can't have cost him much more than £50,000. The article says he had an interest-only mortgage, but why has it crept up to £110,000? A bit of mortgage equity withdrawal, perchance? And yes, his pension lump sum only turned out to be half what he'd been promised, but it still paid out £34,000, meaning he would left with a very modest £16,000 outstanding on his mortgage, which is still a fantastic deal, seeing as the mortgage he was paying was probably a lot cheaper than renting and he's made a £150,000 windfall, tax-free gain on the house.

But for some reason, The Daily Mail see this as a hard luck story (although he doesn't get much sympathy in the comments), while having no sympathy with somebody who's starting out today who's expected to magic a £40,000 deposit out of nowhere and then pay off a £160,000 which will cost twice that by the time it's paid off.

Again, mortgage equity withdrawal is the banks' secret weapon - a lot of the Boomers will be disappointed to find that their parents have already spent it all on themselves. Remember: in the end, the bank always wins (until I'm in charge).