Wednesday 13th November

Humans are just like herd animals, aren’t they.  As soon as they get a whisper, they all turn and face the other way, then when they are spooked – they gallop in a mad frenzied rush, all in the same direction.  There have been whispers in the wind for weeks, and slowly that becomes a trickle and now the trickle is threatening to become a flood.  Reports have been creeping in of a rise in house prices.  They dropped quite dramatically at the time of the financial crash, and despite the benefit of much lower mortgages because of low interest rates, people felt aggrieved.  A house for almost everyone is your sole asset, and when it is worth less than you paid for it (and still are paying for it, in most cases) you feel wretched.  It has also meant that a lot of people were in negative equity.   But as I learned in the early nineties, as long as you keep paying your mortgage, the years will roll by, and one distant day the house will be paid for, whatever it is worth.

And now there is a reported mad rush of people desperate to buy.  Many couples, saving for their first house, now see that dream inflating even further out of their reach, and maybe with parents help, or even the Government’s Help to Buy, are rushing to market.  Then those who for years have wanted to move, but couldn’t afford to, now see this as their only chance.   And there is a sense of panic, that if you don’t get in soon, it will all soon be out of your reach forever.

The only solution is to build far more houses, to take the heat out of the market.  But with housebuilding almost exclusively in the hands of the private sector, it suits them to build slowly and keep the prices high.  The worst aspect of all, is that despite this, many are taking on far too large mortgages, which when interest rates inevitably rise will cause the market to crash.  Seems as if we never learn.