Posted on 11/25/2004 6:57:46 PM PST by Pikamax
House price boom fuels social divide Housing charity says Britain risks a return to Victorian times as millions of people are caught out by the unequal property market
Peter Hetherington, regional affairs editor Friday November 26, 2004
The Guardian
Social divisions caused by rapidly rising house prices are forcing Britain back to the Victorian era with an unprecedented wealth gap trapping millions of people in poorer areas while rewarding those on the property ladder in the south, research published today shows. Quantifying the impact of a boom which has seen the level of housing wealth rise 50-fold in 30 years to £2.3 trillion - double that of pension and life assurance funds combined - the study commissioned by the homeless charity Shelter warns greater inequalities risk marginalising a generation born on the wrong side of the housing divide.
It says children of less affluent families, mainly in Scotland, south Wales and the north of England, face a lottery by accident of their birth, denied the rewards of family property wealth in the south - and unable to raise the instant cash to fund either university or a move to a more prosperous area in search of work.
The study will be seized upon by Labour's election strategist, Alan Milburn, charged with overseeing the party's manifesto.
He said last month that the exclusion of large sections of the population from property wealth was the biggest obstacle to social mobility, threatening the economy itself. His team is drawing up proposals to widen home ownership and spread assets more equitably.
The study is certain to be used by the government as fresh ammunition to challenge the countryside lobby which is resisting John Prescott's plans for 200,000 houses in four growth areas in the south.
Mr Prescott, the deputy prime minister, says they are necessary to increase supply and bring prices down.
But the Shelter report will give Mr Milburn's crusade greater urgency. It reveals that the slice of national wealth held in housing has almost doubled to 42% in 30 years. It is five times higher than the amount locked into shares and securities.
Illustrating the wealth divide in the starkest terms, the researchers calculate that 10 years ago, the sale of the average house in Kensington, central London, the richest area, would have bought two houses in the Fife town of Leven, the poorest area. Today, the Kensington house would buy 24 properties in Leven.
At one end house prices have risen 20-fold in 20 years, whereas in the poorest areas they have barely doubled. Overall, England and Wales have 22 times the housing wealth of Scotland.
"It is not an exaggeration to claim that we are moving towards a situation in which the country's children will be divided more by wealth than has been the case at least since the Victorian times," says the study by a team from Sheffield University's department of geography.
"For the children of the poor, there will be large parts of the country to which they cannot consider moving in the future, even if they wish to."
Even in the early 80s, the report says, mobility was easier because a narrower house-price divide meant people had the cash to move from one part of the country to the other.
But now while those born into wealthier households can look forward to help with buying a home and a windfall when their parents die, others will inherit "almost nothing and be given no financial help throughout their lives".
At current prices, the housing wealth of the top tenth on the property ladder amounted to almost £85,000 per child by the end of 2003.
It could rise still further. Accepting that the current plateau in house prices is probably a blip, the study says over the medium and longer term the wealth gap will be much greater.
Adam Sampson, the director of Shelter, called for measures to reduce the property divide and bridge growing inequalities. "They are leading to a society increasingly divided by where people live," he said
"In a country increasingly obsessed by house prices, the growing inequality in housing is marginalising a whole section of society."
Despite the government's target on child poverty, and the measures that are beginning to make an impact, he said children born this century would be starting life "more financially unequal that at any time since the Victorian era".
The researchers say that without measures to soften the excesses of the market, the spectacle of families buying "two or three houses", alongside pension funds investing in property and pushing up prices further, would continue. To further complicate matters, in a "wealth parade beneath the elite", hundreds of thousands of highly-paid migratory workers were now also competing for living space in the south.
But at the other extreme, in many parts of the north significant amounts of housing were being abandoned as valueless.
wouldn't it be smart to grab these properties and make something of them.
This article is full of whine, another example of the people who make it being made to feel guilty of doing so.
It would seem, that in this age of choice, that an antiquated phrase such as "accident of birth" would be put to rest.
Three cheers for eliminating fiat currency and central banks, the ultimate sources of inflation. The world's fiat currencies cause all goods and services to rise in 'value' over time. The scheme is inherently unjust and enriches the well connected.
Whose complaining? My husband and I sold in the Los Angeles area and got a much nicer house outside LA. A house we were looking to buy a year ago at $325,000 just sold for $435,000. And that is in less than a year. The one we decided on and likely will keep for the duration has done as well or better.
Here I thought we were spending our kids inheritance. Instead we end up with some real cash and a house that will soon be worth as much as the one we sold in Los Angeles so the kids still will get something.
Great post.
The same "strategists" of our own labour (communist) party here in the US, the Democrats, will be sure to follow suit. Class warfare is their stock in trade.
Horse pucky. I don't believe this for a moment.
There's not one state in this country where a house in the swankiest part of the largest city would be only twice as expensive, on average, as a comparable house in the poorest part of the state. Five or ten times would be more like it.
-ccm
---Here I thought we were spending our kids inheritance. Instead we end up with some real cash and a house that will soon be worth as much as the one we sold in Los Angeles so the kids still will get something.---
If housing continues to go up. A problem in California is that people who basically can't afford to pay for a house are buying them anyway and hoping that the equity they'll accrue in the next few years will give them a down payment on a house they can afford. Money from outside and insane loan practices are driving the market, but for how long.
The situation could easily go the other way and leave them upside down. It sucks to have the bank demanding money from you when the hyperinflated value of your "asset" goes in the tank.
bump
The cost of housing in England--particularly within reasonable commuting distance of any small city where jobs might be found--is absolutely staggering, and I live in the Washington DC area where real estate prices are among the highest in the US. I cannot imagine how anyone manages to buy a house in the UK. People there live far, far more modestly than we do; on the same amount of money that would buy a comfortable upper-middle-class lifestyle here, they live in very modest accommodations. Whenever I go over there I feel sorry for them.
Ahhh, Marx would have been so proud. Milburn, you're a chip off the ol' "Communist Block"...
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