Seeking that elusive silver lining, a journalist recently requested my help in finding people likely to benefit from the mortgage/buy-to-let/credit-crunch fiasco. I explained that his search for goodness in this economic ill-wind is endearing, but likely to be scuppered by factors largely ignored by the media.
Outsiders might imagine that the residents of Dovecot Towers live in rented property as we predicted the housing crisis, and are cannily biding our time, waiting for prices to spiral downwards so we can emerge from the rubble as smug, billionaire property barons.
The reality is different. Most inhabitants of urban newbuilds are not aspiring landlords, and many of us are starting to accept that we will never own a home. Lower house prices are tantalising, but most of us avoid the property treadmill for reasons other than cost. It’s just that, we’re poor, and we’d need a deposit so huge and distant, it exists in space.
Dovecot Towers is populated by a surprising mix of people. There’s a sizeable amount of Divorced Dads, who will never afford a place with room for when the kids come to stay. The rest are mostly students who move at least once a year: life is uncertain (or crazy, wild and free if you’re a glass-half-full-type). Inevitably, short-termism discourages or prevents students from owning property, although parents might invest. The remaining tenants are trainees on entry level wages or just low paid, like shop workers, and impoverished ‘creatives’.
But still we are decreed capable of affording inflated rents on newbuilds, which were originally set at cheeky levels. Because our pay is so low, we will never be accepted onto the mortgage chain, although we must pay these silly rents. As my fellow blogger Alice, on the excellent ukbubble (see links below) explains, there is a limit on how much income should be eaten up by housing costs. Current prices for both owning and renting have almost reached an economically feasible ceiling.
Property prices plummet, but tenants seldom benefit as we don’t earn enough. Our problem isn’t house prices, but job insecurity, short term contracts and especially, low pay (whenever I hear politicians boasting proudly about keeping a lid on wages, I could scream.) And yet, we are supposed to aim for home ownership, despite tenuous employment, empty bank accounts and unattainable deposit rates.
There’s a brief moratorium on handing out mortgages to people unlikely to repay them, but give it a few years and the wastrels of Dovecot Towers will be actively recruited by bankers again. A few may benefit: some couples - a tiny minority - are slumming it hereabouts to save money, feet hovering on the first rung of that stairway to property heaven, waiting to pounce on a bargain.
For everyone else, the problem is wider and more complicated than house prices or low wages; it’s a reluctance, or inability to incur debt. We can’t get loans, so prudence is forced upon us. Renting isn’t a crime (well, not officially) so we’ll stay put and let those newly risk-averse bankers speculate when the boom/bust circle turns.