Some unpleasant side-effects

While we’re waiting for the world to stop digging this capitalist hole and find a way out, there are a few secondary effects of the system we might think about mitigating. Top of my list at the moment are London’s house and rental prices.

“Supply and demand,” they say, as if it explains, excuses and dismisses unacceptable situations such as unaffordable housing. “Supply and demand” is the dynamic relationship between actors in the market: what it encompasses is always complex but is also highly dependant on the circumstances. Arch-capitalists will assert that self-balancing and mutually rewarding circumstances form the majority of real situations, but we all suffer from badly distorted markets. And accommodation is one of the worst.

According to the Office of National Statistics, family expenditure on housing has gone from 9% of income in 1957 to 19% in 2006 (http://news.bbc.co.uk/1/hi/business/7213462.stm). Of course, this is the national average and people spend much more in property hotspots, and the younger and poorer spend much more too. Which is the situation a large chunk of London’s population is in. Like me.

The truism I prefer is “the price is what the market can stand”. Everybody wants to live in a pleasant neighbourhood, with plenty space, good schools and amenities, and only a short trip to work. When a city population is in the millions, it’s clear that not everyone can get what they want. In fact, very few can get most of those things, and those few are almost exclusively rich.

Hence, there is never the supply to meet the demand. Instead, house prices and rents are simply set as high as people can justify to themselves. How high, exactly? Well, here are some common situations for Londoners: mortgages that leave no room for frivolous or emergency spending; couples, and even families, in “studio” flats, which means only one living/bedroom; little terraced houses built for little terraced families split into two or even three flats. Or more specifically, a tiny triangular patch of land with planning permission for seven “luxury flats” (http://maps.google.co.uk/maps?f=q&hl=en&geocode=&q=w4&ie=UTF8&ll=51.493425,-0.267078&spn=0.00079,0.002511&t=h&z=19&om=0).

In the absence of a more radical overhaul, this town needs some form of rent and price control. A radical overhaul would mean changing to a system that has stewardship embedded. But that’s a different story.