Home’s Are Not Just An Asset Class!

According to a report in The Economist the American Housing Market is the world’s largest asset class, worth $26 trillion, more that America’s entire stockmarket.

If Donald Trump really wants to build a wall then perhaps he should dig up the dollars buried beneath the surface in this massive concentration of mortgage debt with which to fund it!

Focusing on this huge financial risk is far more important than whether a few more Mexicans filter into the USA.

The world hasn’t fully recovered from the last financial collapse, it certainly couldn’t stand another just yet!

Although house prices in America have improved and are now approaching where they were prior to the financial collapse in 2007, mortgage debt has risen massively with them. There are still very many Americans living with negative equity.

Home ownership in The US has fallen to just over 60%, something that has caused Mr Trump much concern but using any housing market to stimulate economies has hidden dangers. Housing policies need careful long term strategic thought and should not become political footballs to be kicked around to improve polling results!

Home owners of course like cheap mortgages so pressure is always on governments and oppositions to provide policies that align with voters wishes.

In the UK, the shortage of building land and a still lethargic planning system results in there just not enough houses being built which transmutes into higher prices, not only for owner occupiers, but those wishing to rent too!

If someone invests hard earned capital in a buy to let property he or she will quite rightly expect a decent return on that investment. The more they had to pay the more they will want, and factually need to pay their investment mortgages from their tenants in rent payments. It’s that simple! The same applies to councils & housing associations too.

Releasing more land quicker and genuinely fast tracking planning applications will inevitably result in more houses being built and in my opinion the stabilisation of prices.

That brings me back to mortgages! No point building houses unless people can obtain the means to buy them! With interest rates at an all time low mortgages are cheaper than ever, if you can get one of course!

Mortgages, particularly for the self employed are not easy to come by!

As I say housing policy needs very careful thought. Houses are of course an investment but it should never be forgotten that first and foremost they are homes. Homes where families actually live. Where parents bring up their children and where family & friends congregate for family celebrations. Places where they can relax in safety and privacy.

We need many more homes to be built right across the UK in every sector. Private for sale, private for rent, public for rent, senior living. Homes for the disabled and so on.

We need large houses, medium size houses, apartments and studios. The list is seemingly endless.

The success or failure of the new Conservative Government led by Theresa May will largely be judged on how this issue of building more homes and making them affordable is handled.

Housing policy needs a major rethink and a long term strategic solution, not a short term fix just to appease voters, which in my opinion is something all political parties have been guilty of over the last 50 years!

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