Since I work for myself, I don't often put myself onto London streets before 9am at the earliest - and I am certainly not mad enough to drive. The whole business of driving inside London in the working day reminds me of the mythical frog in the frying pan.I have no idea if frogs will actually fry if the heat increases slowly, but London traffic seems to fit into this metaphor. Wasting time in jams that would be quite unacceptable if we met them for the first time, just gets lazily accepted because they increase slowly.
Which is basically what I think about house prices, especially now that they are into acceleration mode again - with record prices in London, East Anglia and the south east. London prices up nearly ten per cent this year alone, with the average price in London over half a million pounds. Only two regions still have the good fortune to have falling prices.
My own home is a small semi worth just under half a million, which is ridiculous considering it cost about £800 when it was built in 1937, with a mortgage paid off in about 15 years, and costing about ten per cent of the average salary.
This is the ultimate frog-in-the-frying-pan phenomenon, and now boosted so egregiously by the government's Help to Buy scheme.
It happens slowly enough for the house-buying public not to notice what is happening - but the result is just the same. Government mistakes since 1980 are in the process of pricing the middle classes out of existence. I've explained whose fault this was in my new book Broke: Who Killed the Middle Classes, and the strange story of why it happened.
But what I find extraordinary is that a Conservative Chancellor can carry on the mistake - creating a property bubble, subjecting the lives of home-owners and rents to a lifetime of indentured servitude in jobs they don't want, just to pay the costs of a roof over their heads.
Why does he not see that making homes easier to buy at existing prices will push them up, and even further out of the reach of the next generation. There is only one way forward if there is to be another middle class generation, and that is to find ways to bring them slowly down.
Yes, there is an argument about why house prices rise, and why those prices accelerate. Politicians like to say that it is a shortage of homes, and there certainly is a shortage and it doesn’t help. But if it was only about housing shortage, you would expect massive price rises in the late 1940s, whereas – after a burst after the war – house prices stayed completely steady from 1949 to 1954. The graph of house price inflation follows the rise in mortgage lending.
In our own day, planning permission has already been given for 400,000 unbuilt homes in the UK, yet prices still rise, as they have done in places like Spain, where there is little or no planning restraint.
Politicians get muddled about this because building houses sounds like a tangible thing they feel confident to tackle (though they usually don’t), whereas they don’t feel confident about mortgage supply at all. Yet that is the other side of the process: inflation is about too much money chasing too few goods, and the main reason for the extraordinary rise is that there has been too much money in property, both from speculation and from far too much mortgage lending.
Sometimes this came from people’s rising incomes, which translated into rising home loans. Sometimes it was lenders lending on increasing multiples of salaries. Sometimes, more recently, it was bonuses and buy-to-let investors.
Politicians get muddled about this because building houses sounds like a tangible thing they feel confident to tackle (though they usually don’t), whereas they don’t feel confident about mortgage supply at all. Yet that is the other side of the process: inflation is about too much money chasing too few goods, and the main reason for the extraordinary rise is that there has been too much money in property, both from speculation and from far too much mortgage lending.
Sometimes this came from people’s rising incomes, which translated into rising home loans. Sometimes it was lenders lending on increasing multiples of salaries. Sometimes, more recently, it was bonuses and buy-to-let investors.
But most of the time, it has been a catastrophic failure to control the amount of money available to lend, and which has fed into all the other trends to create a tumbling cascade of finance, with its own upward pressure on incomes and debt until the vicious circle now seems quite unbreakable.
It was a roller coaster that terrified and thrilled the middle classes, as they saw the value of their homes rise so inexorably, but which is now undermining the very basis for their continued existence.
Amazing really that this process is continuing, as yet another government sacrifices the next generation to help this generation onto the housing ladder - and especially amazing that it is an admirer of Margaret Thatcher at the helm as it happens. No wonder UKIP is threatening the Tory heartlands.