Editorial
| DOI | https://doi.org/10.1108/JPIF-02-2020-141 |
| Pages | 1-3 |
| Date | 23 January 2020 |
| Published date | 23 January 2020 |
| Author | Graham Squires,David White |
| Subject Matter | Real estate & property,Property valuation & finance,Property management & built environment |
Editorial
Housing affordability –can we put the housing wealth genie back in the
bottle?
We can argue that the wish to get more people into home ownership has to a certain extent
been granted. As a result for the vast majority of homeowners, there has been an exchange
in the freedoms of home ownership with the shackles of debt. With more recent homeowners
relative to those half a century ago being burdened by more (and more) debt. What is of
more consequence is an exponential rise in house prices and home affordability problems.
These trends show limited signs of being reversed anytime soon. What remains to be seen is
the impact on serviceability of this debt should interest rates rise from these unprecedented
low levels. For now, the housing wealth genie is now out of the bottle.
In many western countries, housing affordability has decreased in an unprecedented
manner in the past decade, led by increases in house prices that have outstripped wage
growth. There has been exponential house price growth and capital accumulation in
housing since the turn of the century (Harvey, 2012). There are many contributors to this
increase on both the demand and supply sides. There have been big issues of demography
(net domestic and foreign migration), income distribution (jobs), housing supply (not
enough), tenure (imbalanced) and an important long history of financial deregulation
(Bramley, 1994).
The impact of this, while fairly ubiquitous, is not evenly distributed. It has resulted in
various inequalities at a spatial and socio-demographic level. The largest impact can be seen
on those households looking to enter or re-enter home ownership, and those for which the
cost of servicing debt represents a significant burden. Lower relative income growth (to
house prices) has affected the ability to qualify for and service a higher value mortgage
( Jewkes and Delgadillo, 2010).
There is an inter-generational impact, such as delaying the age at which children become
independent of their parents financially and physically, with children choosing to remain in
the family home for longer (to save for home ownership) and the increasing need for parents
sharing the equity in the family home to leverage children into ownership. These scenarios
can both have negative implications for the financial and social well-being of the family unit.
For others, the path to home ownership is increasingly out of reach, and people are
taking the (diminished) alternative tenure “choice”into the rented sector. In many
countries, this is putting additional pressure on the rental sectors, requiring investment
into the sector, both of capital and expertise. The rental sector is now needing to provide
for long-term rental tenure in addition to the traditional stepping-stone-to-ownership that
it once was.
It is broadly accepted that housing is more than a private good, that can be financialised
by the market without recourse to social or political will. The United Nations Special
Rapporteur on Housing has pointed out adequate housing is a basic human right. Further,
that adequate housing should be treated as a social good in line with the needs of the most
vulnerable people in the population, rather than an investment vehicle for the well off. It
can be further argued that the social cohesion associated with mixed communities and
good spatial linkages (especially with employment) are positive externalities with a
social-good element.
The wider role of housing within the social fabric appears to have lost political support in
a neoliberal era. Increasingly there has been a drift from housing need via public or social
housing to a more market orientated policy focus of housing affordability (Whitehead, 1991).
Journal of Property Investment &
Finance
Vol. 38 No. 1, 2020
pp. 1-3
© Emerald PublishingLimited
1463-578X
DOI 10.1108/JPIF-02-2020-141
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Editorial
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