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Fanning the flames of the housing market will leave us all burned

Sometimes, gazing around the pulsating bars of the Slug and Lettuce, one is struck by the sangfroid of the drinkers there. They seem the least troubled collection of individuals you could ever hope to see. Guilelessly seeking pleasure and relaxation, you would not think to look at them, even to talk to them, that a death sentence had been passed on the world as they know it.

But it has been so passed nonetheless.

Far away in Whitehall, the minions of the civil service have compiled an enormous calculation, as important an act of terrestrial mensuration as any since Sir Isaac Newton volunteered to weigh the Earth. They have succeeded - errors and omissions excepted - in working out how much Britain is worth, and following upon that they have calculated other things too.

Some of which, like the death sentence on a centuries-old way of life, concentrate the mind wonderfully. According to the Office for National Statistics, were Britain to have been auctioned at the end of last year, and the proceeds paid out to the population, every man, woman and child would have received £84,200.

Phew, I hear you say. That's not so bad.You had me worried for a minute. And nor it probably is, but the likelihood of such a sale is so small that we must disregard it. More to the point, surely, is the breakdown of the capital sum that produces this per capita figure, which is calculated to be £5,000 billion, a figure that conversely seems hardly to be enough. And nor is it when you find out that less than half of it is made up of the activities of trade and industry and the economy, while uncomfortably more than half is simply the estimated value of our jerry-built, ramshackle deteriorating housing stock, commonly acknowledged to be the worst in Europe.

This decrepit legacy of overvalued dwellings, many hundreds of them well into their second millennium and all of them blithely expected to last another thousand years at present derisory rates of renewal, is the secret of the relaxed confidence of the patrons of all the Slug and Lettuces in the country. Home ownership is what gives us the idea that we are rich.

Let us disabuse ourselves. The superheated housing market may be worth £2,744 billion, but its nearest rival, infrastructure - roads, railways and pipelines - clocks up barely £537 billion, while British industry, such as it is, tips the scales at a mere £61 billion.On these figures alone, it is clear that we do not so much have a national economy, as a housing economy with national accessories. Worse still, while our housing economy thrives on a diet of 20 per cent inflation, its national accessories persist in pretending that inflation has been conquered by 'fiscal prudence'. The case is surely quite the opposite. It is a textbook example of 'unsustainability', for if these two separate economies are left to run on unchecked, with annual 20 per cent increases in house prices concealed by inflation of 3 per cent, there will be disturbances on the scale of the Poll Tax riots at the very least. Conversely, if the roaring flames of the housing market, instead of being fanned by cheap money, are stifled by higher interest rates, there will surely be a resurgence of negative equity and a property slump more sudden and more severe than that of the early 1990s.

Either way, the problem will be a housing problem, and the best response for architects must be to focus on the low-cost sector of that neglected category of work, because it is going to be needed soon.

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