Farewell owner speculation, hello continental-style tenancy
Long ago a little-known commentator put his finger on the heart of the housing problem. If we go on like this, he wrote in the mid-1980s - a time when, by 21st century standards, nobody had a clue what wild oscillations between equity and debt could lead to - houses will end up earning more money than the people living in them, and the post-industrial age of leisure will have arrived.
At the time this was intended to be a statement of the ridiculous, but now it has turned into a statement of the obvious. The apocalypse has come and houses are regularly awarding themselves the sort of fat-cat pay hikes that their owners would never get from their day jobs. As a result every household has been turned into a miniature tax-free self-employing development company.
There is nothing intrinsically wrong with this. After all, the end of work has long been a staple of futurologists. The trouble is that most people stop there, regarding entry into the house price economy as a Nirvana that, once attained, will last for ever - unless, that is, you happened to be paying attention to the media last week when the great euro scare was running on all channels. There it was, the first ever admission that the colossal cash pile of UK owner speculation might not make its way into the tiny piggy bank of old-style landlordism in continental Europe after all.
In this new situation of uncertainty, the rate of production of new houses - which used to be high enough to enable the government to moderate the ebb and flow of the whole housing market by that means alone - has now been swamped by such a tidal wave of refinancing that existing houses now outnumber new ones by an impossible margin. No one should doubt that this monumental failure of production is important, but neither should they imagine that anything can be done about it. The possible consequences of continental incompatibility raised by euro entry have put it in the shade, along with the £100 million collapse of estate agency shares and the looming threat of huge damages awarded for alleged mortgage mis-sellings.
Instead we should accept that the century of unfettered owner occupation was the 20th, while we are citizens of the 21st, and our take on the housing problem is different. We must base it on three intractable variables (rather than five suspiciously subjective 'economic tests') - namely the euro value of sterling;
the sterling value of the euro;
and the continued availability of low mortgage interest rates of the kind we have become accustomed to in recent years. If we want the last plus long-term fixed interest rates, then we must accept currency swings. If we want a currency insulated against swings, then we will have to accept variable interest rates.
As I have written here before, we can no longer plead ignorance of our own monstrous housing market. It is a business in which we Brits are all experts.
We can no longer plead that we were answering a deep call of human nature when we took out our first mortgage. Now we must admit that we were in it for the equity and the untaxed capital gain.
So, if we suspect the continental landlords of having too much invested wealth to take part in a guiltless, leak-prone British-isation of their own housing markets, we will have to say goodbye to it ourselves and say hello to German-style tenancy instead. Thereby, incidentally, bringing the history of housing full circle back to where it was in 1914.