House Prices Tumbling?

 There is now a lot of evidence that the buoyant housing market will not last, and house prices will reduce over the next five years. This is a conclusion in Climate House Change. It also notes that volatility also tends to drive away investors.

The prospect of future falling house prices is also politically a problem. Politicians tend not to be elected against house price instability scenarios. Taxing speculators is also a difficult option. There have to be alternatives to provide a known secure return in housing investment.

In addition, lower prices do not solve the need for accommodation; the demand for more homes will not fade even if the hyperinflation housing prices go away in the time it takes to build a housing estate.

The return we get from house price inflation is not good for the national economy. It is a case of higher prices but no productivity advantage. This need not be the case. Factory built houses cost less and are a productivity advance over bricks and mortar.

Instead of stoking inflation, it is possible to turn the investment in a house into a source of income. The idea that a house can generate energy, save water, reduce public sector costs such as social care, respiratory and allergy diseases and cut public service costs such as street cleaning, grass cutting and drone postal services is an eye opener. It grows the economy and cuts public sector costs.

And, by the by, it will be quite soon when climate change proofed houses are in much greater demand than other homes. And with inflation capped incentivise faster house improvements that make investing in renovation and re-building more attractive.

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