The Financial Issues and Housing

 Today, The markets and mortgage rates are in turmoil.

It was not unexpected. I even commented on it in my book Climate Change House. Prescient or What!

There is considerable volatility that makes financing the housing sector problematic. However, the trend in inflation from houses has been with us for a long time supported by a perceived shortage of homes. One can only wonder at the bright green glee in the mind's eye as we behold the property money men.

There is every incentive for a wide range of powerful institutions to keep house price inflation growing. It is an asset that keeps investors from the smallest to the biggest, happy. This is an investment in inflation not in houses. It is not an investment in assets but even so does yield an income as people pay their mortgages.

There was some evidence that the buoyant housing market in 2021 would not last, and house prices may even reduce over the next five years. 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 has to be alternatives to provide a known secure return on 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.

As I argue in the book, factory built houses cost less and have 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.

Long after the impacts of the Ukraine war have passed, a big flood, fire, even a pandemic or social disruption caused by mass migration to avoid the effects of Climate Change with its consequential economic turmoil will have a knock on effect in the UK too.

By 2070, 19% of the world will be a barely livable hot zone. Just being outside for 4 hours will be a killer.