For a lot of people the recession brings tidings of woe, house values are dropping like stones, business are going broke and people are suffering from bankruptcies. There is however a silver lining to the recession.
It has been more than acknowledged in passing that house prices in the UK are insanely high. Not even 60 years ago a house could be bought for 3 times annual earnings, hence why mortgages have usually been given at 3 times annual earnings. Today however people earning around £20,000 ($40,000) a year are expected to spends between £200,000 ($400,000) and £500,000 ($1,000,0000) on a home in Britain. How can people afford this?
Well quite simply they can’t, interest rates will keep increasing what is owed to such an extent that nearly a fifth of new mortgage buyers are expected to never pay off the loan themselves, instead leaving the remainder as something for the kids.
For this reason the incoming recession is a good thing, house prices should be brought back into the realm of the reasonable and affordable. Houses that once cost £15,000 shouldnt, half a century later, cost £150,000.
As recession bites strings will need to be tightened, but a lot of things that have grown in price will fall, while the basics become more expensive. It does however need to happen, for too long Britain has stood in the shadow of a false economy, a problem which has haunted it in a million different ways.
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