If there is one thing (apart from Brexit) that politicians in the UK acknowledge the need to do something about, it is housing. The average house price is now almost eight times the average salary, meaning even the smallest starter homes are well beyond the reach of all but a few first-time buyers.
The well-documented result is that much of the millennial generation has been shut out of the housing market. Left without a stake in a property-owning economy, many are naturally beginning to question some of the basic tenets of that economic system itself.
The fact that there has been a serious lack of house building in recent decades is well known. What is less widely acknowledged – but equally to blame – is the role interest rates have played in creating the housing crisis.
In 2006, a monthly payment of £1000 would have funded a mortgage of £145,000; today that £1000 supports one of £185,000. The problem is that as mortgages have grown bigger, house prices have simply adjusted to accommodate the extra buying power enabled by low interest rates. If you combine that debt-fuelled buying power with a housing supply that responds slowly – if at all – to demand pressures, the result is inevitable: rapidly rising prices.
Few politicians are looking at monetary policy as a part of any solution. The excuse for inaction is that the Bank of England is independent; it is not for politicians to tell the Bank and its Monetary Policy Committee how to do their job.