Homes will no longer be one-way gambling chips

After a 50-year boom, a saner property market is beginning to emerge, writes Will Hutton

- Will Hutton

The British housing market has hit the buffers. The 50-year house price boom - kickstarted by Ted Heath’s relaxation of credit controls on banks in the early 1970s, turbo charged by the huge, misjudged financial deregulation of the 1980s and kept simmering by cheap money until the Ukraine war ~ has been stuttering for the last few years. Now, despite optimistic predictions by the pundit community at the start of the year, it is obviously and decisively over.

The principal author of this overdue correction is one Rachel Reeves. Whatever else is said about her ill-fated November budget, she had the chutzpah to follow through on the Tory policy of permitting the doubling of council tax on Britain’s half a million second homes with the introduction of four new council tax bands for all properties worth more than £2m ~ a year before the next general election. And she introduced a tax on landlords’ rental income.

A powerful whistle has been blown on the structures that have so unfairly enriched anyone born before 1970 who had the capacity to buy a house, a luck of birthday not shared by most born after 1995 unless they had the luck to have rich parents ~ the evermore important bank of mum and dad. Over the last two generations, the ratio of the average house price to average earnings ~ a crucial measure of affordability - has trebled, so that home ownership for all but the richest first-time buyer is now a pipe dream. It takes 10 years of saving to raise the cash for a deposit on an average house, and the average age of a first-time buyer has risen to 34.