If you take that excellent map showing negative equity ‘hot-spots’ produced by George Bridges for The Spectator a couple of weeks back, and overlay it across a map of cancer ‘hot-spots’ for the UK, you will find that those baleful dark areas, the bad places on each map, tally almost exactly. You might have expected as much: falling house prices cause cancer. Or maybe cancer causes house prices to fall — one of the two. Anyway, those areas where hundreds of tumours pop up like jack-in-the-boxes throughout your body while you are eating your breakfast are also the areas where your house is now worth less than a month’s chemotherapy. I’d move, if I were you, get the hell out. Head for somewhere like Devizes or Guildford where houses are still going up in price and nobody ever gets cancer.
I discovered this correlation while attempting to draw up a Map of General Abject Bloody Misery for this magazine; an outline of Britain shaded in dingy hues of brown and purple pinpointing the fecundity of malignant illness, financial ruin, date rape, vector-borne disease, sudden infant death syndrome, rats, speed cameras and myocardial infarction in your part of the world. I haven’t finished it yet; but when I do you’ll be able to pin it to your wall and gaze at it on those few days — Christmas Day, general election polling days, football World Cup finals — when there isn’t a Map of Specific Misery in your morning newspaper explaining why you’re heading straight for the workhouse or the hospice.
The house price business has kept me greatly entertained these past few months, the grim chicken-licken prognoses from the bankers, now counting the cost of their own greed and naivety (and yet, remarkably, being repeatedly bailed out for it), the piteous whining from estate agents. In the summer of last year, when we were up to our knees in floodwater (remember all THOSE maps? Your house is built on a flood plain, you mug! You’re going to drown!), the worry was about property being far too expensive and what’s more increasing in price too rapidly. What can we do, the experts debated, to make houses more affordable for people who want them? The same question asked every week since the last property crash. The solution arrived unbidden and now the very same people greet it as a disaster. The Arbitrary Gods of Economics must be greatly confused: how can we please these people?
The truth is, a 25 per cent fall in house prices — to take the gloomiest of the million or so recent prognoses — is, overall, good news. It will not hurt you if you stay put, where you are, which is what people in every other part of the world do with their homes — live in them and enjoy them. It will not hurt you even if you wish to buy a more expensive house. It will affect adversely largely those who wish to get out of the housing market altogether: a tiny minority.
The reason for our schizophrenia over house prices comes down to that most regrettable aspect of British culture this last 25 years or so, the idea that homes are not simply to be lived in, where you put down roots and form a community with those who live nearby — your neighbours — but a means of making a swift buck, or forever trading up and cashing in, borne aloft by an economic mechanism which at times resembles nothing more than pyramid selling. Money for nothing. The social ramifications of this state-approved greed are atomised communities where people do not know one another because they are forever moving on and, of course, a growing army of young families who cannot possibly afford to buy their own homes. But nobody minded too much, or complained too loudly, because the dosh was, magically, rolling in, every year, on paper. The relentless dash for property cash has been encouraged by a whole swath of repulsive television programmes, urging us to move ahead, to buy a second home, to sell, to make a few thousand quid, to paint the bathroom white and install a freestanding iron bath so some poor sap will think it’s a trendy house and thus pay an extra five grand for it, to treat the home as a short-term investment, shorn of any value save for its automatically rising pecuniary worth. It is a loathsome and of course unsustainable premise which we have recently inflicted upon our continental neighbours, to much localised dismay.
I checked out a property website about Berlin recently, which advised me to hurry, hurry and help impose an unsustainable property boom upon the benighted inhabitants of that city. Only 14 per cent of Berliners own their own homes, apparently, and property prices are commendably low, the blurb advised. So, since 2004, some 600,000 property units (I assume they mean ‘homes’) in Germany have been bought by foreign investors, largely Brits. Yes, 600,000! It is not enough that in the quarter of a century since Margaret Thatcher introduced the right to buy for council house tenants (coincidentally, the greatest redistribution of wealth ever effected in Britain: I have nothing against that at all) and Britain went from being a nation within which 42 per cent of people owned their own homes to the 70 per cent figure we see today; we wanted still more. Let’s own Germany! And indeed France, where an estimated 56 per cent of the population are owner occupiers — a figure growing every day at least in part because of the example set by the hundreds of thousands of English immigrants looking for investment opportunities and a beaker of the warmish south. Our avarice spreads a few miles further east and further south with every year that passes; this year Berlin and Croatia, next year, who knows, maybe Chisinau and Macedonia.
Do you remember the ‘Hearts’ investment scheme of five or six years ago, a pyramid selling scam aimed at women? Each woman was required to find six friends to shove money into the system — and each of those six was required to find six more, and so on. Its unique selling point was that the mystical power of womankind, with their womanly belief and lack of cynicism, could conjure money out of nothing, ad infinitum. Eventually, of course, one runs out of stupid, gullible women, difficult though that might be to imagine — but only after quite a lot of people have made a lot of money for doing absolutely bugger all. The buying-abroad property market reminds me a little of Hearts, except that it is a pyramid scheme aimed at Brits, not women. Every year the market stretches to ever more desolate quarters, in search of money to be made from nothing. But unlike Hearts, there are more profound social consequences than a few confused and angry husbands.
So don’t worry too much about negative equity. Close your eyes and ears for a while and it won’t exist; in most cases it is, after all, only a reality if you choose to make it so.