Are high house prices in Liverpool 18 a good thing?

As house prices soar in Liverpool 18 we need to consider the social consequences in our area and in wider society.

A couple of weeks ago Liverpool 18 was named as the most popular post code in the country. My ward (Church) is entirely in Liverpool but another 50% of the post code lies in 4 other wards. This ‘title’ was awarded by one of the big online estate agencies. It certainly accords with what local estate agents are saying. ‘For sale’ boards rarely go up. Normally a house in the area attracts a buyer within about 48 hours if properly priced.

I can understand why people want to live here. We are adjacent to 3 great parks, Allerton Road with its shops and restaurants and a Sainsbury’s moving in soon! We can get a bus into town approximately every 3 minutes but can be on the motorway in 10. Our library is the most popular in Liverpool outside the central library and there is good NHS coverage with GPs or the big services if required. The schools are great and dare I say this (coughs nervously!) the councillors are superb!!

But as I’ve gone door knocking in the area since the accolade was awarded, I’ve found that many people do not think that raging house prices are a good thing. I agree with them. We’re not quite at London prices but I find the fact that in this area a two-bedroomed terrace can sell for £200,000 scary.

When I was visited a few years ago by a friend from London he asked how much my own house is worth. I didn’t really know but I hazarded a guess. He was shocked. This would be worth £1.5 million in Islington I was told. My response was, “it’s just as well as it’s in Liverpool then as we couldn’t have afforded to buy it!

That’s the problem summed up concisely. Rising house prices restrict social mobility. It used to be that only reasonably paid people could afford to live round here. Now it’s becoming only people who are either relatively wealthy or can get support from the ‘Bank of Mum and Dad’ who can move in.

In the short-term we are ghettoising society. Old over there, young over here; wealthy   over here less wealthy over there and people dependent on social housing being increasingly squeezed out of everywhere.

In the longer term that means an increasing difference between the top and the bottom of the wealth ladder. Perceived wealth leads to different patterns of spending. People who feel wealthy, even if their cash is tied up in property, go and spend more on a variety of goods and services.

The full impact is perhaps seen in people’s later years. The property wealthy can choose to ‘downsize’ and help their kids on the property ladder. If they die in their property it gets shared out according to the Will. And what squeals we hear then from some people. “I worked hard for my money, why should the state take it?” say some people at the thought of paying inheritance tax.

That’s not entirely true. The vast majority of most people’s capital assets are caused because property has risen in value at a rate far exceeding other prices. No-one worked for this. They just rode the inflationary wave.

Much of the price rises are caused by three factors:

Firstly, a continued intent of the Government to meddle with the market which produced adverse effects. Following at least a year of effective lock up there was a pent-up demand for sales and purchases. The Government didn’t need to anything to make this happen. Instead they stoked inflationary fires in which, by removing or reducing stamp duty, the price of the houses went up to match the stamp duty discount.

The net result being purchasers shelling out as much money as before but the Government missing out on huge amounts of tax at a time when it complains of a lack of money. This is true of all the campaigns this Government has run to stimulate demand from first time buyers which has simply pushed up profits for the house builders who have been paying their executives huge amounts for taking advantage of Government stupidity.

Secondly, a shortage of supply of moderately priced housing for sale. This is particularly true in Liverpool where the Council has concentrated on the one hand on expensive luxury homes with Redrow and on the other on poorly built apartments produced, or often not produced, by some dubious developers.

Lastly, there has been a total lack of concentration on social housing. The 13 years of the Blair/Brown Government followed on the Thatcher Government’s ‘Right to buy’ which sold off social houses at knock down prices and failed to use the meagre cash achieved from sales for creating new stock. This has forced people into the private sector which can often be disreputable at the lower end of the market.

So, there are four things to do:

Firstly, build more homes with a concentration on social housing, and homes for sale at the bottom end of the range.

Secondly, stop interfering with the market with ill served interventions on tax and price which benefit no-one except speculators.

Thirdly, give councils more powers to develop the housing which is required to create the socially balanced neighbourhoods in which long-term communities can develop.

Fourthly change the capital allowances system which advantages ‘buy-to-let’ investors against home buyers.

These policy changes will not change things immediately. Housing polices take a long time to take effect. Over time these changes will make a major difference to housing affordability, wealth distribution and the creation of neighbourhoods. Perhaps the next couple of years will see a modest deflation in house prices to enable earnings to begin to catch up.

About richardkemp

Leader of the Liberal Democrats in Liverpool. Deputy Chair and Lib Dem Spokesperson on the LGA Community Wellbeing Board. Married to the lovely Cllr Erica Kemp CBE with three children and four grandchildren.
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