The Housing Crisis III - Commentary

Kevan James

April 16, 2025

There is a tipping point; a point where one can go no further. Regardless of what one is doing, be it a test of physical strength, be it trying to handle the EU-inspired plastic bottle caps, it doesn’t matter – there are limits.

It applies to money as well. It too has limits. Why must we ask why there is so much of the month left at the end of the money? At what point does one say, “This is too much, I can no longer afford it.”

And to what does one apply that concept? These days pretty much everything.

Many have already applied the affordability principle. A new car – have to wait until next year. This year’s holiday - nope, can’t be done. That delicious food item – that’ll have to wait. Subscriptions – have to cut back on those. The cost of all of these things keeps on rising. As does heating one’s home and keeping the lights on.

First though, one has to have a home to heat and illuminate. Without a home, one has nothing. And the cost of having somewhere to live has gone beyond reason, rationale and plain old common sense.

The standard stock answer from those within the housing sector is always the same: “Demand!” they squawk. I once asked an estate agent why house prices in my home turf of West London (Fulham in case you wondered) were rocketing. “Demand,” he replied succinctly. And this…was nearly 25 years ago.

The problem is not new. Actually it is a very old problem.

What does ‘demand’ actually mean?

Those who supposedly know say it means there are more people wanting to buy or rent than there are homes available, so the price goes up. And it does so by itself; all on its own with no human intervention.

They call it ‘The Market.’ House prices, again buying or renting, are driven (so the tale goes) by demand for homes within the market for them. And ‘The Market’ is a life-form of its own, a free-thinking, living entity, beyond the control of humanity.

Rubbish!

The housing market is an invention of humanity and can be controlled by humanity. If that is, humans choose to do so. This they do not.

Demand is patent nonsense. What it means is somebody offers a home for sale or rent at £A. Somebody offers that then somebody else offers more; then more and more still. The estate agent smirks and counts their ever-rising commission, the seller thinks, “Cor! I’m making a packet here!”

There is another, more apt word for ‘demand’ – greed.

That is why the cost of having a home continues to spiral. Greed – nothing more. Just plain old, ordinary greed.

So apart from the afore-mentioned estate agent, who are notorious for driving up prices, who and what else? Property developers have gained equal notoriety for hoovering up tracts of land then building not a single house. This poor habit arises because there are times when house prices do not magically go up on their own so the developer waits until they do, then builds, so they make more money - greed at its finest. And for that matter exploitation too – exploitation of a basic human need.

When Red Ed Miliband was Labour leader (2010-2015) one of his bright ideas was to confiscate such land so that a government led by him could get on with building more homes as they were needed and that was then. Has anything changed – no, not at all.

Once can also criticise sellers and Landlords for being equally greedy and some are, to the extreme. That criticism is fair up to a point but only up to a point. Most sellers and landlords are not property ‘experts’ so look to get the right advice from those who purport to be. And those experts are so riven with greed they have completely lost sight of any possible limits.

Letting Agents are forever whispering sweet nothings into Landlord’s ears about how they could get SOOOooo much more money and human nature being what it is, many succumb. The same argument is applied by agents to sellers.

There are of course a number of other factors that contribute to the never-ending fantasy of ever-rising costs of having somewhere to live. Interest rates are one; when they are low a mortgage costs less each month. When they go up so does the amount you pay to your lender – who gets the extra cash you shell out?

When interest rates rise, the primary beneficiaries are banks and other financial institutions. Specifically, banks see their net interest income increase as they charge higher rates on loans and mortgages.

Let’s put that another way – you are being ripped off.

Perhaps it’s time for housing to be taken out of the interest rate system. You want to buy a home, be it to live in or rent out, so you borrow the purchase price. Your lender puts a bit on top in return for doing business with you (which is fair, they have to make money to stay in business) and you pay it back over the agreed term – usually 25 years - at a specified amount every month. And it stays that way throughout the term.

This keeps things simple, straightforward, easy to handle and most of all, you know what it will cost every month. Undoubtedly there will be a number of those experts (and some who aren’t) who will steam in and say why such a scheme can’t be done.

But I’ll wager none, not a single one, will say why it can.

That essentially is our problem. We have got used to a system that, over a huge number of decades, suits those who run it but not those who actually have to use it. And another vow of silence over the insanity of housing seems to have been taken by politicians. None of them has spoken out against the absurdity of the cost of having somewhere to live.

All carry on trotting out the same, lame old phrases about building more homes. What kind of homes? Big houses, small boxes, low-rise flats, tower blocks? Where will they all go? You will not get an answer from the average MP in the UK.

Estate and Letting agents will carry on living in the la-la fantasy land of an endless supply of people with loads of money who will willingly throw it willy-nilly at overpriced, overvalued homes.

Agents and others will come crashing down soon because we have reached and gone beyond the tipping point over housing costs. We have reached the limit.

Until and unless we, as ordinary people, do something about it ourselves (whatever that something may be), it won’t change anytime soon so we will continue to see the ongoing, utter madness over housing and the price of having a home.

© Kevan James 2025.

Image - iStock via PBC Today

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