The political economy: my salary is £27,600 can I afford a house in the capital?
Who is responsible for such inequality of house prices? Should we blame the state, government, the elite or simply the economy? Is there a clear distinction between neo-liberalism and conservative approaches to the society? The property market has been one of interest to many, especially for the younger generation. For they are the next in line to purchase a home to live in.
However, there is a catch: the average house prices in London according to The Guardian is £527, 349. House prices are to rise 2% in 2017, says Rightmove. Therefore, if we are to calculate this with average earnings in London from young working professionals to the senior working citizens it works out that all these people mentioned are out of question when it comes to affording a home, they simply cannot afford one.
Why is this? There has been a past history of housing bubbles from 1997-2007. Although, since the financially crash in 2008 in America it had a ripple effect on the economy of other countries including the UK. Although, The UK remains the number one investment destination in Europe. The USA remained the UK’s largest source of inward investment providing 570 projects. (Gov, 2016). The stake in which private businesses hold in terms of property is out of proportion to the average 9-5 worker. Could this be aiding in inequality? Perchance, or is the remaining 95% purely uneducated about the subject of getting on the housing ladder? This means that only the top tier of the population can afford homes or either being snapped up by foreign investors.
So the ultimate question is, how can we afford to have a home if in theory, are not adequate to either by monetary funds or education about the property market? This is the political economy. The decisions are made by the government in practice and which ever policy they put in place, as citizens of the country it is our duty to abide by the laws and follow. In spite of this, the beauty in politics is that all voices are heard (well, we’d like to think so) from this, we can understand that those who are in charge of implementing these policies do comprehend the conundrums and obstacles most of us face in regards to housing.
Rationality often breaks down to the fact on whether you have got the right information or not. What is more, since the findings of the inequality in the housing market, the government has implemented ways that people whether from disadvantaged backgrounds, average jobs and so on can have an advantage in their way to a large extent. The government has recently offered schemes such as help to buy ISA bank accounts from building societies which has been a national interest for the younger generation and a new incentive for new home buyers and first time buyers.
It is heavily important to keep in mind that government schemes have helped over 300,000 people in the past year or so this in turn will help boost the numbers of new home owners or existing home owners to live in better homes. Since the recent rates from the Autumn Statement 2016, Phillip Hammond the Chancellor of the UK has implemented that 40,000 new homes will be built and £1.4 billion will go towards this. This will help society by answering all our mind-bobbling questions on how whether we can afford a house to live in. http://budgetresponsibility.org.uk/.
Or is this all just a matter of the economy and something whereby nobody has control of? Financial crises have a detrimental effect on a nation’s economy and this lead to rapid changes in house prices and living costs to transportation costs. But the elite still thrive during economic troubles “…the orthodox liberal Adam Smith (1723-1790) argued that the welfare of society depends on the individual’s ability to pursue his or her interests.” (Cohn, 2000). Perhaps, it is merely down to merit – how intelligent you are about the economy in order to cope, thrive and survive.
With this being said, with the rise of the neo-liberalism economy it is now far easier to distinguish the inequality amongst people within the state. Who is responsible for such inequality of house prices? It is difficult to fathom as to who we should point our fingers to. But affordable housing should be available for all members regardless of their salary or the rates of the economy.
Writer: Patrick Ngombo
Bibliography and Further Reading:
“Autumn Statement 2016: Philip Hammond’s Speech – Oral Statements to Parliament – GOV.UK”. Gov.uk. N.p., 2016. Web. 23 Nov. 2016.
Cohn, Theodore H. Global Political Economy. 7th ed. New York: Longman, 2000. Print.
Collinson, Patrick. “Average London House Price Down By £30,000 In July, Says Haart”. the Guardian. N.p., 2016. Web. 1 Nov. 2016.
“Office For Budget Responsibility”. Office for Budget Responsibility. N.p., 2016. Web. 1 Nov. 2016.
“UK Remains Number One Investment Destination In Europe – News Stories – GOV.UK”. Gov.uk. N.p., 2016. Web. 1 Nov. 2016.