While I was not sure of some of the feigned shock shown by the presenter Jon “You bought it for £12,000 40 years ago and now its’ worth £800,000 that’s outrageous” Henley, I thought he put together an interesting programme.
The main interest was to remind everyone why the UK has become a nation obsessed with owning their own property.
Henley took us back to the hell-hole that was Notting Hill in the late 1950’s before the area steadily grew more affluent. The original struggle of immigrants paying rogue landlords like the notorious Peter Rachman for tiny bedsits now seem somewhat unimaginable, and reminded everyone that it is only when you own your property that you actually have any real control over your home.
The stories of incredible property value growth also serves to remind us all that property is a long-term investment, if it is to be considered an investment at all. The most important part is that it is a home, a refuge, security and part of a community.
For all these reasons this nation is always going to be the same. We want to own our homes and be masters of our domain. Hence demand will always be strong, hence prices will in the long-term always remain buoyant, especially when demand exceeds supply.
Despite the drop in prices, Halifax says we have seen house prices from July to August 2008 fall by 10.9%, the average house price is down to £174,000, this is just a return to February 2006 levels. This is still higher than five years ago.
I think there is more to go in terms of house prices, and while I have been advised by a leading economist that we will then see a longer period of stable or small growth, in the long-term, and faced by high demand and low supply, I expect prices to rise again.
Warren Buffett once said that being an investor is like being in business with a manic-depressive as a partner. There are times when your partner becomes wildly euphoric about the prospects for your business and wants to buy you out at almost any price. Then there are other times when he is down in the dumps, frantic to sell. As a rational person, Buffett says, you should buy when he’s depressed.
As for the nationwide obsession of getting onto the housing ladder as early as possible, I do not expect this to change any time soon.