Most UK homeowners would give up gains to ease property market

[LONDON] Most British homeowners would give up future gains in the value of their property if it helped others onto the housing ladder, according to research by the campaign group Positive Money.

The finding accompanied a report that calls for a long-term housing affordability strategy to turn homes back into places where people live rather than speculative investments. Positive Money suggested the Bank of England should get a target of keeping house prices inflation low just as it has with consumer prices.

Polling by YouGov for the "Banking on Property" report found that 54 per cent of homeowners would be happy for house prices to stagnate over the next 10 years to make property more affordable for others. Two-thirds of the 1,751 survey respondents supported the proposal to give the Bank of England a sustainable house price target, like the Reserve Bank of New Zealand.

"The prevalent narrative that house prices are out of reach for so many due to a shortage of homes fails to explain the explosive growth of recent decades," said Danisha Kazi, senior economist at Positive Money.

"House price inflation has mainly been driven by successive governments and central bankers transforming homes into financial assets, through deregulation and other policies favouring investment in property."

Housing in Britain has become increasingly unaffordable over the past 2 decades as the growth in prices has outstripped wages. According to the Office for National Statistics, typical full-time employees now need to spend 9.1 times of their annual earnings to buy a home in England and Wales, up from 3.5 times in 1997.

In the 12 months to February 2022 alone, the average UK house price increased by £27,215 (S$48,366) more than the average wage in 2021 of £25,971, Positive Money calculated.

Positive Money also called for a higher capital gains tax on second homes to equalise rates with income tax, as well as additional surcharges on overseas investors and homes bought through corporate vehicles. Other suggestions included improving alternatives to home ownership such as rent controls.

"Governments have failed to deal with the housing crisis because of a pervasive view that the public, who are majority homeowners, would be against policies that restrict house price growth," Kazi said. "However, the evidence suggests that most people support a fairer approach to housing." BLOOMBERG

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