“Home ownership to slump to 80s levels” is a very popular headline today – it’s also extremely dodgy logic.
Apparently, high deposits and difficulty actually getting a mortgage are making it harder (but not impossible), for first time buyers. So far so good – but what possible effect could this have on existing home owners, to cause a slump – a reduction – in home ownership? None.
Existing home ownership won’t diminish just because some newbies can’t get on the home-owning ladder, so clearly there will be no slump.
What there will be – which is not the same thing at all – is reduced growth in new ownership, plus a degree of stagnation in the market as opportunities to upgrade diminish (fewer people coming in at the bottom means fewer people will be able to move up). There will still be a little movement, though, because there will still be some newbies coming in at the bottom.
Ergo “Home ownership to slump to 80s levels” is, to use a technical term, complete bollocks. Reduced growth is not a slump, reduced home ownership would be a slump, but nobody is even suggesting that’s going to happen.
Ergo, no slump.
Oh yeah, but reduced growth won’t garner as many readers or sell as many tabloids as panic words like slump.
It was actually the Guardian, but it seems to be everywhere.
But just how dumb do they think people are? There was a time when the Guardian had a degree of respect for its readers’ intelligence. Not any more, it seems.
People not buying new cars will cause a slump in the industry – it just doesn’t apply with new house-buyers (not to be confused with buyers of new houses).
Ron.