This is a true story: a few years ago, well twenty four in fact (I’m getting on), FedEx delivered a slender A4 package to my house. It opened with a pleasing zip, and inside, in a smart plastic wallet, was a bearer bond for $258 Million. To say the least, that was a surprise, so I looked more carefully at the packaging and realised it was for the fellow who had owned the house before me. He was a young estate agent in Balham. Suspicions surfaced, and I called the issuer, Morgan Stanley, who promptly sent the fastest courier in history to collect the bond: sparing me any fleeting temptation to look up flight times to Northern Cyprus. And here’s the point…the contents of that shiny package were 258 times more valuable than my home, but I felt not the slightest affection for them…I was happy (very happy) to let them go and for Morgan Stanley to deal with them properly, as I’m sure they did. But my home…my home was my pride and joy.
At some point most of us have been pinioned in a bar or restaurant (or, God forbid, a long distance train) by someone telling us what their house was worth, but it’s not just about money…
The primordial desire to own a home of your own is buried deep in the human psyche: studies suggest that owning a home enhances a feeling of engagement in the local community, a sense of belonging and social responsibility. Stress levels are lower too, because homeowners feel more secure and more in control of their environment (even if that just means choosing the wallpaper); their children do better at school (9% better in maths and 7% better in literacy than non-homeowners), and will have 3% less behavioural problems, although it might not feel that way after a year in lockdown, with most of them climbing the walls or locked to their iPhones. And, of course, money comes into it too: for most of us our home is our most valuable investment, but it’s certainly not just about money…it’s about wellbeing and a sense of personal worth: our home is our castle.
Resurgent Property Markets
Small wonder then that despite the uncertainties and anguish of COVID 19 (perhaps because of them), property markets in the UK are resurgent at the moment: rising nearly 9% year on year and fuelled in part by a temporary cut in stamp duty rates: 114,940 sales were completed in May alone, so by the end of April (the most recent period for which figures are available), average house prices in the UK rose to £250,772. And in India, the trend has been even more pronounced, with across the board increases in property prices between April and June: as much as 5% in Ahmedabad and Hyderabad (www.proptiger.com), combined with concomitant supply side pressures that seem set to pave the way for further increases in the future.
Affordability
But, of course, it’s not all about escalating prices: the enduring theme of global home ownership is affordability as well, especially on the subcontinent where accessibility has significantly increased since 2015. In its May Report, JM Financial Institutional Securities (www.jmfl.com) found a consistent advance in affordability since 2015, reflecting increasing income levels and improved price stability. And that trend has also been strengthened and invigorated by a relaxation in the Reserve Bank of India’s interest rate policies, finally making home ownership a real possibility for what will soon be the most populous country on the planet.
Estate agents in Balham might take note too…
Executive Overview
These are testing times, all the more reason then to look up and look forward to the world we will share together tomorrow. Home ownership will be part of that future…because it’s ingrained in our psyche: so let’s get set to make it work…together.
