Date Published 29 March 2017
The surge in house prices continues to make the national press as national average prices are now close to 8 times average earnings. The Pattern over the UK differs wildly with some areas in the north as low as 2.8 earnings, and Kensington and Chelsea topping the league at an eye watering 38 times earnings. In the south west we enjoy more modest prices but that has to be counterbalanced by lower earnings. Taking a single earning as being the relevant comparator for house prices is probably old hat now. Most buyers buy as couples – the counter argument being that they have to as opposed to choose to.
An interesting argument from the author of 'The Road to Somewhere' David Goodhart who suggests that the trend for both partners in a couple to be working full time is a result of need not desire. Couples need the money from both incomes to buy, and when children arrive the choice of whether to work or not is the purview only of the well off. He makes the case for tax breaks for the parents who decide to stay at home to undertake childcare. Transferrable tax allowances for couples would enable the traditional role of home maker to be one that is encouraged and celebrated rather than penalised. He has a point. With child care costs at £8bn with nothing available to those who remove the burden form the state those that save us money face financial penalisation in return.
The argument that the decision to work is good for the family is compelling. Evidence has long since shown that those who are in households where the example to work is entrenched early are both more likely to work and have better life outcomes as a result. Goodhart does temper this though with the types of work and the pay it accords. We should pay indigent workers more to do the jobs such as fruit picking or simply accept that it is an unsustainable activity, and switch to imports. An interesting perspective but switching training to build skills in the developing technology industries would increase productivity and wealth for the longer term.