Kirstie Allsopp is wrong about house prices

7 February 2022

12:32 AM

7 February 2022

12:32 AM

They could cancel their Netflix subscriptions, stop drinking chai tea or go a little easier on the avocados and the smoothies. And perhaps most of all they could get on their bikes and start searching for some cheaper places to live. Kirstie Allsopp, the presenter of popular TV shows such as Location, Location, Location, probably always knew she was going to stir things up with her comments this weekend. Allsopp said that if young people simply cut back on some self-indulgent luxuries, and explored some alternative areas to live, then they would be able to get on the property ladder in their twenties just the way she did:

‘I don’t want to belittle those people who can’t do it. But there are loads of people who can do it and don’t. It is hard. We’ve fallen into the trap of saying it’s impossible for everybody. I was brought up to believe owning your home is the be all and end all and in a way I still believe that…It’s about where you can buy, not if you can buy.’

The trouble is, while many of Allsopp’s fellow-fifty-somethings will be tempted to agree with her, she is wrong on economics. In truth, the British housing market is completely dysfunctional – and cutting back on avocados and cancelling Netflix won’t help.

True, Allsopp has probably hit a nerve with her remarks in the Sunday Times. There is plenty of moaning from Generation Rent about how hard it is to buy that first home. And there is a kernel of truth in her comments. A young London professional, who was willing to run a side hustle or two, and thought about working from home from Wrexham rather than Clapham, might find it easier to buy a property.

And yet, she is ignoring the bigger picture. When Allsopp was walking to work to buy her first flat, the average home cost about five times her then salary of £11,500. Today, the average home costs about £260,000, or nine times the average salary. In fact, two things have happened to the property market since the 1980s.

First, decades of planning restrictions have meant that we have not built nearly enough homes, even though a combination of mass immigration, and the splintering of the typical family, has meant demand for properties has massively increased.

Second, a decade of flat interest rates has inflated every form of asset market, sending prices through the roof. That is true of bonds and equities just as much as apartments in Shoreditch, but it is the price of property that matters most.

Whatever Allsopp says, it would not even be very helpful for potential first-time buyers to move elsewhere. In reality, we want the brightest young people to be working where productivity levels are at their highest. More often than not, that means London and the South-East, and, to only a slightly lesser extent, Manchester, Bristol and Birmingham. A successful economy encourages more workers to its most dynamic, expanding urban hubs. It doesn’t send them to the middle of nowhere.

Obviously the twenty-somethings are annoying for the fifty-somethings such as Allsopp. They may well be self-indulgent, moany, and ungrateful (and that’s even before we get on to their terrible taste in music) compared with her generation. And yet, they have a genuine beef about the state of the British housing market. Doing what Allsopp does and just telling them off is not going to help anyone.

Got something to add? Join the discussion and comment below.

Show comments