Home Economics

Shocking news from the rock of the Hunter; the affordability of housing is terrible in the UK and getting worse.

See the plot below which shows the percentage of average salaries used to service mortgages in the UK and London.

The odd thing, not recognised by many, is that the purchasing power of the income not spent on housing has also gone up in the same time despite the fact that it has shrunk as a proportion of total expenditure.

This, due to increased productivity in the manufacturing of goods and services.

All the angst that people feel is related to the fact that their desire to own stuff and have an exciting lifestyle has gone up faster than productivity.

So they have to get the house and then suffer increasingly because this causes an unwanted trade off in lifestyle.

There’s no plot for this effect but its very much related to the improvements in the effectiveness of marketing.

Technology and psychology, a powerful mix.