July 23, 2006

Soon Money Will Buy You Happiness

The National Housing Federation reported this week that the average house will cost £300,000 in five years' time.

With few houses set to be built in that timeframe and there being no lack of demand which would bring about a fall in prices, we are pretty much buggered.

This generation of students – and seemingly the next one too – will find it impossible to own a house of their own, and only the very rich will be able to prosper by buying–to–let. The gap between the rich and poor will inevitably grow, with the poor becoming a bigger group.

So the adage that "money can't buy you happiness" is set to become false. Maybe it's a bit extreme to say that without a mortgage you can't be happy, but until you own something as fundamental as a house, many people will feel unfulfilled. Moreover, those who want to build their dream home (and they need not be loaded to do so), will in the future find their dreams evaporate.

This causes other problems. Younger homeowners are more likely to desire an environmentally–friendly home, are more likely to put solar panels on their roof and wind turbines in their garden. But if the vast majority of young people are renting until well into their 30s (as looks probable) then the move towards more sustainable housing will slow.

There's been much talk about the 'politics of happiness' recently, helped by a TV series on BBC Two and mention of it from David Cameron. The former was a bit drawn out while the latter sounded like opportunism, but the 'happiness formula' will become far more important as a whole generation finds it can't afford somewhere permanent to live.

Money might not be the be–all–and–end–all, but the gap between the haves and have–nots is becoming ever–larger as affordable housing becomes more and more invisible.


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  1. But then demand for buying houses falls and thus simple economics implies that prices would fall as well (assuming no change in supply)

    23 Jul 2006, 22:00

  2. £250k, £300k, what's the difference? Emigrate, my friends, emigrate!

    23 Jul 2006, 23:48

  3. Christopher Rossdale

    But then demand for buying houses falls and thus simple economics implies that prices would fall as well (assuming no change in supply)

    Wasn't Chris suggesting that the rich opportunists would use their capital to buy–up properties on the market, taking advantage of the buy–to–let culture that will become so widespread. This will maintain demand on the housing market, keep prices ticking over, and we're all fucked.

    For once, I'm with Cooper.

    24 Jul 2006, 01:18

  4. I'm glad I'm already on the property ladder, but I wish people would believe me when I say I can't afford new windows.

    24 Jul 2006, 08:17

  5. Actually, I still think we could be in for a correction.

    When the last bear stops roaring, and all that…

    But frankly, I'm trying not to care and beginning to succeed.

    24 Jul 2006, 18:37

  6. Kevin Smith

    In the last housing bubble similar projections where made. However interest rates rose, people lost their jobs and the housing market corrected itself.

    At the moment rents in many areas are really expensive and lots of buy–to–let landlords particularly the ones who have jumped on the bandwagon in the last 3 years, are having void periods of 5 months a year when their properties are not being rented out, and some of them are actually renting 2 bedroom flats as flatshares to one person just so they can get some income. So their rental yields are really low. If interest rates rise these landlords will start getting rid of their properties and in fact I know quite a few landlords are doing this already as some of my friends' who are lucky enough to be buying properties are actually buying properties that use to be rented out.

    My friend's who are buying their first properties now are mostly in their early to mid 30's and mid–way through their careers.

    24 Jul 2006, 20:02

  7. Ah, not so.

    I'm just wolfing down some breakfast in preparation to see the head of pensions at a major high street bank. If all goes well today, Smarter Housing will soon be offering luxurious student accommodation on a proper student budget.

    25 Jul 2006, 08:50

  8. Inheritance shelters people whose parents or grand–parents own houses from the worst effects of high house prices.

    You may talk about inheritance tax (IHT), but the rich have long regarded such taxes as voluntary. So lots of business for tax specialists advising the middle classes on how they can avoid IHT! And greater disparities of income and lifestyle across society.

    25 Jul 2006, 09:56

  9. I'm looking to buy land as soon as possible and then take my time building a property that meets my demand. I think in the long run this allows me to get a home for less, as land with building permission doesn't cost as much as land with property, although it's pretty galling having to spend close to £100,000 before you have the first brick laid. My advice to all is to get a mortgage as soon as possible – it'll only get worse as prices continue to rise faster than wages. You can always buy a place and let rooms out to friends in a similar position, thus allowing you to fund larger mortgage repayments. Many first time buyers fund property in this manner in order to get a foot on the ladder.

    25 Jul 2006, 10:34

  10. James Black

    ‘Until you own something as fundamental as a house, many people will feel unfulfilled’

    No, I disagree with you, rather, if anything, the truth is the other way round.

    The act of owning something fundamental, like a house, installs a feeling a ‘progress’ in your heart, and its this in itself that causes the feeling of being unfulfilled. Without a house, without anything ‘fundamental’, you give up the entire belief system of ‘material progress’ and hence you are satisfied.

    This is why those who have money (i.e. the middle classes) are perversely also those who care the most about money. They are the ones who see great importance in getting ‘a good job’ and going on the housing ladder. However those without money (i.e. the working class) do not talk about money, they do not see the importance of getting a house and a good job; they see life in a totally different belief system (i.e. imperative is to be ‘socially happy’, not ‘materially safe’) because they do not have something fundamental, or even the hope of getting something fundamental, to start in the materialistic belief system.

    There is nothing wrong about this increasing inequality in the distribution of housing accept for the sons and daughters of rich middle class parents who have indoctrinated them in the importance of material progress but have failed to make enough money to ensure that they can get a house. Those richer can find a house; those poorer do not care (well, they do care, but not to the extent that they will feel ‘unfulfilled’ if they do not get a house).

    25 Jul 2006, 14:28

  11. Ellen

    I own a house and feel fulfilled and socially happy but I think that is due more to the people I share that house with than the fact that the house is owned by me. At the end of the day it's people and not pocessions that make you feel fulfilled.

    25 Jul 2006, 17:47

  12. Re James Black comment. There's a problem that people have to slave away for years in jobs they hate to generate enough money to pay rent or mortgage payments.

    25 Jul 2006, 19:25

  13. Who said money can't buy you happiness?

    25 Jul 2006, 19:55

  14. James Black

    Bloody Hell George, its like talking to children sometimes…

    As I implied, if people really are slaving away miserably just to get enough money to buy that ‘nice’ house down the road or rent a house in a ‘nice’ neighbourhood than its their own bloody fault for being so materialistic.

    I’m just saying that you are all being a bit small minded here. We are pretending that just because we (by this I mean from the suburban consumer class) seem to think that its so utterly important to buy a house that we cannot ever be fulfilled without, this doesn’t mean that the same principle goes for everyone. People adapt.

    If someone is too poor to buy a house, and they realise that either they have to have a job they hate but get the house or have a job they like but rent a house, then I’m saying that most people (well, most healthy people anyway, and I don’t see why we should bother about weak morally corrupt fools) would just rent, and than they would adapt their belief systems appropriately and decide that owning a house wasn’t as important as they previously thought, and hence they remain happy. Indeed now that they are renting they do not feel compelled to join the rat race and they are out of the ‘materialistic progress’ trap. While if they bought the house they would still be looking at other houses, by renting they have given up the rat race and taken up an entirely new belief system, one in which materialistic progress plays relatively little importance and hardly matters whether they feel self fulfilled or not.

    You want a socialist world where people do not care about money? Well this is it. Increased economic inequality forces people out of the materialistic rat race. Falling house prices will just encourage people to buy a house and hence get themselves trapped in the materialistic rat race of keeping up with the Jones and material self improvement. Have you all forgot that socialism died when Thatcher got millions in the working class to buy their houses and hence bring them into the capitalist system (not to mention sow the seeds for a gigantic increase in the DIY industry a decade hence)?

    25 Jul 2006, 22:42

  15. Look, James Black, this is probably the third time you've brought this stupidness up on blogs. You're totally wrong and obviously have no idea what you're talking about. Please just shutup. It physically hurts me to read your shite on blogs, it's hard to believe people are actually as stupid as you. Stop. Please. At least free marketers are coherant. The truth is usually the exact opposite of what you say it is. Thought you'd gona away, man. You're killing me here.

    26 Jul 2006, 01:46

  16. I just wanted my own house so that I had stability and control over my own space – freedom to decorate it how I liked etc. I think the only way my house contributes to my happiness is in that I share it with some great friends. Otherwise it causes me numerous headaches with having to find money for repairs and such like. So I agree that property is not necessary for happiness, but that doesn't mean that people who do derive such happiness from it are materialistic. I hope this makes some sense – it's early and my brain is still slightly fuzzy.

    26 Jul 2006, 07:13

  17. There's a problem that people have to slave away for years in jobs they hate to generate enough money to pay rent or mortgage payments. bq.

    How is this made any different by an increase in housing prices? Lots of people don't enjoy their jobs, but the way our system works it's necessary for the population to go out and be economically productive. We can't all just sit around on our arses living off the state. And what's that socialist slogan anyway, "work sets you free"? ;–)

    Oddly enough, as housing prices increase further the problem will dissapear I think, as banks start offering longer term mortgages such as those you can get in Germany and Japan, where the mortgage is paid off over more than one generation.

    26 Jul 2006, 08:04

  18. Actually my silly error, before someone corrects me on it. I always thought that was a socialist/communist slogan, but it was actually a german phrase put up in concentration camps during the second world war.

    26 Jul 2006, 08:07

  19. I don't think I was trying to make a materialistic point – but while people are stuck renting, their style of living is entirely dependent on what the market provides. If they own a house, don't they have greater liberty to live in the way that they want?

    To use an utterly crap example – we'll never be able to have pets again!

    26 Jul 2006, 09:33

  20. I hate the way people use the word "materialistic" when they refer to obsessive consumption. People who are much upset by environmental destruction and live in hippy type self–sufficient communes are very materialistic – their critique of society is that it's destroying the biological basis for life on earth. Yet their life–style is a long way from the relentless pursuit of holidays, SUVs, big houses etc. So they are not obsessive consumers.

    Don't think you can avoid slaving away at a crap job by renting. Rents tend to follow house prices in the long run. If investors find that their returns from housing are lower than from other things, they switch out of letting to those other things, reducing the availability of rented accommodation, forcing rents up. In the short–term, however, rent increases go in the opposite direction to house price increases, as investors are drawn to the capital gain and overlook the effect of increased supply of lettings on rents.

    26 Jul 2006, 10:11

  21. James Black

    Look, I’m just saying that it isn’t a simple system where the richer you are the happier you are. Why do poor people not despair when they realise that they are poor? That’s because they do not place as much value on material wealth as some richer people do.

    Granted that the feeling of failure may arise in the hearts of some people because they cannot afford to buy a house. But I am arguing that this is because they are stuck in a very consumerist belief system at the moment and that it would probabally be best for them if they adapted and adopted a new belief system (like socialism for example, one where being poor isn’t necessarily synonymous with being lazy/stupid/inferior/bad).

    To remedy this problem of people being trapped in a belief system that is blatantly unsuited towards them we need to set up social institutions (like the church) and improve education (so people can create their own belief systems). The drive towards economic equality will not necessarily fix the situation. Suppose that we were all economically equal, but in this society some people are naturally better looking than others and being good looking is considered as a ‘good thing’. The ugly looking people will be miserable, so what now? Do we force everyone to wear the same clothes and look the same (this was the original Marxist and Maoist position)? No. The way to fix the problem of inequality (in any sense of the word) is not to try to make everyone the same but rather is to encourage diversity and get people to specialise in their own belief systems, the result being that everyone becomes members of their own hierarchical elite.

    Perhaps when it dawns on some people that they may not achieve some things because they are poor than it causes them to delegate themselves a sub–optimum role in life. Perhaps the lure of the materially based belief system is too strong and people cannot seriously reject it until they confronted it, enjoyed it, gained self–respect in it, and than got bored and rejected it. This is a good case for economic equality. But Vincent’s cascade of petty insults isn’t a good criticism.

    27 Jul 2006, 00:32

  22. It's difficult.

    27 Jul 2006, 09:50

  23. Michael Jones

    Obviously the solution is to move to the Fens, where houses are the cheapest in the country. If you do move there, however, you'll find out why.

    I like the NHF though, they make a fair contribution towards keeping me in a job.

    27 Jul 2006, 10:00

  24. In answer to James Black

    Why do poor people not despair when they realise that they are poor? That’s because they do not place as much value on material wealth as some richer people do.

    Plenty of poor people do despair. You need to be able to buy a certain amount of things in order to participate in society – instead of just sitting at home watching TV. Money for bus fares, food in cafes, clothing, your broadband connection so that you can rant away on blogs all day…...

    To remedy this problem of people being trapped in a belief system that is blatantly unsuited towards them we need to set up social institutions (like the church) and improve education (so people can create their own belief systems).

    But the Capitalist system needs people to consume more and more stuff – if you try to change that you will get enormous resistance from its supporters. Wars have started for lesser reasons.

    Do we force everyone to wear the same clothes and look the same (this was the original Marxist and Maoist position)?

    I don't know about Maoism. But I know of no evidence that Marx had that idea. I'd support equality of liberty as a key aim.

    27 Jul 2006, 11:09

  25. James Black

    Your right, George, plenty of people do despair. What makes them despair is that they cannot see any alternative belief system to give them comfort. They are reified into thinking that material consumption is a good in itself and they cannot see any other alternative. They need to learn the fallacy of their beliefs, and than get some new beliefs, only than will they be free.

    For example David Brent (guy in ‘the office’ for anyone not in the know) is reified into thinking that being funny is of an up most importance, but because he isn’t funny this just makes him miserable. It isn’t until he meets his new girlfriend that he realises that there is more to life and realise that being funny isn’t important, liberated he gains new self confidence and hence stood up to his ‘friend’ at the office Christmas party.

    You are also right in pointing out that money is needed to join some other belief system. It’s silly to imagine that we can just become Buddhists and live without money. This is why I’m in favour of a guaranteed minimum income.

    Equality of opportunity may be an important thing. If it is than this housing thing is to the detriment of society. Its all–very well for people to indulge in their own belief systems, but if this was forced out of necessity it could leave a disappointment feeling. Rejecting the consumerist way of life in such a case wouldn’t be the noble action of sacrifice and hence empowering you will, but rather it would be a depressed action of chopping off a diseased limb, and thus resulting in you becoming a cripple (angry at the world for what it did to you, not feeling like a real person as the world has determined what you are and not yourself, etc). So perhaps this housing inequality thing is bad.

    However I remain in my original statement that many people will not fill unfulfilled because they cannot buy a house and that by being priced out of the market and not being able to buy a house it may actually liberate some people from falling into the materialistic consumerist trap (instead of falling into the trap of trying to buy shit thinking that once you had it you will be happy, if the ‘shit’ cost too much money in the first place you would look at other avenues to seek happiness, and these may be more productive areas. For example, Edward Norton in fight club was depressed when he was just a consumer, but than his apartment blew up. This forced him out of his consumerist trap. The result was that he discovered a whole new world that he enjoyed much more).

    27 Jul 2006, 17:36

  26. James Black

    Plus, George, can you just clear this up for me. I always thought that communism was ‘the end of history’ because the dialectic had run its course and that all conflicts in society have been resolved. These conflicts arise out of diversity. Hence Marx mentions how in the communist society there would be no urban/ rural distinction (everyone would live in suburbs) and people would be fishers in the morning, poets in the afternoon, and write maths in the evening. Have I got this completely wrong?

    27 Jul 2006, 17:36

  27. i wish marx was alive now so i could marry him

    27 Jul 2006, 17:38

  28. I'm hoping that my book does alright so I can buy my house within the next couple of years. Failing that, I'll probably live in a box (this is not intended to make light of homelessness, this might actually happen).

    27 Jul 2006, 18:15

  29. I'm just imagining James Hughes kidnapping Marx and taking him away to some remote place where they can be married (against Marx's will). I don't know what would happen next but it would be jokes.

    And Ailsa, if you want your book to do well then you're not pimping it NEARLY enough. I mean, this is the first I've heard about it and I've read loads of your comments. 9 out of every 10 things you say, write or express when you've just published written a book should be plugging it. Seriously.

    No, but SERIOUSLY.

    Why do I love that word.

    27 Jul 2006, 20:23

  30. Did I forget to mention my book as well?

    27 Jul 2006, 20:57

  31. Under a pseudonym?

    27 Jul 2006, 22:40

  32. Re comment 26. The short answer is I don't know. I only got 60% in the Marx's Social Theory course I took last year.

    The long answer is I suspect not. Marx wasn't one to make detailed predictions, he thought it was up to the workers to work out all the details about what the post capitalist society was all about. Also I'm skeptical about the end of history. Just because people no longer have to fight about basic resources doesn't mean that they stop having different opinions about other matters such as where society should be heading.

    Remember that even during his lifetime much of Marx's work was mis–represented (e.g. Engels wrote a whole book, entitled Anti–Dühring, attacking the mis–representations popularised by a certain Professor Dühring). Then in the days of the USSR there were plenty of distortions put about as justifications of what the leaders of the USSR got up to. Even today there are social studies academics who really should know better than to repeat others' mis–representations rather than check the original texts. Which are free to view!

    27 Jul 2006, 23:11

  33. Second time you're banging on about "Edward Norton in Fight Club" on two completely irrelevant blog discussions. Did you just see that film or something? Getting a bit obsessed?

    30 Jul 2006, 19:59

  34. James Black

    Yes, I did notice that I used fight club examples an awful lot. I think its because Nietzsche’s ‘beyond good and evil’ is the only proper philosophy book I have ever read in fully and proper (i.e. reading about three times and taking notes). Consequentially I do tend to end up talking about Nietzschean subject matter and with a Nietzschean worldview more than most (but for anyone wondering I disagree with most of his particular ideas– plus for anyone interested I’ve just read Russell section on Nietzsche in his ‘History of Western Philosophy’. Its complete and utter crap, Wittgenstein was right when he said Russell had become a silly and glib fool in his old age. If this is the popular conception of Nietzsche, as I suspect it is, than I must empathise that I have very little to do with this view of Nietzsche). Anyhow, back to the point. Fight club tends to follow Nietzschean subject matter also, and so naturally I do tend to borrow examples from it. I’m sure that if I had read Sartre instead I would always be making reference to some famous film noir film.

    31 Jul 2006, 00:41

  35. James Black

    Yeah, actually on reflection most of my above comment is crap… I probabally don’t make references to fight club just because I’ve read Nietzsche. I could probabally probe into the real reason, but I can’t be bothered…

    31 Jul 2006, 01:20

  36. Jenny

    I’ve just realised that it is a book of Nietzsche’s philosophy that my partner has had his head in for the last week or so. I flicked through it last night and have to say that I understood very little of it, perhaps I’m just not intellectual enough or thick or something! Although my partner did say it’s not the sort of book you can just flick through and hope to understand. I couldn’t say whether I agree with his ideas or not because after reading bits of the book I was left thinking “what the hell is Nietzsche’s philosophy”!

    03 Aug 2006, 12:16

  37. Jenny

    I realize now that I was being lazy and after having read more of Nietzsche’s book It’s starting to make sense and I actually got quite engrossed in it last night. Basically I think he is saying ” life is short so experience it intensely, sexuality is not the opposite of virtue, find yourself, challenge yourself, love yourself….yeah, I like his thinking, it’s cool, man!

    04 Aug 2006, 11:05

  38. Jenny

    Scrap the above comment….I’ve changed my mind. In the very next chapter Nietzsche says ” Woman was Gods second blunder and if you are going to women do not forget the whip.” I’ll give him the will to power – male chauvanist pig!!

    04 Aug 2006, 16:46

  39. Bank of England raised interest rates the other day I see… I remain optimistic that a correction is on the way. Who knows, perhaps in a year’s time we’ll be the ones laughing…

    Until then, there’s always overseas. Not only cheaper houses, but better quality of life and (in the right countries) no pensions crisis!

    07 Aug 2006, 21:10


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