There are very few topics that are as actively discussed and generate such strong and differing opinions, as property prices and house ownership in the UK.

Property and property prices, it seems, have been topics of conversation for decades at mother and baby coffee mornings, the hairdressers, the pub, the local wine bar, and dinner parties, alike. This is not a surprise, as residential property has been, and still remains, the biggest asset of the average Brit even after sustained periods of house price volatility and recent malaise; after all “house prices don’t go down , do they?”

In the 80’s much was made of the substantive drop in prices and associated rise in personal and corporate losses, with over extended borrowers not able to meet mortgage payments on their once solid assets. Record numbers of houses were repossessed by the banks and sold on to extract what little remained of the potential equity.

After five years or so of price falls and consolidation up to the mid 1990’s, the foundation was set for a sustained corrective recovery in the housing market. Cheap and available capital drove substantial price upswings in pockets of the South East especially, supporting a new breed of so called ‘property developer’ and buy-to-let landlord. So widespread was this activity and so easy was it to jump aboard this skill less gravy train, that rather than just having to talk about property at dinner parties, worst still one had to keep the company of this new breed too. As the number of players taking part in this property game increased, the greater the upward pressure on house prices became and apparent increase in enthusiasm for banks to lend them money.

When one takes a retrospective, and for the purposes of being applicable to 80% of households rather than just the very wealthy or the less well off, it is astonishing the ease at which banks gave cash away for basically anything. As the nation’s economy became more dependant on house prices it seemed as though the Bank of England kept an agenda to support them too.  

The new ‘low level’ of interest rates experienced since 1994 (basically at the same level as Q2 2008) can never really be justified purely from an inflation standpoint. Personal inflation for most consumers has done nothing but race away during the present government’s tenure, appearing to have little correlation to the indices used to guide monetary policy.

Britain simply became a nation of amateur landlords fuelled by greed and ignorance whilst happily being funded by banks trying to build assets and market share. No surprise then that the gravy train eventually ran dry.

One only has to look at the stark reality of commercial property and the substantial hit taken at the end of 2007 to realise the effects. But look on the bright side, there’ll be less airtime for shows on television about how to make your fortune in property; with no financial, technical, engineering, or personal skills needed.