The persistence of the house price myth

Why should commercial companies get away with myths about house prices, asks Steve Burgess.

High house prices are bad for Edinburgh.
That should be self-evident, shouldn’t it?  After all, we have seen the devastation wreaked on the economy by the last house price bubble, which burst in 2008.  It is the households on the lowest incomes who are paying most for that crash, despite being no part of reckless gambling on infinitely-rising house prices.

Steve BurgegssHigh house prices are bad for the economy as they divert capital into unproductive land values and away from investing in the green, low carbon industries which are the source of our future jobs and prosperity. High house prices exclude future owners, push rents up for tenants and make it harder for social landlords to get land.

 So let me repeat – high house prices are bad for the city, for its economy, and for its ability to house everyone adequately.

 Yet, it is easy to lose sight of that simple truth, such is the blizzard of messages from commercial companies who have a vested (if short-term) interest in riding the roller-coaster of the next house price wave.  Take this week in one local paper, the Edinburgh Evening News.  On Tuesday, a page lead was given to Savills – estate agent to the wealthy – proclaiming a predicted 18% rise in Edinburgh house prices as a good thing.  Next day, on Wednesday, an opinion slot was handed over to CKD Galbraith to regurgitate some half-witted nonsense about how good it was that Edinburgh has the highest house prices in the land and that  demand for second homes was strong.  Really!? Are we really to sacrifice precious green space to satisfy the second homes market and those looking for “long term investment opportunities”?

 I don’t deny Savills’ and CKD Galbraith’s right to have their say but we really need to stop treating these companies – and others like ESPC and Homes for Scotland – as independent property experts and understand them for what they are: commercial concerns with a direct interest in the market working in a certain way to boost profits.

 So used are we now to the roller-coaster of the housing market that we are in danger of not seeing just how broken it really is.  Step one must be to reclaim the way we think and talk about the market.